Cougar Mountain Associates v. King County

Callow, J. —

Cougar Mountain Associates (Cougar Mountain) challenges King County's denial of its subdivision application. The County denied the application primarily because of the potential adverse environmental impacts that could result from the development of the proposed subdivision. We hold that the County erred in the procedure by which it denied Cougar Mountain's application. The County failed to set forth precisely the significant environmental impacts it considered in denying Cougar Mountain's application. Furthermore, the County failed to either describe mitigating measures available to Cougar Mountain or state that the potential environmental impacts could not be mitigated. We reverse the decision of the trial court upholding the County's denial of Cougar Mountain's subdivision application and remand the cause for further consideration.

In July 1982, Cougar Mountain filed an application in King County for preliminary plat approval of the proposed Ames Lake Hills Subdivision. An environmental checklist accompanied the application. Cougar Mountain initially sought permission for the development of 101 single family residential lots on 135 acres located on a plateau above the Snoqualmie River Valley. The site was selectively logged in 1980 to 1981, and has not been reforested due to the likelihood of future conversion to urban development. Ames Creek crosses the southwest corner of the property, and the Ames Lake 57 Wetland is immediately adjacent to the northwest corner of the property. The subject property was included within the "Residential Reserve" area pursuant to the 1964 King County Comprehensive Plan. The recommended maximum density in such areas was one dwelling unit per 5 acres. In 1985, the County adopted a new comprehensive plan. Under the new plan, the subject property is classified as "Rural", but the recommended maximum density continues to be one dwelling unit per 5 acres. However, the zoning classification for the property is "G”, which allows a maximum density of approximately one dwelling unit per acre. The land surrounding the proposed subdivision consists of agricultural and residential lots ranging in size from 5 to 10 acres.

After reviewing Cougar Mountain's application, the King County Building and Land Development Division (BALD) issued a Declaration of Significance pursuant to the State Environmental Policy Act of 1971 (SEPA), thus necessitating the preparation of an environmental impact statement (EIS) for the proposal. At the same time, the Subdivision Technical Committee, consisting of the head of the subdivision control section of BALD, a member of the Planning Division, and a member of the Department of Public Works recommended that Cougar Mountain's proposal be denied because of incompatibility of the proposed use with the surrounding area and the inability to conform the proposal to the King County Code requirements regarding availability of water. This recommendation was made pursuant to then-existing King County Code (KCC) 20.44.100(E), which stated:

When denial of a private proposal, which is determined to be significant, can be based on existing county ordinances, the responsible official may deny the request without preparing an EIS in order to save the applicant and the county from incurring needless expense . . . Provided, that the examiner may find that there is reasonable doubt that grounds for denial are sufficient, and therefore remand the application for consideration following preparation of an EIS . . .

Pursuant to the recommendation of the Subdivision Technical Committee, the Zoning and Subdivision Examiner held a hearing in October 1982. The Examiner concluded that there was a reasonable doubt that the plan should be denied outright, and remanded the application for reconsideration following preparation of an EIS. Cougar Mountain prepared a draft EIS, which the County issued in September 1985. The EIS analyzed the effects of the proposed subdivision on erosion, surface water, fish and wildlife habitat, land use, public services, and utilities. The draft EIS was then circulated to affected agencies, libraries, newspapers, and special interest groups. The County subsequently issued an EIS addendum to reflect the comments made by interested parties. By this time, the proposed subdivision consisted of 90 lots on 128 acres; an average density of .7 dwelling units per acre.

In May 1986, after reviewing the EIS, BALD issued a preliminary report on the proposed Ames Lake Hills Subdivision. BALD recommended that the plat be approved, subject to numerous conditions. The King County Zoning and Subdivision Examiner held a public hearing on the subdivision in June 1986. Following the hearing, the Examiner recommended denial of the plat, based on his conclusion that the proposal conflicted with the 1985 King County Comprehensive Plan, the zoning code, the Agricultural Preservation Program, and the purposes and policies of SEPA. However, the Examiner offered Cougar Mountain the option of amending its proposal to include 25 sites with a minimum lot size of 5 acres.

