In the middle of the most important urban renaissance in a century, the people of the United States have elected a president who lives in a 58-story mixed-use building in midtown Manhattan. Whatever you think of him, the president-elect is a man who ought to understand cities. He has lived in America’s largest city his entire life. He comes from a family that has developed and managed urban real estate for three generations. The glitziness of major cities – New York, Chicago, Los Angeles, even Pennsylvania Avenue in Washington, D.C. – has always had a magnetic appeal for him. And yet Donald Trump’s election may be the most anti-urban act on the American political stage since the nomination of William Jennings Bryan 120 years ago, when the populist Nebraskan railed against New York bankers in a fiery speech at the Democratic convention. Trump’s political base is anything but urban. It is white, older, exurban and rural, and angry. His supporters are nothing like the Manhattan social elite he has always aspired to be part of. (He lost his home county 82%-9%.) They are more like the Archie Bunkers he lived among – admittedly, as a rich kid – growing up in Queens. On the campaign trail, Trump occasionally brought up issues of urban blight – especially in African-American neighborhoods – but he usually did it in an old-fashioned way that made a lot of political observers think he was simply dog-whistling his white supporters rather than actual appealing to blacks and other urbanites. And he never proposed any urban-centric policies, insisting instead – in surprisingly classic Republican fashion – that he would stimulate so much economic growth that everybody would benefit. All of which probably means that the federal government won’t be doing much of anything for cities over the next four years. Trump will try to revive American manufacturing with protectionist policies. He may seek to deport millions of immigrants, many of whom live in major cities. And in all likelihood he will otherwise be held hostage by the traditional tax-cutting rhetoric of the Republican Party, which will leave him no money to throw at the cities even if he wanted to. Fortunately, this is a time of great energy, creativity, and prosperity for American cities. Just as states become laboratories of democracy when Ronald Reagan cut back the role of the federal government in the 1980s, now cities are becoming the urban laboratories of democracy, pilot-testing new policies and ideas that might later spread across the country to become commonplace. Ironically, even as most of them are controlled by progressive Democrats, American cities are the engines of our nation’s prosperity – and practical Republican business leaders understand this pattern. Metropolitan areas – led by cities and inner suburbs – are now generating most of the nation’s growth in population, jobs, and wealth. This is even true in Texas, where most economic growth and virtually all economic growth is occurring in four big metropolitan areas even as the legislature is largely controlled by rural interests. There is little reason to expect that will change under President Trump. Because of their density and flexibility, cities are at the epicenter of the tech innovation that is changing the way people live, travel, and work on a daily basis – innovation that is driving economic growth across the nation. Car-sharing services such as Uber began and thrived first in big cities and now are expanding outward into suburbs, where they are gradually becoming part of the transportation system. The same is true for food delivery services, Amazon drones, and a host of other “disruptive” emerging businesses. And the educational institutions that incubate a lot of these innovations – such as our host institution, Rice University – are still located in the center of major cities. It’s true that these emerging businesses don’t create as many jobs as the old factories used to (not that new factories create many jobs these days for anybody other than robots), but they are at the cutting edge of the 21 st Century economy and the urban-centric approach to innovation and adoption of new ideas isn’t going to change. Cities are also at the epicenter of the greatest economic and social problem of our time -- the growing gap between rich and poor – and increasingly the solutions appear likely to come from the ground up rather than the top down. One characteristic of both Democratic and Republican approaches to growth and opportunity over the past few decades has been a top-down approach from Washington. If you want to grow the economy or expand economic opportunity, you do something big at the federal level – a huge jobs program, a huge tax cut. But such moves are increasingly hard to make in a polarized governmental system and because most of the big moves have already been made (huge tax cuts, for example), new moves increasingly occur only on the margins with limited effect. Trump will try to make a big economic move with protectionist tariffs, of course, but his own party is divided on them and it’s likely that they’d create a deep recession in the short term because of the way the United States is integrated into the world economy. On the ground in cities, however, it’s different. Some of the solutions involve new ways to connect people to opportunities -- as the Upskill Houston efforts attempts to do by helping young adults to get the technical training they need to get good blue-collar jobs. More and more, you’ll see cities and metro areas initiating these moves, in large part because that’s where the jobs and people are located; and then the moves that work will be scaled across the country. Similarly, it’s clear that there is an increasing trend at the local level – and, to a lesser extent, at the state level -- toward New Deal-style economic policy that seeks to lift people up. Though it’s going nowhere in Texas, for example, the move toward higher minimum wages is gaining traction across the country – and not just in blue states. Several red states have passed minimum wage increases at the ballot box – Arizona approved a $12 minimum wage yesterday – and cities are experimenting with a wide variety of minimum wage policies as well. Though conservative thinkers argue that minimum wage stifles economic growth and kills jobs, the practical reality is that cities across the country will tinker with minimum wage systems, providing evidence for states and eventually the federal government as to what works and what doesn’t. Unlike Congress or even state legislatures, cities don’t have to come up with blunt-instrument solutions in order to win over ideological legislators. They can craft nuanced approaches to policy and – as many mayors have shown – use big data in clever ways to monitor the effectiveness of those policies. The bottom line is that on domestic and economic policy in particular the federal government is increasingly irrelevant. As Bruce Katz of the Brookings Institution likes to say, the federal government today is really just a health insurance company with an army. Whatever you think about Donald Trump as president – whether that inspires you or terrifies you – the federal government under any president has limited running room to deal with the fundamental issues of economic innovation and the rich-poor gap. Meanwhile – unlike during the “Laboratories of Democracy” era of the 1980s – most states are stuck on one side or the other of the red-blue ideological divide, pursuing predictable policies depending on which party controls the statehouse and the legislature. Which means that even with Donald Trump as president, the future of America belongs to the urban laboratories of democracy. This blog originally appeared in the Urban Edge , published by the Kinder Institute for Urban Research at Rice University.

A New Yorker, one whose favorite pastime was building skyscrapers before he turned to statecraft, has bewilderingly captured the hearts of the American suburbs, exurbs, and small towns. Yes, this election hinged on race. But it also hinged on geography. While traffic of all sorts — foot, pedal, taxi, subway — rumbles along below the window of his penthouse, the nation’s wide-open spaces and moribund towns cheer for the change they have wrought.  And what of California? What of mid-rise urbanism, mid-range density, the blue ocean, and the 900 miles of blue coastline against which it crashes? What of the 60% of us who envisioned a different four years?  A California secession  movement arose within hours of Trump’s victory. It even has a cute, hashtaggable name: Calexit. As much as this prospect may appeal, we all know it’s an emotional salve and not a solution. If I knew how to navigate the Constitution well enough to permit secession, there are probably a few other changes I’d make first. A certain Electoral College system comes to mind.  A far more powerful and far more realistic option occurs to me. We should not leave the United States. We should do what we have always done: invite the United States to come to us.  Donald Trump’s election reveals that a long-developing trend has now become an axiom: the “sorting” of Americans is essentially complete. America’s open interstate borders have enabled like-minded citizens to group together in places of their choosing. Broadly speaking, liberals have moved to cities and coastal states while conservatives have remained in the Heartland — effectively gobbling up electoral votes (and House districts) in the process. Structurally, “sorting” gave us the discrepancy between Trump’s electoral victory and Clinton’s popular victory. Culturally, it leads to the gross misunderstandings between so-called Red and Blue America. One strategy for a Democratic resurgence is for Blue voters to move to swing states . It’s a clever idea for the adventurous. Anyone who wants to wave the flag of progressivism in Columbus, Durham, or Des Moines has my respect. But I don’t think anyone should have to uproot themselves for the sake of a political strategy in a free country. And it doesn’t solve the clear and present discomfort, disenfranchisement, and, possibly, danger that many Blue voters now feel.  If Donald Trump threatens to pull the nation back into the past, I suggest that California remains — as ever — its future.  The vast majority of my 40 million neighbors are diverse, embracing, industrious, and progressive. (Some of them are undocumented – so what?) As is often cited, California has assets most countries — possibly all countries — can only dream of, foremost being its $2.5 trillion economy. While the presidential campaign lamented the demise of old-school factory jobs in the Midwest, California has developed companies that make 20 th century steel concerns look like lemonade stands. Iowa can only dream of our crop output.  From Apple, Google, and Tesla on down, California’s future seems pretty secure. (Though, terrifyingly, Trump’s victory could undercut the tech industry, which is the economic triumph of our time.) I happen to think that Hyperloop is silly , but if it takes off, I’ll be the first one to cheer. We have media, science, medicine, finance, and, yes, good old-fashioned manufacturing. What’s the country’s No. 1 manufacturing county? Oh yeah, it’s Los Angeles .  Nobody took America. It’s been right here all along. And there is no superlative that can fully describe California’s opportunities to whomever wants to enjoy this version of the American dream. We have the wealth and the economic might. We have the human resources. We have the commercial infrastructure. We have the food and the landscape. We have the ports and the airports. We have global clout. We have some of the finest universities in the world. We have a political class that is not perfect but knows how to make incremental strides. We have the best kind of diversity.  We have all of this and more. Except for two complications.  First, California cannot currently house all the people it has. Residents and businesses alike are paying exorbitant rents, especially in coastal cities. Rents eat into our economic power, limit companies’ hiring options, decimate local multiplier effects, and essentially pit neighbor against neighbor in the search for shelter.  Second, California has traffic.  