The First District Court of Appeal held that a failure to act to preserve an historic property is not a
“project” under CEQA. (The Lake Norconian Club Foundation v. Department of Corrections and Rehabilitation (2019) 39 Cal.App.5th 1044.)

The Lake Norconian Club opened in 1929 as a “luxury resort catering to Hollywood stars and sports celebrities.” Since then, the building has operated as a military hospital, a drug rehabilitation facility, and administrative offices. The building, which sits adjacent to a state prison, has been vacant since 2002.

In 2012, the Legislature enacted SB 1022, which required the Department of Corrections and Rehabilitation to close the adjacent prison. The Department published a draft EIR for the closure of the prison, which included analysis of potential impacts on the former hotel as a result of the closure. The EIR concluded there was no funding for repair or rehabilitation of the building, and continued deterioration was expected. The Legislature subsequently rescinded closure of the prison. The Department certified a final EIR in 2013, which concluded that although the prison would not be closed, the Department would not be able to repair or maintain the former hotel.

The Lake Norconian Club Foundation filed a petition for writ of mandate in November 2014, alleging the Department abused its discretion by failing to act to protect the hotel. The Foundation alleged that the “department’s de facto issuance of ongoing demolition permits is a precommitment to a CEQA project that cannot lawfully be considered for approval or implementation without first preparing and certifying an EIR to consider impacts and alternatives.”

The trial court concluded that the Department’s failure to seek or allocate funding to preserve the hotel was a project within the meaning of CEQA, but rejected the Foundation’s assertion that the failure to engage in routine maintenance or mere inaction was a project. Regardless, the trial court held that the petition was untimely because the statute of limitations began to run when the Department certified the EIR for the closure of the prison complex in 2013.

The Court of Appeal upheld the trial court’s denial of the petition, but on different grounds. The court concluded that an agency’s failure to act is not itself an activity subject to CEQA, even if there are potential environmental consequences of the inaction. The continuing failure to make repairs, the court said, is not an activity under CEQA. The court noted several difficulties with determining when the statute of limitations would begin to run on an agency’s inaction. The court relied on similar circumstances arising in NEPA case law and explained that federal courts have repeatedly rejected similar arguments.

Finally, the court explained that it need not decide whether the analysis would be different where there is a mandatory duty on the part of the agency to act, because here, the Department had no such mandatory duty. For sure, the court said, absent a statutory duty, the Department’s failure to act cannot be deemed a project or challenged for noncompliance with CEQA.