Cougar Mountain subsequently appealed the plat denial to the King County Council (Council). Following a hearing in October 1986, the Council passed ordinance 7811, denying the appeal. The ordinance adopted and incorporated the findings and conclusions made by the Zoning and Subdivision Examiner. However, the Council later determined that these findings and conclusions did not accurately reflect the Council's October decision. As a result, the Council drafted new findings and conclusions supporting its denial of Cougar Mountain's application. Copies of the revised findings and conclusions were sent to the parties of record. A revised ordinance adopting the new findings and conclusions was introduced in January 1987, and a hearing on the proposed ordinance was held in February. On February 2, 1987, the Council adopted ordinance 7945, which included the new findings and conclusions. The new ordinance reflected the Council's determination that Cougar Mountain's proposal should be denied because the subdivision would result in significant adverse environmental impacts that could not reasonably be mitigated. The Council also concluded that the proposal conflicted with several policies of the 1985 King County Comprehensive Plan.

In November 1986, Cougar Mountain sought review of the Council's denial of its subdivision application in King County Superior Court, pursuant to a writ of certiorari, writ of mandamus, and complaint for declaratory judgment. Cougar Mountain filed its complaint before the King County Council revised the ordinance denying Cougar Mountain's plat application. Cougar Mountain subsequently amended its complaint in light of the revised ordinance. After a hearing in March 1987, the trial court entered judgment in favor of King County. Cougar Mountain appealed the decision directly to this court, contending that this case raises "a fundamental and urgent issue of broad public import which requires prompt and ultimate determination." RAP 4.2(a)(4).

I

Cougar Mountain contends that the County's denial of its subdivision application should be reviewed under the clearly erroneous test. The County asserts that the proper standard of review is the arbitrary and capricious test. In upholding the County's denial of Cougar Mountain's plat, the trial court apparently applied both standards of review, stating,

for purposes of clarity we do find that there was appropriate compliance with the statutory mandates so that we now as a review court are unable to say that the action of the Council was either arbitrary and capricious or that it was clearly erroneous.

Under the clearly erroneous standard of review, the court "does not substitute its judgment for that of the administrative body and may find the decision "'clearly erroneous'" only when it is "'left with the definite and firm conviction that a mistake has been committed.'" Polygon Corp. v. Seattle, 90 Wn.2d 59, 69, 578 P.2d 1309 (1978) (quoting Ancheta v. Daly, 77 Wn.2d 255, 259-60, 461 P.2d 531 (1969)). See also Norway Hill Preserv. & Protec. Ass'n v. King Cy. Coun., 87 Wn.2d 267, 552 P.2d 674 (1976). The court should "examine the entire record and all the evidence in light of the public policy contained in the legislation authorizing the decision." Polygon, at 69.

Cougar Mountain relies on Polygon to support its argument in favor of application of the clearly erroneous standard of review. In Polygon, a developer sought a building permit for construction of a 13-story condominium on Queen Anne Hill. After the developer submitted an environmental information worksheet, the Seattle Building Department determined that the proposal constituted a "major [action] significantly affecting the quality of the environment" under RCW 43.21C.030(2)(c), and that therefore an EIS would be required. Polygon, at 61. After the EIS was submitted, the superintendent of buildings denied the developer's application pursuant to the standards set forth in SEPA. Polygon, at 61. The superintendent based the denial on his conclusion that the project was inconsistent with the aims of SEPA. He cited the visual impact of the building, the adverse effects on property values, and the trend toward more intense land use on Queen Anne Hill. Polygon, at 62. The developer appealed the superintendent's decision to the King County Superior Court, which granted summary judgment in favor of the City. The developer then sought direct review in this court.

Polygon recognized that "SEPA confers substantive authority to the deciding agency to act on the basis of the impacts disclosed [in the EIS]." Polygon, at 64. The court then determined the standard by which the superintendent's decision should be reviewed. It began by reviewing Norway Hill Preserv. & Protec. Ass'n v. King Cy. Coun., supra, in which the court applied the clearly erroneous standard of review to a negative threshold determination.¹ Polygon stated that the result in Norway Hill was based on the determination that "close review was necessary to ensure that the policies of SEPA were achieved." Polygon, at 68. The court stated additionally:

We find it equally important that the same broad standard of review be available to a property owner whose property use has been limited by the denial of a building permit on the basis of SEPA.

