Tag: exemption

Fifth District Holds Interim Renewal Contracts for Central Valley Project Water are Exempt from CEQA

Even though the renewal contracts have expired, and thus the case was moot, the Court of Appeal nevertheless resolved the case, finding the renewal contracts both statutorily and categorically exempt from CEQA. In North Coast Rivers Alliance v. Westlands Water District, Case No. F067383 (July 3, 2014), the Fifth District Court of Appeal upheld the Westlands Water District’s interim renewal contracts with the United States Bureau of Reclamation, which continued the existing terms for water delivery from the Central Valley Project (CVP.) The court upheld the District’s findings that the interim contracts fell under the statutory exemption for ongoing pre-CEQA projects as well as the categorical exemption for the continued operation of existing facilities.

Westlands Water District and its related distribution districts serve more than 600,000 acres of farmland in San Joaquin Valley, and have a right to receive over one million acre-feet of water per year from the CVP, due to water service contracts that have been in place with the Bureau of Reclamation since the 1960s. In 2012, the Bureau and the water districts entered into two-year contracts to renew the districts’ contractual rights to receive CVP water, during which time the Bureau was set to complete the environmental review required for 25-year renewal contracts.

The water districts found that the renewals were statutorily and categorically exempt from CEQA because they involved ongoing receipt and delivery of water on identical terms as the prior water service contracts, with no expansion of service and no new facilities, and any changes related solely to minor administrative matters.

The court first rejected the water districts’ assertion that the renewal contracts were statutorily exempt under the statutory exemption for rate-setting activities under Public Resources Code section 21080, subdivision (b)(8). The court found no evidence that the renewal contracts involved any rate-setting activity.

But the court did uphold the water districts’ conclusion that the renewal contracts were statutorily exempt as ongoing projects approved before CEQA was enacted. (See CEQA Guidelines, § 15261 subd. (a).) The court found that the original contracts and construction of facilities predated CEQA’s enactment in November of 1970. Any assignment agreements and renewals entered into after CEQA’s enactment, the court found, did not result in an expansion or material modification of the underlying activity that was initially approved; rather, the agreements merely facilitated the districts’ ability to receive a stable and adequate water supply within the scope of the original project.

The court found that the renewal projects also came within the categorical exemption for operation of existing facilities. (CEQA Guidelines, § 15301.) Categorical exemptions, unlike statutory exemptions, are subject to exceptions. While the courts of appeal disagree on whether a fair argument standard or substantial evidence standard applies to exceptions, the court here found the disagreement irrelevant because it would reach the same conclusion under either standard.

Petitioners first argued that “unusual circumstances” exception applied. The court, however, agreed with the water districts that the project did not involve unusual circumstances because it was not uncommon for utility-type public agencies to have large-scale facilities operating at a large volume and to impact the environment to some extent simply by existing and functioning as utilities. The court noted that even if the large scale of the water diversion at issue constituted unusual circumstances, as petitioners argued, petitioners would still have to establish that there was a reasonable possibility the activity will have a significant effect on the environment due to such circumstances. Using the established levels of operations as the baseline, the court concluded there was insufficient evidence that there would be a substantial adverse change from the environmental baseline, and thus the exception did not apply. The court also rejected petitioners claim that the renewal contracts fell within cumulative impacts exception to the exemption. The court stated that the present litigation was not the proper time for petitioners to raise the cumulative-impact claim because the short-term interim renewal contracts did not constitute “successive projects of the same type” and therefore did not fit within the definition of the exception.

Second District Court of Appeal Finds Museum Remodel Exempt from CEQA

Highland Park Heritage Trust v. City of Los Angeles, Case No. B242930 (Feb. 18, 2014), unpublished

On February 18, 2014, in an unpublished decision, the Second District Court of Appeal denied petitioners’ request to set aside approval of the Autry Museum’s internal remodeling project. The court held the city of Los Angeles did not abuse its discretion in determining the project was exempt from CEQA.

