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Supreme Court Rules CEQA Does Not Apply When Agency Declines to Renew Use Permit for Private Applicant

The California Supreme Court has clarified that a local agency’s decision to deny renewal of a private party’s existing, time-limited land use permit is not a “project” to which the California Environmental Quality Act (“CEQA”) applies.

This decision applies only to private facilities; agency decisions to close existing public facilities have been held previously by the Courts to be “projects” that require environmental review under CEQA.

In Sunset Sky Ranch Pilots Association v. County of Sacramento, filed December 28, 2009, a privately owned airport applied to renew its existing conditional use permit, which had previously been granted for a term of 5 years and was about to expire. The County Project Planning Commission voted to renew the CUP for two more years, with no further extensions. On administrative appeal, the Board of Supervisors denied renewal of the CUP outright. The Board’s findings stated: “The action taken by the Board of Supervisors is not a revocation of an existing use permit but, rather merely a decision not to renew a use that has already expired.”

The airport brought suit contending that the County had failed to comply with CEQA, because it had not analyzed the environmental impacts of closing the airport. The trial court denied relief, but the Court of Appeal reversed, reasoning 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.

The Supreme Court reversed the Court of Appeal’s judgment and held that CEQA did not apply. The Court held that “projects” subject to CEQA fall into three categories: actions directly undertaken by a public agency; actions funded by a public agency; or projects submitted to a public agency for approval. The Court held that the airport’s application for CUP renewal fell into the category of projects submitted for agency approval. The Court further held that, because the County denied the airport’s application, this case fell within CEQA’s statutory exemption for “[p]rojects which a public agency rejects or disapproves.” (Pub. Res. Code § 21080(b)(5))

The Court observed that the fact that the airport was privately owned distinguished this case from others in which closures of existing public facilities have been deemed to be “projects” which require environmental review under CEQA. (See examples San Lorenzo Valley Community Advocates for Responsible Education v. San Lorenzo Valley Unified School Dist. (2006) 139 Cal.App.4th 1356 or Association for a Cleaner Environment v. Yosemite Community College Dist. (2004) 116 Cal.App.4th 629.)

The Court was not persuaded by the airport’s argument that denial of CUP renewal is a special situation requiring environmental review, since closure of an existing private project may result in alteration of the environmental status quo. The Court observed that denial of applications for new permit might likewise have foreseeable environmental consequences (e.g., diversion of development to different sites), yet such denials are nevertheless exempted from CEQA. The Court further observed that, since CEQA allows agencies to charge permit applicants for environmental review, a requirement to review denials of private applications for CUP renewals might result in unnecessary costs to private applicants.

For more information about the Sunset Sky Ranch Pilots Association v. County of Sacramento case, CEQA or land use matters, please contact Peter Hayes.