When all was said and done, it was a case of “same wine, different bottle” for Defendant and Appellant San Mateo Community College District (“District”) after the First District Court of Appeal’s published May 5, 2017 decision, following remand from the California Supreme Court, in Friends of the College of San Mateo Gardens v. San Mateo Community College District, et al. (1st Dist., Div. 1, 2017) ___ Cal.App.5th ___.  While the District’s project changes to demolish its San Mateo College Building 20 complex, which was formerly slated for renovation, were held not to result in an “entirely new” project for CEQA review purposes because the original MND retained informational relevance, the District’s Addendum to that MND was again held by the Court of Appeal to constitute an inadequate environmental review document for the modified project under CEQA “because there is substantial evidence to support a fair argument that the project changes might have a significant effect on the environment.”

As this is my seventh blog post on this important litigation, I won’t reiterate the case’s facts.  My post on the Supreme Court’s opinion ((2016) 1 Cal.5th 937) can be found here.  The facts and other relevant information concerning the case can be found in my posts dated July 8, May 12, May 4 and April 26, 2016, and March 25, 2014.

Key takeaways from the First District’s opinion after remand include:

• The arbitrary “new project” test, formerly used by some courts as a means to invalidate an agency’s CEQA review, is dead. “The Supreme Court explained that our approach in assessing whether the [District’s] proposal amounted to a new project was incorrect and “would inevitably invite arbitrary results” because neither CEQA nor the cases interpreting it contain any standards for determining whether a project qualifies as “new.””  [citation]  Instead of resting on whether a project is new “in an abstract sense,” the “decision to proceed under CEQA’s subsequent review provisions must … necessarily rest on a determination – whether implicit or explicit – that the original document retains some informational value.”  [citation]  Such an inquiry “is a predominantly factual question … for the agency to answer in the first instance, drawing on its particular expertise.”  [citation]
• The “critical” focus in subsequent review is whether “major revisions” to the original CEQA document are required. An agency’s decision regarding continued relevance is subject to very deferential substantial evidence review by a court, but it still decides only the “first step” of the relevant inquiry which determines the applicability of CEQA’s subsequent review provisions; “the next – and critical – step is to determine whether the agency has properly determined how to comply with its obligations under those provisions.  In particular, where … the agency has determined that project changes will not require ‘major revisions’ to its initial environmental document, such that no subsequent or supplemental EIR is required, the reviewing court must then proceed to ask whether substantial evidence supports that determination.”  [citation]  This judicial review “must reflect the exacting standard that as agency must apply when changes are made to a project that has been approved via a negative declaration.”  [citation]
• The District’s determination that the Building 20 complex demolition was a project modification, rather than a new project, was proper and supported by substantial evidence. Applying these standards as mandated by the Supreme Court, the Court of Appeal held the District’s Building 20 project was subject to CEQA’s subsequent review rules because substantial evidence supported the determination that the initial MND retained informational value.  Key facts comprising this substantial evidence included that much of the project description and many of the mitigation measures remained applicable, and that the addendum did not affect plans to demolish 14 of the 16 buildings originally slated for demolition.
• The District’s use of an Addendum was not proper because “major revisions” to the prior MND were required. The District did not fare so well with the second “critical” step of the inquiry – the Court of Appeal held its use of an addendum contravened CEQA’s subsequent review rules.  Those rules provide no subsequent EIR is required for a project unless the lead agency determines based on substantial evidence that substantial changes proposed to the project will require “major revisions” of the prior EIR or negative declaration “due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects.”  (Quoting CEQA Guidelines, § 15162(a)(1).)
• While the Guidelines are unclear, an MND may be appropriate. After reciting the Guidelines’ provisions regarding the appropriate uses of subsequent negative declarations and addendums, the Court stated:  “CEQA Guidelines section 15162 does not clearly specify when the agency must prepare a subsequent negative declaration instead of issuing an addendum or providing no further documentation.  But … a subsequent mitigated negative declaration is at least appropriate where a subsequent EIR would otherwise be required under … section 15162 but the project’s new significant environmental effects may be avoided through mitigation measures.”
• Under the Supreme Court’s “exacting standard,” when the original document is a negative declaration, a “major revision” is necessarily required if the project modification results in a previously unstudied significant effect that cannot be mitigated. Again, following the rules laid down by Supreme Court’s opinion, the Court of Appeal observed that (1) whether “major revisions” are required “depends on the nature of the original environmental document’ – “i.e., whether it was an EIR or a negative declaration”; and (2) “the appropriate standard of review also depends on the nature of the original environmental document.”  While reviewed for substantial evidence, the agency’s decision regarding whether “major revisions” are required ”must reflect the exacting standard that an agency must apply when changes are made to a project that has been approved via a negative declaration,” as opposed to the deferential standard that applies when the project was originally approved by an EIR.  [citations].”  Zeroing in on the required standard of review in this specific context, the Court quoted the Supreme Court with some added emphasis:  “[W]hen 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.  [citation]  Indeed, if the project modification introduces previously unstudied and potentially significant environmental effects that cannot be avoided or mitigated through further revisions to the project plans, then the appropriate environmental document would no longer be a negative declaration at all, but an EIR.”
