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CASE UPDATE: California Supreme Court Clarifies “Unusual Circumstances” Exception To CEQA Exemptions In Case Involving Huge House Constructed On Steep Slope In Berkeley.

In Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, California Supreme Court held that the “unusual circumstances” exception to CEQA’s categorical exemptions literally requires unusual circumstances, and that agency decisions as to whether or not unusual circumstances exist are reviewed under the deferential substantial evidence standard.

In this case, the City of Berkeley approved a project to construct a 6,458 square foot house with an attached 3,394 square foot, 10-car garage on a wooded, steep slope in a residential neighborhood without an environmental impact report or negative declaration.  In so doing, the City found that the project was categorically exempt from CEQA under the “new, small structures” exemption and the “in-fill development” exemption.  The trial court affirmed the City’s approval.  The court of appeal then reversed the trial court and invalidated the City’s approval, relying on the “usual circumstances” exception, which provides:

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.  (CEQA Guidelines § 15300.2(c).)

The court of appeal reasoned that the potential for significant environmental impacts of the subject project itself constituted “unusual circumstances,” and thus, the categorical exemptions did not apply and an EIR or negative declaration was required.

The California Supreme Court then reversed the court of appeal.  It rejected the notion that the potential for environmental impacts could be “unusual circumstances” under section 15300.2(c) because that is such an easy standard to meet such an interpretation would read the phrase “due to unusual circumstances” out of the exception.  The Court explained that CEQA’s categorical exemptions were adopted based on the Secretary of Resource’s findings that these types of projects typically do not have significant impacts and based on public policy decisions that these types of projects should not require environmental analysis under CEQA.  Thus, the Court held that section 15300.2(c) should only apply to unusual circumstances other than the particular project’s environmental impacts.

The Court stated the settled rule that the party challenging the application of a categorical exemption has the burden of producing evidence as to why it does not apply.  It then adopted a two-prong analysis for agencies to follow in determining whether the “unusual circumstances” exception applies.  The challenger must establish: 1) that unusual circumstances exist; and 2) that the unusual circumstances give rise to “a reasonable possibility that the activity will have a significant effect on the environment” (Guidelines, § 15300.2, subd. (c)).

In addition, the Court held that the standards of judicial review of agency decisions on categorical exemptions and the “unusual circumstance” exception are also two-pronged, as follows:  An agency’s determination as to whether (or not) there are “unusual circumstances” (Guidelines, § 15300.2, subd. (c)), is reviewed under the “substantial evidence” standard of Public Resources Code section 21168.5.  Under the substantial evidence standard, court defer to agency decision as long as they are supported by substantial evidence, even if there is conflicting evidence.  However, an agency’s finding as to whether unusual circumstances give rise to “a reasonable possibility that the activity will have a significant effect on the environment” is reviewed under the non-deferential “fair argument” standard, under which the exception to the exemption would apply to require CEQA environmental analysis if the record contains evidence (submitted in favor of or opposed to the project), that supports a fair argument that the unusual circumstances may produce a significant effect on the environment.

©2015 Miles J Dolinger. This article is not intended to and does not constitute legal advice or a solicitation for the formation of an attorney-client relationship.

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