Fortunately, while the rest of the nation was electing Donald Trump, Californians took strides — some small, some large — to address at least one of these problems. In local elections , Los Angeles County passed Measure M, which, at $120 billion, is probably the largest transportation funding package in the history of the free world. The Bay Area voted for sorely needed funds for BART. Sacramento’s transpiration measure failed, and so did San Diego’s. It’s worth noting, though, that all of these measures required two-thirds majorities. They will be reconfigured and they will find their voters (as Los Angeles did after the 2012 defeat of Measure R). As for housing, that’s where California’s planners come in. The cause of smart infill development — replete with all the urban amenities and efficiencies that should accompany it — is possibly the only thing that lies between California and its full potential. On that front, yesterday’s votes were mixed. Santa Monica rejected the restrictive Measure LV, and affordable housing measures passed throughout the Bay Area. And yet many cities adopted or strengthened urban growth boundaries — without necessarily embracing the infill development to go along with it. Whatever voters say in a given election, planners need to keep fighting for the cause of density. And they need to promote their work. If nothing else, that is the lesson they can learn from Donald Trump. And what of the environmental impact of more Californians and the development to contain them? Well, urban living is inherently more efficient than its alternatives. And we have regulations. Senate Bill 375 in particular directs us to build in such a way that we reduce the state’s per capita carbon footprint. CEQA does some good and might yet do more if it’s ever reformed. That still leaves the problem of water. Even then, dense infill development consumes less water per capita than old suburban development does.  Two days ago, these efforts were just common sense policies for a vibrant, progressive state. Today, for everyone out there who seeks the embrace and promise of California, they are morally imperative.  I suspect that the new regime in Washington is not going to make things easy on us. Trump willfully mischaracterized  cities (including his own) in the campaign, demonizing them to rural and Rust Belt crowds. And, as CP&DR Publisher Bill Fulton notes , Trump will surely betray cities as often as he can with the powers of his office. That’s OK. We just have to work harder, accept the occasional sacrifice, and love each other a little bit more. So, let’s not break away from America. Let’s make sure California remains the best of America.

The recently established Oakland Department of Transportation released its strategic plan, which focuses on four pillars: equitable jobs and housing; holistic community safety; vibrant, sustainable infrastructure; and responsive, trustworthy government. The plan includes a range of goals and strategies in those four categories that the city will pursue. Other points include that transportation has a role in maintaining affordability, strong policies must be made, governments with accountability and transparency, and lastly that the focus must be on the region instead of only Oakland. OakDOT is comprised of 270 staff and 18 work units from the Department of Public Works and the Police Departments. The strategy calls for partnerships with the departments of Planning and Building, Race and Equity, local transit partners, and stakeholders at the local, regional, state and federal levels. (See prior CP&DR coverage .) L.A. County Gold Line Spurs $6.7 Billion in Transit Oriented Development The Foothill Gold Line Construction Authority released two reports that detail the amount of transit-oriented development that has been built or is underway within a half-mile radius of a current and future Gold Line stations. The reports reveal that TOD projects near 18 Gold Line stations from Chinatown to Montclair have resulted in $6.7 billion in private investments since 2003. More than 12,500 new housing units, 3.6 million square feet of commercial space and 1,400 hotel rooms have been built within a half-mile radius of a Gold Line station. The potential TOD for Phase 2 corridor from Arcadia to Montclair would add 17,000 more housing units, 10 million additional square feet of commercial space and 250 more hotel rooms as well as generating $100 million more in annual tax revenues to LA County. The six Pasadena stations amount to $3.3 billion in economic output and roughly 20,700 jobs. These light-rail lines create temporary jobs as well as tax revenues to the county. Los Angeles Takes Stock of Thousands of City-Owned Parcels The City of Los Angeles controller’s office recently a database of counts of properties including parking lots, parks, and orange groves that the city owns but that had not previously been cataloged comprehensively. The data shows the city owns 9,900 parcels in Los Angeles County, much more than previously listed. City officials see this as a first step toward identifying land that could be sold, leased or better utilized for things like condominiums, affordable housing development, parks, or other public facilities. While the databases shows parks, airports and government buildings most residents recognize as city property, the city also found that in 1969 officials began purchasing vacant desert lots in Palmdale to build an airport- there are 17,500 acres in Palmdale that Los Angeles owns. The system will be further detailed to include information on zoning, parking, energy usage, and in some cases estimated property value. UCLA Considers Effects of Climate Change, Envisions L.A. in 2050 Recent climate research from UCLA has found that Los Angeles by 2050 will be hotter, drier, with less snow in the San Gabriel Mountains. It will also grow by 1.5 million people. While one solution is to create denser multi-use developments along transportation corridors, many Angelenos are worried about losing their communities’ characters. The university’s Now Institute released two publications called 100% Sustainable : Strategies for 2050 renewable energy, local water, and ecosystem health in Los Angeles and 99% Preservation, 1 % Densification: A case for 2050 sustainability through a denser, more connected Los Angeles. The studies , led by Los Angeles-based, Pritzker Prize-winning architect Thom Mayne, find increasing the density of Los Angeles’ Wilshire Boulevard to accommodate an additional 1 million people on the 15.8-mile long corridor would be sufficient. Additionally, the plan would be to extend the purple line light rail to Santa Monica allowing more than one million residents to live within a half-mile of a Metro stop. This densification would allow more residents to live a public transit-based lifestyle, diminish water demand, reduce vehicular emissions, and protect an area 10 times its size, primarily by building upward instead of outward. Coastal Cities Sue FAA Over New Flight Paths Newport Beach, Laguna Beach and Culver City have sued the Federal Aviation Aministration citing concerns about potential increased aircraft noise and pollution, arguing the environmental analysis for a new air traffic control system was not adequately prepared. The FAA’s Metroplex Project intends to replace aging air traffic control systems, redesign busy airspace and change arrival and departure procedures for 21 local airports including LAX and John Wayne in Orange County. FAA officials say the new procedures will be phased in from November through April and many public outreach sessions will be held. City of Ontario Takes Over ONT Airport The City of Ontario has finally assumed ownership of LA/Ontario International Airport from LA after years of litigation and negotiation. The once fast growing airport saw dramatic cuts in airline service and its annual passenger volumes plummeted from 7.2 million in 2007 to 3.97 million in 2013. Ontario International Airport Authority paid LA World Airports $55.5 million in bonds issues by LA for airport improvements and the FAA issues an operating certificate to the authority. In addition to spreading out the region’s air travel, control of ONT may lead to a development boom around the airport as the city tries to capitalize on its new asset. (See prior CP&DR coverage .) Gas-Powered Autos Cost State $15 Billion Annually The American Lung Association released a report saying California’s dependence on gas-powered vehicles costs the state $15 billion a year in health and climate-related expenses. The research tries to quantify the costs of smog and climate pollution caused by passenger vehicles. To evaluate health care costs the report looked at asthma attacks, hospitalizations, and premature deaths. California has some of the worst air in the country, but new policy calls for 15 percent of cars sold by 2025 to be zero-emission vehicles. Coleman to Succeed McKenzie at League of Cities The League of California Cities Board of Directors has selected Carolyn Coleman as the new executive director. Coleman has a law degree from Indiana University and currently serves as the director of Federal Advocacy for the National League of Cities since 2006. She has experience in the public and private sectors and will be the first female executive director of the League and only the fifth executive director in the organization’s 118-year history. Colman succeeds Chris McKenzie, is retiring after 17 years. (See further CP&DR coverage .) Updates & Quick Hits A controversial $1.2-billion residential, hotel and retail complex in South LA known as The Reef is one step closer to approval after the city council’s Planning and Land Use Committee voted to support the project despite arguments from the community activists who said the project could lead to widespread displacement of low-income residents. The Reef would transform two empty parking lots and the current 12-story Reef building into a walkable community just blocks from the Metro Blue Line station. L.A. Metro received three more unsolicited proposals for mega-projects related to the Measure M ballot measure. Two are for the Sepulveda Pass rail tunnel and another for the West Santa Ana Branch Light Rail project. The approaches in the 8 proposals Metro has received utilize an innovative public-private partnership to deliver projects sooner than anticipated. An Alameda County Superior Court judge denied petitions brought forth against an 18-story mixed-use project in Downtown Berkeley. The Berkeley City Council approved the project in December 2015 but lawsuits were filed against the project’s EIR saying the impacts on nearby schools weren’t studies, the project was incorrectly designated as urban infill development, and the buildings height violated zoning limits. The San Diego City Council rejected , 7-2, a proposal to ban short-term vacation rentals in single-family neighborhoods. The Council directed its staff instead to return with a comprehensive ordinance that would regulate STR. “Star Wars” creator George Lucas has released designs for museums for Treasure Island in San Francisco and Exposition Park in Los Angeles. Both museums are designed by Chinese architect Ma Yansong and have a futuristic, fluid look. Lucas will make a decision early 2017. Sacramento rents are steadily increasing with the healthy job market, population growth and stagnant construction of new development according to Yardi Matrix, a real estate research group, Sacramento’s rents are the fastest-growing rent market in the nation with increases of 11 percent per year and occupancy rates of 96.7 percent. This has created a surge in homeless families. The San Diego County Board of Supervisors unanimously approved a permit to build a solar farm in Jacumba that would generate electricity for 5,000 homes. The proposed plant is located nearly three miles east of Jacumba Hot Springs near the U.S.-Mexico international border fence and near a San Diego G&E substation, so long transmission lines to hook into the region’s power grid will not be needed. The permit allows Jacumba Solar LLC to build 108-acre solar plant along 304 acres of land. Orange County Superior court Judge William D. Claster ruled the City of Fullerton can continue its plan of preserving pieces of West Coyote Hills with other areas getting developed. Friends of Coyote Hills have fought against the 510-acre development and took the city to court last year saying its plan to preserve 60 percent of the land as open space violated state law and a 2012 voter-approved ballot measure. The City of Santa Ana released planning documents titled “The Safe Mobility Santa Ana Plan” that identifies 42 high-priority projects (37 corridors and 5 intersections) that would take around $40 million to complete. The plan signals a shift from the city away from passenger vehicles to a greater focus on pedestrian and bicycle safety.

