In an exceptionally thorough and well-reasoned opinion, the Third District Court of Appeal affirmed the trial court’s judgment denying a writ petition challenging respondent 14th District Agricultural Association’s (District) approval of a rodeo event to be held at the Santa Cruz County Fairground pursuant to the CEQA Guidelines’ Class 23 categorical exemption. Citizens For Environmental Responsibility v. State of California ex rel 14th District Agricultural Association (3d Dist. 3/26/14) ___ Cal.App.4th ____, ___Cal.Rptr.3d ____, 2014 WL 1232608.  In doing so, the Court addressed and clarified important issues regarding (1) the scope of the Class 23 exemption for “normal operations of existing facilities for public gatherings” (14 Cal. Code Reg., § 15323), (2) when alleged “mitigation” measures disqualify a project from utilizing a categorical exemption, and (3) operation of the “unusual circumstances” exception to categorical exemptions. (14 Cal. Code Reg., § 15300.2(c).)

The facts of the case are both interesting and critical to the decision. The District approved a rodeo event that was held in October 2011 at the Santa Cruz County Fairground in Watsonville (“Fairground”).  It approved a Notice of Exemption (NOE) from CEQA review for the event under the Class 23 categorical exemption for “normal operations of existing facilities for public gatherings for which there is a past history of the facility being used for the same or similar kind of purpose.” The Class 23 exemption further provides that “‘past history’ shall mean that the same or similar kind of activity has been occurring for at least three years and that there is a reasonable expectation that the future occurrence of the activity would not represent a change in the operation of the facility. Facilities within this exemption include, but are not limited to, racetracks, stadiums, convention centers, auditoriums, amphitheaters, planetariums, swimming pools, and amusement parks.” (14 Cal. Code Reg., § 15323.)

Plaintiffs sued to challenge and enjoin the rodeo event approval under CEQA, a stay was denied, and the event proceeded; thereafter, the writ was denied, plaintiffs appealed, and the Court of Appeal expressly exercised its discretion to decide the moot appeal to address an issue of broad public interest that is likely to recur and capable of evading review.

Regarding its past history of relevant operations, the County Fair was established in 1885; District bought the current Fairground site in 1941 and constructed most of the currently-existing equestrian/livestock arenas and barns that same year; the existing equestrian facilities there have been in place at least 50 years; equestrian and livestock events have always been accommodated at the Fairground; in the 1970s, the Fairground hosted at least 8 annual rodeos; and the Fairground facility has sponsored two to four equestrian or livestock shows per month for the past 25-30 years, in addition to the annual County Fair.

Regarding its relevant environmental setting, the Fairground is in the Corralitos/Salsipuedes Creek watershed, and Salsipuedes Creek runs adjacent to and through a portion of the Fairground where the horse and cattle stalls, horse barn and horse arenas are located. In 2009, the Regional Water Quality Control Board for the Central Coast Region (RWQCB) determined both Corralitos and Salsipuedes Creeks had impaired water quality due to human and animal fecal coliform discharged from storm drains, homeless encampments, pet waste, septic tanks, and farm and livestock operations (including the Fairground). The RWQCB established a total maximum daily load (TMDL) for fecal coliform in the creeks, imposed discharge prohibitions approved by the State Water Resources Control Board and USEPA, and required owners/operators (including animal/livestock owners, though not specifically the Fairground) to control discharges and monitor and report progress. The Fairground’s voluntary stream monitoring program, begun in December 2010, showed the amount of E. Coli entering the property via Salsipuedes Creek upstream was actually greater than that leaving the property and flowing downstream.

Beginning in the 1960s, the Fairground had taken steps to manage manure produced during its equestrian and livestock events. Since the early 1990s, among other steps, the manure has been hauled away to a composting facility on a daily basis during such events. The Fairground’s preexisting manure management practices were formalized in a written document in July 2010 (the Manure Management Plan, or MMP) after appellants objected to an earlier, grander-scale proposed rodeo that never took place.

