The State Supreme Court heard oral arguments December 2 in the major Berkeley Hillside CEQA exemptions case, focusing on the legal significance of the term "unusual circumstances".

While the genesis of the case is a single residence, the ruling may have statewide impact on the application of exceptions to categorical exemptions from CEQA. Thus, the case has attracted interest from environmental advocates, public agencies, preservation activists, and the development community across the state.

The case arises from a proposed single-family home in the Berkeley Hills, consisting of a 6,478-square-foot house and an integral 3,395-square-foot parking garage. The City of Berkeley approved the project without environmental review, finding it categorically exempt from CEQA under both Class 3 (single-family residence) and Class 32 (infill development). The house would be one of the largest in town but would comply with local zoning. Because the lot is sloped, the parties have disputed how much earthworks and shoring work would need to be done. In 2012, the Court of Appeal ruled against the City

At issue in the case are two questions of statewide importance.

First is how to interpret the Legislature's intent in Section 21084 of the Public Resources Code, which directs the Natural Resources Agency to list classes of projects categorically exempt from CEQA. This includes CEQA Guidelines Section 15300.2(c), which states 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 so-called "significant effects exception." Specifically, can a project that otherwise fits a CEQA exemption have a reasonably possible significant environmental impact and yet not be "unusual"?

Second is what standard of review should apply to lead agencies' decisions regarding exceptions to categorical exemptions. Should parties challenging the agency's finding of a categorical exemption be required to demonstrate substantial evidence that there should be a significant effects exception, or is it enough to show substantial evidence that a fair argument exists for such an exception?

Arguing for the respondents and real parties in interest, Amrit S Kulkarni, with the firm of Meyers Nave Riback Silver and Wilson, contended that the language of Section 15300.2(c) requires a two-step process to determine if the significant effects exception applies: first, the presence of unusual conditions must be established; and second, the potential for significant environmental effects due to those conditions must be established.

Justice Goodwin Liu quickly cut to the chase, asking Kulkarni if it was his understanding that the Legislature had authorized designation of "categories [of projects] that, as a rough cut, should not concern us because there are no significant impacts and… within the class there may be outliers that have significant environmental impacts, but nonetheless the categorical exclusion applies unless project characteristics, separate from the effects, make it unusual?" Kulkarni confirmed this was the respondents' interpretation, and reiterated their position that to conclude otherwise is to render the phrase, "due to unusual circumstances" meaningless.

In response to questioning from Chief Justice Tani Cantil-Sakauye and Justice Marvin Baxter, Kulkarni argued there should be substantial deference to the city's discretion, and that the Court of Appeals went wrong in applying the fair argument standard instead of the substantial evidence standard. He contended the fair argument standard applies in determining if CEQA review is required for projects that are not categorically exempt.

The justices then pursued the meaning of "unusual circumstances", asking what would make a project unusual, with Justice Liu noting that the project would be an "unusual size for Berkeley". Kulkarni replied that such a subjective standard as "too big" would defeat the purpose of categorical exemptions -- to which Liu asked, "Isn't your definition subjective?" Kulkarni responded that it was not, because the project was appropriate for the site per the city zoning code. Justice Carol Corrigan asked if an unusual project would be one that was non-compliant with zoning, and Kulkarni responded yes. Later, during rebuttal, Justice Liu asked it was possible for a significant effects exemption to apply even for a project that complied with zoning. Kulkarni replied that a lack of adequate sewer service at the site would constitute unusual circumstances for a zoning-compliant project.

Arguing for the plaintiffs and appellants, Susan Brandt-Hawley contended that the legislative record and rulemaking file showed Section 15300.2(c) was based on Section 21084 and the holding in Wildlife Alive v. Chickering, 18 Cal. 3d 190, a 1976 Supreme Court ruling that a categorical exemption did not apply to Fish and Game Commission actions that might have significant environmental effects. She said neither of these founding sources refers to "unusual circumstances".

In response to a question from Justice Corrigan asking if the appellants agreed with the two-step process for Section 15300.2(c), Brandt-Hawley argued that only one step is required: determination of the reasonable possibility of significant environmental impact, with unusual circumstances being inherent in such projects.

Justice Liu asked what the point of categorical exemptions would be in that light, as opposed to evaluating all projects on a case by case basis. He said "fair argument doesn't seem very onerous for potential significant effects exceptions… if the trigger is so light, then we're sent into the quagmire so quickly," to which Brandt-Hawley replied, "That's the sky-is-falling argument" that opponents of the appellants' position had made repeatedly. She said a fair argument must still be based on facts, fact-based assumptions, or expert opinions. She also argued that the appellants' perspective would not interfere with the main time-tested function of categorical exemptions: to save local agencies the trouble of investigating each ordinary project's impact individually.

Justice Liu pursued the meaning of "due to unusual circumstances", asking what "due to" meant, and if it implied a causative link between unusual conditions and impacts. Justice Liu asked if it could be understood that it was the "legislative intent to… [strike] balance, accepting some significant environmental impacts" from some projects that fell within categorical exemptions. Brandt-Hawley repeated that Section 21084 and Wildlife Alive made no reference to unusual circumstances, and that there was no presumption in favor of allowing some significant environmental impacts.

Brandt-Hawley argued that in general, unusual circumstances are "not run-of-the-mill, not typical." But Justices Corrigan and Werdegar pressed her for a clearer definition. In response, Brandt-Hawley stated that unusual circumstances for the project resulted from the combination of the size of the house, which she described as planned for "a constrained space" on a small street although the lot itself is large, together with the slope of the hill, seismic hazards, and a nearby roadway bridge.

The justices also asked about the potential significant effects of the project, including those based on the expert opinion of Dr. Lawrence Karp, provided by the plaintiffs/appellants to the city prior to city approval, on the extent of earthworks and retaining walls required to stabilize the house and slope. Justice Werdegar asked if the city implicitly rejected Karp's opinion and if so, if it had done so in error. Brandt-Hawley argued the city had done so in error, because Karp's opinion presented a fair argument for a significant environmental impact. Responding to Chief Justice Cantil-Sakauye later, Brandt-Hawley argued that appellants provided an expert opinion on potential significant effects, and that the city must study them.

The court's ruling must be filed within 90 days. Due to the complex nature of the case, there are several possible outcomes. The court must decide if it will apply a one-step or a two-step process and what standard of review should apply. Then, it must apply the process and standard it has chosen to whether the appellants have sufficiently shown a reasonable possibility of significant effects, and/or whether the significant effects are due to unusual circumstances. In the meantime, the CEQA community will be anxiously awaiting the ruling.

The case is Berkeley Hillside Preservation v. City of Berkeley, Case No. S201116.

Matt Dixon is a transportation engineer in the Los Angeles area