The status of the California Coastal Commission was everything but clear in January, following a December 30 appellate court ruling that the Commission's composition was unconstitutional. The court ruled that the authority of the Assembly speaker and Senate Rules Committee to appoint eight of twelve commissioners and remove them at will violated the separation of powers doctrine (for details, see , Page 7). Gov. Davis called a special session of the Legislature on January 22 "to keep the California Coastal Commission viable and doing its job." Davis said he was working with state Sen. Sheila Kuehl (D-Santa Monica) and Assemblywoman Hannah Beth Jackson (D-Santa Barbara) and expected to sign legislation by the end January. The bills would give legislative appointees to the Commission fixed terms and would prohibit lawmakers from removing Commissioners at will. The legislation would keep the current system that gives the governor, the Assembly speaker and the Senate Rules Committee four appointees each. Whether such a measure would satisfy the court was unknown. Property rights activists said they would not accept any measure that allows lawmakers to appoint more than a token representative to the Commission. "The Legislature has to get out of the process," said Sacramento attorney Ronald Zumbrun, who brought the case against the Coastal Commission. An injunction preventing the Coastal Commission from considering permits or issuing cease and desist orders was scheduled to take effect January 29. The Third District Court of Appeal rejected Attorney General Bill Lockyer's request for a rehearing, but coastal commissioners said in January they would ask the state Supreme Court to review the decision. In the meantime, the status of the agency as a whole appeared to remain unchanged. In numerous communications, Coastal Commission Executive Director Peter Douglas noted that the appellate court did not strike down the 1976 Coastal Act, which established state oversight of lands and waters in the state coastal zone. CENTRAL VALLEY SMOG and the lack of a plan for clearing the air could prevent construction of a large power plant. California Energy Commission analysts have recommended denial of a permit to build a 1060 megawatt, gas-fired power plant in the Fresno County city of San Joaquin because of air pollution concerns. The denial stems from developer Calpine Corporation's proposed air pollution mitigations. Calpine proposed purchasing emission reduction credits and shutting down or modifying the businesses that have been producing the pollution — a standard mitigation. The San Joaquin Valley Air Pollution District approved Calpine's plan. But the U.S. Environmental Protection Agency (EPA) has determined that because the eight-county district does not have an approved plan for cleaning up the Central Valley's air, the emission credits are unavailable. State Energy Commission analysts sided with the EPA and further found that the emission reduction credits were inadequate even if they were available. FORMER SAN JOAQUIN COUNTY Supervisor Lynn Bedford pleaded not guilty in January to five criminal charges stemming from a proposed power plant at the Port of Stockton. Federal prosecutors allege Bedford and Monte McFall, a former San Joaquin County sheriff's deputy and longtime political operative, colluded to block Calpine from building a power plant in an attempt to clear the way for rival Sunlaw Corporation. Authorities allege Sunlaw promised to pay McFall and his associates $2 million if Sunlaw won the right to build. Bedford was indicted in December, one month after he lost a re-election bid. McFall allegedly told Calpine that unless the company dropped its Port of Stockton plans, he would use his political connections to block the project and he would work to kill a proposed 1,100 megawatt Calpine power plant in Alameda County. Bedford introduced a Board of Supervisors resolution opposing Calpine's Stockton proposal. Both also are accused of lying to FBI agents about their activities. Calpine refused to drop its Port of Stockton proposal, and its project in Alameda County is pending before the California Energy Commission. THE HOUSING INDUSTRY is the largest segment of the California economy, according to a study by the Sacramento Area Commerce and Trade Organization and California State University, Sacramento. The study pegs the direct economic impact of new housing construction at $20.25 billion, which leverages another $19.65 billion in indirect and induced expenditures every year. That equates to about 359,000 jobs. The entire industry of new and existing housing — including construction, financing, sales, furnishing, and operations and maintenance — amounts to $257 billion annually, or 13% of all economic activity in California, the study asserts. The study concludes that the housing industry could do even more, as builders since 1997 have produced only 57% of the 230,000 units that the Department of Housing and Community Development says the state needs annually. The study is available on the California Building Industry Association website: www.cbia.org. THE DAVIS ADMINISTRATION'S first crack at a five-year infrastructure plan was a good start, but the plan had a number of shortcomings, according to a Legislative Analyst's Office (LAO) report. As required by 1999 legislation (AB 1473, Hertzberg), the administration prepared the first of what are supposed to be annual five-year infrastructure plans so that policymakers have a coordinated picture of capital investment needs. The plan, released in mid-2002, outlined $56 billion worth of proposed capital spending, about three-fourths of which was for transportation and K-12 schools. While the plan provided the Legislature with a "big picture" look, the plan did not explain what the priorities were, failed to coordinate among departments, used available funding as a need constraint, omitted maintenance issues, and avoided a number of policy and programmatic questions, according to the LAO's report. "While the plan presents various departmental priorities, it does not place these priorities in the context of the administration's overall, statewide priorities," the LAO stated. "For example, the plan does not state whether the administration's priorities are: the renovation of aging facilities, addressing certain critical deficiencies, the development of new facilities and capacity, or a combination of these. We believe that such a context is needed." The LAO recommended the Legislature establish special policy and budget committees to address capital outlay issues. The LAO report is available at www.lao.ca.gov. A STATE TASK FORCE has recommended a number of changes to the way government agencies and developers address the threat of flooding. Among the recommendations: drawing up floodplain maps based on watersheds, not political boundaries; revising flood maps to take into account current and future development; building at least 1 foot above the National Flood Insurance Program's 100-year floodplain line; better technical assistance from the Department of Water Resources (DWR) to local agencies and practitioners, including new California Environmental Quality Act guidelines; and an advisory committee to perform further review. The California Floodplain Management Task Force, formed by DWR in early 2002, "sought to recommend floodplain management strategies designed to reduce flood losses and maximize the benefits of floodplains. The Task Force found that existing programs are inadequate to accomplish these goals and that time is of the essence," the report states. The 41-member Task Force included representatives of state and local agencies, development interests, environmental groups, agriculture and water users. The report is available at http://fpmtaskforce.water.ca.gov/. THE SANTA ANA Redevelopment Agency should reorganize its housing program to ensure that money reserved for housing is spent on production, a state Department of Housing and Community Development Audit has concluded. The state found that for three fiscal years ending in June 2000, Santa Ana spent only about 16% of its low- and moderate-income housing funds on housing rehabilitation and property acquisition, while 47% went for planning and administration, and 35% paid for street and sidewalk improvements. When city officials protested that those three years were not representative, the state reviewed four more years of records. Auditors found that the city had spent at least two-thirds of housing money for those periods on planning and administration and on off-site improvements. In a written response to the audit, Santa Ana Redevelopment Agency Executive Director John Reekstin called HCD's recommendation "offensive and misdirected." ORANGE COUNTY Planning and Development Services Director Thomas Mathews retired in January amid a financial crisis in his department. County officials earlier announced they would lay off about 20% of the department's employees in January because the agency was accumulating a deficit of at least $500,000 per month (see , January 2003). Newspaper reports in January said that the Board of Supervisors conducted closed-door meetings to question County Executive Officer Michael Schumacher's handling of the Planning Department financial situation. County Auditor David Sundstrom has taken over a Planning Department study of fees to determine if they are covering the county's costs. The fees are already the subject of a builder lawsuit. A LAWSUIT challenging the City of Irvine's environmental review of a 7,743-acre project has been upheld by the Orange County Superior Court. The organization Defend the Bay argued that the city did not adequately study impacts to traffic congestion, water quality, agriculture and other issues. But the court said the city's review was sufficient. The Irvine Company's "Northern Sphere" plan would increase the size and population of the City of Irvine by about one-quarter. A CONTROVERSIAL PARK and retail development in West Covina has been slowed and might need new boundaries because of the discovery of three endangered gnatcatcher birds. In September 2002, the City Council voted 3-2 to approve a golf course, six baseball and softball fields, and 375,000 square feet of retail development on 230 acres near a closed garbage dump. Since then biologists have located the rare birds on the former dump site.

