On May 30, 2014, the Court of Appeal for the First Appellate District (Division 4) filed its order denying rehearing and granting the requests of real party in interest AT&T, Verizon, Remy Moose Manley and others to publish its April 30 opinion in San Francisco Beautiful, et al. v. City and County of San Francisco, et al. (AT&T California, RPI) (1st Dist. 2014) ___ Cal.App.4th___, 2014 WL1694992.  The case involved a challenge, by plaintiffs comprised of numerous citizens and neighborhood groups, to the City’s determination that AT&T’s “Lightspeed” project was categorically exempt from CEQA and therefore didn’t require an EIR. The project involved installing 726 new utility cabinets – most to be 48” high, 51.7” wide, and 26” deep – at undetermined locations on public sidewalks throughout the City within 300 feet of existing cabinets, in order to upgrade broadband speed and capabilities using an expanded fiber-optic network.

After withdrawing its application for a previous version of the project to respond to publicly-expressed concerns, AT&T submitted a revised proposal. That revised project reduced the number (from 850 to 726) and size of the cabinets, increased the distance between proposed and existing cabinets, eliminated the proposed addition of new facilities within historic districts, committed to screening and use of anti-graffiti protocols and materials, and committed to numerous limitations when choosing locations for individual cabinets that assured protection of pedestrian access and “clear zones,” unobstructed views of traffic signs and signals, and minimum setbacks, among other requirements. The Board of Supervisors by 6-5 vote denied the petitioner group’s administrative appeal of the Planning Commission’s determination approving the project based on CEQA’s Class 3 categorical exemption for (in pertinent part) the “construction and location of limited numbers of new small facilities or structures; [and] installation of small new equipment and facilities in small structures….” (14 Cal. Code Regs., § 15303.) The trial court denied petitioner’s mandate petition, which alleged that CEQA required an EIR for the project; petitioners appealed that judgment and the Court of Appeal affirmed and, as noted, ordered its initially-unpublished decision to be published in full a month after its filing.

Key takeaways from this now-precedential opinion include:

• The Court found it unnecessary to decide whether the first clause of the Class 3 exemption – “construction and location of limited numbers of new, small facilities or structures” – applied, and thus unnecessary to decide whether 726 new structures was a “limited number.” Rather, it held as a matter of law that the project fell within the coverage of the exemption’s second clause – “installation of small new equipment and facilities in small structures” – and rejected plaintiffs’ argument that the clause was limited to existing small structures as contrary to the exemption’s plain language. According to the Court, as a matter of “common-sense interpretation,” the “project propose[d] the “installation” of the utility cabinets for purposes of clause [2] of the Class 3 exemption.”
• The Court once again acknowledged the current “split of authority regarding the standard of proof and the standard of review applicable to an agency’s determination of whether a project falls within an exception to the categorical exemptions.” It also noted the issue was currently pending before the Supreme Court in the Berkeley Hillside Preservation case (in which review was granted 5/23/12). Ultimately, however, it held that regardless of whether it applied the “substantial evidence” test or the “fair argument” test to the City’s exemption determination, no exception to the categorical exemption was established by petitioners on the facts before it.
• The Court rejected plaintiffs’ attempt to invoke the “unusual circumstances” exception because they failed to show the proposed 726 “utility boxes would create impacts that would ‘differ from the general circumstances of the projects covered by’ the Class 3 exemption or, for that matter, in which any circumstances “create an environmental risk that does not exist for the general class of exempt projects.’” Emphasizing the factual context – an “urban environment… already replete with facilities permitted on the public rights-of-way” – the Court observed “that the City has, at a minimum, tens of thousands of street-mounted facilities; these include 1,100 bus shelters, 13,000 MUNI–maintained poles, 132 cabinets to support MUNI operations, 33 advertising kiosks, 5,800 signalized intersections, 25 automatic toilets, 113 kiosks, 744 news racks, 5,151 trolley poles, 21,891 street lights, and five street light controllers for a total of 47,994 such facilities.”
• The Court held a “fair argument” was not supported by plaintiffs’ evidence consisting of the statements of numerous residents and Board of Supervisors members “to the effect that the utility boxes would be unsightly, they would attract graffiti and public urination, they would impede pedestrians, and they would block driver’s views.”  It noted the established CEQA principles that public controversy alone does not require an EIR, and that differences of opinion between the planning commission and the board do not establish serious public controversy. It concluded that, as to the type of aesthetic impacts asserted in this case in an urban setting, the relevant question is whether a project would “[s]ubstantially degrade the existing visual character or quality of the site or its surroundings” (citing CEQA Guidelines, Appendix G), and that plaintiffs failed to produce sufficient evidence to make such a showing. According to the Court: “In this [already heavily urbanized] context, the concerns raised by certain officials and members of the public do not rise to the level of a significant impact on aesthetics or pedestrian safety.”
• The Court found inapposite two leading cases that found significant aesthetic impacts in other contexts, distinguishing them as follows: “Pocket Protectors [v. City of Sacramento (2004) 124 Cal.App.4th 903] and Ocean View [Estates Homeowners Assn, Inc. v. Montecito Water Dist. (2004) 116 Cal.App.4th 396] are both characterized by a clear change to the existing environment. In Pocket Protectors, the residential project was to be built on undeveloped land, in a manner inconsistent with zoning. The aluminum roof proposed to cover a four-acre reservoir in Ocean View would alter the views from public trails. These cases do not consider the sort of impact present here – the addition of new small structures to urban streets in which such structures are already a ubiquitous feature of the environment. Neither the concerns expressed by residents nor those raised by members of the Planning Commission or the Board of Supervisors rise to the level of fact-based evidence that the utility cabinets will substantially degrade the existing visual character of the urban environment in which they will be placed.”
• To drive home its point, the Court quoted its own decision in Bowman v. City of Berkeley (2004) 122 Cal.App.4th 572, in which it “reached a similar conclusion”: “[W]e do not believe that our legislature in enacting CEQA… intended to require an EIR where the sole environmental impact is the aesthetic impact of a building in a highly developed area…. To rule otherwise would mean that an EIR would be required for every urban building project that is not exempt under CEQA if enough people could be marshalled to complain about how it will look.”
• The Court also rejected plaintiff’s argument that the cumulative impacts exception (14 Cal. Code Regs., § 15300.2) applied, since they had not shown “the cumulative impact of successive projects of the same type in the same place, over time is significant.” (Emph. added.)  It cited Robinson v. City and County of San Francisco (2012) 208 Cal.App.4th 950, 958, for its holding that the projects whose cumulative impacts must be considered for purposes of the exception must be in the same location – not just the same jurisdiction – under the exception’s plain language, and that this “limitation makes sense” lest the “exception… swallow the rule, and the utility of the Class 3 exemption… be vitiated.” The Court noted that in the case before it “[p]laintiffs have not drawn our attention to any evidence showing that the utility boxes will create significant cumulative impacts in the individual locations in which they are placed” and that referenced comments in the record made in opposition to the withdrawn 2008 version of the project were “not evidence that AT&T is currently planning to locate more than one box in close proximity, nor that the cumulative impacts of such a placement would be significant.”
• Finally, the Court rejected plaintiffs’ contention that the City improperly relied on mitigation measures in concluding the project was categorically exempt. Acknowledging the rule that “[m]itigation measures may support a negative declaration but not a categorical exemption” (quoting Salmon Protection & Watershed Network v. County of Marin (2004) 125 Cal.App.4th 1098, 1102), the Court nonetheless rejected the argument that individualized review by the City’s Department of Public Works – which was required for excavation permits by generally-applicable provisions of the City’s Public Works Order – constituted a mitigation measure. According to the Court: “An agency may rely on generally applicable regulations to conclude an environmental impact will not be significant and therefore not require mitigation.” Moreover, AT&T’s voluntary agreement to provide additional public notice for each cabinet site, maintain a public web-site, consider non-sidewalk locations and screening options, and to conduct other public outreach measures, did not constitute either a basis for the Board’s categorical exemption determination or a mitigation measure for a significant environmental effect.

The Court of Appeal’s newly-published decision makes a significant contribution to CEQA case law not only in construing the Class 3 categorical exemption, but generally on the topics of aesthetic impacts in an urbanized environment and the characterization of generally-applicable environmental regulations not to constitute CEQA “mitigation measures” precluding an exemption. It underscores the CEQA rule that the significance of physical changes to the environment vary with the environmental setting, and that in the absence of impacts on traffic, safety or scenic views, it will be difficult to support a fair argument that adding zoning-consistent small structures to a highly urbanized setting may have a significant adverse aesthetic effect.