California Supreme Court rejects “new project” test for supplemental review and upholds the application of CEQA Guidelines section 15162 to negative declarations.

After requesting additional briefing, the California Supreme Court published its decision in Friends of the College of San Mateo Gardens v. San Mateo Community College District (S214061) on September 19, 2016. In its unanimous opinion, the Supreme Court addressed narrow legal questions presented by the case, including whether an agency’s decision to proceed with subsequent review (see Pub. Res. Code § 21166) under the California Environmental Quality Act (CEQA) is subject to a threshold, question of law, “new project” test, whether the CEQA Guidelines implementing CEQA’s subsequent review provisions apply where the lead agency originally adopted a negative declaration or mitigated negative declaration, and the appropriate standard of review to apply to that decision.

Background

The facts underlying this case began with the San Mateo Community College District’s adoption of a campus-wide construction and renovation project at the College District’s three college campuses. In particular, the plan addressed the disposition of each building at the College of San Mateo (College), which had not undergone any major renovation work since its construction in the 1960s. The plan indicated that some buildings would be demolished and replaced, while others would be renovated. Buildings targeted for renovation included the Building 20 Complex, which consisted of a concrete classroom and lab structure, greenhouse, workshop area and surrounding garden space. The College District studied the proposed facilities renovation plan and prepared a mitigated negative declaration (MND) in 2006, which the College District certified in 2007.

The College District updated its facilities renovation plan in 2011 after it failed to obtain funding for the planned Building 20 complex renovations. In light of this, the College District proposed demolishing the Building 20 complex and replacing it with a parking lot and landscaping improvements. Also, Buildings 15 and 17, which were to be demolished under the prior plan, would instead be renovated. The College District approved these changes after preparing an addendum to the prior MND. Project opponents, Friends of the College of the San Mateo Gardens (“Friends”) filed suit challenging approval of the project changes, and the College District rescinded the original addendum and issued a revised addendum. The revised addendum included additional analysis addressing concerns raised by Friends and indicated that the changes would not require any major revisions to the original MND, nor would the changes result in any new or substantially more severe impacts that identified in the MND.

Procedural Background

The revised addendum did little to assuage Friends’ objections, and they filed another CEQA challenge in the superior court seeking preparation of an environmental impact report (EIR), among other remedies. The trial court agreed with Friends and granted their petition. The College District appealed to the First District Court of Appeal. The Court of Appeal, citing Save our Neighborhood v. Lishman (2006) 140 Cal.App.4th 1288, determined, as a threshold matter of law, that the proposed demolition of Building 20 was actually a “new project.” Thus, CEQA’s subsequent review provisions, Pub. Res Code § 21166 and CEQA Guidelines §15162, did not apply. Rather, the appellate court concluded that the College District should have prepared an initial study to determine whether an EIR was required for the demolition of Building 20.

The Supreme Court’s Ruling

At the outset, the Supreme Court rejected the so called new project test described in Save our Neighborhood. In reaching this decision, the Supreme Court noted the standing disagreement among appellate courts on the issue and the lack of any objective standards to inform a court’s application of the new project test. The Court noted such a test “would inevitably invite arbitrary results.” Rather, the question as to whether an initial environmental document requires major revisions due to changed plans or circumstances is a factual one best left to the lead agency to answer.

The Court also requested supplemental briefing to address whether CEQA Guidelines section 15162 is valid. Guidelines section 15162 expands the subsequent review scheme described in Public Resources Code section 21166 to projects initially approved via negative declarations. While section 21166 does not mention negative declarations explicitly, the Court noted that section 21166 was adopted in 1972 while negative declarations were not introduced until 1976. Furthermore, the Court noted that no provision of CEQA directly addresses subsequent review where a negative declaration was initially adopted. Thus, the Court determined that CEQA Guidelines section 15162 constitutes a valid gap-filling measure.

Unfortunately, the Court guidance on the appropriate standard of review to apply to an agency’s decision with regards to subsequent review of a negative declaration is less than straightforward. The Court begins its discussion by suggesting the substantial evidence standard of review applies. According to the Court, Guidelines section 15162 requires substantial evidence to support a determination that proposed project changes will not involve “substantial changes” that “require major revisions” of the previous negative declaration due to the involvement of “new or significantly more severe environmental effects.” However, the Court concludes its discussion of the issue with a citation to Friends of “B” Street v. City of Hayward (1980) 106 Cal.App.3d 988, 1002, stating that if “a project is initially approved by negative declaration, a ‘major revision’ to the initial negative declaration will necessarily be required if the proposed modification may produce a significant environmental effect that had not previously been studied.” (italics added) This statement smacks of fair argument standard language and seems at odds with the Court’s prior statements.

Conclusion

This decision, overall, is a victory for project proponents in California, as the Court struck down the Save our Neighborhood “new project” test. The new project test invited uncertainty and inconsistent outcomes in litigation challenging subsequent review decisions. Furthermore, the new project test made it extremely difficult for CEQA practitioners to advise their clients on subsequent review matters, since the test involved no objective standards and was subject to threshold, question of law review by courts. Now, CEQA practitioners can at least point their clients to the framework established by Public Resources Code section 21166 and CEQA Guidelines section 15162. However, the decision will likely invite additional and costly litigation over the appropriate standard of review to apply to an agency’s determination to proceed with subsequent review rather than an EIR, where the original environmental review document is a negative declaration. The ambiguity of the Court’s discussion on this issue is unfortunate in light of the increasingly hostile business environment in California, which is created, in no small part, by excessive CEQA litigation.

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