. . . This is particularly true in view of the fact that environmental factors, especially those involving visual considerations, are not readily subject to standardization or quantification. That potentiál for abuse is even stronger where the decision must be made in a climate of intense political pressures.

Polygon, at 68-69. The court concluded that

this potential for abuse, together with a need to ensure that an appropriate balance between economic, social, and environmental values is struck, requires a higher degree of judicial scrutiny than is normally appropriate for administrative action. Consequently, in order that there be a broad review, we apply the clearly erroneous standard to the superintendent's denial of Polygon's building permit.

Polygon, at 69.

The denial of the building permit in Polygon is analogous to the denial of Cougar Mountain's subdivision application in this case. As noted in Polygon, decisions based on environmental factors are not readily quantifiable, and often are made in an atmosphere of intense political pressure. SEPA should not be used to block construction of unpopular projects. Parkridge v. Seattle, 89 Wn.2d 454, 466, 573 P.2d 359 (1978). One commentator has set forth additional reasons why the clearly erroneous standard of review is appropriate for substantive decisions based on SEPA:

First, in order to ensure that the policies promoted by SEPA are in fact incorporated into agency decisionmak-ing, it is necessary that the decisions be subject to critical review. Second, the major basis for judicial deference to administrative decisions — the expertise of the particular agency — does not apply when the agency is acting outside the area of that expertise, as is usually the case under SEPA. Third, the fundamental nature of the rights protected by SEPA makes a more intense standard of review appropriate. Finally, because the legislature has made it clear that the mandate announced by SEPA is statewide, broader review of administrative decisions is necessary to ensure that the statewide policy is not undermined by inappropriate political or economic pressures at the local level.

(Footnotes omitted.) Note, A Standard for Judicial Review of Administrative Decisionmaking Under SEPA — Polygon Corp. v. City of Seattle, 90 Wn.2d 59, 578 P.2d 1309 (1978), 54 Wash. L. Rev. 693, 699-700 (1979). For these reasons, application of the clearly erroneous standard of review is appropriate.

The County contends, however, that the arbitrary and capricious standard of review should be applied. Arbitrary and capricious conduct is defined as

willful and unreasonable action, without consideration and [in] disregard of facts or circumstances. Where there is room for two opinions, action is not arbitrary and capricious when exercised honestly and upon due consideration though it may be felt that a different conclusion might have been reached.

Barrie v. Kitsap Cy., 93 Wn.2d 843, 850, 613 P.2d 1148 (1980) (quoting Buell v. Bremerton, 80 Wn.2d 518, 526, 495 P.2d 1358 (1972)). As noted in Polygon, the clearly erroneous standard of review is broader than under the arbitrary and capricious test and avoids placing the responsibility for an ultimate decision within the sole subjective discretion of the administrative or legislative body. Polygon, at 67.

The County cites Nagatani Bros. v. Skagit Cy. Bd. of Comm'rs, 108 Wn.2d 477, 739 P.2d 696 (1987) in support of its argument that the arbitrary and capricious standard of review should be applied. In Nagatani, the County denied approval of a preliminary plat for the development of 29 residential lots. The denial was based in part on potential adverse environmental impacts. This court concluded that "[b]ased on this record, denial on that basis was an arbitrary and capricious decision." (Italics ours.) Nagatani, at 482. However, this decision does not represent a purposeful determination by the court to apply a narrower standard of review in such cases. The parties in that case did not challenge the application of the arbitrary and capricious test. In addition, the court held that the County could not satisfy even the more relaxed arbitrary and capricious standard of review. The clearly erroneous standard of review used in Polygon should also be applied in this case.

II

In 1971, the Washington Legislature passed the state environmental policy act. The purposes of SEPA are:

(1) To declare a state policy which will encourage productive and enjoyable harmony between man and his environment; (2) to promote efforts which will prevent or eliminate damage to the environment and biosphere; (3) and stimulate the health and welfare of man; and (4) to enrich the understanding of the ecological systems and natural resources important to the state and nation.

