By Janell M. Bogue
In development, as in life, plans change. From a CEQA standpoint, problems emerge as projects are modified, as the triggers requiring new environmental review are less than precise. The recent case of Mani Brothers Real Estate Group v. City of Los Angeles (2007) 153 Cal.App.4th 1385 (“Mani Brothers”) demonstrates that even the courts are unclear on the issue, as two appellate courts have come to two different conclusions. The court in Mani Brothers emphasized that the question is not whether the changes amount to a new project, but whether there is substantial evidence that the changes in the project would create new and significant environmental impacts.
In 1989, developers proposed a project in the City of Los Angeles (“City”), consisting of office space, a hotel, retail facilities, and an optional cultural center. In 1990, the lead agency certified the EIR and approved the project. However, litigation delayed the project and when it could finally proceed, the weak real estate leasing market made development unattractive. Subsequently, the developer proposed a change in the project to allow residential and mixed use development to take advantage of increased demand in these market segments. The lead agency determined that there would be no new or more significant environmental impacts than had previously been evaluated in the EIR for the original project and thus no new EIR was needed. The lead agency then prepared an addendum to the original EIR, pursuant to CEQA Guidelines section 15164. The addendum found that the modified project would reduce the environmental impacts that would have been caused by the original project, even though the footprint would be increased. This is because residential development tends to cause fewer impacts as compared to retail, and the modified project would reduce vehicle trips by fifty percent. Also reduced were impacts on water supply, wastewater treatment facilities, and landfill capacity. After preparation of the addendum, the City approved the modified project. Mani Brothers Real Estate Group and 8th & Francisco, LLC (collectively, “MBREG”), rival developers and landowners, challenged the approval of the modified project and the use of an addendum. The trial court upheld the approval and MBREG appealed.
The appellate court held that there was substantial evidence to support the City’s decision to use an addendum rather than requiring a supplemental EIR (“SEIR”). The “substantial evidence” standard is codified at Public Resources Code section 21168 and says that in any action to challenge a local agency’s determination, “the court shall not exercise its independent judgment on the evidence but shall only determine whether the act or decision is supported by substantial evidence in the light of the whole record.” Substantial evidence includes:
…enough relevant information and reasonable inferences from this information that a fair argument can be made to support a conclusion, even though other conclusions might also be reached. Whether a fair argument can be made that the project may have a significant effect on the environment is to be determined by examining the whole record before the lead agency. (Guidelines, § 15384(a).)
The court explained that CEQA requires a supplemental EIR only when “substantial changes are proposed in the project which will require major revisions of the [EIR].” (Pub. Resources Code, § 21166(a).) The CEQA Guidelines further clarify, and state that an SEIR must only be prepared when “substantial changes are proposed in the project which will require major revisions of the previous EIR…due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects.” (Guidelines, § 15162(a)(1).) However, an addendum can be prepared “if some changes or additions are necessary but none of the conditions described in section 15162 calling for preparation of a [SEIR] have occurred.” (Guidelines, § 15164(a).) An addendum is attractive because it is not necessary to circulate it for public review or comment. It is merely attached to the FEIR and considered by the lead agency before the project is approved.
When a lead agency has decided to not require a SEIR, that decision is no longer reviewed under the “fair argument” test, which is used when determining whether an EIR should be prepared in the first place. “CEQA requires the preparation of an EIR whenever it can be fairly argued on the basis of substantial evidence that the project may have a significant environmental impact.” No Oil, Inc. v. City of Los Angeles (1974) 13 Cal.3d 68. The “fair argument” test has a low threshold. When deciding whether project modifications require new environmental review; however, “…agencies are prohibited from requiring further environmental review unless the stated conditions are met.” Friends of Davis v. City of Davis (2000) 83 Cal.App.4th 1004. Instead, reviewing courts should remember that they are “not reviewing the record to determine whether it demonstrates a possibility of environmental impact, but are viewing it in a light most favorable to the City’s decision in order to determine whether substantial evidence supports the decision not to require additional review.” Id. at 1021. The limitations on requiring an SEIR are in place because “in-depth review has already occurred, the time for challenging the sufficiency of the original EIR has long since expired, and the question is whether the circumstances have changed enough to justify repeating a substantial portion of the process.” Bowman v. City of Petaluma (1986) 185 Cal.App.3d 1065.