Apparently emboldened by political success in the mid-term election, the Bush administration has become more aggressive in its efforts to alter strict Clinton-era environmental protection policies. In California, strong state laws — and a political scene still dominated by Democrats — could hold the line on many issues, especially protection of wetlands and endangered species. But on issues in which active federal involvement is crucial, such as water and public lands policy, a major conflict could be arising. Indeed, California is likely to provide a stern test for the Bush administration's stated philosophy of returning power to state and local governments. Although rural counties, landowners, and farmers will no doubt welcome the Bush approach, the state government's strong pro-environment stance could serve as a controversial counterpoint. There is little question that the latest moves leave behind — perhaps permanently — the state-federal cooperation on natural resource issues that has flourished for more than a decade. In fact, many of the state-federal efforts now being rolled back were initiated during the first Bush administration, from 1989 to 1993, when both the president and the governor of California were Republicans. Since the election, the administration has taken several significant steps that indicate a more aggressive approach to environmental policy. Here are a few highlights: • The administration has issued a new rule that essentially turns regulation of isolated wetlands -- including small streams and vernal pools -- over to state governments. This rule interprets a 2001 U.S. Supreme Court wetlands ruling extremely broadly. • The administration has issued a new rule that will make it easier for state and local governments to move forward with claims to take over wilderness roads on national forest and Bureau of Land Management property. This rule could permit San Bernardino County, among others, to take possession of thousands of miles of wilderness roads that provide access to isolated areas. • The Pentagon is moving forward with new plans to ask Congress for relief from environmental laws on military bases. A similar request failed last year, but with an Iraq war in the offing and all of Congress now in Republican hands, a different reception seems likely. • The administration continues to starve Cal-Fed financially, arguing that the massive state-federal effort to restore the ecological health of the San Francisco Bay-Delta region requires federal budget reauthorization. It is difficult to know how much of a target California is in these efforts or whether the administration has a political goal in mind for the state. The conventional wisdom is that California is lost to Republicans, even at the presidential level, for the foreseeable future. And state environmental policy is likely to take up much of the slack. At the same time, however, Californians will likely play an important role in determining how the administration's efforts play out, particularly on water policy. Anne Veneman of Modesto is the secretary of Agriculture. The Interior Department's point person on Cal-Fed is Jason Peltier, who as director of the Central Valley Project Improvement Association was one of the leading opponents of the 1992 legislation that loosened valley farmers' grip on California water. And the wild card — perhaps one the administration wishes it did not have — is Rep. Richard Pombo, a Republican from San Joaquin County who recently leapfrogged over several more senior House members to become chairman of the House Resources Committee. Pombo has been an ardent opponent of environmental protections, especially those regarding endangered species. His hard-edged style is in keeping with the House leadership but does not reflect the Bush approach, which generally masks strident policy action in gentle, or even no, rhetoric. The new wetlands rule, advance notice of which was issued on January 10, provides insight into the administration's approach to interpreting the U.S. Supreme Court's ruling in , 531 U.S. 159 (2001) (see , February 2001). The Supreme Court ruled that the use of an isolated wetland by migratory birds cannot be the sole basis for federal jurisdiction over the wetland. Under the new proposed rule, the Bush administration has instructed field staff from the Army Corps and the Environmental Protection Agency not to assert jurisdiction over wetlands that are either located in a single state or isolated from a navigable waterway. The ruling is likely to have less impact in California than elsewhere because of overlapping regulations. Many wetlands projects are also subject to state regulations, including state endangered species laws. For example, vernal pools — the seasonal puddles located mostly in the Central Valley that have complicated development of many projects, including the new University of California campus in Merced — would still be subject to considerable scrutiny because of the presence of fairy shrimp, a federally listed endangered species. The Pentagon's action could have a more significant effect, given the fact that federal military bases are not subject to state law. Congressional debate last year focused on Camp Pendleton, a Marine training base in southern Orange County that has also served as a key component in the regional efforts to protect the California gnatcatcher and a variety of other endangered birds -- an effort that has taken place mostly under the auspices of the California Endangered Species Act. Most of Pendleton, as well as land at Miramar Marine Corps Air Station in San Diego, could eventually be designated as critical habitat. Under the Pentagon's legislative proposal, military bases would be exempt from critical habitat designation under the Endangered Species Act, provided they are covered by natural resources management plans prepared under the Sikes Act, a separate federal law that permits the Pentagon and the Department of the Interior to work together on such plans. Environmental groups such as the Natural Resources Defense Council claim the Sikes Act's provisions are not stringent enough and will likely oppose the Pentagon's efforts again this year. Then there's Cal-Fed, the ongoing multi-agency effort to improve the San Francisco Bay-Sacramento Delta water system. Dating back to the Wilson-Clinton days, when state and federal resource managers began working cooperatively, Cal-Fed remains an effort of more than 20 different state and federal agencies. However, the Bush Administration has cut Cal-Fed funding from $30 million to $15 million in the current budget year. Despite efforts by both Republican and Democratic members of Congress from California, Congress has not reauthorized the Cal-Fed program. This has led to criticism from groups such as Taxpayers for Common Sense, an advocacy group that has called the Cal-Fed appropriations a pork barrel that needs to be re-examined so that it is "not just a rehash of outdated water storage projects from years past." So most of the Cal-Fed burden will apparently fall on the state, which has authorized a wide variety of Bay Delta-related improvements in recent bond issues, especially Proposition 50, which passed in November and contains more than $300 million for Bay-Delta projects. What remains to be seen is whether the state-level regulatory and spending programs can hold together the efforts that have been undertaken jointly with the federal government during the last decade. From Cal-Fed to Southern California habitat preservation planning, state-federal cooperation lay at the core of many of efforts. With the Bush administration, the Pentagon and perhaps Congress pulling out of the partnership — and the state facing a budget crisis — environmental advocates in Sacramento may not be able to hold the dike.

