First District Court of Appeal Upholds Use of Class 3 Categorical Exemption for Utility Project in San Francisco

The First District Court of Appeal ordered publication of its opinion upholding San Francisco’s determination that a city-wide utility project was exempt from CEQA under the “Class 3” categorical exemption. The case, San Francisco Beautiful v. City and County of San Francisco (April 20, 2014) ___ Cal.App. ___, was published May 30, 2014.

The challenged project was AT&T’s proposal to install 726 metal utility boxes housing telecommunications equipment on San Francisco sidewalks in order to expand its fiber-optic network. San Francisco approved the project without requiring an EIR, based on its conclusion that the project fell within the “Class 3” categorical exemption described in CEQA Guidelines section 15303. Class 3 establishes exemptions for “[1] construction and location of limited numbers of new, small facilities or structures,” and “[2] installation of small new equipment and facilities in small structures.” (CEQA Guidelines, § 15303.) Among the examples of this exemption are “[w]ater main, sewage, electrical, gas, and other utility extensions, including street improvements, of reasonable length to serve such construction.” (Guidelines, § 15303, subd. (d).)

The petitioners argued that the project was not exempt under clause 1 of the Class 3 exemption because the 726 new structures were not a “limited number,” and that it was not exempt under clause 2 because it involved the construction and location of new structures, rather than the “installation” of equipment in existing small structures. The Court of Appeal disagreed, finding that under clause 2, the terms of the exemption were not limited to the installation of equipment in existing small structures. Rather, it determined that the Class 3 exemption can apply even when new structures are installed or constructed. Based on this determination, the court held that the city’s project fit into the Class 3 exemption. Because it found the project exempt on this basis, the court found it unnecessary to address the “limited number” argument.

The petitioners also claimed that, even if the Class 3 exemption applied, the city was still required to prepare an EIR because exceptions to the exemption applied. Specifically, they argued that the project would have a significant environmental effect due to unusual circumstances and would have cumulative impacts. (See CEQA Guidelines, § 15300.2, subd. (b), (c).) Regarding the unusual circumstances exception, the court determined that the petitioners identified no unusual circumstances relating to placement of the new utility structures in an urbanized area that already housed similar structures. The court also determined that, even if there were unusual circumstances, the petitioners failed to demonstrate that the project would have a significant environmental effect.  Notably, the court rejected the petitioners’ argument that residents’ views on the project’s aesthetic effects constituted evidence of a significant impact sufficient to trigger the need for an EIR.

The court acknowledged that the appropriate standard of review for the “unusual circumstances” exception is an issue currently pending before the Supreme Court (Berkeley Hillside Preservation v. City of Berkeley (S201116, rev. granted May 23, 2012). The court was careful to explain that its decision would be the same under either standard of review (“substantial evidence” or “fair argument”) and, therefore, it was not necessary for the court to determine that issue or any other issues that are before the Supreme Court in Berkeley Hillside.

The court also rejected the applicability of the cumulative impacts exception, explaining that the city did not have to consider the cumulative impact of all similar equipment to be installed throughout the city because the CEQA Guidelines instead limit the cumulative impact exception to successive projects of the same type in the same place. For the purposes of the utility boxes, the court found the “same place” meant the individual locations where the boxes would be placed.

Lastly, the court determined that the city had not improperly relied on mitigation measures in concluding the project was categorically exempt from CEQA. Although the city was required to review the utility cabinets to evaluate their potential to impede travel, inconvenience property owners, or otherwise disturb use of the right-of-way, that review is required by a Public Works Order, which is generally applicable to excavation permits for surface-mounted facilities. According to the court, this was not considered mitigation because an agency may rely on generally applicable regulations to conclude an environmental impact will not be significant and therefore does not require mitigation.