Palm SpringsThe Fourth District has waded into the world of CEQA exemptions, holding that the City of Palm Springs improperly relied upon the Class 5 categorical exemption for “minor alterations in land use limitations.” However, in a confusing discussion of whether an exception to that exemption might apply, the Court seemed to ignore the Supreme Court’s guidance in Berkeley Hillside Preservation v. City of Berkeley. This marks at least the second instance in which, despite a clear ruling in Berkeley Hillside, a court of appeal has so grossly misread the Supreme Court’s ruling, which portends a confusing road ahead for categorical exemptions. (See also Paulek v. Western Riverside County Regional Conservation Authority (2015) 238 Cal.App.4th 583, now unpublished, which applied the wrong standard of review to the unusual circumstances exception).

In 2013, the City approved a General Plan amendment removing reference to minimum density requirements for each land use designation. The General Plan had stated that, while the maximum densities were limits, the lower thresholds represented “a minimum amount of development anticipated” in that land use designation – in other words, they were predictions, not lower bounds. The City found that the action was exempt under CEQA’s Class 5 categorical exemption for “minor alterations in land use limitations in areas with an average slope of less than 20%, which do not result in any changes in land use or density . . .”, because it was simply revising the General Plan to conform with the City’s ongoing permitting practices.

Citizen group People for Proper Planning (“PPP”) filed a petition for writ of mandate and complaint for declaratory and injunctive relief, arguing that the exemption did not apply, and that the amendment was inconsistent with the General Plan and in violation of Government Code section 65863, which prohibits cities and counties from reducing residential densities under some circumstances.

Application of the Categorical Exemption

The trial court denied the petition, agreeing with the City that the elimination of the minimum density limits simply brought the General Plan into conformance with existing practices under the General Plan and Zoning Ordinance, which included no lower limits. The court determined that PPP had failed to show a “reasonable possibility of an adverse environmental impact” that would remove the project from the categorical exemption, because the baseline for measuring environmental impacts – in other words, the City’s current practice – would remain unchanged.

Without deference to the City’s interpretation, the Court of Appeal reversed the trial court, finding that the cited categorical exemption did not apply for reasons obvious on the face of the proposed amendment. The Court rejected the City’s argument that because the lower threshold numbers represented “anticipated” levels of development, the removal of those numbers would not actually change the densities. The Court pointed to the fact that “[b]ecause the Amendment does not retain existing density minimum standards on its face, it apparently results in a change to land density,” thus rendering it inconsistent with the text of the exemption.

In the second part of the opinion, the Court found that, even if the amendment could fit within the cited categorical exemption, PPP had met its burden to show that the amendment falls within one of the exceptions to the exemption. Without specifying which exception applied – most likely the “unusual circumstances” or “cumulative impacts” exception – the Court simply stated that PPP “presented sufficient evidence supporting a fair argument that the Amendment will result in a significant impact on the environment due to its across-the-board change in land use regulation that affects every residential area identified by the General Plan.”

Citing to Committee to Save Hollywoodland v. City of Los Angeles, a pre-Berkeley Hillside case involving the “unusual circumstances” exception, the Court stated that “courts are divided on the question of whether the ‘fair argument’ standard . . . or the substantial evidence test applies to . . . the determination of whether an exception to the exemption exits.” The Court dropped a footnote, though, stating that it need not decide this issue “as the result is the same under either test.”

Although the Court’s holding with regard to application of the exemption is on solid ground, its discussion of the exception demonstrates that despite the guidance offered in Berkeley Hillside, exemptions are still capable of engendering confusion by practitioners and, apparently, the courts.

Equally troubling is the Court’s discussion of baseline. The Court rejected the City’s argument that its current practice of not considering a minimum density requirement constituted the baseline for measuring project impacts. Instead, the Court found that the requirements of the General Plan – even if not being enforced – constituted the appropriate baseline for the project – a questionable conclusion in light of the Supreme Court’s decision in Neighbors for Smart Rail v. Exposition Metro Line Construction Authority and the string of cases leading up to it.