California Court of Appeal Decision Frustrates Capitol Annex Plans

In a largely unanimous ruling, a three-judge panel of the California Third District Court of Appeal granted an appeal on Dec. 6, 2022, pursuant to California Environmental Quality Act (CEQA) that threatens to frustrate development of the planned Capitol Annex Project.¹ Approved by the legislature in 2016, the project envisions the replacement of the existing East Annex with a new, larger annex building as well as a new underground visitor center and parking garage. The petitioners, Save Our Capitol!, successfully challenged the sufficiency of several aspects of the project's environmental impact report (EIR).

The Capitol Annex Project is notable in that it was designed in accordance with the Construction Manager at Risk (CMAR) delivery method, rather than the standard design-bid-build or design-build methods. As a consequence of this approach, the project design became more detailed, and in some instances changed approaches, between the circulation of the draft EIR and the final EIR.

The court's analysis focused heavily on two such changes, both of which occurred after public comment on the draft EIR. The first concerned the exterior design for the new annex. Whereas the draft EIR had stated that the new annex's materials would be consistent with the Capitol and would create a "one building" feel, the final EIR disclosed that the exterior would employ a contemporary pleated glass design, clarifying that only the interior materials would contribute to the "one building" feel. Second, the final EIR disclosed a change in the location of the new underground parking lot, which was moved from the south side of the Capitol to the east of the replacement annex, with expanded boundaries to accommodate new entry and exit ramps. The final EIR concluded that these two modifications would not result in any new significant impacts beyond those addressed in the draft EIR, a conclusion that factored heavily into the petitioners' arguments and the court's ultimate decision.

The Court's Analysis

The court's 59-page opinion considered numerous issues with the project's environmental review. While it rejected most of the petitioners' arguments, it did find fault with three aspects of the analysis: the project description, the impacts analysis and the alternatives analysis.

Stable Project Description

First, the court held that the EIR lacked an accurate and stable project description, which is a CEQA requirement.² The court focused on two changes that occurred between the draft EIR and the final EIR – the relocation of the parking garage and the previously undisclosed glass design for the new annex – in addressing the question: "how much may a project develop or change after the draft EIR is circulated before the project description is no longer accurate [or] stable[?]"³

The court emphasized that CEQA does not require "freezing" the ultimate design "in the precise mold of the initial project."⁴ Rather, "the governing principal is whether the project description may have thwarted the public's ability to participate in the process and comment meaningfully on the EIR."⁵ While the relocation of the parking garage did not rise to this level, the court determined that public participation was thwarted with respect to the new annex's late-disclosed glass exterior: "When they commented on the earlier EIR, the public believed only that the new Annex's design and materials would be consistent with the Historic Capitol and create a 'one-building' feel."⁶ As such, the court determined that the EIR lacked a stable project description with respect to the new annex's glass design.

Impacts Analysis

Second, the court took issue with several aspects of the EIR's impacts analysis, focusing primarily on the design for the new visitor center and its impacts on the view of the Capitol's west façade – itself a "protected scenic vista" under CEQA.⁷ As the planned visitor center was to be constructed largely underground (i.e., below the West Lawn), the draft EIR did not include a rendering of the project's impact on the West Lawn itself. The petitioners contended that such renderings were required. The court declined to adopt a rule requiring renderings in all instances, but did hold that such a rendering was required here, emphasizing the unique nature of the Capitol as a protected resource.⁸ "The project's impact on aesthetics," the court concluded, "cannot be understood unless the project is seen."⁹

The court also determined that the late disclosure of the new annex's glass façade rendered the impacts analysis inadequate, for several reasons. The court found that the impacts analysis did "not account for public comment on the new Annex's exterior [glass] design," explaining that a "final EIR's responses to comments are an 'integral part' of an EIR's substantive analysis of environmental issues."¹⁰ In addition, the court found that the EIR failed to inform the public of the new façade's impacts on light and glare, relative to the existing concrete annex.¹¹ For each of these reasons, the court found the EIR's impacts analysis inadequate under CEQA.

Alternatives Analysis

Lastly, the court turned to the petitioners' arguments concerning the EIR's analysis of alternatives. In addition to the required "no project" alternative, the EIR considered and analyzed two other alternatives to the project: fully renovating the existing annex, and constructing the new annex and new parking garage with two underground levels.¹² The petitioners alleged that the EIR should have considered an alternative that would lessen the project's impacts on the West Lawn, such as moving the visitor center to the south side.¹³ The court agreed.