RCW 43.21C.010.² SEPA's primary enforcement tool has been the EIS. An EIS must be prepared on proposals that will have a probable significant adverse environmental impact. RCW 43.21C.031. "'Significant' as used in SEPA means a reasonable likelihood of more than a moderate adverse impact on environmental quality." WAC 197-11-794(1). In the past we have found significant impacts in cases wherein there was major opposition to a project, a primary change of direction in the use or activity on a large area, a meaningful threat posed to flora or fauna, or the perceived beginning of accelerating development. Noel v. Cole, 98 Wn.2d 375, 655 P.2d 245 (1982); Asarco Inc. v. Air Quality Coalition, 92 Wn.2d 685, 601 P.2d 501 (1979); Department of Natural Resources v. Thurston Cy., 92 Wn.2d 656, 601 P.2d 494 (1979), cert. denied, 449 U.S. 830 (1980); Polygon Corp. v. Seattle, supra; Sisley v. San Juan Cy., 89 Wn.2d 78, 569 P.2d 712 (1977); Leonard v. Bothell, 87 Wn.2d 847, 557 P.2d 1306 (1976); Swift v. Island Cy., 87 Wn.2d 348, 552 P.2d 175 (1976); Norway Hill Preserv. & Protec. Ass'n v. King Cy. Coun., supra; Narrowsview Preserv. Ass'n v. Tacoma, 84 Wn.2d 416, 526 P.2d 897 (1974); Toandos Peninsula Ass'n v. Jefferson Cy., 32 Wn. App. 473, 648 P.2d 448 (1982). It is important impacts such as these upon an area that are classified as "significant" and while they require the preparation of an EIS, they also require the full panoply of procedural protection. See also Rogers, The Washington Environmental Policy Act, 60 Wash. L. Rev. 33 (1984).

The Washington courts have recognized that the SEPA legislation has bestowed broad and far reaching powers. We have recognized that SEPA confers substantive authority on agencies to act on the basis of impacts disclosed in an EIS. See Polygon, at 64; Department of Natural Resources v. Thurston Cy., 92 Wn.2d 656, 663, 601 P.2d 494 (1979), cert. denied, 449 U.S. 830 (1980). However, before an agency can condition or deny a proposal based on SEPA, it must comply with certain statutory and regulatory requirements. Cougar Mountain contends that the King County Council failed to comply with these requirements when it denied Cougar Mountain's subdivision application. We agree, and reverse the trial court's decision upholding the Council's denial of Cougar Mountain's application.

RCW 43.21C.060 provides that any governmental action may be conditioned or denied pursuant to SEPA. See also Polygon, at 64. Any denial must be based "upon policies identified by the appropriate governmental authority and incorporated into regulations, plans, or codes which are formally designated by the agency". RCW 43.21C.060; WAC 197-11-660(1)(a). King County Code (KCC) 20.44-.080(B) sets forth policies, plans, rules, and regulations that may serve as potential bases for the exercise of the County's authority under SEPA. The potential bases for county action include, inter alia, SEPA, the King County Comprehensive Plan, and the King County Zoning Code. KCC 20.44.080(B). Additionally, in order to deny a proposal on SEPA grounds, an agency must find that:

(1) The proposal would result in significant adverse impacts identified in a final or supplemental environmental impact statement prepared under this chapter; and (2) reasonable mitigation measures are insufficient to mitigate the identified impact.

RCW 43.21C.060; WAC 197-11-660(1)(f). WAC 197-11-660(1)(b) adds that "The decision maker shall cite the agency SEPA policy that is the basis of any condition or denial under this chapter".

In this case, the King County Council apparently based its denial of Cougar Mountain's application on conflicts with SEPA and the 1985 King County Comprehensive Plan. However, the Council failed to describe the specific SEPA policies with which Cougar Mountain's application conflicted. The Council merely stated that "the proposal as presently envisioned would likely result in significant adverse environmental impacts which cannot be mitigated by reasonable mitigation measures."

In ordinance 7945 denying Cougar Mountain's application, the County Council concluded that:

1. As presently envisioned, the proposal would be likely to result in significant adverse environmental impacts on water quality and wildlife habitat, specifically Ames Lake Wetlands Nos. 57 and 58 and Ames Creek, assorted public services including schools, fire protection and solid waste disposal, and land use by heightening the trend toward more intense land use in the area and creating pressure to alter surrounding land use, both in and of itself, and considered as part of the cumulative impact with other similar developments.

