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.

Citizens for Environmental Responsibility v. State of California ex rel. 14th District Agricultural Association (Mar. 26, 2014) ___ Cal.App. ___, Case No. C070836.

On March 26, 2014, the Third District Court of Appeal affirmed the trial court’s denial of injunctive relief against a rodeo. Appellants, an environmental group concerned about possible water quality impairment due to manure runoff from the rodeo, claimed the 14th District Agricultural Association violated CEQA by approving an exemption from environmental review for a rodeo held at the Santa Cruz County Fairground in 2011. The District had found the rodeo exempt from CEQA review under the Class 23 categorical exemption for normal operations of existing facilities for public gatherings. Appellants argued that the Class 23 exemption did not apply here because (1) the rodeo project impermissibly included mitigation measures in its determination that the project was exempt, and (2) the unusual circumstances exception to the exemption applied. The Court of Appeal disagreed.

A Class 23 exemption covers “normal operations of existing facilities for public gatherings for which the facilities were designed, where there is a past history of the facility being used for the same or similar kind of purpose.” This means similar activity has been occurring for at least three years and there is a reasonable expectation that the project would not represent a change in operation of the facility. The court noted that the fairground had hosted dozens of livestock and equestrian events annually for decades. The court rejected appellants’ contention that the exemption was impermissibly premised on proposed mitigation measures. The alleged mitigation measures, which dealt with manure disposal, had been in place years before the proposed rodeo, and had been formalized in a manure management plan in 2010. Thus, the court found that the plan was not a new measure proposed for or necessitated by the rodeo project, and was instead part of the ongoing “normal operations” of the fairground.

Finding that no mitigation measure precluded application of a categorical exemption, and finding that the Class 23 categorical exemption applied to the project, the court turned to appellants’ second argument that the rodeo fit within the unusual circumstances exception to the exemption.

The court laid out a two-part test for the unusual circumstances exception: first, determine whether the project presents unusual circumstances. If there are unusual circumstances, the court then determines whether there is a reasonable possibility of a significant effect on the environment due to the unusual circumstances. In assessing whether the rodeo project presented any unusual circumstances, the court looked at whether the circumstances of the project differed from the general circumstances of projects covered under the exemption. The court found that the rodeo did not represent a change in the operation of the fairground, as the project was no different in nature and scope from previous fairground events. In addition, appellants did not provide any evidence that a “normal” fairground would operate any differently. Because the court found no unusual circumstances, it did not reach the second issue of whether there was a reasonable possibility of a significant effect on the environment due to such circumstances.

The First District Court of Appeal considered a legal challenge brought against an ordinance enacted by the Marin County Board of Supervisors in Save the Plastic Bags Coalition v. County of Marin (2013) __Cal.App.4th __ (Case No. A133868). The ordinance prohibited certain retail establishments from providing single-use plastic bags and imposed a minimum fee for the distribution of single-use paper bags. The County determined the ordinance was categorically exempt from CEQA because it was a regulatory action designed to assure the maintenance, restoration, enhancement, or protection of natural resources and the environment. Both the trial court and Court of Appeal upheld the County’s determination.

Facts and Procedural Background

The Marin County Board of Supervisors adopted the challenged ordinance in 2011. This ordinance was intended to encourage retail customers to bring reusable bags for their shopping and applied to approximately 40 retail stores within the unincorporated county selling food or perishable items. The ordinance excluded restaurants and other establishments selling prepared foods.

The ordinance was proposed by the county’s agricultural commissioner who provided analysis to the Board of Supervisors which showed that single-use plastic and paper carryout bags have adverse environmental impacts throughout the state. According to the agricultural commissioner’s analysis, a shift to reusable bags would conserve resources, reduce the amount of greenhouse gas emissions associated with the production of single-use bags, reduce waste and marine pollution, protect water resources and water quality, and enhance the quality of life for county residents, visitors, and wildlife.

Among other things, the commissioner relied on a master environmental assessment prepared by Green Cities California in which it was reported that a ban on single-use plastic bags combined with a five-cent charge for single-use paper bags in the District of Columbia had caused as many as two-thirds of consumers to shift from single-use to reusable bags. From this information, the commissioner concluded that a ban on plastic bags combined with a minimum charge on paper bags would rebut any claim that the ordinance would simply shift consumer’s habit from one environmental impact to another (single-use plastic to single-use paper). Based on this finding, the county concluded that the ordinance was categorically exempt from CEQA “by demonstrating and achieving a result that is environmentally superior: moving people to reusable bags and reducing waste from all single-use products.” The county did not identify which categorical exemption it was relying on under CEQA.