Here again, the court's conclusion hinged on the unique nature of the West Lawn, which is regularly used for political demonstrations and other gatherings, as a historic resource.¹⁴ The court explained that "it can hardly be doubted that moving the visitor center to the south side would lessen the project's impacts on the West Lawn as a historic resource," while also meeting the project objectives, unlike the alternatives considered in the EIR.¹⁵

Impact of the Ruling

The court remanded the matter to the trial court with instructions to order the state to revise and recirculate the three deficient portions of the EIR before the project is reapproved. The court's original opinion left open the question of how its decision will impact construction, which is already in the early stages. In passing legislation authorizing the project, the legislature did not exempt the project from CEQA outright, but it did prohibit courts from halting the project pursuant to a CEQA suit without first making certain statutory findings.¹⁶

Following a rehearing requested by the California Department of General Services (DGS), the court supplemented its opinion to clarify the ruling's impact, instructing that all project activities other than demolition of the existing annex must be suspended during remand.¹⁷ Notably, the court did not make – or even address – the specific statutory findings required by the legislature.¹⁸ Instead, the court determined that only activities related to demolition were severable and that the continuation of any other development activities must be halted to avoid jeopardizing DGS's ability to comply with CEQA: "[W]e must not allow any project activities to proceed that would prejudice DGS's ability to alter the Annex's exterior design should it decide to do so because of its new analysis."¹⁹ In view of the court's decision to halt the bulk of project activities in the face of the legislature's prohibition on doing so, the impact of that prohibition is unclear.

Takeaways

The court's opinion is instructive in at least two respects. First, the court's analysis has implications for developments that, like the Capitol Annex Project, employ the CMAR delivery method or otherwise evolve over the course of the environmental review period. The court directly addressed the CMAR approach in the context of its project description analysis, sounding a cautionary note: "Neither we nor CEQA attempt to tell DGS what delivery method it must use to produce the project. But whether CMAR or some other method is chosen, that method must comply with CEQA. It does not drive CEQA. The public cannot be denied its opportunity to participate meaningfully in the CEQA process merely because the project's design and delivery method is dynamic and fluid."²⁰

Second, the court was careful to emphasize the unique historical nature of the State Capitol complex as a protected resource, underscoring this fact again and again throughout its analysis.²¹ This repeated emphasis suggests that a more deferential approach may be appropriate in cases that do not involve historical resources of this magnitude and that close calls that were resolved against the state here (such as whether to require project renderings) might be resolved the other way in garden-variety CEQA actions.

Notes:

¹ Save Our Capitol! v. Dep't of Gen. Servs., No. C096617, 2022 WL 17421318 (Cal. Ct. App. Dec. 6, 2022).

² Id. at *7-8.

³ Id. at *7.

⁴ Id. at *6.

⁵ Id. at *7.

⁶ Id. at *8.

⁷ Id. at *17.

⁸ Id. at *21 ("It is difficult to conceive of an instance where the nature of a project would dictate a greater degree of specificity and analysis of a project's visual impacts than this project with its significant impacts on the Historic Capitol, the seat of state government.").

⁹ Id. While concurring in the remainder of the opinion, Judge Louis Mauro dissented from this portion, concluding instead that renderings were not required in light of the other descriptive material in the EIR, and noting that "CEQA requires public agencies to carry out the EIR process in an efficient and expeditious manner." Id. at *31 (Mauro, J., concurring).

¹⁰ Id. at *14.

¹¹ Id. at *22 (explaining that the EIR failed to "inform the public and decision-makers how the light generated by the new glass Annex will compare to the light generated by the current Annex and how much that light may detract from the focus on the Historic Capital or alter the aesthetics within the existing State Capitol Complex.").

¹² Id. at *26.

¹³ Id. at *28.

¹⁴ Id. ("Unlike the design considered in the draft EIR's alternatives analysis, the new design would significantly impact the West Lawn as a historical resource because it would materially alter the West Lawn's physical characteristics that convey its historical significance and justify its designation as a historical resource.").

¹⁵ Id.

¹⁶ Id. at *2. Specifically, the legislature prohibited courts from enjoining project construction pursuant to CEQA litigation without first finding either that "continuation of the project presents an immediate threat to the public health and safety" or that "the project or its sites contain 'unforeseen' important Native American artifacts or 'unforeseen' important historical, archaeological, or ecological values that would be materially, permanently, and adversely affected by the project's continuance" absent a stay. Id.

¹⁷ Save Our Capitol! v. Dep't of Gen. Servs., No. C096617, 2023 WL 238064, at *31-32 (Cal. Ct. App. Jan. 18, 2023).

¹⁸ Id.

¹⁹ Id. at *32.

²⁰ Save Our Capitol!, 2022 at *9.

²¹ See, e.g., id. at *20 ("Here, the historic value of the State Capitol Complex, the importance of the view of the west façade of the Historic Capitol, and the importance of considering the impact of aesthetic changes on both cannot be overstated.").

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