In 2003, the Autry Museum merged with the Southwest Museum and thereafter discovered that the Southwest site was unsuitable for housing the museum collection. Autry decided to move the collection from the Southwest’s Arroyo Campus in Mount Washington to Autry’s Griffith Park Campus. At first, Autry intended to expansively extend the external footprint of its museum, but withdrew the plan after it was met with public controversy and delays. Autry replaced this proposal with a less ambitious plan to replace 18,000 square feet of the first floor of the museum. The City of Los Angeles approved this new project and determined it was categorically exempt from CEQA. The state later awarded Autry a $6.6 million grant to redesign the interior of the Griffith Park Museum.

Local residents and preservationists sought to set aside the approved collection relocation, claiming that the city had a duty to support the Southwest Museum as a cultural resource and preserve the Arroyo Campus location. Petitioners claimed that the project was not exempt under CEQA, and that the project was improperly piecemealed from a greater project. The trial court held for the city, and petitioners appealed.

The Court of Appeal held that whether the project could be considered a piecemealed section of a larger project was irrelevant where the project was exempt from CEQA. Under Class 1 exemptions, certain projects involving interior alterations to an existing facility are categorically exempt from CEQA, unless they fall under an exception whereby there are unusual circumstances creating a reasonable probability that the activity would have a significant impact on the environment. The court found no such exception here. The court held that moving the artifacts from the Southwest collection to the Autry Museum would not have a significant impact on the geographic environment of that museum or its surroundings, and the objects themselves were not site-specific to the Arroyo location. The court also held that the project was not inconsistent with the Northeast Los Angeles Community Plan because the plan’s goal to preserve and protect the Southwest museum pertained to the building itself rather than its contents. Thus, the city had not abused its discretion in approving the project.

Sixth District Finds CEQA Action Barred by 30-Day Statute of Limitations in Government Code Section 65457, Which Prevails Over an Earlier-Enacted and Less-Specific Statute of Limitations in CEQA That May Conflict

In May v. City of Milpitas (2013) __Cal.App.4th__ (Case No. H038338), a California Environmental Quality Act (CEQA) challenge was found time-barred by a 30-day statute of limitations in the Government Code even though appellants argued that a 35-day statute of limitations in CEQA should control.  The Sixth District Court of Appeal affirmed the trial court’s decision to sustain the city’s demurrer on the basis that the later-enacted and more-specific statute of limitations in Government Code section 65457, which provided an exemption applicable to the residential development project, must prevail over a statute of limitations in CEQA that may conflict.

Facts and Procedural Background

The City of Milpitas certified a programmatic Environmental Impact Report (EIR) for the Transit Area Specific Plan on June 3, 2008.  Three years later, a 732-unit condominium project was proposed within the area covered by the Transit Area Specific Plan.  On November 1, 2011, the city adopted a resolution approving amendments to permits and a tentative map for the residential development project.  The city’s resolution also found the project to be exempt from CEQA review because it was consistent with the 2008 specific plan and did not have any significant effects on the environment.  On November 3, 2011, the city filed a Notice of Exemption (NOE) for the project.  Both the resolution and the NOE expressly reference CEQA Guidelines section 15168, subdivision (c)(2), and section 15061, subdivision (b)(3).

On December 7, 2011, petitioners Michael May and Carpenters’ Local Union No. 405 filed a CEQA challenge to the city’s approval of the resolution on November 1, 2011. The city and real parties in interest demurred on the ground that the action was time-barred by the 30-day statute of limitations under Government Code section 65457, subdivision (b), and CEQA Guidelines section 15182. The petitioners argued that the action was not time-barred because the filing of the NOE triggered the 35-day statute of limitations in Public Resources Code section 21167, subdivision (d), and CEQA Guidelines sections 15112 and 15062 instead. The trial court sustained the demurrer, finding that Government Code section 65457 governed, and the November 1, 2011 approval had triggered the 30-day limitation period in section 65457.

Court of Appeal’s Decision

The court began its discussion with an overview of CEQA, the application of exemptions to projects, and the “usual limitations periods for CEQA challenges” provided by Public Resources Code section 21167.  In particular, the court emphasized that even meritorious lawsuits may be time-barred because the legislative intent behind CEQA and section 21167 was to ensure “extremely prompt resolution” of legal challenges brought under CEQA.