Planning practitioners who are perplexed about how to handle certain projects in light of a recent court decision regarding the California Environmental Quality Act (CEQA) Guidelines should not feel alone. Planners, environmental consultants and attorneys who spoke with presented a surprising lack of consensus about the effects of the Third District Court of Appeal ruling, which threw out six guidelines addressing cumulative impacts, thresholds of significance, tiering and probable future projects. Indeed, some practitioners conceded that they had received conflicting interpretations from lawyers and colleagues. What is clear is that almost no one has complete confidence about how to address a project's impact on a cumulative condition — an area of CEQA law that has long perplexed practitioners. The Third District ruled that "one molecule" of contribution to a cumulative condition was not enough to trigger an environmental impact report. The court also ruled that a lead agency cannot weigh incremental contributions as a ratio. Instead, the court pointed to an older CEQA Guideline, § 15064 subsection (i)(1). " n assessing whether a cumulative effect requires an EIR, the lead agency shall consider whether the cumulative impact is significant and whether the proposed project's incremental effects are cumulatively considerable," Justice Rodney Davis wrote for the court. "The thing that struck me is that it's not the one-molecule rule," said Charlie Bull, president of RECON, a San Diego-based environmental consulting firm. "But based on what he wrote, it's hard for me to tell what the rule is." Added former Resources Agency counsel Maureen Gorsen, "Absolutely nobody knows what ‘cumulatively considerable' means." In late October, the appellate court invalidated several changes that the state made to the CEQA Guidelines in 1998. The court upheld one guideline addressing cumulative impacts but provided additional direction for interpreting the rule. The court also upheld an infill development exemption that environmentalists had contested (see , December 2002). The decision has become known as the "CBE case" for the lead plaintiff, Oakland-based Citizens for a Better Environment. The decision is final because no one asked the state Supreme Court to review it. The ruling was a victory for environmental groups, which contended the amendments adopted during the final months of the Wilson administration were an attempt to hinder project opponents' ability to fight using CEQA. On the losing end of the CBE case was the building industry, which had taken up defense of the guidelines when the Davis administration and Attorney General Bill Lockyer backed away from the case. Builders said the guideline amendments brought a needed measure of certainty to environmental reviews. Today, about 150 guideline revisions from 1998 stand. But the few guidelines that the court invalidated were generally acknowledged to be the substantial changes. The cumulative impacts portion of the CBE case might be the most important. The court overturned a guideline that allowed planners to determine a project's contribution to a cumulative condition — such as air pollution — was "de minimis" and, therefore, not deserving of further study. The rejected guideline was intended to bridge the gap between "one molecule" of impact, and a "level of considerableness" that would trigger additional environmental review, said Terry Rivasplata, who headed the State Clearinghouse for the Office of Planning & Research (OPR) when the revisions were drafted. The court said the "one molecule rule" was not appropriate, but the court also ruled that comparisons and ratios were not the proper approach either. And the court indicated that the worse the cumulative condition, the more scrutiny a project should receive. "Therein lies the confusion," said Curtis Alling, managing principal of EDAW's Sacramento office. "If you don't do this from a comparative standpoint," said RECON's Bull, "I don't know how you do it." Alling suggested that planners either fully mitigate a project that contributes to a cumulative condition, or demonstrate that the project complies with an adopted plan that addresses the condition. "Maybe there's an encouragement to do broad-scale planning," he said. Rivasplata, now a CEQA compliance specialist for Jones & Stokes in Sacramento, agreed with that approach. If planners can show that a project is covered by an existing plan, program or mitigation fee, they might be able to avoid further study of cumulative impacts, he said. The appellate court did uphold a guideline that allows an agency to determine a project's incremental contribution to a cumulative effect is not significant if the project complies with an approved plan or mitigation program. However, the court ruled, the "fair argument" standard still applies, meaning an EIR would be required if there is substantial evidence a project may have a significant impact. That caveat is important because it reduces the certainty that guideline drafters sought, said Gorsen, the former Resources Agency counsel responsible for the 1998 amendments. The court rejected a guideline that required a finding of no significance if a project's impact fell below an established threshold of significance. But the court did not throw out the concept of thresholds of significance — a concept backed by developers and some planners. "This ruling does not mean environmental standards cannot be used as evidence to support significance determinations," according to an analysis by Morrison & Foerster attorneys Michael Zischke and Alicia Guerra. "It means that the standards cannot be given a presumptive effect that defeats the fair argument standard." The court invalidated a guideline that allowed a lead agency to approve a project without making findings of overriding considerations when the project is covered by a master or program EIR that found significant, unavoidable impacts. The court held that the public agency must adopt overriding findings every time. Many people read this part of the ruling as a requirement to prepare a second-tier EIR for any project covered by a master EIR with overriding considerations. But Alling, legislative director for the Association of Environmental Professionals, pointed out that the court did not explicitly say an EIR is required in such cases. Overriding considerations could be part of a negative declaration, he said, although he also called such an approach "very risky." The court upheld a guideline that provides a CEQA exemption for infill projects of less than five acres in urban areas if the project would not impact traffic, noise, air quality or water quality, and if the project complies with the general plan. While the exemption might appear too narrow to be of much use, some people see its value. "There are projects that get the go-ahead based on this," Rivasplata said. "But they may be small projects like a couple of units on one lot." Gorsen, now with Weston Benshoof, Rochefort, Rubalcava, MacCuish in Los Angeles, said some school projects could fall under this exemption. "So much of what they are doing is meeting class-size reduction mandates," she said. "They are not generating more trips or more students. So really the only impacts are construction impacts." Besides avoiding an EIR process that often lasts two years, school districts that use the exemption can also skip site assessments normally required by the Department of Toxic Substances Control, Gorsen said. The Resources Agency is following the formal administrative rulemaking process to erase the guidelines that the Third District struck. In the meantime, what should an agency that has relied on the now-invalid guidelines do? Rivasplata said that if the review period on an environmental document is complete, the lead agency should keep going. But if the agency can rework the document, it should, he urged. Last year, the Resources Agency and OPR completed a package of proposed guideline changes; however, officials held onto the proposal until the CBE case was decided. "Now that the court has ruled, we can move forward with a package of updates to the guidelines," said Terry Roberts, state clearinghouse director for OPR. Neither Roberts nor Resources Agency officials would say when the proposed revisions would be made public. Contacts: Terry Rivasplata, Jones & Stokes, (916) 737-3000. Curtis Alling, EDAW, (916) 414-5800. Charlie Bull, RECON, (619) 308-9333. Maureen Gorsen, Weston, Benshoof, Rochefort, Rubalcava, MacCuish, (213) 576-1000. Terry Roberts, Governor's Office of Planning and Research, (916) 445-0613.

A divided panel of the Ninth U.S. Circuit Court of Appeals has allowed two water districts and two farmers to sue the federal government for damages caused by changes in the management of the Central Valley Water Project, even though the districts and farmers have not yet experienced an injury. The decision appears to set an important precedent regarding when a party has the legal "standing" to seek compensation for damages. The court ruled that the districts and farmers need not wait until the new water management practices turned their water excessively saline before demanding compensation. "The injury alleged has not yet occurred; it is threatened," Justice Stephen Reinhardt wrote for the court. "Nevertheless, the possibility of injury may be sufficient to confer standing on plaintiffs; threatened injury constitutes ‘injury in fact.'" In 1992, Congress approved the Central Valley Project Improvement Act to address environmental concerns with the huge federal water project. The act required the Bureau of Reclamation to manage Central Valley rivers and streams to increase salmon populations; to dedicate 800,000 acre-feet of water to aid fish, wildlife and habitat restoration; and to develop a program to meet these goals in accordance with State Water Resources Control Board permits. Those permits, among other things, set a standard for salinity at the confluence of the San Joaquin and Stanislaus rivers known as the Vernalis standard. The Bureau then began releasing water for fishery habitat purposes from the New Melones Reservoir into the Stanislaus River during April, May and October — key months for fishery health. The Central Delta Water Agency, the South Delta Water Agency and two farmers within the districts sued the federal government in 1999. District Court Judge Oliver Wanger ruled that the agencies and farmers did not have standing to pursue their claims. But a 2-1 panel of the Ninth Circuit overturned the lower court's decision. The key issue for the Ninth Circuit was whether the water districts and farmers had suffered "injury in fact" because a hypothetical injury is not enough to establish standing. The farmers argued that the Bureau's method of operating New Melones Dam was highly likely to cause water salinity levels that violated the Vernalis standard, thus hampering their ability to grow crops. They pointed to a Bureau modeling study that predicted the new plan would cause the Vernalis standard to be violated at least one month a year in 41% of the subsequent 71 years. They further cited three Clean Water Act cases in which environmentalists were given standing, even though there was only a threat of actual harm to the environment in each case. The cases were Ecological Rights Foundation v. Pacific Lumber Co., 230 F.3d 1141 (9th Cir. 2000) (see CP&DR Legal Digest, December 2000); Friends of the Earth v. Gaston Copper Recycling Corp., 204 F3d 149 (4th Cir. 2000); and Friends of the Earth v. Laidlaw, 528 U.S. 167 (2000) (see CP&DR Legal Digest, February 2000). The federal government argued that those cases were inapplicable because they all involved ongoing violations of the Clean Water Act, and they only provided that violation of the statute was sufficient to confer an aggrieved party with standing. The court, however, found the cases on point. "Standing resulted not from the existence of an ongoing statutory violation, but because of the threatened future damage to plaintiff's environmental interests," Reinhardt wrote of the three cases. He then extended that reasoning to this case. " e conclude that the necessary showing for standing purposes is not that the Vernalis standard has already been exceeded or that plaintiffs' crops have already been damaged by excessively saline water, but that plaintiffs face significant risk that the crops that they have planted will not survive as a result of the Bureau's decisions to discharge water from the New Melones Reservoir during April, May and October, rather than when needed to meet the Vernalis standard," Reinhardt wrote. "The threat of injury resulting from the Bureau's employing an operational plan that will likely lead to violations of the Vernalis standard is sufficient to confer standing on plaintiffs." Because the farmers have standing, the agencies — which are charged under state law with protecting a dependable supply of high-quality water — have standing as well, the court ruled. The Ninth Circuit further ruled that the district court was wrong to block the lawsuit on the basis that previous administrative and judicial proceedings had settled the management of New Melones Dam. The Ninth Circuit held that earlier lawsuits did not address the same issue, namely the release of water pursuant to the Bureau's operation plan for environmental purposes. The Ninth Circuit returned the case to the lower court for further proceedings. In a short dissent, Judge Ferdinand Fernandez said the water districts and farmers had not proven the "invasion of legally protected interest" was more than hypothetical. "What is significant here is the fact that the United States has not violated any law, rule, regulation, or contract," Fernandez wrote. "Nor has it threatened that it will do so in the future." The Case: Central Delta Water Agency v. United States, No. 01-16172, 02 C.D.O.S. 10525, 2002 DJDAR 12140. Filed September 26, 2002. Amended October 21, 2002. The Lawyers: For Central Delta: Daniel McDaniel, (209) 465-5883. For the U.S.: David Shilton, Department of Justice, (202) 514-2000.

