Land Development in the New Millennium: Navigating Species, Wetlands, Water and Forest Issues

Transcription

1 Land Development in the New Millennium: Navigating Species, Wetlands, Water and Forest Issues By Paul P. ( Skip ) Spaulding, III Private land development in California has recently become more complex because of a proliferation of environmental and land use permit approvals at all government levels. Although land development has historically been the province of local governments, federal and state laws that protect wetlands, species, forests and water resources have transformed the project approval process. As a result, land development in the new millennium has changed dramatically -- it is no longer sufficient to procure a building permit and comply with the local agency s California Environmental Quality Act ( CEQA ) process. Instead, to successfully develop land within a modest time frame and at a reasonable cost, it is essential to proactively navigate the natural resource permitting maze from the outset of a project. The convergence of the following natural resource developments has caused this phenomenon: Aggressive wetlands jurisdictional determinations and more restrictive regulations issued by the U.S. Army Corps of Engineers ( Corps ) have channeled more projects into the onerous individual permit process and have triggered a variety of associated federal and state approvals that result in significant (and often expensive) project changes and wetlands mitigation requirements; New endangered species listings and critical habitat designations (particularly for the California red-legged frog, vernal pool species, California tiger salamander and salmon/steelhead species) are increasingly providing the U.S. Fish and Wildlife Service ( FWS ) and National Marine Fisheries Service ( NMFS ) with approval and mitigation authority over development projects; Water quantity and quality issues are now impacting many land use decisions -- government agencies at all levels are managing water resources to protect endangered species, to preserve public trust resources and to allocate water equitably among all users, and the federally mandated Total Maximum Daily Load process is expected to dramatically affect development occurring near watercourses; California cities and counties are increasingly adopting stream setback ordinances, forest protection acts, erosion prevention laws and other legislation that more intrusively regulates development projects than in the past; and Federal agencies are using the full menu of civil and criminal enforcement provisions in federal law, and private citizens are utilizing both federal citizen suit provisions and a creative potion of state law theories (such as unfair competition and the public trust doctrine), to enjoin or modify development projects. In short, natural resource issues are often now a key driver in determining whether, when and how California land development projects will go forward. This article will describe these recent legal trends and will recommend a general strategy for navigating this new regulatory framework. The Potent Wetlands Hook Section 404 of the federal Clean Water Act ( CWA ) requires a person to obtain a permit from the Corps for any project that will result in the discharge or placement of any material (including fill, dirt, rocks, culverts, and structures) into defined waters of the United States. 33 U.S.C. 1344, 1362(7). The 1