Proceeding to the merits, first the court explained why the 30-day statute of limitations in Government Code section 65457 controls. Enacted in 1984 as part of the Planning and Zoning Law, Government Code section 65457 provides an exemption from CEQA for residential development projects that are consistent with a specific plan for which an EIR was certified after January 1, 1980.  Section 65457 only provides a qualified exemption, however, because a supplemental EIR for the specific plan must be prepared if any event listed in Public Resources Code section 21166 occurs.  Therefore, if substantial changes to the specific plan occur, or substantial changes to the circumstances surrounding the specific plan occur, or new information that could not have been known at the time the specific plan’s EIR was certified becomes available and major revisions to the EIR are required, then a supplemental EIR for the specific plan must be certified before section 65457’s exemption may be used for the residential development project.

Under subdivision (b) of Government Code section 65457, where a public agency approves a project using the exemption in section 65457, a legal challenge alleging that a supplemental EIR for the relevant specific plan was required must be filed within 30 days of the agency’s decision to “carry out or approve the project.”  This limitations period is mirrored in CEQA Guidelines section 15182, subdivision (e).

The court found that the City’s resolution factually invoked Government Code section 65457’s exemption and that the petition essentially alleged that a supplemental EIR for the 2008 specific plan is required because substantial changes to the circumstances have occurred and new information has come to light.  Although neither the resolution nor the NOE explicitly references section 65457, the court concluded that the resolution invoked section 65457’s exemption because it stated that the project was “consistent with the certified EIR for the Transit Area Specific Plan.”  The court also found that the resolution’s reference to CEQA Guidelines section 15168, subdivision (c)(2), implied that the City had concluded no events listed in Public Resources Code section 21166 had occurred.  Similarly, the court found that the resolution’s reference to CEQA Guidelines section 15061, subdivision (b)(3), reflected the City’s conclusion that the residential development project would not cause any new environmental effects.

Having established that Government Code section 65457 applied, the court found that the 30-day statute of limitations under subdivision (b) of section 65457 had started running upon the City’s decision to approve the project on November 1, 2011. Consequently, the trial court properly sustained the demurrer because the action filed on December 7, 2011 was time-barred.

Then, the court turned to the reasons why it rejected appellants’ arguments.  The court noted that appellants’ argument that they are requesting a “free-standing EIR” or a mitigated negative declaration (MND) for the development project, not a supplemental EIR for the 2008 specific plan, was in conflict with their petition’s factual allegations and ignored the appropriate use of tiering allowed by CEQA.  To support its conclusion, the court provided a brief examination of the legislative history of Government Code section 65457 and its predecessor former section 65453 to establish that the purpose of section 65457 is to excuse residential development projects from having to do a “free-standing EIR” or MND if they are consistent with a prior-approved specific plan.

The court also set forth reasons why Public Resources Code section 21167, and CEQA Guidelines sections 15062 and 15112 do not apply.  Public Resources Code section 21167, subdivision (d), provides a 35-day statute of limitations that runs from the filing of a NOE in actions alleging that a public agency has improperly determined that a project is not subject to CEQA pursuant to section 21080.  The court found section 21167 did not apply because the exemptions listed in section 21080 do not include Government Code section 65457.  In particular, the court noted that the exemption applied in this case was not one of the 33 categorical exemptions designated pursuant to of Public Resources Code section 21084 and specifically referenced by section 21080, subdivision (b)(9).  Therefore, the 35-day statute of limitations in section 21167 could not be controlling.

Regarding CEQA Guidelines section 15062, which provides a 35-day statute of limitations triggered by the filing of a NOE where a public agency finds a project exempt pursuant to section 15061, the court similarly concluded that section 15062 did not apply because Government Code section 65457 does not fall within the scope of exemptions described by CEQA Guidelines section 15061.  Concluding that section 15062 did not apply, the court also rejected the argument that the 35-day limitations period in CEQA Guidelines section 15112, subdivision (c)(2), applied because section 15112, subdivision (c)(2), only applies to situations where a NOE is filed in compliance with section 15062.

