The California Supreme Court Tackles CEQA's Gordian Knot: Unusual Circumstances and CEQA Exemptions

By William W. Abbott

Berkeley Hillside Preservation v. City of Berkeley, S201116, SUPREME COURT OF CALIFORNIA, 2015 Cal. LEXIS 1213, March 2, 2015, Filed.

While the long wait is over, issues remain for CEQA practitioners. The California Supreme Court finally issued its decision in Berkeley Hillside Preservation v. City of Berkeley, a case which addresses the application of the “unusual circumstances” limitation on the use of certain CEQA categorical exemptions. The decision is lengthy at 64 pages. Justice Chin authored the opinion, joined by four justices, one of whom is retired (J. Baxter) and one of whom was from the Court of Appeal sitting on assignment (J. Boren). Justice Liu and Wedegar concurred in one aspect of the majority’s decision, but disagreed as to the seminal legal question. Counting heads, it was a 3-2 decision by the sitting justices, with two new justices to fill out the court’s roster. With a 3-2 decision, apparently all sides can declare victory. Consider the views of project opponents as well as property rights advocates.

The underlying facts involved the City of Berkeley’s review of a proposed large home on a steep hillside lot (50% grade). The property owner sought approval to demolish the existing structure and replace it with a two story home of 6,478 square feet with a 3,394 square foot 10-car garage. Pursuant to the city code, a use permit was required. The city determined that the project was exempt based upon CEQA Guidelines section 15303(a) (single family home in a residential zone) and 15332 (infill exemption). Interested citizens appealed this to the city council. On appeal, the neighbors argued that the use of an exemption was not appropriate given the size of the building compared to other homes in Berkeley, as well as potential impacts. An architect/geotechnical engineer submitted critical comments based upon his review of the plans as well as a visit to the site, along with his conclusion that the plans were missing key information including information on slopes, and that the fill had to be benched and keyed to the slope. His testimony also raised issues about earthquake risk. The administrative record included a response by the project’s geotechnical engineer which included a statement that commentor had misread the plans. Following the hearing, the city council adopted the zoning board’s findings, and dismissed the appeal. The planning department filed a notice of exemption, relying upon 15303(a) and 15332, determining that Guidelines section 15300.2 (the unusual circumstances limitation) did not apply.

Opponents filed a writ of mandate. The trial court denied the writ and the court of appeal reversed, concluding that unusual circumstances precluded the use of the exemptions reasoning that the potential for an effect on the environment was itself an unusual circumstance thereby nullifying the use of the exemption. The California Supreme Court granted the city’s petition for review.

After reviewing the administrative and litigation history, the Court devotes considerable analysis to the key issue on appeal and concludes that the court of appeal erred when it determined that evidence of a potentially significant impact by itself was sufficient to nullify the use of an exemption. The core of the legal debate was the effect of Guidelines section 15300.2 (c). “A categorical exemption shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” To conclude that an impact by itself would nullify the exemption would in the opinion of a majority of the Supreme Court, result in key language in the Guidelines rendered as surplusage, a result contrary to rules of statutory interpretation.

The Court then turned to the standard of review to be applied by a reviewing court. The Court stated that as the city was not required to hold an evidentiary hearing, review was pursuant to Public Resources Code section 21168.5. Pursuant to this section, a reviewing court looks to see if that agency proceeded as required by law and whether there was substantial evidence in support of its findings. As to the question of whether the unusual circumstances exist, the Supreme Court concluded that the more deferential traditional substantial evidence test applies, not the “fair argument” test. However, as to the related question of whether or not unusual circumstances give rise to the “reasonable possibility that the activity will have a significant environmental effect” this analysis is reviewed under the fair argument standard to determine if the agency proceeded in a manner required by law. Evidence of a potential impact to the environment is relevant to both inquiries. As noted however, different standards of review apply to the judicial review of agency’s conclusions and findings as they pertain to that and the other evidence. Despite incorporation of the fair argument test onto the second prong of the analysis, the Court’s decision in the end, facilitates the use of categorical exemptions.

Applying the aforementioned rules to the lower court proceedings, the Court concluded that the trial court and court of appeal had incorrectly reviewed the city’s decision and reversed and remanded. As the court of appeal had reversed the trial court’s decision on only one substantive ground (geotechnical impacts), the Supreme Court’s remand thus necessitated that the court of appeal then address the remaining arguments concerning aesthetic and view impacts, inconsistency with land use policies, construction impacts, traffic impacts from future fundraising activities at the house and whether the city had improperly mitigated its way into an exemption by use of a traffic control plan as a form of mitigation.

The Court tackled other issues as well. In determining whether or not environmental effects were unusual or typical, the lead agency has the discretion to look at the immediate neighborhood (as compared to a jurisdiction wide analysis.) At the Supreme Court, the City of Berkeley had challenged the lower court conclusions that the testimony of the engineer criticizing the plans constituted substantial evidence of a fair argument. On this issue, all of the justices agreed that the finding of impact must be based upon what was approved, not based on “unapproved activities that the opponents assert will be necessary because the project, as approved, cannot be built.” As the architect/geotechnical engineer had rendered his comments based upon an outdated set of plans, his testimony was “legally insufficient”.

The Supreme Court was also faced with the argument that evidence of the environment on the project (earthquake related risk) was not a basis for application of the unusual circumstances doctrine. In light of the Supreme Court’s pending review of this issue in CBIA v. Bay Area Air Quality Management District, the court declined to address the issue.

Finally, the Supreme Court addressed the issue of judicial remedies, clarifying that it is up to the lead agency to determine what CEQA document is appropriate, and that a reviewing court can only order the preparation of an EIR in circumstances in which the lead agency lacked the authority to use an exemption or negative declaration.

The dissent agreed on the point that the evidence of impact had to be based upon the project as approved, and not on unapproved activities that the opponents claim will be necessary. The dissent then provides a vigorous and detailed critique of the majority opinion’s central thesis as to the effect of a potential effect on the use of an exemption, reaching the opposite conclusion.

Commentary: Understandably so, there will be a flurry of commentary (this one included) on this judicial decision. What I suspect will be largely missing is a discussion and debate as to why this home was subject to discretionary review and in turn, CEQA evaluation. As I have observed before, CEQA reform begins at home. I think that the real professional challenge for local planners is development of codes which eliminate CEQA review. Two CEQA decisions open the door to the creation of design review ordinances which do not trigger CEQA review. Check out Health First v. March Joint Powers Authority (2009) 174 Cal.App.4th 1135, San Diego Navy Broadway Complex Coalition v. City of San Diego (2010) 185 Cal.App.4th 924. To local planners, my advice is to do your homework.

Sadly, this sordid story for the property owner is not over. As noted above, the courts will have to now address the effect of the Supreme Court’s decision, then resolve all of the remaining issues challenging the use of an exemption. All of that for a single family home. It reminds me of the tag line from the old Pogo cartoon by Walt Kelly: “We have met the enemy and he is us.”

Finally, a digression on the title of this blog. For those interested in the Gordian knot, it is attributed to the town of Gordium, capital of Phrygia (northwestern Turkey.) An intricate knot was used to hold the yoke of the City founder’s chariot to a pole. It was widely believe that the person who could unravel the knot would conquer Asia. Legend has it that Alexander the Great solved the mystery. In one version, he withdrew the yoke. In another, he cut the knot with his sword. If only CEQA issues could be resolved so easily.

William W. Abbott is a partner at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

 

 

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