Archive for September, 2017


In Respect Life South San Francisco v. City of South San Francisco (2017) 15 Cal.App.5th 449, the First District Court of Appeal, Division One, upheld the City of South San Francisco’s (City) finding that a conditional use permit for the conversion of an office building into a medical clinic was categorically exempt from CEQA, as well as the City’s implied finding that the unusual circumstances exception did not apply.

The challenged project proposed converting an existing office building into a medical clinic providing a range of services and operated by Planned Parenthood. The City Planning Commission approved the application after a public hearing and found that the project was categorically exempt from CEQA review. Respect Life South San Francisco (Respect Life) appealed that decision to the City Council, arguing that, because of the nature of Planned Parenthood’s services, the project might draw protests that could have environmental impacts. The City Council rejected the appeal and found that the project qualified for three categorical exemptions. Respect Life and three individuals filed a petition for writ of mandate challenging the City’s decision. The trial court denied the petition and Respect Life appealed. On appeal, Respect Life admitted that at least one of the exemptions applied, but alleged that the unusual circumstances exception applied, requiring full environmental review.

The court first rejected Planned Parenthood’s argument that Respect Life lacked standing. Planned Parenthood argued that Respect Life had failed to allege that it had a beneficial interest in the litigation, but the court found that the group’s petition included sufficient allegations to establish standing.

The court then articulated the standard of review for categorical exemptions and the unusual circumstances exception under the California Supreme Court’s recent decision in Berkeley Hillside Preservation v. City of Berkeley (2016) 60 Cal.4th 1086 (Berkeley Hillside). At the administrative level, a challenger must prove to the agency that 1) there are unusual circumstances, and 2) there is a reasonable possibility of a significant impact because of those circumstances. Upon judicial review, a court applies the deferential “substantial evidence” test to the agency’s decision regarding the first prong, and the non-deferential “fair argument” test to the agency’s decision on the second.

Here, the City denied the administrative appeal and found the project categorically exempt, but made no express finding on the unusual circumstances exception. Thus, the record did not reveal whether the City concluded that the project presented no unusual circumstances (a decision entitled to deference) or had found that, while there were unusual circumstances, there was no reasonable possibility of significant impacts due to those circumstances (a decision reviewed under the non-deferential “fair argument” test). The court determined that when an agency makes an implied finding regarding the unusual circumstances exception, the court must assume that the agency determined that there were unusual circumstances. To uphold the agency’s implied finding that the exception is inapplicable, a court must conclude that the record contains no substantial evidence supporting either 1) the existence of unusual circumstances, or 2) a fair argument that such circumstances will have a significant effect on the environment. Thus, the court applies a non-deferential test to both implied determinations.

In this instance, the court found that even assuming that the first condition had been met by Respect Life, it had not identified any substantial evidence supporting a fair argument that the protests may result in significant effects. The court stated that Respect Life contradicted itself by conceding that CEQA review does not consider the identity of the applicant or operator, but also arguing that because the proposed operator is Planned Parenthood, the project might draw protests that will create indirect environmental impacts. The court held that “the possibility of ‘foreseeable First Amendment activity’” does not establish the unusual circumstances exception, where Respect Life “simply assert[ed] that protests will lead to environmental impacts.” The court also found that comments by opponents of abortion, even those that indicated they would protest, were not substantial evidence supporting a fair argument that there is a reasonable possibility that protests will have indirect significant effects on the environment. Ultimately, Respect Life was required, but unable, to point to evidence of the alleged indirect impacts, not just evidence of the protest activity that might lead to such impacts.

Streamlining—the promotion of organizational and systemic efficiency through the simplification of process—has been steadily incorporated into CEQA for years, largely through exemptions. The notion being: why not shorten the lengthy CEQA review where prior planning documents have nearly fully assessed potential impacts of a project? (E.g., CEQA Guidelines, § 15183.3, subd. (a).) These exemptions, categorical or statutory, are intended to save agencies, and by extension the public, time and resources.

Unlike many statutory exemptions that excuse qualifying projects entirely from CEQA consideration, categorical exemptions only discharge a “class” of projects from typical CEQA evaluation via a discretionary preliminary review. (CEQA Guidelines, § 15354.) The “Class 32” exemption is one such class promoting “shovel-ready” urban infill development projects through categorical streamlining. Established in 1998, this urban infill exemption requires projects to be consistent with applicable general plans and zoning designations, located within a city’s limits on a site five acres or less, bordered by urban uses, and without significant impacts to traffic, noise, air quality, or water quality. The project site itself can be either vacant or previously developed, but must be devoid of sensitive habitat and adequately served by public utilities. (CEQA Guidelines, § 15332).

In 2011, additional streamlining provisions included in Senate Bill 226 were intended to balance the interests of the government, business, and the environment by better fast-tracking Class 32 urban infill development by specifying conditions under which these projects would be adequately supported by existing planning documents and land use designations. (Pub. Resources Code, § 21094.5.) Despite SB 226 streamlining and Class 32’s beneficial function, it still goes underutilized. So why aren’t cities using this infill categorical exemption and should that change?