The NOE for the challenged 2011 rodeo event noted the event would utilize existing facilities, proposed no construction or physical alterations, and would not result in impacts on a resource of critical concern, cumulative impacts or other significant impacts; it also adumbrated the inapplicability of any regulatory exceptions to the Class 23 exemption. Regarding the potential for runoff to pollute the impaired creeks, the NOE stated: “A narrow segment of Salsipuedes Creek flows through the Fairground and the arena area and is mostly an earthen-channel devoid of vegetation within the arena location; a short segment flows through an underground pipeline culvert. Horse and livestock manure is strictly managed in accordance with the District’s ‘Manure Management Plan.’ Manure is collected, contained in enclosed bunkers and hauled offsite, and animal washdown areas flow to the existing sanitary sewer. These required operations and management of the animals will prevent non-point source pollution into the creek and indirect impact to the aquatic species that may be present.”

Groups calling themselves “Citizens for Environmental Responsibility” and “Stop the Rodeo,” and an individual filed the CEQA action challenging the NOE and rodeo event. The Court of Appeal made a number of significant holdings and determinations in rejecting plaintiffs/appellants’ arguments and affirming the trial court’s judgment denying the requested writ of mandate, including:

• The MMP was not a “mitigation measure” proposed for the rodeo project, and thus did not violate the rule that “’[a]n agency should decide whether a project is eligible for a categorical exemption as part of its preliminary review of the project without reference to or reliance upon any proposed mitigation measures.’” (quoting Salmon Protection & Watershed Network v. County of Marin (2004) 125 Cal.App.4th 1098, 1006 (“SPAWN”), emph. added.)
• While the MMP may fall within the Guidelines’ general definition of “mitigation” (14 Cal. Code Reg., § 15370), it was “not a new measure proposed for or necessitated by the rodeo project” but, rather, “a preexisting measure previously implemented to address a preexisting concern, which was formalized in writing before the rodeo project was proposed.” The Court thus held “the MMP is actually part of the ongoing “normal operations” of the Fairground” and that “[u]se of this measure does not disqualify the rodeo project from Class 23 exemption.”
• The Court further distinguished SPAWN as involving a county’s improper reliance on a categorical exemption for construction of single family homes despite the facts that (1) the proposed home at issue “was adjacent to a protected anadromous fish stream and within a stream conservation area… of ‘critical concern’” and (2) the County’s conclusion that no exceptions to the exemption applied relied on “dozens of [proposed] drainage features for erosion and sediment control” attached to the grant of exemption and absent which “[t]he landowner’s engineering consultant acknowledged runoff from new roof tops and driveways could erode streambanks[.]” Unlike SPAWN, the rodeo NOE did not rely on any newly “proposed” mitigation measures; rather, “the MMP predated this rodeo project and formalized practices that had been implemented for decades.”
• In light of the foregoing facts, the Court found the case more akin to Wollmer v. City of Berkeley (2011) 193 Cal.App.4th 1329, which held a dedicated right-of-way that helped the City improve existing adverse intersection traffic conditions “was not a CEQA mitigation measure for project impacts, but a component of the [originally proposed] project [design]” and thus “did not [improperly] mitigate the project into qualifying for a categorical exemption.”
• Turning to the scope of the Class 23 exemption for “normal operations” of public gathering facilities (an interpretive task which courts properly determine as a matter of law), the Court noted it consists of three elements, such that it “applies to projects that: (1) are normal operations of existing facilities for public gatherings for which the facilities were designed, (2) where there is a past history of the facility being used for the same or a similar purpose within at least the past three years, and (3) there is a reasonable expectation that the future occurrence of the activity would not represent a change in the operation of the facility.”
• The Court had little trouble concluding that substantial evidence supported the District’s factual determination that the rodeo project fell within the scope of the Class 23 exemption as it “is indistinguishable from other livestock and equestrian events held at the Fairground for many, many years. It involves the presence of no more cattle and/or horses in fairground facilities than have been present for prior events. These facilities are designed to house those animals, and no changes to the facility or facility operations are necessary for the rodeo project.”