Finally, the court held that, to the extent any conflict existed between the statute of limitations in Government Code section 65457 and statutes of limitations in CEQA, the later-enacted and more specific statute of limitations controls.  Since Government Code section 65457 and Public Resources Code section 21167 both apply to CEQA challenges, they are equally specific to CEQA claims.  Therefore, because Government Code section 65457 was enacted after Public Resources Code section 21167, the statute of limitations in the former must prevail.

First District Court Of Appeal Upholds City’s Application of Exemption for Residential Development Consistent with a Specific Plan for Which an EIR Was Certified

On March 28, 2013, following a publication request submitted by James G. Moose, of Remy Moose Manley, LLP, the First District Court of Appeal ordered published its decision in Concerned Dublin Citizens v. City of Dublin (2013) ___Cal.App.4th___, Case No. A13570. The case is the first published decision to address the exemption from environmental review set forth in Government Code section 65457. That section provides an exemption from environmental review for a residential development that is consistent with a broader specific plan for which an EIR has been certified.

Background: In 2002, the City of Dublin approved the Eastern Dublin Specific Plan for the Dublin Transit Village Center development, a high-density mixed-use, transit and pedestrian-oriented development adjacent to the Bay Area Rapid Transit’s East Dublin/Pleasanton Station. The specific plan includes a “stage 1” development plan that establishes the permitted land uses and development standards for future development projects within the transit center. The city also certified a final EIR for the project.

The EIR for the specific plan was prepared as a program EIR, pursuant to CEQA Guidelines section 15168. It described general impacts and mitigation measures for, among other things, the specific plan stage 1 development plan. Under the stage 1 development plan, the parcel at issue in this case was designated as “site C” and was to include a maximum of 405 high density residential dwelling units and up to 25,000 square feet of retail space.

In 2011, following rescission of two previous proposals, Avalon Bay Communities submitted a proposal for development of site C. The planning commission approved the proposed site development review and map and recommended the city council approve the stage 1 development plan amendment, a stage 2 development plan, and a development agreement. The planning commission found the project was exempt from CEQA under Government Code section 65457, as a residential project that is consistent with a specific plan for which an EIR was certified. The organization Concerned Dublin Citizens (CDC) appealed the planning commission’s decision to the city council and the city council affirmed. CDC thereafter filed a petition for writ of mandate in the Alameda Superior Court challenging the exemption from environmental review. The superior court denied the petition and CDC appealed.

Residential Development. The Court of Appeal first considered CDC’s argument that the project is not a “residential development” and therefore the exemption under Government Code section 65457 could not apply. CDC acknowledged that the development as then-proposed included only residential units, but contended that the project is nonetheless a mixed-use development because the specific plan, the development plans, and the development agreement authorize up to 25,000 square feet of commercial usage in site C.

CDC argued that because Avalon Bay retains the option to convert 25,000 square feet of residential uses to retail space, the project falls outside the scope of the exemption. The Court of Appeal rejected this argument, explaining that the city code approval process for the project makes it clear that any future retail use on the project site will be subject to further discretionary review in the form of an amendment to the site development review approved for the project. As such, the only project that has been approved by the city for site C at this time is the development of residential uses.

The court further explained that the fact that the property is zoned for mixed-use does not convert the otherwise purely residential project into a mixed-use project. Avalon Bay is not entitled to develop retail property simply because such use would be consistent with zoning requirements. Further, the specific plan contemplates that before any use of the property is approved, there will be compliance with the site development process, which includes compliance with applicable environmental review. Therefore, approval of the project did not constitute approval of retail uses within site C, and the city properly characterized the project as “residential development” within the meaning of section 65457.

Specific Plan Consistency. CDC argued that in two respects the project is inconsistent with the transit center specific plan for which the EIR was certified. First, it contended that because the specific plan calls for mixed-use, the project must also be a mixed-use plan. According to CDC, the inclusion of ground-floor retail is integral to the transit center’s goal of creating a pedestrian-friendly environment, and if the city deleted the retail uses from area C, then the project would be inconsistent with the specific plan. The court disagreed.

