Berkeley

California Supreme Court Clarifies the “Unusual Circumstances” Exception under CEQA

Today, the California Supreme Court issued its long-awaited decision in Berkeley Hillside Preservation v. City of Berkeley (No. S201116), and affirmed that even in Berkeley, building a single-family home does not require environmental review under the California Environmental Quality Act.  Berkeley Hillside clarified when the “unusual circumstances” exception prevents project proponents from using CEQA exemptions for their projects.

At issue in Berkeley Hillside was the approval by the City of Berkeley (“City”) of a use permit to construct a 6,478-square-foot single-family house with an attached 3,394-square-foot garage on a hillside parcel within the City’s residential zone. The City’s zoning adjustment board, and subsequently the City Council, found the project exempt from CEQA review under CEQA Guidelines sections 15303(a) (construction of a single-family residence in a residential zone) and 15332 (in-fill development projects on a site of no more than five acres substantially surrounded by urban uses). A City resident, joined by an environmental group, sued arguing that CEQA review was required because the “unusual circumstances” exception set forth in CEQA Guidelines section 15300.2(c) removed the project from the scope of those categorical exemptions. Section 15300.2(c) provides that “[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.”

The trial court sided with the respondents and found that the “unusual circumstances” exception did not apply because, while there was evidence that the project may result in significant impacts, petitioners had failed to demonstrate that those impacts were due to unusual circumstances. The First District Court of Appeal reversed the trial court’s decision after concluding that the “unusual circumstances” exception did apply, and thus the project was not exempt from CEQA review. According to the appellate court, “the fact that [the] proposed activity may have an effect on the environment is itself an unusual circumstance” triggering the Section 15300.2(c) exception. Thus, the main issue addressed by the Supreme Court was whether the project’s potential significant effect on the environment is itself an unusual circumstance that triggers the exception, or whether petitioner must come up with unusual circumstances apart from the project’s potential environmental impact to rely on the exception’s applicability.

Relying on the plain language of Section 15300.2(c) of CEQA Guidelines and legislative intent, the Supreme Court held: “[T]o establish the unusual circumstances exception, it is not enough for a challenger merely to provide substantial evidence that the project may have a significant effect on the environment, because that is the inquiry CEQA requires absent an exemption.” Rather, a potentially significant effect must be “due to unusual circumstances” for the exception to apply. Accordingly, the challenger has the burden of producing evidence that an unusual circumstance exists that would justify removing the project from the exempt class. Although the project’s potentially significant impacts may serve as evidence of such “unusual circumstances,” the lead agency must make its determination on the basis of the entire record before it, including contrary evidence regarding the project’s environmental effects. As the Supreme Court explained, “circumstances do not become unusual merely because a fair argument can be made that they might have a significant effect.”

The Supreme Court also considered the standard of judicial review that courts should apply in evaluating the application of the “unusual circumstances” exception by lead agencies. The Court has articulated the following “bifurcated” approach: (1) the lead agency’s determination as to whether there are “unusual circumstances” constitutes a factual determination reviewed under the deferential “substantial evidence” standard; and (2) the lead agency’s determination that there is “a reasonable probability” that an unusual circumstance will produce a significant environmental effect is subject to a less deferential “fair argument” standard and whether the agency applied this standard in the manner required by law.

Cities and counties across the State routinely rely on CEQA exemptions, including the one for single-family homes, for issuing expeditious approvals to various small-scale projects that do not typically result in significant environmental impacts. The Supreme Court’s Berkeley Hillside decision provides an important guarantee that property owners who want to build a home on their land should be able to do so without having to go through the costly and time-consuming CEQA process.

Update provided by Mitchell Chadwick attorney Katerina Deaver