2 Corps regulations implementing the CWA define waters of the United States very broadly to include not only traditionally navigable rivers and lakes, but also tributaries to those waters and adjacent wetlands, even when seasonal. 33 C.F.R (a). In practice, the Corps asserts expansive jurisdiction over small ponds, intermittent and ephemeral watercourses, wetlands, wet meadows, vernal pools, swales and other land features that are wet only briefly each year. For example, in Arizona, the Corps routinely asserts jurisdiction over desert washes that transport water from mountain storms a few days each year. Section 404 has been under constant attack from both the development and environmental communities since its enactment in its current form in However, Section 404 has proven to be resilient. In a high-profile 2001 case, the U.S. Supreme Court found that that the Corps exceeded its jurisdiction by attempting to regulate isolated waters with no hydrologic connection to navigable waters (in this case, rainwater-filled mining pits). Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001)( SWANCC ). Although some commentators hailed SWANCC as the beginning of a judicial contraction of Corps jurisdiction, this trend never materialized. Indeed, most federal court cases since SWANCC have upheld the Corps expansive interpretation of its own jurisdiction. In April 2004, the Supreme Court declined to review three such cases. The Section 404 permit is pivotal to many development projects because it opens the door to a range of other government authorizations. Among other things, a nationwide or individual Section 404 permit triggers the following further approvals: (1) a consultation with FWS and/or NMFS regarding the potential impacts of the project on listed endangered or threatened species; (2) a Section 401 certification or waiver by a California Regional Water Quality Control Board ( RWQCB ) on whether the project protects surface water quality standards; (3) review under the National Historic Preservation Act; (4) a consistency determination under the California Coastal Act and federal Coastal Zone Management Act; and (5) for individual permits, the preparation of a separate environmental assessment or environmental impact statement under the National Environmental Policy Act. Thus, if your project will impact even a few cubic feet of jurisdictional waters, you must either revise the project to avoid all water/wetlands impacts (which is often impossible) or you must obtain some form of Section 404 permit that will expose the project to a variety of further government authorizations. In practice, each derivative agency will actively review the project and may well extract its own set of expensive concessions. Moreover, navigating these derivative government approvals can take time the FWS/NMFS consultation process by itself can take over a year to complete. Both the California Department of Fish and Game ( DFG ) and the State Water Resources Control Board ( SWRCB ) have also become more active in protecting watercourses and wetland areas. Although DFG does not have an organic statute to rival the depth and breadth of Section 404, it does have authority to enter into Streambed Alteration Agreements. Fish & Game Code, These Agreements are required for any development that will affect the bed, bank or stream of a watercourse or affect its flow. For many years, this was a relatively streamlined process, categorically exempt from CEQA, that resulted in the issuance of a standard set of avoidance and best management practice measures. However, since an adverse 1999 court decision, DFG applies CEQA to all Agreement decisions and crafts individual project mitigation measures. Similarly, the SWRCB has been more aggressive, since the SWANCC case, in requiring waste discharge approvals for projects affecting isolated waters. The Environmental Gorilla: Protecting Endangered Species The federal Endangered Species Act ( ESA ), 16 U.S.C , has become legendary as a tough environmental law that provides a 2

3 powerful tool for government agencies, environmentalists and community groups to condition, delay or halt land development projects. The ESA protections are triggered when an animal, fish or plant species is formally added to the federal threatened or endangered species list (with lesser protections for candidate species). A species listing invokes two important protections. First, any federal agency issuing a permit (such as the Corps), undertaking a project or contributing funds to a project must engage in a consultation process -- known as a Section 7 consultation -- with FWS and/or NMFS before the action can proceed. If the continued existence of the species will be jeopardized by the permit issuance, the permit cannot be issued and the proposed project cannot occur. At a minimum, these agencies will impose conditions to protect the species, and often these conditions are expensive and must be completed before the project can begin. Second, the ESA and its implementing regulations prohibit the take of a listed species by any private person or public agency. This prohibition applies to everyone, and does not require the presence of any federal permit or funding. Significantly, the definition of take is extremely broad. It prohibits not only direct physical harm to a species (such as hunting, trapping and capturing), but also prohibits adverse modification to a species habitat which significantly impairs essential behavioral patterns, including breeding, feeding and sheltering. 50 C.F.R This expansive definition was upheld by the U.S. Supreme Court in response to a facial challenge to its validity. Babbitt v. Sweet Home Chapter of Communities for a Great Oregon, 515 U.S. 687 (1995). There are now 1265 animals, fish and plants on the federal species list. Of equal import, FWS and NMFS recently have made expansive designations of critical habitat for many listed California species. For example, FWS has proposed 4.1 million acres of California private and public land in 28 counties for the California red-legged frog, 406,000 acres for the Alameda whipsnake and over 1.5 million acres in 36 counties for vernal pool species. Although a few of these designations have been temporarily withdrawn or legally invalidated, they are expected to eventually survive largely intact. NMFS has designated hundreds of waterways throughout California and the Pacific Northwest as critical habitat for salmon and steelhead, and these designations are impacting many projects located near these watercourses. As developers and farmers have discovered recently, a critical habitat designation of property can greatly affect the development potential of the property. For example, landowners who must obtain a Corps permit to fill wetlands or drainages must await completion of a consultation between the Corps and/or NMFS that can last anywhere from several months to several years. This consultation must occur whether or not the affected species is actually present on the property if the project may affect designated critical habitat. Moreover, at the end of the consultation, the landowner may receive a list of required conservation and mitigation measures to protect the species that could significantly alter the project footprint and size, or greatly increase the expense or reduce the value of the project. FWS and NMFS are not shy about wielding their considerable ESA authority. The agencies have been known to take an initial position that a project will cause jeopardy to a species (thereby preventing the project from going forward as proposed) and to thereafter extract a series of conservation measures (such as creation of species preserves, purchase of species credits at approved mitigation banks and imposition of expansive conservation easements) to authorize the project. The project applicant often is in a weak bargaining position because it is under tight time constraints and/or it is not willing to legally challenge the imposed project conditions. If your company is concerned that a project might adversely affect a federal threatened or endangered species (thereby causing a take ), you will need to obtain an advance incidental take authorization from FWS or NMFS. The two alternative methods to obtain such 3

