As described in a prior Legal Alert, in March 2015, the California Supreme Court issued its opinion in Berkeley Hillside Preservation v. City of Berkeley, which clarified the circumstances under which it is appropriate for public agencies to rely on a “categorical exemption”—rather than undertaking environmental review—when approving projects under the California Environmental Quality Act (“CEQA”). Specifically, the Court addressed one of the “exceptions” to the use of categorical exemptions, which precludes an agency from relying on an exemption if there is a “reasonable possibility” that the project will have a significant effect on the environment due to “unusual circumstances.” In the decision, the Court laid out a new framework for how courts should analyze whether this “unusual circumstances” exception applies, and then remanded the matter to the First Appellate District Court of Appeal for further proceedings, in light of the decision.
On Wednesday, October 28, the Court of Appeal published its decision on remand (originally issued on September 23). The Court’s opinion applies the framework announced by the Supreme Court, affirms the trial court’s ruling that the “unusual circumstances” exception did not apply to the project – a 6,478 square-foot, single-family residence on a steep slope in Berkeley, with an attached 10-car garage – and holds that the project was categorically exempt from CEQA review.
The Court of Appeal’s conclusion was a departure from its original ruling that was appealed to the Supreme Court. Throughout the proceedings, petitioners had relied solely on an interpretation of the “unusual circumstances” exception that was ultimately rejected by the Supreme Court, and had conceded that substantial evidence supported the City’s determination that two categorical exemptions applied to the project. On remand, the Court of Appeal held that petitioners’ concession had the effect of placing “the proposed project within a class [of projects] that presumptively does not have an effect on the environment,” thereby conceding “in effect, that there is no feature distinguishing it from the exempt class” – and therefore no “unusual circumstances” prohibiting use of the exemptions. (Slip Op., pp. 12-13.)
The Court of Appeal also ruled for the City on a separate issue that the Supreme Court did not address, but left for the lower court to resolve: petitioners’ contention that the City’s imposition of traffic mitigation measures on the project precluded the use of categorical exemptions. When the City approved the project, it included a condition requiring that the applicant obtain approval of a construction traffic management plan from the City’s traffic engineer, in part to address the need for removal of 940 cubic yards of soil from the project site in 20-yard trucks. The staff report to the City Council noted that this condition, along with all other conditions – except for one – were “standard conditions imposed on residential development in the [project area] which are not intended to address any specific environmental impacts resulting from construction of this project.” (Slip Op. at 16-17.) The only non-standard condition imposed on the project required circulation of the draft version of the traffic management plan to local residents.
The Court of Appeal recognized that prior decisions have held that a project’s eligibility for a categorical exemption from CEQA review should be determined without any reliance on mitigation measures, because only projects that have no significant effect on the environment are eligible for such exemptions. In this instance, the Court found that the traffic management plan was not a measure that was implemented to mitigate a significant project effect: “Managing traffic during the construction of a home is a common and typical concern in any urban area, and especially here given the narrow roads in the area and the volume of dirt to be removed. We reject appellants’ argument that implementing a traffic plan amounted to a mitigation measure that precluded the application of two categorical exemptions.” (Slip Op. at 19.)
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The rulings by the Court of Appeal on remand are not surprising, given the facts of the Berkeley Hillside case. However, the Supreme Court’s framework for evaluating the applicability of the “unusual circumstances” exception to categorical exemptions is fairly complex and will require a detailed, fact-specific analysis in every case. This issue, like many other issues of CEQA interpretation, remains murky; no doubt further appellate decisions will issue before lead agencies have a clear understanding of the legal risk associated with the use of categorical exemptions for controversial projects.