No Oil, Inc. v. City of Los Angeles

• Decision Date: 10 December 1974
• Citation: 118 Cal.Rptr. 34,529 P.2d 66,13 Cal.3d 68
• Court: California Supreme Court
• Parties: , 529 P.2d 66, 7 ERC 1257, 5 Envtl. L. Rep. 20,166 NO OIL, INC., et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES et al., Defendants and Respondents. L.A. 30268. In Bank

Page 34

118 Cal.Rptr. 34

13 Cal.3d 68, 529 P.2d 66, 7 ERC 1257, 5 Envtl. L. Rep. 20,166

NO OIL, INC., et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES et al., Defendants and Respondents.

L.A. 30268.

Supreme Court of California,

In Bank.

Dec. 10, 1974.

As Modified on Denial of Rehearing Jan. 29, 1975.

Brent N. Rushforth, Carlyle W. Hall, Jr., Mary D. Nichols, John R. Phillips, A. Thomas Hunt and Fredric P. Sutherland, Los Angeles, for plaintiffs and appellants.

Evelle J. Younger, Atty. Gen., Robert H. O'Brien, Asst. Atty. Gen., Nicholas C. Yost and Jan E. Chatten, Deputy Attys. Gen., as amici curiae on behalf of plaintiffs and appellants.

Lawler, Felix & Hall, Robert Henigson, William K. Dial, Hanna & Morton, Harold C. Morton, Edward S. Renwick, Bela G. Lugosi, Mitchell, Silberberg & Knupp and Arthur Groman, Los Angeles, for defendants and respondents.

Hindin, McKay, Levine & Glick and Denies A. Glick, Beverly Hills, as amici curiae on behalf of defendants and respondents.

TOBRINER, Justice.

Plaintiffs appeal from a judgment of the Los Angeles Superior Court ruling that the City of Los Angeles need not prepare an environmental impact report (EIR) before enacting ordinances to permit defendant Occidental Petroleum Corp. to sink two test oil wells in the Pacific Palisades region of the city. This appeal, the first case arising under the California Environmental Quality Act (hereafter CEQA) (Pub. Resources Code, § 21050 et seq.) to reach this court since Friends of Mammoth v. Board of Supervisors (1972) 8 Cal.3d 247, 104 Cal.Rptr. 761, 502 P.2d 1049 compels us to inquire into how an agency should decide whether a pending project requires an EIR. ¹

In CEQA, the Legislature sought to protect the environment by the establishment of administrative procedures drafted to 'Ensure that the long-term protection of the environment shall be the guiding criterion in public decisions.' (Pub. Resources Code, § 21001, subd. (d).) To achieve these objectives, CEQA and the guidelines issued by the State Resources Agency to implement CEQA ² establish a three-tiered structure. If a project falls within a category exempt by administrative regulation (see Pub.Resources Code, §§ 21084, 21085), or 'it can be seen with certainty that the activity in question will not have a significant effect on the environment' (Cal.Admin.Code, tit. 14, § 15060), no further agency evaluation is required. If there is a possibility that the project may have a significant effect, the agency undertakes an initial threshold study (Cal.Admin.Code, tit. 14, § 15080); if that study demonstrates that the project 'will not have a significant effect,' the agency may so declare in a brief Negative Declaration. (Cal.Admin.Code, tit. 14, § 15083.) If the project is one 'which may have a significant effect on the environment,' an EIR is required. (Pub. Resources Code, §§ 21100, 21151; see Cal.Admin.Code, tit. 14, § 15080.) The parties assume that the drilling project is one which may possibly have a significant effect and thus requires an initial threshold environmental study. The question is whether the city properly determined that no EIR was necessary.

Judicial review of the city's decision is governed by Public Resources Code section 21168.5, which provides that 'In any action or proceeding, other than an action or proceeding under section 21168, to attack, review, set aside, void or annul a determination or decision of a public agency on the ground of noncompliance with this division, the inquiry shall extend only to whether there was a prejudicial abuse of discretion. Abuse of discretion is established if the agency has not proceeded in a manner required by law or if the determination or decision is not supported by substantial evidence.' ³ Since, as we shall explain, the judgment of the superior court sustaining the city's decision must be reversed because of the city's failure to proceed in the manner required by law, we do not reach the question whether that decision is supported by substantial evidence.