A collection of San Joaquin Valley water technology companies is attempting to make Fresno the center of the "flow technology" world. Representatives of dozens of companies have been meeting regularly for nearly two years as part of the Water Technology Industry Cluster in hopes of boosting business and improving the San Joaquin Valley's economic status. The cluster and California State University, Fresno, are trying to attract dollars to build a center at the university for research and development, testing, certification, education and marketing. The cluster has also joined with Fresno City College and Reedley College on a work force training program. The effort has grown from a three-year-old study by Collaborative Economics for the Great Valley Center. The Palo Alto-based consultant found a number of indicators of poor economic health in the region. During the 1990s, construction and retail activity driven by rapid population growth was a major component of the regional economy. Yet the study reported that the labor force grew faster than jobs, and per capita income declined by about 5% in constant dollars from 1990 to 1997. The study recommended the region move away from being a low-cost center and join the technology-driven global marketplace. To do this, the study urged the cluster approach, in which businesses in the same field collaborate on many fronts. Consultants identified six "opportunity areas" for potential clusters, all of which they said were "nascent and require significant scale-up to create critical mass." The study's findings and recommendations gave San Joaquin Valley leaders something with which they could work. "The prognosis was the regional economy was only going to get worse," said Ashley Swearengen, executive director of the Central California Futures Institute at CSU Fresno. "We missed the last wave (of prosperity) and every indicator was that we would miss the next wave." With financial assistance from the Irvine Foundation, the cluster that has taken shape is in the field of water technology, which the study called "precision irrigation technology." Fresno State is already home to the Center for Irrigation Technology, and some of the world's leading companies in the area of moving, restricting, filtering and treating water are based in a region that stretches from Kern County to Modesto. Plus, many people see the provision, cleaning, recycling and conservation of water as a growing issue worldwide. The first cluster meeting was in April 2001. "I really thought it was kind of a dumb idea," said Claude Laval, whose company, Claude Laval Corp., makes filtration equipment. "Most of these people had not collaborated with each other. Most of them hated each other." Laval helped get people to attend the first meeting anyway. Since then, Laval has become a cluster co-chair. "It's better than waiting for some automobile manufacturer to build a factory in Fresno," he said. The semi-monthly meetings now draw 60 to 70 people from around the country. Meetings are not all hugs and kisses, but people are talking and finding more common ground than they knew they had. Members now speak of "cross-fertilization." Swearengen, who has helped get the cluster going, saw many "false barriers" because people in similar businesses had not communicated with each other. "The group felt very under-the-radar and very fragmented," she said. Once they started seeing what they had in common, cluster members established three priority areas: Work force preparation, export development and promotion (including joint marketing at trade shows), and one-voice advocacy. Much of the cluster's effort is tied to the proposed water tech center, and not only for improved research and development. Already, trade delegations from around the world visit the San Joaquin Valley because of its reputation for agricultural production, Swearengen said. However, to learn about the latest in water technology, those visitors have to go from farm to farm to see individual components. The water tech center would showcase the region's technical and manufacturing capabilities in one place. Fresno State has agreed to donate land for the center, and cluster leaders believe a requested $2 million federal grant will receive approval. If the federal money comes through, it will leverage private sector donations, Swearengen said. In the meantime, the work force program is moving forward. Cluster members agreed they had trouble finding certified welders, CNC machinists and maintenance mechanics. Manufacturing, noted Swearengen, is the heart and sole of the cluster. "This is an area of huge unemployment," said Laval, "but you can't find anybody that you need." The cluster is working with the two community colleges, which already have vocational programs but experience high drop-out rates, said Russ Densmore, a cluster member and vice president of operations for American AVK, which makes valves and fire hydrants. The cluster is setting up internships and work experience programs to encourage students to finish two-year vocational programs and to provide workplace skills. The cluster is focused on growing existing businesses, a strategy recommended in the original Great Valley Center study. Everyone involved agrees that growth will require greater export of products and technology. Some companies already have an international presence – American AVK is owned by a Danish holding company, for example — while others need help making connections overseas. And there is hope that new water tech companies will open in the region, and existing businesses located elsewhere will move to the valley. "We're already beginning to see people moving into this area because they see all of the testing and research facilities in the area," said Laval, who noted two small companies from Montana and Oklahoma have relocated. In the end, what cluster members want to see is more decent-paying jobs available in the region. Past economic development efforts have focused on call centers and logistics, which often pay little above minimum wage, noted Laval, a member of the Fresno Business Council. Certified welders typically command $20 to $25 per hour, he noted. Contacts: Ashley Swearengen, Central California Futures Institute, (559) 278-8433. Claude Laval, Water Technology Industry Cluster, (559) 255-1601. Russ Densmore, American AVK, (559) 452-4300. International Center for Water Technology website: www.icwt.net Economic Future of the San Joaquin Valley study: www.greatvalley.org/nvc/nvc_publications.aspx

The San Diego Redevelopment Agency can use a state law to require the owner of property the agency took by eminent domain to pay for cleanup of soil contamination, a state court has ruled. A unanimous three-judge panel of the Fourth District Court of Appeal, Division One, ruled that the city could recover remediation costs under the Polanco Act (Health & Safety Code § 33459 et seq.). The property owner, the Salvation Army, argued that the city could not recover costs because it did not follow requirements of the federal Superfund law (the Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA). But the court ruled that the federal law did not prevent the city from recovering costs and that, in any event, the city did comply with the federal law."Contrary to Army's suggestion, the Polanco Act does not limit a redevelopment agency's rights to those available under CERCLA," Presiding Justice Daniel Kremer wrote for the court. The city's attorney, Richard Opper of Foley & Lardner, called the decision a "shot in the arm" for the Polanco Act. "California law has been unclear in its guidance on the market value of condemned, contaminated land," Opper said. "Now, there is approval for using the Polanco Act in coordination with eminent domain." The property in question is in San Diego's East Village Redevelopment District, where the city is constructing a downtown baseball stadium (see CP&DR Places, January 2002). In 1998, the city identified the Salvation Army's parcel as one the city needed to acquire, so the city included it in a phase I environmental site assessment of the area. A consultant identified a possible underground storage tank on the Salvation Army parcel, so the city requested the Salvation Army submit a remediation plan within the Polanco Act's 60-day time limit. The Salvation Army did not respond to the request or to a 30-day extension. In 1999, the county Department of Environmental Health approved the city's master work plan for cleaning up the redevelopment project area. In February 2000, the city filed a lawsuit against the Salvation Army to acquire the property through eminent domain. The following month, the Salvation Army submitted an assessment and remediation work plan to the county. But the city took possession of the parcel, which the Salvation Army did not dispute, in May. After demolishing the structures, the city found evidence of lead-contaminated burn ash. The city prepared a property mitigation plan for review by the county and the Salvation Army, and then did the cleanup work, including excavation and disposal of the contaminated soil. In 2001, the city and the Salvation Army settled on $550,000 – less any amount recoverable under the Polanco Act — as the price for the property and any damages the property owner suffered. San Diego County Superior Court Judge Judith McConnell (since appointed to the Fourth District bench) later concluded that the Salvation Army did not respond to the city's request for submission of a remedial action plan before the statutory deadline. Judge McConnell awarded the city $172,000 in remediation costs, plus attorney's fees and mediation expenses. The Salvation Army appealed. It argued that the Polanco Act's inclusion of CERCLA's "scope and standard of liability for cost recovery" limited the city's recoverable costs to those allowed under CERCLA. The Army further argued that the city did not follow the federal Environmental Protection Agency's implementing regulations for CERCLA (known as the "national contingency plan") because the city did not assess the threat to human health or the environment before proceeding with cleanup. The Salvation Army also argued that the city's disposal of soil was compelled by state waste laws, not because the soil threatened human health and the environment. The appellate court rejected these arguments. Foremost, the court ruled that cost recovery under the Polanco Act is different than under CERCLA. "The Polanco Act involves cleanup of the release of hazardous substances in the context of a redevelopment project," Justice Kremer wrote for the court. "The Polanco Act was enacted to provide a redevelopment agency with the means to require responsible parties to bear the costs of mitigating contamination on property within that agency's redevelopment project area." The Polanco Act's reference to the national contingency plan is intended to provide the city's redevelopment agency "with a basis for evaluating a proposed remedial action plan submitted by a responsible party in response to the agency's 60-day notice," the court ruled. The state law "does not make compliance with any portion of the national contingency plan a precondition for the agency's recovery of costs under Health & Safety Code § 33459.4. Instead, a redevelopment agency's entitlement to cost recovery under the Polanco Act depends upon the redevelopment agency's implementation of a plan approved by the designated regulatory agency overseeing the redevelopment plan." In this case, the county Department of Environmental Health was the designated regulatory agency, and it approved the city's plan. Besides, the court continued, the city did comply with the federal regulations by conducting a remedial investigation and preparing a feasibility study. Meanwhile, the Salvation Army "remained silent" through the whole process, Kremer noted. The city satisfied the conditions necessary for cost recovery under the Polanco Act by submitting a notice to the Salvation Army asking for a remedial action plan. The Salvation Army, meanwhile, submitted a remedial action plan and removed the underground storage tank more than a year after the statutory deadline for responding to the city's notice, Kremer wrote. The court also rejected the Salvation Army's contention that the city was only complying with state waste disposal laws. "Agency's master work plan and its amended property mitigation plan were both designed to protect the health and safety of construction workers and to prepare the property for future use," the court held. Additionally, the court held that the Salvation Army was a "responsible party" subject to liability, even though the city's cleanup occurred after the city took possession of the property. The Salvation Army qualified as the "present owner" because it owned the property when the city filed the eminent domain lawsuit. And, as the present owner, the Salvation Army was liable even if it did not cause the contamination, the court ruled. The Case: Redevelopment Agency of San Diego v. Salvation Army, No. D038835, 02 C.D.O.S. 11137. Filed October 21, 2002. Ordered published November 14, 2002. The Lawyers: For the city: Richard G. Opper, Foley & Lardner, (619) 234-6655. For Salvation Army: H. Douglas Galt, Woolls & Peer, (213) 629-8792.

