California Supreme Court Clarifies "Unusual Circumstance" Exception to Categorical Exemptions under CEQA

Berkeley Hillside Preservation v. City of Berkeley

2015 WL 855725

In a widely anticipated decision, the California Supreme Court has overturned the First District Court of Appeals decision in Berkeley Hillside Preservation v. City of Berkeley (2012) 203 Cal. App. 4^th 656, which had held that a potentially significant environmental effect in and of itself constituted an unusual circumstance under CEQA Guidelines section 15300.2, subdivision (c). (Cal. Code Regs., tit. 14, § 15300.2 (c).) In reversing the Appellate Court’s decision, the Supreme Court held that the reasonable possibility that an exempt project will have a significant environmental effect is not sufficient to establish an exception. Instead, the Court reasoned, the reasonable possibility of a significant effect must be due to an unusual circumstance for an exception to apply. A copy of the Court’s majority decision, as well as Justice Liu’s concurrence can be found here.

By way of background, the case finds its genesis in a 2010 decision by the City of Berkeley to approve a use permit for the construction of a 6,478-square-foot house with an attached 3,394-square-foot garage on a steeply sloping residential lot in the Berkeley Hills. In approving the use permit, the City determined that the project was exempt from CEQA under Class 3 and Class 32 categorical exemptions. Appellants had argued that the exemptions did not apply because the project was of unusual size and location and because the project’s nature and scope would have a significant effect on its surroundings. Following the City’s approval, Appellants filed a petition for writ of mandate, which was rejected by the trial court. On appeal, however, the First District Court of Appeals reversed the trial court’s ruling and held that “the fact that [a] proposed activity may have an effect on the environment is itself an unusual circumstance” sufficient to support an exception to an exemption under CEQA.

Applying principles of statutory construction, the Court reversed the Appellate Court’s decision on the basis that the Appellate Court’s construction would essentially read the “due to unusual circumstances” language out of the CEQA Guidelines and would generally result in categorical exemptions having little, if any, effect. Further, the Court harmonized it construction of Guideline section 15300.2, subsection (c) with its seminal 1972 decision in Friends of Mammoth v. Board of Supervisors (1972) 8 Cal. 3d 247, which extended CEQA’s reach beyond just public projects to also include private projects requiring a government permit or entitlement.

Significantly, the Court noted that its decision in Mammoth presaged the Legislature’s subsequent establishment of categorical exemptions. Specifically, the Court pointed to its observation in Mammoth that in extending CEQA to include private projects it expressly understood that a majority of those projects would be minor in scope and “in the absence of unusual circumstances” would have little or no effect on the environment. This interpretation of CEQA, the Court noted, was subsequently adopted by the Legislature when it directed the Office of Planning and Research to establish “classes of projects” that would be categorically exempt from CEQA. Accordingly, the Court held that “construing the unusual circumstances exception as requiring more than a showing of a fair argument that the proposed activity may have a significant environmental effect is fully consistent with the Legislature’s intent [in establishing categorical exemptions].”

In rendering its decision, the Court also resolved a split in appellate authority regarding the proper standard of review for determining, in the first instance, whether an unusual circumstance is present. Notwithstanding the Appellant’s argument that the “fair argument” standard applied, the Court expressly concluded that a lead agency’s decision respecting the presence of an unusual circumstance in a particular case is subject to the substantial evidence standard outlined in Public Resources Code section 21168.5 and can only be overturned by a showing of abuse of discretion.

The Court’s ruling is significant in many respects. In the simplest terms, it preserves a valuable CEQA streamlining tool and resolves a lingering split in authority regarding the proper standard of review for exemption determinations. More important, however, the Court’s ruling signals a potential reversal in the recent trend towards the expansive use of environmental impact reports as a conservative defense for controversial land use projects. The Court’s acknowledgement that “the majority of private projects . . . have little or no effect on the public environment” should serve as a bellwether for project applicants and lead agencies alike that categorical exemptions are a robust and legally sustainable option under CEQA.

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