4 authorization are: (1) through the Section 7 consultation process, or (2) through receipt of a separate incidental take permit. Although a separate permit occasionally makes sense, this permit process can sometimes be frustrating and potentially fruitless. It involves the formulation and negotiation of a Habitat Conservation Plan, preparation of a NEPA document and a public approval process, all of which can take years to complete. For these reasons, a project developer may actually seek a federal permit hook to undertake the less burdensome Section 7 consultation process. Finally, DFG also protects species under the California Endangered Species Act ( CESA ), Fish & Game Code There are important differences between CESA and the ESA. First, the ESA and CESA have different lists of threatened and endangered species. For example, the California red-legged frog is formally listed under the ESA, but not under CESA. DFG tends to be more active in protecting species that are listed under CESA only. Second, CESA has a much less expansive definition of take (limited to direct takes such as hunting, shooting, capturing, etc.) that does not include the broad harm and harassment definitions in federal law. Nonetheless, all species that fall within DFG jurisdiction should be in your permitting plan. The Hot Water Issues Water availability and water rights are playing an increasingly important role in the development context. At the outset, you will want to ensure that you have both available water and valid water rights to support your project. In addition, it is essential to obtain all necessary stormwater and waste discharge permits from the RWQCB for construction and operation of the project. Moreover, federal and state government entities are increasingly regulating the flows of streams and underground diversions of water to protect public trust resources (particularly endangered fish species). A variety of federal courts have held that federal and state governments have the authority to reduce water deliveries and water diversions to protect flows for, or to avoid takes of, endangered fish species. See, e.g., Rio Grande Silvery Minnow v. Keys, 333 F.3d 1109 (10 th Cir. 2003); Department of Fish & Game v. Anderson-Cottonwood Irrigation District, 8 Cal.App.4th 1554 (1992). Pursuant to the CWA, and under the watchful eye of the U.S. Environmental Protection Agency ( EPA ), California s RWQCBs are calculating Total Maximum Daily Loads ( TMDLs ) for many watercourses. The TMDL program identifies polluted waters, determines the maximum pollutant loads they can bear and then leads to actions that reduce the pollutants. The TMDL process is still in its infancy, but is widely expected to spawn further constraints on new development. The Trend of Increasing Local Environmental Regulation California cities and counties have become more aggressive in adopting ordinances, designed to protect streams, wildlife, forest resources or aesthetic qualities, that may limit or prevent development projects. Although some municipalities already had some of these laws, there has been a noticeable recent trend in the proposal (often driven by community and environmental groups) and adoption of such ordinances. At this point, many cities and counties have adopted modest stream setback requirements for new development that are intended to buffer land uses and protect creeks and drainages. However, more significant proposals are in the municipal pipeline. For example, in the special March 2004 election, Napa County voters considered Measure O, an initiative measure that attempted to prohibit any timber cutting (basically defined as the removal of even one tree) up to 1000 feet from wetlands, streams and springs. Although Measure O failed, similar measures are being considered in Sonoma County and other locations. There are conflicting court decisions on whether local regulations limiting tree cutting in riparian or setback zones are preempted by state forestry laws, and one case is now on appeal to the California Supreme Court. Cf. Big Creek Lumber Co. v. County of Santa Cruz, 115 4