2. Reasonable mitigation measures are insufficient to mitigate these identified adverse environmental impacts in that the evidence established that native growth protection easements would not effectively protect the impacted creeks and wetlands, and that the pressures on existing public services and heightened trend towards more intensive land use unavoidably follow from the introduction of 90 homes housing in excess of 300 individuals in a predominantly rural area.

These conclusions are not sufficiently specific to comply with the requirements of RCW 43.21C.060 and WAC 197-11-660 regarding denials of proposals on SEPA grounds. The Council merely stated in a conclusory fashion that the proposal would result in significant environmental impacts and that these impacts could not reasonably be mitigated. Much the same could be said for the settlement of the cities and towns of the state during the last century. The purpose of SEPA is to control the expansion of our population upon the land in such a way as to harmonize the interaction between humans and the environment and to protect nature. SEPA seeks to achieve balance, restraint and control rather than to preclude all development whatsoever. Its scheme cuts both ways as an instrument of control placed in the hands of government, but not an unbridled control that can ignore due process and fair treatment of landowners. Although the Council did set forth significant adverse impacts that would result from development of Cougar Mountain's proposed subdivision, it failed to state why the mitigation measures included in the EIS were insufficient to offset these impacts.³

The Council began by concluding that Cougar Mountain's proposal would be likely to result in significant adverse environmental impacts on water quality and wildlife habitat. The Council noted that one suggested mitigation measure, native growth protection easements, would be difficult to enforce. However, the Council failed to discuss the numerous other mitigation measures recommended in the EIS. Thus, it is unclear whether the Council's decision is based solely on the potential difficulty in enforcing native growth protection easements, or whether the Council also determined that the other recommended mitigation measures were insufficient to protect water quality and wildlife habitats.

The Council then noted that Cougar Mountain's proposal would be likely to result in significant adverse impacts on public services in the area of the proposed development, including schools, fire protection, and solid waste disposal. Again, the Council did not specifically state why reasonable mitigation measures would be insufficient to alleviate the impact of the proposed development.

Finally, the Council pointed to the adverse impacts on land use that would result from Cougar Mountain's proposal. The Council stated the obvious — that the addition of 90 new homes to the area would result in an impact on the existing area land use. However, the only concern raised by the Council involved the potential conflict between traffic to the development and slow-moving agricultural traffic currently using the roads near the site of the proposed development. The Council cannot merely state that a proposed development will have an impact on existing land use in an area. If this were the case, no development could occur in rural areas. The Council cannot use SEPA as an excuse for the denial of proposals. If proposals are rejected on the basis of SEPA concerns, the agency must spell out its objections and how they can be satisfied or, if not, why not. Thus, before denying a proposal on SEPA grounds, we hold that an agency must (1) specifically set forth potential adverse environmental impacts that would result from implementation of. the proposal, and (2) specifically set forth reasonable mitigation measures to counteract these impacts, or, if such measures do not exist, (3) specifically state why the impacts are unavoidable and development should not be allowed. The King County Council did not follow this procedure.

Ill

Cougar Mountain also asserts that the Council erred when it used the King County Comprehensive Plan as a means for denying Cougar Mountain's subdivision application. Cougar Mountain contends that because its application complied with applicable zoning requirements, the fact that the application fails to comply with the provisions of the Comprehensive Plan is irrelevant.

RCW 36.70, the county planning enabling act, defines a comprehensive plan as:

[T]he policies and proposals approved and recommended by the planning agency or initiated by the board and approved by motion by the board (a) as a beginning step in planning for the physical development of the county; (b) as the means for coordinating county programs and services; (c) as a source of reference to aid in developing, correlating, and coordinating official regulations and controls; and (d) as a means for promoting the general welfare. Such plan . . . shall serve as a policy guide for the subsequent public and private development and official controls so as to present all proposed developments in a balanced and orderly relationship to existing physical features and governmental functions.

RCW 36.70.020(6). Thus, the comprehensive plan provides an overall guide for development. Zoning regulations, on the other hand, set forth specific requirements for land use in a particular area. "The heart of a typical zoning ordinance defines the various districts and the regulations of use, lot size, site coverage, density, height, landscaping, parking, signs and other matters." R. Settle, Washington Land Use and Environmental Law and Practice § 2.3(a) (1983).