Class 32 and the Balancing Act of Senate Bill 226

The Class 32 infill development exemption was included in the Guidelines as a part of a 1998 revision by the Governor’s Office of Planning and Research (OPR) to clarify project types that are categorically exempt from typical CEQA review. In an effort to promote this exemption, along with other environmental tools such as solar technology, in 2011 State Senator Joseph Simitian penned SB 226 to expand CEQA streamlining provisions for infill development projects. Sen. Simitian intended the bill to balance interests, especially with increasing legislative demands for a reduction in greenhouse gas emissions. He also purported to provide a much-needed boost to industries struggling to recover from the country’s economic recession, specifically construction. (See State Sen. Joseph Simitian, letter to Governor Jerry Brown, Sept. 5, 2011, http://www.senatorsimitian.com/images/uploads/SB_226_CEQA_Letter.pdf; Sen. Rules Com., Off. of Sen. Floor Analyses, Analysis of Sen. Bill No. 226 (2011–2012 Reg. Sess.) as amended September 9, 2011, p. 4.) By June 2012, OPR had effectuated the final proposal, incorporated the bill’s language into CEQA Guidelines, and published its accompanying performance standards as Appendix M, at which time it became an official enhancement to Class 32 exemptions.

Exemption Usage…or Lack Thereof

While a Class 32 exemption and its streamlining provisions can help cities more predictably plan development, it has gone underutilized.

Scott Morgan, OPR Deputy Director of Administration and State Clearinghouse Director, has stated that agencies often choose to prepare negative declarations or even environmental impact reports (EIRs) for projects that meet infill exemption criteria, despite the fact that negative declarations are often litigated and held to an less deferential standard of judicial review (“fair argument” versus “substantial evidence” standard, see below). Mr. Morgan explains some of this underutilization as simple unfamiliarity—city staff often aren’t aware of or comfortable using this exemption and its streamlining possibilities. However, some larger cities like Oakland and San Francisco almost exclusively use this exemption for their smaller-scale infill projects, thereby exemplifying the principle that areas already predetermined for these exact uses by a CEQA-driven planning process need not undergo a more onerous review.

The City of Oakland has developed a Class 32 exemption process that includes a preliminary review with report-style documentation, inclusive of applicable technical analysis and informal findings. In July 2015, for example, the Oakland Bureau of Planning prepared a 54-page Class 32 exemption report for a 24-story, mixed-use project with residential, retail, and restaurants on a previously developed half-acre site at 1700 Webster Street. This report included a detailed project description, CEQA categorical exemption and streamlining criteria, a CEQA exemption checklist demonstrating how this criteria has been met, and seven technical appendices ranging from transportation impact analysis to air quality and noise studies to a wind tunnel analysis. The report led to the planning staff’s December 2015 recommendation for approval and the Planning Commission’s subsequent approval. The project broke ground in the spring of 2017.

Taking Exception: How Unusual Are Unusual Circumstances?

Procedurally, Class 32 exemptions require a fraction of the process prescribed for standard CEQA review, with no required public review period, specific CEQA documents, or mitigation. Exceptions to the exemptions, however, add back in a measure of consideration to the process. (CEQA Guidelines, § 15300.2, subds. (b), (c)–(f).) Under these exceptions, the infill exemption cannot be used if the project would cause cumulatively significant impacts, impact scenic highways or historical resources, involve hazardous waste, or are subject to “unusual circumstances.” While these four exemptions lend themselves to relatively straightforward interpretation and have been largely uncontroversial, the “unusual circumstances” exception has been the subject of much litigation.

The “unusual circumstances” exception precludes the use of any categorical exemption when there is a “reasonable possibility” that the project “will have a significant effect on the environment due to unusual circumstances.” (CEQA Guidelines, § 15300.2 (c.).) In reviewing a lead agency’s determination as to whether the exemption applies and if the effects will be significant, the Supreme Court has applied a two-prong test wherein an agency must answer: (1) are there unusual circumstances? And if so, (2) would these unusual circumstances create a potential for significant impact? Further complicating the issue is the bifurcation of the standard of review that applies the “substantial evidence” standard to the first prong of the test and the “fair argument” standard to the second. Under the more deferential first prong, an agency may base its decision on substantial evidence, including conditions in the vicinity of the project. If it determines there is an “unusual circumstance,” then the “fair argument” standard requires an EIR when it can be fairly argued based on substantial evidence that “due to” the unusual circumstances of the project, it may have a significant effect on the environment. Both standards require substantial evidence in the record. And the question of whether a project qualifies for the Class 32 exemption in the first instance is subject to the more deferential “substantial evidence” threshold. (Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, 1114).

Given the above, a prudent agency using a Class 32 exemption should document its determination of whether any “unusual circumstances” are present and resulting potential significant effects (or presumably, the lack thereof) with applicable land use documents (zoning maps, general plans, etc.) and if warranted, some standard preliminary technical analysis (traffic, biology, noise, etc.). With these components on the record, as in the Oakland example, in conjunction with the issuance of an NOE, the outcome of legal challenges should be more favorable for cities and developers.

Conclusion

Although litigation for Class 32 exemption projects is always a possibility for development projects, with fulfillment of applicable CEQA criteria and requirements, agencies would be wise to consider the Class 32 exemption. Based on judicial trends, this exemption may be more likely to survive a legal challenge than a negative declaration at least in some jurisdictions. If these trends continue, over time challenges to these exemptions could even quieted by case law that supports agency discretion with the use of the Class 32 CEQA infill exemption, making it an increasingly viable option for agencies to speed up the development of much needed infill housing and other urban projects.

By: Casey Shorrock Smith