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California Supreme Court Upholds CEQA Exemption Despite Potential Environmental Impacts

March 09, 2015

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A very recent California Supreme Court case supports the City of Berkeley's determination that a project is subject to a California Environmental Quality Act ("CEQA") exemption and need not undergo further environmental review even if a fair argument can be made that the project may potentially cause a significant environmental impact. In Berkeley Hillside Preservation v. City of Berkeley, California Supreme Court, Case No. S201116, March 2, 2015, the Court ruled that the CEQA small facilities or structures and in-fill exemptions under CEQA guidelines sections 15303 and 15332) were applicable to a 6,478 sq. ft. home with a 3,394 sq. ft. attached garage because it met the requirements of the exemptions. The Court held that even if there were a potential for a significant environmental impact, the exemption would still apply unless there were unusual circumstances associated with the project. Thus the project would have to have characteristics out of the ordinary to require further review and not just a fair argument for a potential  environmental impact, without a finding of no unusual circumstances. Otherwise, the whole idea of the CEQA exemptions would be swallowed by the unusual circumstance if it were defined to include the potential for an environmental impact. 

The Court also held that because the CEQA determination was made without an administrative hearing on the record, the correct standard of review to apply was "whether there was a prejudicial abuse of discretion," meaning whether the agency has proceeded in accordance with law or if the determination is not supported by substantial evidence. The parties differed in their view of the standard with one advocating a traditional substantial evidence test, one that requires the court to uphold the determination as long as there is substantial evidence to support it and despite the existence of substantial evidence to the contrary that is of equal or even greater reasonableness. The opposition argued that even if there is substantial evidence to support the decision, the court must inquire whether there was substantial evidence that a "fair argument" could be made that significant impacts could occur from the project. The Court adopted a two-part approach to resolve the issue. First, the Court decided that the substantial evidence test would apply to determine if unusual circumstance existed at all. The reviewing court's would defer to the fact-finding efforts of the agency if there was substantial evidence to support a finding of no unusual circumstances. However, if unusual circumstances were found, then the Court would allow the fair argument test to apply. Thus, if there were a fair argument supported by substantial evidence in the record that the unusual circumstances could potentially cause a significant environmental impact, then the agency must prepare either an initial study, with or without a mitigated negative declaration, or a full environmental impact report.

For more information, please contact:

Michael Van Zandt

415-995-5001 Direct Phone
415-995-3566 Fax

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