WASHINGTON _ A deadlocked U.S. Supreme Court has upheld a $500,000 fine against a California developer for "deep ripping" about two acres of wetlands on a Central Valley ranch while converting pasture to vineyards and orchards. The justices divided 4-4 in an appeal by Angelo Tsakopoulos seeking to set aside penalties levied by the U.S. Army Corps of Engineers for violating provisions of the Clean Water Act that require a permit before filling or dredging waterways. Tsakopoulos, a prominent Sacramento-area housing and commercial developer, drew the fines for deep plowing wetlands that lay on parts of the 8,400-acre Borden Ranch about 30 south of Sacramento that he bought in 1993. The Corps of Engineers said the deep ripping — a process also called deep ripping, which involves heavy bulldozers dragging five-foot-long plow shanks through the soil — filled the wetlands with dirt, rock, and sand churned up from the densely packed "claypan" below the layer of arable soil. The high court's tie vote, announced in a one-sentence, unsigned opinion, resulted from the decision by Justice Anthony M. Kennedy to recuse himself from the case because of his acquaintanceship with Tsakopoulos and his family. The court does not announce individual votes in tie cases, but lawyers and observers surmised from questioning and past cases that the justices divided along conservative-liberal lines. The split has the effect of affirming a decision by the Ninth U.S. Circuit Court of Appeals upholding the fines (see , October 2001). Tsakopoulos and an array of industry groups had warned that the ruling went beyond the Corps of Engineers' statutory authority and could hurt farmers, ranchers, developers, mining companies, and road builders. Environmental groups said they were pleased with the high court's action even though the government's power to regulate deep ripping remains unresolved. "So far, so good," said John Echeverria, a professor and director of Georgetown University Law Center's Environmental Law Institute. "The Ninth Circuit ruling is upheld, the precedent remains in effect, and the battle is deferred to another case in which Justice Kennedy doesn't know one of the parties." "We're delighted," said Howard Fox, managing attorney with the environmental law firm Earthjustice. "There were a lot of industries in the Supreme Court asking for major loopholes in the Clean Water Act. We're already losing tens of thousands of acres of wetlands, and to have weakened the law further would have made that situation even worse." For their part, industry groups said they remain hopeful that the court will back their position in a future case. "We're disappointed that they didn't see things our way, but we were encouraged that they took the case," said Rick Krause, regulatory counsel with the American Farm Bureau Federation, which filed a brief supporting Tsakopoulos. "We think that that might mean they had a little bit of difficulty with the Ninth Circuit reasoning, and we're hopeful that after an appropriate case arises in the future that they'll take it and that all nine justices will be able to vote on it so that they will have a clear direction." In a prepared statement, National Association of Home Builders President Gary Garczynski attempted to find a positive outcome. "The speed and brevity of the high court's decision — a 4-4 split ruling delivered less than one week after oral arguments were heard, without Justice Kennedy's participation, with little precedential value and with no legal analysis — raises more questions than it answers," Garczynski said. "We are by no means discouraged by this split ruling." The deadlock was announced December 16, only six days after oral arguments at the high court. The justices' questions from the bench had indicated a possible division along ideological lines — leading lawyers on either side of the case to forecast a tie vote. In addition, the court had split 5-4 along ideological lines in its most recent wetlands regulation case just last year. In that case, , 121 S. Ct. 675 (see , February 2001), the court ruled that the federal government has no authority to regulate isolated ponds or wetlands. Kennedy joined the court's other four conservatives in the majority, while the four members of the court's liberal wing were in dissent. The legal question in Tsakopoulos's case turned on provisions of the Clean Water Act that require a permit from the Corps of Engineers for "any addition of any pollutant to any navigable waters from any point source." In urging the justices to strike down the fines against Tsakopoulos, Chicago attorney Timothy Bishop contended that deep plowing did not meet that statutory definition. "Deep plowing of that sort doesn't add fill or dredge material, and it doesn't involve a point source," Bishop argued. "We don't think it's permissible to protect wetlands by disregarding the words of the statute," he added. In turn, Assistant U.S. Solicitor General Jeffrey Minear argued that Congress used broad language to apply to "any unauthorized addition of a pollutant" to protected waters. "The most common form of dredging is moving material from one point of a body of water to another," Minear said. "Turning over material in place," he added, "does environmental harm." Krause, the farm bureau lawyer, said the group was most concerned with the possibility that the Corps of Engineers would claim authority to regulate any form of plowing despite an exemption in the law for "normal farming activities." In its brief, the government said the exemption did not apply because the deep plowing was intended to change the use of the land and had the effect of transforming the wetland areas to dry land. The home builders' association had been hoping for a ruling in Tsakopoulos's favor for use in a pending challenge to a general regulation issued by the Corps affecting builders. In that case, , NAHB is carrying on a 12-year-fight against the Corps' authority to regulate land clearing if it involves "incidental fallback" of soil into wetlands or other waterways. NAHB asked that the case — pending in federal district court in Washington — be put on hold pending the high court's decision in the Borden Ranch case. Bishop — who represented the Cook County solid waste agency before the Supreme Court — said he thought Kennedy's absence in the Tsakopoulos case had cost the landowner a victory. "Had Justice Kennedy been able to participate in this case, we quite likely would have won it," Bishop told the Associated Press. Echeverria called Bishop's assessment "a plausible guess," but "premature." "Kennedy is a swing vote in a variety of environmental cases," Echeverria said. "He just hasn't been heard from." The case: , No. 01-1243. Filed December 16, 2002. The attorneys: For Borden Ranch: Timothy S. Bishop, Mayer, Brown, Rowe & Maw, (312) 782-0600. For Corps of Engineers: Jeffrey P. Minear, Assistant U.S. solicitor general, (202) 514-2203.