The court explained that while the transit center is designed for mixed-use, commercial development in site C is not required by the specific plan. Further, the specific plan states only that retail uses are encouraged, not required. Thus, the absences of retail space did not render the project inconsistent with the specific plan.

Second, CDC contended that because the EIR for the specific plan was a program-level EIR, a tiered-project-specific EIR necessarily was required to follow the program EIR. The court found this argument to be without legal support. Contrary to CDC’s contention, nothing in the CEQA statute or Guidelines mandates a particular level of environmental review in evaluating later projects within the scope of a certified program EIR. Although in some cases, it will be necessary to prepare a negative declaration and in others to prepare a full EIR, in others, the analysis will be completed by determining that the subsequent project is exempt from further analysis under CEQA—as was the case here.

Section 65457 Qualification to the Exemption. Lastly, the court held that the qualification to the Government Code section 65457 exemption did not apply. Government Code section 65457 provides that the exemption does not apply if, after certification of the program EIR, an event specified in Public Resources Code section 21166 (requiring preparation of a supplemental EIR) has occurred, “‘unless and until a supplemental environmental impact report for the specific plan is prepared and certified.’” Thus, explained the court, the qualification to the section 65457 exemption turns on whether, after certification of the EIR, circumstances have changed to the extent that reliance on the EIR is unwarranted. Here, the court found that substantial evidence supported the city’s determination that the circumstances requiring additional environmental review of the transit project were not present. Therefore, the qualification to the application of the Government Code section 65457 did not apply.

Fifth District Holds CEQA Review Is Required Where A Lead Agency, Without Holding An Election, Chooses To Approve A Project Submitted To It By Initiative Petition

The Fifth District Court of Appeal in Tuolumne Jobs & Small Business Alliance v. Superior Court (2012) 210 Cal.App.4th 1006, has held that a city council’s decision to approve a development project under Elections Code section 9412, subdivision (a), is not a ministerial decision and does not exempt the project from the California Environmental Quality Act (CEQA). Where a lead agency approves a project by adopting the text of a voter initiative as an ordinance instead of holding a special election under Elections Code section 9412, subdivision (b), CEQA review is necessary. The court acknowledged creating a split of authority because it did not follow Native American Sacred Site & Environmental Protection Assn. v. City of San Juan Capistrano (2004) 120 Cal.App.4th 961, and certified the relevant portion of the case for partial publication.

Background

Wal-Mart sought to expand an existing store in Sonora and make it into a Wal-Mart Supercenter. The city prepared an environmental impact report (EIR), but postponed its vote on the EIR when it received notice of an initiative petition seeking to approve the construction and operation of the supercenter. On October 18, 2010, the city council held a public hearing to consider the Wal-Mart initiative. After the public hearing, the city council voted to adopt the text of the initiative as an ordinance even though the EIR had not been certified.

Tuolumne Jobs & Small Business Alliance filed a writ of mandate in trial court alleging a violation of CEQA. The trial court sustained a demurrer filed by Wal-Mart with respect to three of the four causes of action. Petitioner then filed a writ of mandate with the appellate court seeking to vacate the superior court’s order sustaining the demurrer. The Fifth District Court of Appeal stayed the trial court proceedings while it considered the petition.

The Court of Appeal’s Decision

As a preliminary matter, the court discussed the grounds for writ relief and the standard of review for demurrers. Then the court turned to the main question of law before it: whether CEQA review is required when a lead agency approves a project by adopting as an ordinance the text of a voter initiative with signatures of at least 15 percent of the jurisdiction’s registered voters.

First, the court noted that “the prerogatives of the electorate when exercising its right of initiative must not be thwarted by procedural constraints” in CEQA or other state laws. Furthermore, the voters’ power to approve an initiative in an election is protected by the California Constitution and cannot be undermined by state laws without clear legislative intent to preempt that power. The court thus framed its interpretation of the statutory language in Elections Code section 9214 as an exercise in selecting a construction that most closely achieves legislative intent.