Distinguishing Save our Neighborhood
Notably, the Mani Brothers court distinguished this case from the 2006 case entitled Save Our Neighborhood v. Lishman (2006) 140 Cal.App.4th 1288 (“Save Our Neighborhood”). (The Abbott & Kindermann Land Use Law Blog discussed Save Our Neighborhood in a September 2006 article.) In that case, the Third Appellate District held that changes in a project (the same land and mix of uses, but different proponents and different drawings, materials, and configurations of structures) rendered it a new and different project requiring a new EIR. In distinguishing Save Our Neighborhood from Mani Brothers, the Second Appellate District emphasized that the former case involved an addendum to a negative declaration (“ND”) while the latter addressed an addendum to a previously certified EIR. CEQA Guidelines section 15164(b) states that an addendum to a ND is only appropriate when “minor technical changes or additions are necessary.”
Further, the Mani Brothers court stated that the “fundamental analysis is flawed” in the Save Our Neighborhood case. It said,
The court in Save Our Neighborhood tackled what it perceived to be the “threshold question [of] whether we are dealing with a change to a particular project or a new project altogether,” and declared that “section 21166 and Guidelines section 15162 apply to the former but not the latter.” (Save Our Neighborhood, p. 1301.) This novel “new project” test does not provide an objective or useful framework. Drastic changes to a project might be viewed by some as transforming the project to a new project, while others may characterize the same drastic changes in a project as resulting in a dramatically modified project. Such labeling entails no specific guidelines and simply is not helpful to our analysis.
The “new project” test in Save Our Neighborhood, also inappropriately bypassed otherwise applicable statutory and regulatory provisions (i.e., § 21166; Guidelines, § 15162) when it considered it “a question of law for the court” whether the changed project was to be reviewed under section 21166 at all. (Save Our Neighborhood, p. 1297.) We disagree with that approach and view the issue of whether an agency proceeded properly in treating a project as subject to section 21166 not as a question of law, but rather as a question of the adequacy of evidence in the record to support the agency’s determination.
Thus, the Mani Brothers court held that the proper test should be the “substantial evidence” test, rather than whether there is a “new project” that requires new environmental review. The court said that the case of Benton v. Board of Supervisors (1991) 226 Cal.App.3d 1467 is instructive. There, the court upheld the use of an addendum for a project modification after an assessment of the environmental impacts of the revisions, not the character of the changes. The Mani Brothers court said:
Most significantly, holding that the court should decide as a matter of law if the later project is a revision of a previously approved project or an entirely new project, without consideration of the environmental impacts of the later project, violates the legislative mandate that “courts … shall not interpret this division or the state guidelines … in a manner which imposes procedural or substantive requirements beyond those explicitly stated in this division or in the state guidelines.” (Pub. Resources Code, § 21083.1; see Maintain Our Desert Environment v. Town of Apple Valley (2004) 124 Cal.App.4th 430, 445.)
Substantial evidence supported City decision to use addendum
In the case at hand, the court held that MBREG did not cite any evidence to support the claim that the project changes would cause “new significant environmental effects or a substantial increase in the severity of previously identified significant effects.” (Guidelines, § 15162(a)(1).) The City, however, did show substantial evidence in the administrative record to show that the project as modified would not have new or more severe impacts than previously analyzed. Thus, the court upheld the decision to not require an SEIR for the modified project.
However, the court did require the City to prepare an SEIR on the limited issue of police services. The EIR prepared for the original project found that the impact on the need for police services would be significant and unavoidable. In the addendum, though, the City stated that the same mitigation measures utilized for the original project would reduce the impact to a less than significant level. The addendum did not explain how the environmental impact would be mitigated to insignificance. Further, the court said that reasonable assumptions derived from the facts; namely that the modifications increased the size of the project and added over 800 residential units, led to the conclusion that police services would be affected. The court said that “the City fails to appreciate that a court may find substantial evidence not only in clearly stated facts, but also from “reasonable assumptions predicated upon facts.” (Pub. Resources Code, § 21080(e)(1).)
The lesson from the Mani Brothers case in the Second Appellate District is that a court applies the “substantial evidence” test when reviewing the decision to use an addendum instead of an SEIR, affording a proper level of deference to the lead agency decisionmaking process.
Janell Bogue is an associate with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and 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.