Crane and building construction site against blue skyOn September 19, in a long-awaited and unanimous decision, the California Supreme Court issued its decision in Friends of the College of San Mateo Gardens v. San Mateo County Community College District.  The opinion, authored by the Court’s newest justice, Leondra Kruger, resolves a split among the Courts of Appeal regarding the proper procedures for addressing changes to a project that have already been subject to CEQA review.  The Court clarified that such changes are not subject to an independent, “new project” threshold test, and that an agency’s decision that no EIR is required as a result of proposed modifications to a previously-approved project is subject to review for substantial evidence.  The decision also affirmed the validity of CEQA Guidelines section 15162 and its application of the principles of finality and subsequent review to projects originally approved with a negative declaration.

In this case, the San Mateo Community College District (District) had approved a plan to improve its campus at the College of San Mateo by renovating ten buildings and demolishing sixteen others.  In compliance with the California Environmental Quality Act (CEQA), the District prepared and adopted a mitigated negative declaration (MND) to address the impacts of its improvement plans.  Later, the District revised its plans for the College by deciding to demolish one building that had been set for renovation and to renovate two buildings that had been set for demolition.  The District evaluated the possible environmental consequences of altering its plans for the three buildings under CEQA’s provisions governing subsequent review of previously-approved projects (Pub. Res. Code § 21166 and CEQA Guidelines § 15162), and ultimately concluded that the changes were not so extensive as to require preparation of a subsequent environmental impact report (EIR).  The District instead prepared an Addendum to address the proposed revisions.  Petitioners challenged the District’s decision, claiming that the changes constituted a “new” project and therefore the District could not rely on the prior MND.

A key question in this case was:  How are courts to review a public agency’s decision, under CEQA, to deviate from a previously-approved project?  It is well established that the deferential substantial evidence standard applies to a lead agency’s decision to not require a subsequent EIR under Public Resources Code section 21166 when changes are proposed to a previously-approved project approved with an EIR.  (See Santa Teresa Citizens Action Group v. City of San Jose (2003) 114 Cal.App.4th 689, 703; Mani Brothers Real Estate Group v. City of Los Angeles (2007) 153 Cal.App.4th 1385, 1397-1401.)  The CEQA Guidelines apply these same principles and procedures to projects approved based on a negative declaration.  (Guidelines § 15162(a); Abatti v. Imperial Irrigation District (2012) 205 Cal.App.4th 650, 668-671, 675.)  The substantial evidence standard is a crucial part of CEQA, as it recognizes the important role public agencies play in administrative matters.  (California Native Plant Society v. City of Santa Cruz (2009) 177 Cal.App.4th 957, 985 [the “highly deferential” substantial evidence standard of review “flows from the fact that the agency has the discretion to resolve factual issues and to make policy decisions.”].)  However, an earlier appellate decision, Save Our Neighborhood v. Lishman (2006) 140 Cal.App.4th 1288, created a separate “new project” test to first determine, without any deference to the agency, whether project changes even qualify for subsequent review analysis under Section 21166.

In an unpublished opinion, the First Appellate District in San Mateo Gardens expressly followed Lishman and held that the question of whether a project is a “new” project is a question of law reviewed de novo by the courts without any deference to the lead agency’s review of the factual circumstances of the particular project.  It went on to find, without expressing any standards to guide the inquiry, that it was “clear” that the changes proposed by the District here constituted a “new project altogether.”  The decision posed noteworthy problems for public agencies: the court declined to defer to the District’s factual determination that the changes were adequately covered by the prior MND and then failed to set standards to guide application of the “new project” test in the future.  This threatened to lead to arbitrary and conflicting results, preventing public officials from relying on previously-approved CEQA documents with confidence.

Despite the fact that the lower court’s ruling was unpublished, the Supreme Court accepted review and ultimately reversed the First Appellate District’s ruling.  Importantly, the Court made several welcome clarifications in the law.  First, the Supreme Court rejected the notion in Lishman and the opinion below that there is any separate “new project” test.  The threshold question should focus on the “effect” of the change and not “abstract” characterizations of the project by the courts.  An agency’s determination of this threshold issue—of whether a project change qualifies for analysis under Section 21166 and Guidelines section 15162—is entitled to substantial deference by the courts:

Under the statutory scheme, the agency’s environmental review obligations depend on the effect of the proposed changes on the decisionmaking process, rather than on any abstract characterization of the project as ‘new’ or ‘old.’  An agency that proposes project changes thus must determine whether the previous environmental document retains any relevance in light of the proposed changes and, if so, whether major revisions to the previous environmental document are nevertheless required due to the involvement of new, previously unstudied significant environmental impacts.  These are determinations for the agency to make in the first instance, subject to judicial review for substantial evidence.

The Court’s opinion repudiates Lishman, which had seriously undermined the ability of lead agencies to rely on the deferential standards and process for subsequent review under Section 21166 (and Guidelines section 15162) based on aspects of the changed project unrelated to environmental impacts (e.g., the identity of the project proponent and the preparer of project design plans).  The Court noted as well its expectation that the “occasions when a court finds no substantial evidence to support an agency’s decision to proceed under CEQA’s subsequent review provisions will be rare, and rightly so; ‘a court should tread with extraordinary care’ before reversing an agency’s determination . . . that its initial environmental document retains some relevance to the decisionmaking process.”

Second, the Court addressed the standards for reviewing project changes once it is determined that those changes properly fall within the rubric of Section 21166.  Petitioner had argued that because the initial project in this case was approved under a negative declaration, the “fair argument” standard should apply.  In response, the Court recited the standards for subsequent review under Guidelines section 15162—“substantial evidence” that “substantial changes . . . require major revisions”—and emphasized that negative declarations “are entitled to a presumption of finality” once adopted and it would be “absurd” to restart the entire process each time a change is proposed in a project.

Third, while the issue did not feature prominently in the briefing, petitioner’s counsel and the Court at oral argument expressed interest in whether Guidelines section 15162 validly applied the principles governing subsequent environmental review under Section 21166 to projects initially approved based on a negative declaration.  The Court clarified that Guidelines section 15162 is a “valid gap-filling measure” adopted by the California Natural Resources Agency.

On the whole, the decision in San Mateo Gardens clarifies the standard of review of changes to previously-approved projects and preserves Guidelines section 15162 as a useful tool to avoid successive and unnecessary rounds of CEQA review.  For this reason, the decision will be extremely valuable to public agencies that must address proposed changes to CEQA projects.

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Downey Brand attorneys Christian Marsh, Andrea Clark, and Amanda Pearson represented the League of California Cities, California State Association of Counties, and the Association of California Water Agencies as Amici Curiae in supporting the petition for review and on the merits in this case.