The city council specifically failed to comply with the requirements of CEQA in two respects. First, because an EIR serves to guide an agency in deciding whether to approve or disapprove a proposed project, CEQA impliedly requires (and the guidelines expressly require) that the agency render a written determination whether a project requires an EIR before it gives final approval to that project. The city council, however, approved the drilling project in October of 1972 without a written determination concerning the environmental impact of that project. The belated council resolution in January of 1973, despite its attempt to render a determination retroactively as of the previous October, does not suffice to comply with the requirement that environmental issues be considered and resolved before a project is approved.

Second, since the preparation of an EIR is the key to environmental protection under CEQA, accomplishment of the high objectives of that act requires the preparation of an EIR whenever it can be fairly argued on the basis of substantial evidence that the project may have significant environmental impact. The superior court in the present case, however, ordered the city council to follow a far more restrictive test that limited use of an EIR to projects which may have an 'important' or 'momentous' effect of semi-permanent duration. The superior court's instruction, in addition, overlooked the importance of preparing an EIR in cases, such as the present action, in which the determination of a project's environmental effect turns upon the resolution of controverted issues of fact and forms the subject of intense public concern. In the context of this case, we shall point out the bases for our conclusion that the city's use of the erroneous test stated by the trial court constitutes a prejudicial abuse of discretion.

1. Chronology of events.

In 1966 Occidental Petroleum drilled the Marquez Core Hole in Santa Monica Canyon and discovered oil producing sands at a depth of 9,200 feet. Seeking to determine the extent of the oil field, Occidental acquired the 'highway drillsite' in Pacific Palisades in 1969. This two-acre site lies across a state highway from Will Rogers State Beach and near the foot of a bluff which has experienced numerous landslides.

In July of 1970, the Office of Zoning Administration of the City of Los Angeles granted Occidental a conditional use permit allowing it to drill a test well at the highway drillsite. The board of zoning appeals overturned that decision, finding that the drilling might trigger a disastrous landslide, that a blowout--an uncontrolled effusion of oil under pressure--would have severe environmental consequences, and that an industrial use of the site would be aesthetically undesirable.

Seeking to circumvent the requirement for a conditional use permit, Occidental petitioned the city in 1972 to establish three oil drilling districts in the Pacific Palisades. Since the oil drilling districts proposed by Occidental would have permitted commercial oil production, the hearing examiner for the city planning commission, concerned about the environmental impact of such production, recommended disapproval of the proposal. Nevertheless the planning commission resolved to approve the proposal on condition that only two test holes be drilled.

On October 10, 1972, the council considered three ordinances which established oil drilling districts in the Pacific Palisades area, subject to the condition that only two test wells could be drilled. At the close of the hearing Councilman Wachs inquired whether the city attorney had examined the proposed ordinances in the light of our opinion in Friends of Mannoth filed three weeks earlier. The city attorney replied that since the city had not yet established procedures to ascertain the environmental impact of measures coming before the council, he had made no such examination.

At the next meeting, on October 17, Councilman Wachs moved to postpone consideration of the ordinances pending preparation of an EIR. No other councilman discussed the motion, which failed by an eight-to-six vote. The council then passed the ordinances by the same eight-to-six vote. Mayor Yorty signed the ordinances into law on October 20.

Plaintiffs, four nonprofit corporations representing persons opposed to oil drilling in Pacific Palisades, filed the instant action on October 27. Their complaint sought a declaration that the ordinances were invalid, prayed for mandate to compel preparation of an EIR, and requested an injunction against the issuance of a drilling permit by the office of zoning administration. ⁴ The city, in response, contended that no EIR was necessary, supporting this contention with declarations from the eight councilmen who voted for the ordinances; each declared, in the statutory language, his opinion that the drilling project was not such as might have a significant effect on the environment. Occidental, on the other hand, maintained that the reports of the planning commission consitituted a sufficient EIR.

Plaintiffs initially claimed that the 'project' whose impact was at issue encompassed commercial oil production in Pacific Palisades; they argued that it was evident such production would have a significant effect on the environment. The trial court, however, limited the issue to the impact of the drilling of the test wells. ⁵ Plaintiffs presented expert testimony to show that even this limited 'project' might have a significant environmental effect. Paul Witherspoon, a professor of petroleum geology at the University of California at Berkeley, explained that a blowout, an unavoidable hazard of exploratory drilling, might lead to oil seepage polluting the adjoining state beach and harbor. George Tauxe, a professor of soil mechanics at U.C.L.A., testified that the drilling site was located at the foot of an unstable bluff, a locale of...