Second, the court laid out the legal implications of the holding in Friends of Sierra Madre v. City of Sierra Madre (2001) 25 Cal.4th 165, that CEQA review is required even if an election is held where a public agency was the entity that chose to put the initiative on the ballot. The court quoted CEQA Guidelines section 15378, subdivision (b)(3), which was amended after the  Friends of Sierra Madre decision to establish that submittals of voter initiatives not sponsored by a public agency are not “projects” as defined by CEQA, but CEQA review is required for those initiatives that are sponsored by a public agency. The court used section 15378 and the holding in Friends of Sierra Madre to conclude that CEQA clearly applies when a city council approves a project without an election after a “mere 15 percent of voters” expressed support of the initiative.

The court then dismissed arguments that the voters’ constitutional power of initiative or the ministerial-projects exemption would support finding the project was excused from CEQA review. The court found that the city’s decision not to submit the initiative to the voters was a policy decision and an exercise of agency discretion that deprived the voters of the opportunity to make the final decision.

Finally, the court discussed why it chose not to follow Native American Sacred Site & Environmental Protection Assn. v. City of San Juan Capistrano. The court in Native American Sacred Site had held that an agency’s decision to approve a project via adoption of an initiative without holding an election is ministerial because the city was bound by Elections Code section 9414 to either adopt a qualified voter-sponsored initiative or to place it on the ballot. The Fifth District Court of Appeal disagreed, concluding that an agency’s policy decision between two choices is discretionary, even if the agency has a mandatory duty to make a choice. Moreover, it found a crucial distinction between the situation where a city is being compelled to hold an election because it failed to act on a petition and the situation where the city chooses to adopt the initiative without submitting it to the voters in an election. Therefore, the court held that CEQA review is required where a lead agency chooses to approve a project submitted to it by voter initiative under Elections Code section 9214, subdivision (a).

Third District Court of Appeal Holds That an Agreement to Provide Water to a Casino Triggered the Unusual Circumstances Exception to the Small Projects Categorical Exemption and Finds Evidence the Project May Exacerbate the Environmental Consequences of a Drought

On October 4, 2012, the Third District Court of Appeal in Voices for Rural Living v. El Dorado Irrigation District (2012) ___ Cal.App.4th ___ (Case No. C064280), affirmed the trial court’s judgment voiding the El Dorado Irrigation District’s approval of an agreement to provide water to a casino on tribal land. The appellate court held the irrigation district’s approval of the agreement did not qualify for the small projects categorical exemption because the project triggered the unusual circumstances exception, and the record contained evidence upon which a fair argument could be made that the project could have significant environmental impacts during a drought. The appellate court reversed the judgment in part and directed the trial court to order the irrigation district to conduct further California Environmental Quality Act (CEQA) proceedings because the trial court should not have mandated the irrigation district to prepare an environmental impact report (EIR). 

In 1987, the Shingle Springs Band of Miwok Indians and the El Dorado Irrigation District entered an annexation agreement to bring 160 acres of tribal land into the district’s service area. In 1989, the El Dorado County Local Agency Formation Commission (LAFCO) conditioned its approval of the annexation by restricting the land to residential uses and authorizing the district to supply only enough water for 40 residential lots or less. Subsequently, the tribe proposed building a casino and hotel on the annexed land. After deciding that the LAFCO conditions were invalid, the irrigation district approved an agreement on May 28, 2008, to provide the tribe with more water than LAFCO had authorized. The district then issued a notice of exemption stating the project was categorically exempt under the class 3 exemption for new construction or conversion of small structures. Voices for Rural Living challenged the approval of the agreement and alleged violations of CEQA and the LAFCO Act. The trial court granted the petition for writ of mandate and ordered the district to set aside its approval and to prepare an EIR. The tribe and Voices for Rural Living appealed the trial court’s judgment, raising different arguments. 

The appellate court first reviewed the irrigation district’s determination that the project did not trigger the unusual circumstances exception to the class 3 categorical exemption. As a preliminary matter, the court applied the de novo standard of review and concluded the project did present unusual circumstances because providing water to a casino and hotel greatly differed from providing water to a single family residence, the type of project typically covered by the class 3 categorical exemption. 