• The second “critical step” is analytically different and much less deferential to the agency when the original CEQA document is not an EIR; effectively, the “fair argument” test is applied to unstudied effects of project changes. The Court of Appeal stressed that the highly deferential standard of review applicable to an agency’s decisions to proceed under the subsequent review rules is similar to that employed in determining whether a subsequent or supplemental EIR is required following an original EIR, but “analytically different” from the standard used after it has been determined the subsequent review rules apply and where the original document was a negative declaration.  In the latter case, it is “less deferential to the agency … because a negative declaration requires a major revision – i.e., a subsequent EIR or mitigated negative declaration – whenever there is substantial evidence to support a fair argument that proposed changes “might have a significant environmental impact not previously considered in connection with the project as originally approved.”  [citations].”  The Court further explained:  “Proposed changes might have a significant environmental impact when there is some competent evidence to suggest such an impact, even if other evidence suggests otherwise.  [citations]  This means that an agency’s determination that a major revision to a negative declaration is not required will necessarily lack substantial evidence when a fair argument exists that the project might have a previously unstudied significant environmental impact.”
• This standard of review is not complex or subtle, and it is plainly compelled by the Supreme Court’s opinion. Rejecting the District’s argument that a more subtle, complex and deferential standard of review applied, the Court of Appeal found this argument would create the sort of “loophole” for agencies the Supreme Court held did not exist.  It found “only one reasonable interpretation” of the Supreme Court’s opinion in the context of subsequent review following an original negative declaration:  if substantial evidence exists that the project changes might have a significant environmental effect not previously considered, major revisions of the negative declaration are necessarily required because the subsequent document must be either an EIR or mitigated negative declaration.
• The “silver lining” for agencies and developers: only project changes are at issue.  Applying these standards of review as mandated by the Supreme Court, the Court of Appeal significantly noted it did not “revisit environmental concerns laid to rest in the original analysis” and that “[o]nly changed circumstances … are at issue.”
• The “fair argument” standard applied to the project changes: District loses because an addendum is insufficient based on substantial record evidence of potential aesthetic impacts from gardens removal.  The Court observed that “[a] project’s negative effect on the aesthetic, natural, scenic or historical environmental qualities in its vicinity may constitute a significant environmental impact under CEQA” and that such issues are by nature “subjective” matters as to which “the opinions of area residents, if based on direct observation” may be relevant and constitute the requisite substantial evidence.  It further held the record in this case contained such evidence of significant aesthetic impacts from the modified project’s planned removal of substantial portions of the subject gardens around Building 20 – i.e., 20% of the north garden and one-half of the south – in the form of the many opinions and comments of professors and students who were personally familiar with and used the gardens (i.e., for solitude, reflection and study).  The District’s arguments in terms of percentages of loss of total landscaped and open space on campus were unpersuasive because they failed to account for the setting, context and uniqueness of the gardens as established by the professors’ and students’ comments, which constituted substantial evidence that the Building 20 demolition project might have significant aesthetic impacts.

While some of my colleagues no doubt think this decision is an absolute disaster because it reduces the usefulness of addendums and the deference granted to local agency decisions in the post-negative declaration subsequent review context, I am more optimistic and don’t think that the CEQA sky will fall as a result of it.

First, I simply don’t see how the Court could have ruled otherwise on the major legal points, which were emphatically dictated by the Supreme Court’s decision.

Second, with regard to the fact-specific issue whether a fair argument of significant aesthetic impacts from project changes was supported by substantial evidence in the record of this case, I would simply make a couple of observations. The legal threshold to make a fair argument is very low.  And the analysis of aesthetic impacts under CEQA is inherently “squishy” and problematic – but that is a CEQA reform topic that is, in itself, probably worthy of a law review article, and cannot be done justice here.  In summing up, it will suffice to say that the result in this case and the Court’s opinion did not surprise me at all, particularly in light of the Supreme Court’s emphatic depublication of the Coastal Hills Rural Preservation case (see my 11/30/16 post on that here).  The Court of Appeal’s opinion here closely adhered to the governing legal rules set forth by the Supreme Court – which is ultimately what it is supposed to do.