• Having noted that once the agency meets its initial “burden to establish the project is within the categorically exempt class, ‘the burden shifts to the party challenging the exemption to show that the project is not exempt because it falls within one of the exceptions listed in Guidelines section 15300.2’” (citing California Farm Bureau Federation v. California Wildlife Conservation Bd. (2006) 143 Cal.App.4th 173, 185-186), the Court turned to plaintiffs’ arguments for application of the “unusual circumstances” exception.
• Citing its own recent precedent (Voices for Rural Living v. El Dorado Irrigation Dist. (2012) 209 Cal.App.4th 1096, 1107-1108), the Court noted “two questions are at issue in reviewing an agency’s determination that a project did not trigger the exception for unusual circumstances that have a significant effect on the environment,” namely: (1) “whether the [p]roject presents unusual circumstances”; and (2) “whether there is a reasonable possibility of a significant effect on the environment due to the unusual circumstances.” It held that “‘[a] negative answer to either question means the exception does not apply.’” (quoting Banker’s Hill, Hillcrest, Park West Community Preservation Group v. City of San Diego (2006) 139 Cal.App.4th 249, 278.)  It further held the first question — whether the project involves unusual circumstances — is one of law reviewed de novo.
• Significantly, the Court pointedly rejected appellants’ oral argument assertions “that the mere fact there is a possibility of an environmental effect is an unusual circumstance and… that nothing more need be shown” as being “inconsistent with current published authority and the language of Guidelines section 15300.2[(c)], which states that the environmental impact must be ‘due to’ an unusual circumstance[,]” and further noted that “[a]ppellants do not challenge the validity of the guideline in this appeal.”
• Applying the rule that “[c]ourts view circumstances as unusual within the meaning of the exemption when ‘the circumstances of the project [] differ from the general circumstances of the projects covered by a particular exemption’” (emph. added), the Court compared the rodeo project “to the facility’s other projects, i.e., events or operations that comprise the normal operations of that facility and compare[d] those circumstances against those presented by the proposed project.” It rejected appellants’ arguments that the project must be compared to activities at other exempt public gathering facilities, or to “normal” fairground facilities, or be classified as presenting unusual circumstances due to Salsipuedes Creek’s impaired status. According to the Court, an “apples-to-apples” comparison precluded comparison to non-fairground facilities, and even if a comparison to other fairground facilities (as opposed to historic activities at the fairground) were appropriate, appellants offered no evidence or proof of circumstances at such other facilities, even though “[they] have the burden of establishing the exception” under the case law.
• In pages of detailed analysis, the Court painstakingly distinguished numerous cases upon which appellants attempted to rely as involving different classes of categorical exemptions, and different factual circumstances. It concluded “[a]ppellants show no change in the use of the facility, nor a change in the use of the facility relative to the temporary housing of cattle and horses, nor any other changes in operations, let alone changes that would constitute unusual circumstances.” Simply put: “the rodeo project had no unusual circumstances to distinguish it from others in the exempt class, e.g., other ‘normal operations’ of the Fairground.” Moreover, it presented no different or additional environmental risks, and “was consistent with the surrounding zoning, which was commercial agricultural, permitting the commercial raising of animals, including grazing and livestock production, and residential agricultural, permitting animal-keeping and farming.”

The Court concluded its analysis as follows: “Since there were no unusual circumstances in this case, there can be no significant environmental effect “‘due to the unusual circumstances.” [citation] The unusual circumstances exception to a categorical exemption does not apply unless the potential impacts of a project will constitute changes or alterations in the baseline environmental conditions as they exist at the time the project is approved and such changes or alterations are due to unusual circumstances. [citation]  Because a negative answer as to the question of whether there are unusual circumstances means the exception does not apply [citation], we need not address appellants’ arguments about significant environmental effects.”

The Third District’s position on the application of the “unusual circumstances” exception to categorical exemptions is thus very clear. It is also diametrically opposed to that taken by the First District in a case in which the California Supreme Court has granted review, and which has now been pending for almost two years in that Court, Berkeley Hillside Preservation et al v. City of Berkeley, et al., Case No. S20116. CEQA practitioners, consultants and developers continue to await the high court’s decision on this critically important CEQA issue.