Then the court applied the fair argument standard to the question of whether there is a reasonable possibility of a significant effect on the environment due to the unusual circumstances, despite acknowledging a split of authority as to whether the less deferential fair argument standard or the more deferential substantial evidence standard should be employed. The court found there was evidence in the record upon which a fair argument could be made that the project may exacerbate the environmental consequences of a drought. The court noted that the irrigation district had failed to consider the effect of climate change on possible shortages during a drought. Additionally, the court found the record lacked sufficient information regarding how the irrigation district would, during a drought, be able to meet its customer demands as well as new in-stream flow requirements, imposed by the Federal Energy Regulatory Commission on a portion of the American River from which the district is entitled to receive water. 

Finally, the court held the irrigation district must comply with the LAFCO conditions because the irrigation district was not vested by the California Constitution or by statute with the authority to determine the validity or constitutionality of LAFCO’s annexation conditions. The court explained that even if the LAFCO conditions were unconstitutional and preempted by federal law, they must be deemed valid and binding until a proper court of law enjoins their enforcement.  (Elizabeth Sarine)

SB 973: “Save Our Events” Act would exempt annual fireworks displays

Senate Bill 973, otherwise known as the “Save Our Events” Act, would exempt annual fireworks displays from CEQA. The CEQA Guidelines include a list of project classes that have been determined not to have a significant effect on the environment. SB 973 authorizes a lead agency to grant, on an annual basis, one categorical exemption per site for a fireworks display. The bill would thereby impose a state-mandated local program. SB 973 would authorize the office of Planning and Research to identify potential environmental issues related to fireworks displays and to develop guidelines to assist local agencies regarding those displays.

According to Senator Juan Vargas, who fought to pass the bill, “CEQA was not created to allow frivolous lawsuits to ban family and charitable events like parades and fireworks on the Fourth of July.” However, the bill’s narrowness may be fatal to its support. The limited application of SB 973 was intended to be a temporary, politically palatable compromise during negotiations, but Vargas and other supporters now say that if they cannot get broader exemptions they would rather abandon the bill.

First District Applies “Unusual Circumstances” Exception to Strike Down Application of Categorical Exemption to Construction of Single-Family Residence

 Berkeley Hillside Preservation et al., v. City of Berkeley et al., (Feb. 15, 2012) __Cal.App.4th__ (Case No. A131254) 

(May 23, 2012, Petition for Review granted; CA Supreme Court Case No. 201116)

On February 15, 2012, the First District Court of Appeal ruled that the City of Berkeley violated CEQA when it approved the construction of a single-family residence based on a determination that the project qualified for a categorical exemption.  Applying the “fair argument” standard to its review of the City and trial court’s contrary conclusion, the court held that an exception to the categorical exemption applied because substantial evidence of a fair argument that the project would have significant environmental impacts had been presented. 

Factual and Procedural Background 

In 2009, a property owner filed an application for a use permit with the City of Berkeley to demolish a single-family dwelling on a 30,000-square-foot lot in Berkeley and replace it with a new home. The application indicated the new dwelling would be a 6,478-square-foot home with an attached 3,394-square-foot garage on a Berkeley hillside. 

Berkeley’s Zoning Adjustment Board approved the project without requiring an EIR because it found that the proposed construction was categorically exempt from CEQA pursuant to CEQA Guidelines sections 15332 (In-Fill Development Projects) and 15303, subdivision (a) (New Construction or Conversion of Small Structures, single-family residence). The board determined that the proposed project did not trigger any of the exceptions to the exemptions under CEQA Guidelines section 15300.2. Specifically, the board concluded that the “unusual circumstances” exception did not apply because the proposed construction would not have any significant effects on the environment due to “unusual circumstances.” 

An appeal was filed with the board, arguing that the unusual circumstances exception should apply because the proposed dwelling would be one of the largest houses in the city.  The city responded to the appeal with its own evidence of comparable sized “dwellings” in the city and the project vicinity. Appellants further challenged the board’s finding that the proposed construction was categorically exempt from CEQA, arguing the project’s unusual size, location, nature and scope may have a significant impact on its surroundings and therefore that an EIR was required to evaluate the proposed construction’s potential impact on noise, air quality and neighborhood safety. 