During the hearing process on the ordinance, the Plastic Bag Coalition submitted numerous objections. The Coalition primarily argued that adoption of the proposed ordinance required preparation of an EIR because alternatives (paper bags and reusable bags) are worse for the environment than plastic bags. Despite the Coalition’s objections, the County Board of Supervisors adopted the ordinance.

Plaintiff filed a petition for writ of mandate in the Marin County Superior Court. The trial court denied the petition and determined that substantial evidence supported the County’s reliance on the categorical exemptions contained in CEQA Guidelines sections 15307 and 15308. The Coalition appealed.

The Court of Appeal’s Decision

The Court of Appeal first described the standard of review applicable to its review of this case. Where an agency concludes a project is categorically exempt from CEQA, that conclusion will be upheld if supported by substantial evidence in the administrative record. Once an agency has established that the project falls within an exemption, the burden falls to the party challenging the exemption to prove that the project is not exempt because it falls within one of the exceptions listed in CEQA Guidelines, section 15300.2. The court noted that, currently, a split of authority exists on the appropriate standard of review (substantial evidence vs. “fair argument”) to apply to a question of fact regarding any exceptions that would kick a project out of exempt status. The court declined to grapple with this split, as it determined the outcome in the case before it would be the same either way.

The Court of Appeal also drew on the California Supreme Court’s decision in Save the Plastic Bag Coalition v. City of Manhattan Beach. The Court of Appeal noted that the Manhattan Beach case involved preparation of a negative declaration for a plastic bag ban ordinance rather than an exemption, but it still found the Supreme Court’s analysis instructive. In Manhattan Beach, the Supreme Court focused on the distinction between local impacts created by a proposed project and impacts that would occur outside the public agency’s geographic boundary. The Supreme Court noted that there might be circumstances when more comprehensive environmental review will be required if it can be shown that a plastic bag ban will result in a significant increase in paper bag use, but that wasn’t the case in Marin County. Marin County’s ordinance applied to roughly 40 stores, compared to over 200 stores affected by Manhattan Beach’s ordinance. The Supreme Court had noted the description of the broader impacts of increased paper bag use in Manhattan Beach to be insubstantial, and the First District Court found the impacts in Marin County to be even more trivial. Here, there were significantly fewer retailers and a fee would be charged for paper bags, thereby increasing the incentive for consumers to bring reusable bags when shopping. No such fee was required by the Manhattan Beach ordinance.

The Court of Appeal then considered the Coalition’s primary argument that the county could not rely on the categorical exemption under CEQA Guidelines sections 15307 and 15308 [Class 7 and 8] because such exemptions are available only to “regulatory agencies implementing regulations authorized by a preexisting state law or ordinance.”  As an initial matter, the Court found that, though the Coalition had not raised the claim during the administrative process, the claim was not barred by a failure to exhaust. Citing another California Supreme Court Case, Tomlinson v. County of Alameda, the court noted that exhaustion is required so long as the public agency gives notice of the grounds for its exemption determination and holds a public hearing where members of the public have the opportunity to weigh in. In this case, county counsel did not identify the basis for the claimed exemptions until a continued hearing on the project.

On the merits, the Coalition argued (without citation to authority, as noted by the court) that legislative actions, such as the enactment of an ordinance, are never exempt from CEQA under Class 7 and 8 because these exemptions apply only to regulatory agencies. But the court acknowledged that the county’s adoption of the ordinance was an exercise of regulatory power provided to it by the California Constitution. The court stated that the “ordinance constitutes a regulation enacted for the purpose of protecting natural resources and the environment.” Having found the county could properly rely on the Class 7 and Class 8 exemptions, the court concluded the Coalition failed to address the substantial evidence relied upon by the County to support its determination that the exemption applied. The Coalition therefore failed to meet its burden to demonstrate that the exemption was not supported by substantial evidence or that an exception would apply to invalidate the exemption. The Court of Appeal affirmed the trial court’s judgment upholding the County’s adoption of the ordinance banning single-use plastic bags.