In this case, the density requirements of the King County Comprehensive Plan are in conflict with those set forth in the King County Zoning Code. Cougar Mountain asserts that the provisions of the zoning code should control, while the Council relied on the provisions of the Comprehensive Plan to deny Cougar Mountain's proposal. In ordinance 7945, the Council concluded that "the proposal as presently envisioned also conflicts with numerous policies of the King County Comprehensive Plan." The policies cited by the Council included those describing recommended uses for areas classified as "Rural". The subject property is classified as a Rural area under the Plan, with a recommended maximum density of one dwelling unit per 5 acres. However, under the King County Zoning Code, the property is classified as "G", with a recommended density of one dwelling unit per acre. Cougar Mountain contends that the recommended density provisions of the zoning code should prevail over those described in the Comprehensive Plan. Cougar Mountain argues that its subdivision application should have been approved, since it complied with the recommended density requirements set forth in the zoning code.

In Nagatani Bros. v. Skagit Cy. Bd. of Comm'rs, 108 Wn.2d 477, 739 P.2d 696 (1987), the Skagit County Planning Commission denied the developer's proposed plat in part because of the proposal's failure to comply with the policies of the Skagit County Comprehensive Plan. Nagatani, at 479. The plat did comply with applicable zoning requirements, however. We stated that an "inconsistency between the zoning ordinance and the comprehensive plan must be resolved by application of the zoning ordinance." Nagatani, at 480 (citing Norco Constr., Inc. v. King Cy., 97 Wn.2d 680, 649 P.2d 103 (1982)); Carlson v. Beaux Arts Village, 41 Wn. App. 402, 408, 704 P.2d 663, review denied, 104 Wn.2d 1020 (1985). "[A] comprehensive plan is no more than a general policy guide to the later adoption of official controls which is subordinate to specific zoning regulations." Carlson, at 408. Cougar Mountain's application complied with applicable zoning requirements, although it conflicted with the guidelines set forth in the King County Comprehensive Plan. Thus, the County erred in relying on the provisions of the King County Comprehensive Plan to deny Cougar Mountain's application. The application complied with the relevant zoning requirements and should not have been denied on the basis of density guides in the Comprehensive Plan.

IV

In order for an agency to deny a proposal based on SEPA grounds, the agency must conclude that the proposal would result in significant adverse environmental impacts and that reasonable mitigation measures are insufficient to mitigate these impacts. Further, the agency must specifically describe the adverse environmental impacts, and either outline mitigation measures or specifically state why such measures are insufficient. Once the agency complies with these requirements, its decision will be reviewed on appeal under the clearly erroneous standard, and the court will not overturn the agency's decision unless "left with the definite and firm conviction that a mistake has been committed." The King County Council did not comply with the requirements necessary for a SEPA denial. We remand the cause to the Superior Court with instructions that it enter an order referring the matter to the King County Council for reconsideration of the proposal of Cougar Mountain Associates.

Utter, Brachtenbach, Dolliver, Andersen, and Durham, JJ., concur.

1 A negative threshold determination is a decision by an agency that a particular project does not represent a "major [action] significantly affecting the quality of the environment." WAC 197-11-330. If a negative threshold determination is made, an EIS does not have to be prepared. WAC 197-11-330.

2 "SEPA is essentially a procedural statute to ensure that environmental impacts and alternatives are properly considered by the decision makers." Save Our Rural Env't v. Snohomish Cy., 99 Wn.2d 363, 371, 662 P.2d 816 (1983).

3 The observation of Sisley v. San Juan Cy., 89 Wn.2d 78, 85, 569 P.2d 712 (1977) indicating the need for specificity is apropos:

[T]he record of a negative threshold determination by a governmental agency must "demonstrate that environmental factors were considered in a manner sufficient to amount to prima facie compliance with the procedural requirements of SEPA." Juanita Bay Valley Community Ass'n v. Kirkland, [9 Wn. App. 59, 73, 510 P.2d 1140 (1973)].

The opinion continues with a criticism of the record made by the governmental authority stating: "Unfortunately the Board's conclusion ... is accompanied by no reasoning, explanation or findings of fact, however informal." Sisley, at 85-86.