Court of Appeal Holds That CEQA Is Not Triggered By a Public Agency’s Investigation of Sites for a Potential Project

July 2010

On June 29th the Fourth Appellate District published its opinion in City of Santee v. County of San Diego (Case No. D055310), holding that an agreement between two public agencies to undertake real estate due diligence on several parcels of land and examine their suitability for a proposed facility did not violate the California Environmental Quality Act (“CEQA”). The City of Santee case interprets and distinguishes the California Supreme Court’s 2009 decision in Save Tara v. City of West Hollywood, a case which held that a public agency’s practical commitment to a future project triggered CEQA’s environmental review provisions.

In City of Santee, the California Department of Corrections and Rehabilitation (“CDCR”) offered a state-legislated funding incentive to any county that assisted CDCR in locating a “reentry facility” in that county. To qualify for the incentive, CDCR asked the County of San Diego to execute a “siting agreement” that signaled the County’s willingness to identify potential sites, help investigate their suitability, and convey land for a reentry facility if needed. The siting agreement stated that any necessary CEQA review would be conducted in the future. In the siting agreement the County identified several potential sites (one was County-owned and one was State-owned), and noted that the County-owned site had the most potential for a reentry facility.

The City of Santee sued the County for not conducting CEQA review before entering into the siting agreement. The City alleged that the County had committed to sell its County-owned site to CDCR, without qualification, if CDCR determined that the site was suitable for a facility. This commitment, along with the County’s preference for the site (based on preliminary due diligence) and its financial incentive to locate a reentry facility within the County, amounted to what the City alleged were circumstances indicating that the County had committed to a definite project that may have a significant effect on the environment. The City claimed that before this occurred the County should have conducted CEQA review.

The lower court dismissed the case outright, on a demurrer, and found that the City could not allege facts showing that the County had made a definite commitment to a project, sufficient to trigger CEQA. The County’s act of signing the siting agreement simply did not indicate that it was in a position to conduct CEQA review on a facility with an unknown design and location. On appeal, the Fourth Appellate District agreed, relying in part on the 2009 case Sustainable Transportation Advocates of Santa Barbara v. Santa Barbara County Association: “when an agency proposes to adopt a ‘mechanism for funding proposed projects that may be modified or not implemented depending on a number of factors, including CEQA review, no commitment to the projects has been made and no environmental review is required.’” In sum, the siting agreement was not a binding development agreement, and the Supreme Court in Save Tara had noted that for all practical purposes, “projects often need some form of government consent or assistance to get off the ground, sometimes long before they come up for formal approval.” Unlike Save Tara, the City of Santee could not point to circumstances showing that selection of the County-owned site by CDCR was “certain or even likely.” Therefore the County’s commitment to potentially convey the site in the future was “entirely conditional” and speculative.

Although each CEQA case is fact-specific, the City of Santee case will help public agencies navigate the legal uncertainty created by the Save Tara decision. Although agencies should not take steps and make statements indicating an unwavering commitment to a project before CEQA review is complete, they are not required to undertake CEQA review when a project is not substantially formulated and may not occur at all depending on a number of factors. City of Santee reflects a common-sense approach under CEQA that will allow public agencies the flexibility to participate in the preliminary formulation of projects without triggering CEQA review.