Cliff Graves is special advisor to the chancellor at University of California, Merced. Graves has overseen many aspects of planning the Merced campus, which is the University of California's first new campus since the mid-1960s. The UC Board of Regents approved the Long Range Development Plan for the campus and an adjacent new community about two miles east of Merced in January 2002 (see , February 2002, , April 2001). Construction commenced in November, and the school is scheduled to open to its first 1,000 students in fall of 2004. Despite the state budget shortfall, the university has the funding to complete the first phase of construction. A planner for more than 30 years, Graves previously was the executive director of the San Francisco Redevelopment Agency. He spoke with Managing Editor Paul Shigley in mid-December. : Where are you in the process right now? GRAVES: The Long Range Development Plan was approved by the regents this past January. The EIR was subject to challenge and was challenged by a small group of environmentalists. The appellate court recently denied their request for an injunction, so we went ahead with construction. They are moving dirt like crazy out there right now. The other point, from a regulatory standpoint, is that the Fish and Wildlife Service gave us a ruling of "no jeopardy" for the entire project, not just for the part of the project we are working on now. Shortly, we will be going out to bid for the buildings themselves and the housing project. The first contract will be let in January. : How much is UC involved in planning the off-campus community? GRAVES: The regents are a 50% owner in the site where the planned community will be. The other partner is the Virginia Smith Trust, which provided the land for the campus itself. There is a joint venture between the two that's called the University Land Company LLC. The university is the managing partner for the project. : It has been a long time since UC built a new campus. Do you have a model for what you are doing? GRAVES: There really isn't a template for what we've done. When we built Irvine and Santa Cruz and San Diego, we didn't have any of the regulations we have today. It was a different time in terms of the fiscal relationships as well; whereas, those campuses had offsite infrastructure requirements, the state was willing to provide support for that. In this case, it's up to the university itself to make those arrangements. So the university has been negotiating, primarily with the city, to work those details out. : So where does money come from for off-site improvements? GRAVES: Eventually, it is going to come out of the campus budget, which is going to further stress the budget of the campus. An agreement has been reached with the city of Merced regarding sewer and water. And we're working with the State Infrastructure Bank. : Is this like planning a new town? GRAVES: In a purely physical sense, it is. But it's planning a town that has to meet the tests of the market. This is not an academic exercise. One of the challenges the LLC will face is coming up with a product that can work in the market that is part of the Central Valley. One the questions it has had to address is of the absorption rate. This new town is on bare land, so all the infrastructure has to be built. Typically, it requires a fairly rapid development rate to offset the costs of that. But the absorption rate is going to be slower than usual. So how they spread those costs out over a period of time is really a challenge. The campus's rate of development will, to some degree, govern the community's rate of development. And there are other areas in the Merced area that are planned for development. : Merced is a town of modest means. How does that influence your approach? GRAVES: It certainly has affected our negotiations with the city, especially regarding the infrastructure and how the city provides services to the campus. I tell people, this is not like BMW coming into Alabama. : The school will have to attract students and faculty. How big a consideration is that in the land use planning? GRAVES: That was a guiding principle of the Long Range Development Plan and something that even the regents insisted upon as they looked at the design of the original buildings. And the same kind of attention has to be given to the community. We want it to be attractive to a really broad, diverse group of people. One of the goals of the Long Range Development Plan was to provide a campus setting that feels comfortable to students who come from families in which no one has gone to college before. : When planning this campus, how far ahead do you look – 20 years? 40 years? GRAVES: The Long Range Development Plan has a window of 25 years. When you start a campus, you don't set everything in concrete for 25 years. You understand technology may change, research may change. So you want something that is usable now but sustainable over time. We're relying on a strong grid system, some fundamental design that is timeless, and we're relying very heavily on landscaping as a unifying factor. We are building the campus two or three buildings at a time, and we definitely expect the buildings 15 years from now to be based on assumptions that we don't have today. Even such things as water treatment we are building in modules to accommodate new technology. : That must be difficult. GRAVES: Yes, it is, because you have to trade off between economies of scale and the realities of changing technology. We are assuming the next wave of buildings will be using fuel cell technology. We considered that for the first phase, but it just wasn't ready. For all we know, by year 15 or 20, another technology for energy production will be available, and we want to be able to adapt to that as well. : Is planning the campus and community enjoyable? GRAVES: Oh, it's enjoyable. How many planners get to do something like this? We're not correcting somebody else's mistakes. We're making the mistakes. I did my thesis eons ago on planning new towns in California. I went back and read it and found out how naïve I was.

A city's erroneous denial of a lot line adjustment application did not qualify as a temporary taking, the First District Court of Appeal has ruled. The court ruled that the City of Lafayette had legitimate reasons for handling the application the way it did and that the delay in approval of the application — which eventually was ordered by a trial court — was not unreasonable. The appellate court relied heavily on Landgate, Inc. v. California Coastal Com., (1998) 17 Cal.4th 1006 (see CP&DR Legal Digest, June 1998), in which the state Supreme Court held that the erroneous handling of a development application was not a temporary taking unless the government acted unreasonably. "This case fits like a hand in a glove with the rule established by Landgate," Presiding Justice James Marchiano wrote for the unanimous three-judge panel of the First District, Division One. "Resolution of the threshold issue of the legality of the lot line adjustment was a normal delay in the process of obtaining a permit pertaining to land use." The property owners in this case, Peter and Helen Loewenstein, built a house on a 3-acre parcel in Lafayette during the mid-1980s. A few years later, they investigated ways to build a second unit. The conditions of approval that went with the original four-lot subdivision that created their lot prohibited establishment of another parcel. So in early 1996, the Loewensteins purchased a 4,500-square-foot parcel where the East Bay Municipal Utility District had maintained a water tank. A corner of that parcel touched a corner of the Loewensteins' parcel. Then they reached an agreement to acquire a small portion of a neighbor's parcel so that that tank parcel would share a common boundary with their original lot. In September 1997, the Loewensteins applied for a three-way lot line adjustment to create a 1.07-acre parcel for their home, and a 2.12-acre parcel that included portions of three existing lots. The city's planning manager denied the application, a decision the Planning Commission upheld. The City Council conducted three hearings before adopting a resolution denying the application. The council determined that, by adjusting the lot line to make a fifth developable lot, the Loewensteins triggerred the city's subdivision regulations and the Subdivision Map Act. (The Map Act does not apply ordinarily unless one parcel is being divided into at least five new parcels.) The council reasoned that the fifth lot would be serviced by infrastructure constructed for the original four-lot subdivision. In September 1998, the Loewensteins sued, seeking to overturn the denial and to get damages for inverse condemnation. The case went through lengthy court proceedings overseen by no fewer than three Contra Costa County Superior Court judges. Ultimately, the court ordered the city to rescind its denial of the application, found that the city used the wrong standard to evaluate the proposed lot line adjustment, ruled that the city denied the Loewensteins "substantially all economically viable use of their property," and awarded the applicants $611,000, plus attorneys' fees. In November 2000, the city rescinded its denial. The city also appealed the judgment for damages and attorneys' fees, which the appellate panel reversed in part. The Loewensteins cited two cases: San Dieguito Partnership v. City of San Diego (1992) 7 Cal.App.4th 748 (see CP&DR Court Cases, August 1992), and Ali v. City of Los Angeles, (1999) 77 Cal.App.4th 246 (see CP&DR Legal Digest, February 2000). In San Dieguito, the court ruled that the city had used the wrong basis for rejecting a lot line adjustment application that reconfigured five parcels in a nine-lot subdivision. In Ali, the court ruled that a temporary taking had occurred because the city's refusal to grant a demolition permit was arbitrary and unreasonable. Loewensteins further argued the they qualified for the Landgate exception for unreasonable delays, pointing to the fact that the city had approved more than 200 lot line adjustments over 16 years. But the appellate court ruled that San Dieguito and Ali did not apply, that Landgate was the controlling precedent and that the Loewensteins' case did not qualify for the Landgate exception. "The city's reasons for rejecting the lot line revision application, as expressed in the official resolution, were based on concerns that the reduced area of the new parcels would not conform to the minimum lot size requirements for hillside lots, and that the application created a fifth lot in a duly restricted subdivision with improvements and utilities designed for four lots," Justice Marchiano wrote. "Even if the city incorrectly maintained that lot size and subdivision restrictions applied, the monitoring of the density and hillside slope requirements are legitimate government interests." The court also expressed skepticism at the Loewensteins' approach. "To avoid the city's concerns about building a fifth home, the Loewensteins argued they were not merging the tank parcel into the subdivision lot, but were pulling a section of the original lot out of the subdivision and placing it into the tank parcel," Marchiano wrote. "These fine distinctions, although accepted by the trial court's ruling that the city's view was wrong, do not make the city's valid concerns either legally unreasonable nor logically deficient." The Loewensteins argued that under the Penn Central takings criteria (Penn Central Transp. Co. v. New York City, (1978) 438 U.S. 104), the city's action qualified as a compensable taking because the delay interfered with their reasonable investment-backed expectations. But the court ruled that if Landgate applied, Penn Central could not. "A landowner can have no reasonable expectation that there will be no delays or bona fide differences of opinion in the application process for development permits," the court ruled. The court overturned the $611,000 takings judgment but allowed the Loewensteins to keep the attorneys fees awarded by the lower court. The First District did not consider the lower court's order to approve the lot line adjustment. The Case: Loewenstein v. City of Lafayette, No. A093590, 02 C.D.O.S. 11130. Filed November 13, 2002. The Lawyers: For Loewenstein: David Bowie, Bowie & Bruegmann, (925) 939-5300. For the city: E. Clement Shute Jr., Shute, Mihaly & Weinberger, (415) 552-7272.