5 Cal.App.4th 952 (2004) (review granted) with Big Creek Lumber Co v. County of San Mateo, 31 Cal.App.4th 418 (1995). The Litigation Shadow Government agencies and private citizens actively utilize litigation to enforce environmental and land use laws. Federal agencies have a wide array of enforcement mechanisms, most of which are no fault in nature. At the State level, the Attorney General has created an environmental enforcement unit and agencies such as DFG appear to be increasing their attention to enforcement. This trend has percolated down to the local level, where individual district attorneys are becoming more aggressive in pursuing criminal environmental violations. One hallmark of our modern federal environmental laws is the citizen suit provision, which essentially empowers citizens to act as private attorneys general to pursue civil actions for environmental violations. The ESA and CWA each contain a citizen suit provision widely used by environmental groups. In general, there is no parallel citizen suit right in California s environmental laws -- with the notable exceptions of CEQA and the Safe Drinking Water and Toxic Enforcement Act of 1986 ( Proposition 65 ). However, environmental plaintiffs are increasingly using state law theories such as Business and Professions Code 17200, et seq. (which prohibits unfair or unlawful competition) as a platform for attacking environmental violations. Thus, any land developer must protect itself during the permitting process to avoid later enforcement action. Navigation Strategy In light of these developments, a land developer must understand the natural resource landscape of a project before beginning any permitting or CEQA process. I recommend the following general strategy: 1. Prepare An Early Action Plan: Utilize legal and technical expertise at the outset of project planning to identify needed natural resource permits, to strategize on ways to avoid or obtain permits that further your goals and to integrate your natural resource planning with the project timeframe and budget. Be ready to devote more time and resources to navigating this maze than you may have in the past. 2. Identify Key Issues: Focus on wetlands and species issues immediately. Two important questions are: (1) will the project require the fill of any jurisdictional waters under Section 404 of the CWA or a Streambed Alteration Agreement from DFG? and (2) could the project adversely affect any listed or candidate species under the ESA or CESA if so, how will we obtain the necessary incidental take authority? 3. Address Wetlands: Conduct a private wetland delineation of the project site at an early time to identify the location and extent of jurisdictional waters. Although it is not official unless and until it is verified by the Corps (which often results in modifications), it should be a fairly good predictor of wetlands issues. If the project will impact jurisdictional waters, decide whether to change the project, to minimize the impacts to improve your permitting situation or to go with the project as is. If you apply for a Corps permit, try to manage your wetlands impacts to utilize a prepublished nationwide permit (rather than undergo the rigorous individual permit process), aggressively advocate for all exemptions and plan an appropriate mitigation package. Adopt a strategy for obtaining the derivative agency approvals triggered by the Corps permit. 4. Focus On Species: If the project may adversely affect a listed federal species or its critical habitat, or will meet the more narrow take definition for state-listed species, you will need incidental take authority from the appropriate wildlife agency (and thereby avoid a later enforcement action). In many situations, you will want to obtain a federal permit as a vehicle for a Section 7 consultation, rather than go through the 5

6 separate incidental take permit process. To help decide these questions, you may need to conduct early protocol-level surveys of the target species. At a minimum, you will want to discuss the sometimes complicated question of whether and when to conduct species surveys. 5. Identify Water Issues: Unless you are relying on a public water system, make sure that you have sufficient water rights and water supply, and that all stormwater permits and waste discharge requirements have been obtained. If not, make appropriate applications. Determine whether any adjacent watercourses have TMDL restrictions or flow/fishery issues and prepare a strategy to address them. 6. Investigate Local Government Regulation: Investigate any relevant city or county setback, forest, water or erosion protection ordinances -- including those in the government approval pipeline and plan accordingly. This strategy will geometrically increase your chances of successfully navigating this maze of natural resource permits and thereby completing your project successfully. Skip Spaulding is a partner in the San Francisco law firm of Farella Braun + Martel, where he specializes in environmental litigation and compliance law. Among other experience, from , he was a managing attorney and then national litigation director of the Sierra Club Legal Defense Fund. Skip s natural resource clients have included Lucasfilm, Catellus, Pacific Gas & Electric Company, the City of Phoenix, Arizona, Rutherford Hill Winery, the University of California and the County of San Luis Obispo. He can be reached at sspaulding@fbm.com. 6