California Supreme Court Update: County’s Action Of Declining To Renew A Conditional Use Permit Was Not A Public Project Under The California Environmental Quality Act

In Sunset Sky Ranch Pilots Association v. County of Sacramento, (— Cal.Rptr.3d —-, December 28, 2009), the California Supreme Court considered whether a county’s action in declining to renew a conditional use permit for a privately-owned airport amounted to a project within the meaning of the California Environmental Quality Act (“CEQA”). Reversing a decision of the Court of Appeal, the Supreme Court held the county’s action in denying the conditional use permit was not a public project within the meaning of CEQA “because the county did not ‘directly undertake[]’ to close the airport” but “[i]nstead decided not to reauthorize a private activity that required county to issue a permit.”

Facts

Sunset Sky Ranch Airport (“Sky Ranch”) came into existence in 1934 when there were no zoning regulations applicable to its operation. In 1968, a zoning ordinance allowed operation of the airport as long as the operator obtained a conditional use permit (“CUP”). Daniel Lange (“Lange”) acquired the property in 1971 and obtained a two-year CUP to operate the private airport. At that time, the airport was used primarily for agricultural flights. Sacramento County (“County”) amended its General Plan in 1972 to allow for a public use airport at Sky Ranch’s location but Lange did not acquire a state airport permit for a public use airport. Lange’s CUP expired in 1973 but instead of applying to renew the CUP, Lange just continued to operate the airport. Lange lost his business license in 1989 because he was not in compliance with the zoning code. Lange appealed and applied for a certificate of nonconforming use. County upheld the denial of the license and refused to certify a nonconforming use.

Sky Ranch applied for a 10-year CUP in 1999, but County only granted a five-year CUP. County required Sky Ranch to inform airplane owners who intended to install or improve airport hangers of the CUP’s terms and expiration date. County also approved a negative declaration under CEQA that the CUP would not have a significant effect on the environment. After the CUP expired, Sky Ranch applied for a renewal. County’s Project Planning Commission voted to approve a two-year renewal of the CUP. On appeal, the County’s Board of Supervisors denied renewal of the CUP. The Board of Supervisors noted that it had been determined that the airport was no longer compatible with its surroundings. The Board also determined that no environmental analysis was needed under CEQA.

Sky Ranch filed a lawsuit in which it claimed, among other things, that County failed to comply with CEQA because it did not analyze the environmental impacts of the airport. The trial court denied the relief requested by Sky Ranch. A Court of Appeal reversed the decision of the trial court finding “that the CUP denial was part of a County plan to enforce its zoning code by closing the airport and transferring pilots to other airports.”

Decision

CEQA only applies to those “activities that meet the definition of a ‘project’ under the statutes and implementing regulations.” A project under CEQA “falls into one of three categories of ‘activity which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.'” CEQA generally “applies to actions that a public agency undertakes, funds, or approves.”

County contended the applicable category here is the one that governs activities that require governmental approval. It argued, however, CEQA specifically exempts from its requirements “[p]rojects which a public agency rejects or approves.” Sky Ranch contended that the cessation of the operation of Sky Ranch after the County denied the CUP was itself a project.

The fact that this case involves a privately-owned airport distinguishes it from cases involving the closure of public facilities, which have been deemed “projects” for the purposes of CEQA. Private action is not subject to CEQA unless government participation, financing, or approval is involved. The Court found “County’s action on [Sky Ranch’s] application for a CUP renewal was not part of the ‘project,’ and closing the airport was not an ‘activity directly undertaken’ by County” pursuant to Public Resources Code section 21065, subdivision (a).

The relevant activity for the purposes of CEQA was the proposed continued operation of the airport, which required the issuance of a permit, making it a private project under CEQA. If Sky Ranch had decided to go out of business and had simply allowed the CUP to expire on its own, “there would have been no occasion for CEQA review by the County.” The application for a CUP renewal “did not place County in the position of proceeding with a project, even though the County may have rejected the application as part of a plan to bring development in the area into conformity with the zoning code.” Sky Ranch sought a new approval for continued operations and “County’s denial of that project application was statutorily exempt from CEQA review” pursuant to Public Resources Code section 21080, subdivision (b)(5).

Although the disapproval of a proposed project may have environmental impacts, “the Legislature has determined for reasons of public policy to exempt project disapprovals from environmental review under the CEQA.” CEQA and CEQA Guidelines do not make any special provision for the denial of CUPs. Accordingly, the California Supreme Court reversed the decision of the Court of Appeal.

Questions

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Mona G. Ebrahimi, Daniel J. O’Hanlon or Karina K. Terakura | 916.321.4500