The city received numerous letters supporting and opposing the appeal. One letter supporting the appeal was submitted by a geotechnical engineer specializing in foundation engineering and construction.  The engineer argued that the project would require significant grading and extensive trucking operations and concluded the project would likely have significant environmental impacts.  A geotechnical engineer for the project proponent disagreed with these findings, noting that the opposing engineer appeared to have relied upon incorrect, outdated project plans and presented evidence that the project would not have a significant impact. 

After receiving a supplemental report and hearing arguments from both sides, the city adopted the findings made by the board, affirmed the decision not to require an EIR, and approved the use permit.  Appellants filed a petition for writ of mandate, which the trial court denied after concluding that there was substantial evidence in the administrative record to support the city’s determination that the infill and new construction categorical exemptions applied to the proposed construction. 

The trial court denied the writ despite finding that the project presented unusual circumstances and finding that the proposed construction would cause significant environmental impacts. The trial court applied a two-part test established in Banker’s Hill, Hillcrest, Park West Community Preservation Group v. City of San Diego (2006) 139 Cal.App.4th 249, 278. Under Banker’s Hill, when considering whether to apply the “unusual circumstances” exception, a court is required to determine: (1) whether the project presents “unusual circumstances” and (2) whether there is a reasonable possibility of a significant effect on the environment due to the unusual circumstances.” (Banker’s Hill, Hillcrest, Park West Community Preservation Group v. City of San Diego, supra, 139 Cal.App.4th 249, 278 (original italics).)  In emphasizing that each step is an independent element, Banker’s Hill stated that, “[a] negative answer to either question means the exception does not apply.” (Id.)  Applying this test, the trial court held that, although there were unusual circumstances were present and the project could have significant impacts, the proposed construction did not trigger the exception to the exemptions because the possible significant impacts were not due to the unusual circumstances. 

Court of Appeal Decision 

On appeal, Appellants conceded that the proposed construction was subject to the two CEQA categorical exemptions. Appellants argued, however, that the “unusual circumstances” exception to the exemptions should apply. CEQA Guidelines section 15300.2, subdivision (c), provides that an activity which would otherwise be categorically exempt is not exempt if there are “unusual circumstances” which create a “reasonable possibility” that the activity will have a significant effect on the environment.  

The Court of Appeal reversed the trial court’s decision denying the writ.  It held that where there is substantial evidence that a proposed activity may have an effect on the environment, an agency is precluded from applying a categorical exemption. “The fact that proposed activity may have an effect on the environment is itself an unusual circumstance, because such action would not fall ‘within the class of activities that does not normally threaten the environment,’ and thus should be subject to further environmental review.” 

The Court of Appeal found Appellants had presented substantial evidence of a fair argument that the proposed construction would have a significant effect on the environment.  This alone was enough for the unusual circumstances exception to apply.  The court relied heavily on the letter submitted by the geotechnical engineer in opposition to the project. The court noted contrary evidence was not adequate to support a decision to dispense with an EIR.  As a result of the substantial evidence in the record supporting a fair argument that the project would have a significant impact, the application of a categorical exemption was inappropriate. The Court of Appeal, therefore, ordered the prior judgment reversed, and directed the trial court to order the preparation of an EIR. 

Conclusion 

By taking this approach, the Court of Appeal essentially rejected the two-part Banker’s Hill test.  Interestingly, however, the court did not expressly state that it was rejecting the Banker’s Hill test.  To the contrary, it proclaimed in the decision that “[the] conclusion that the unusual circumstances exception applies whenever there is substantial evidence of a fair argument of a significant environmental impact is [] not inconsistent with Banker’s Hill.”  (A previous error in this statement was corrected by a modification issued by the Court of Appeals on March 7, 2012.) 

Despite the Court of Appeal’s statement otherwise, the decision is not consistent with Banker’s Hill.  The court’s holding that the unusual circumstances exception will apply whenever there is substantial evidence of a fair argument that a proposed project will have a significant effect on the environment is contrary to Banker’s Hill and significantly limits the availability of categorical exemptions under CEQA. The apparent split in authority creates substantial uncertainty for the future application of categorical exemptions.