On November 22, 2016, the California Supreme Court issued a significant Order granting review in Coastal Hills Rural Preservation v. County of Sonoma (2016) 2 Cal.App.5th 1234, and also transferring the matter back to the Court of Appeal (First Appellate District, Div. 1) for reconsideration in light of Friends of the College of San Mateo Gardens v. San Mateo County Community College District (2016) 1 Cal.5th 937, 957-959, fn. 6, and CEQA Guidelines § 15384.  The high court further ordered the First District’s opinion to be depublished, and it is therefore no longer citable as binding legal precedent.  Both orders were unanimous.

Friends of the College of San Mateo Gardens, which addressed the applicability and operation of CEQA’s “subsequent review” rules (Pub. Resources Code, § 21166; Guidelines, § 15162), was analyzed in my prior post here.  Coastal Hills, analyzed in detail in my prior post here, had applied the traditional substantial evidence standard of review to Sonoma County’s approval of a Subsequent Mitigated Negative Declaration analyzing approved modifications to an existing master use permit for a controversial rural Buddhist retreat center.

The portions of the Friends of the College of San Mateo Gardens opinion cited in the Supreme Court’s “grant-and-retransfer” Order emphasize that, while negative declarations (like EIRs) are entitled to a presumption of finality, such that proposed project changes are not an occasion to reopen the original environmental review of the project, “the inquiry prescribed by the Guidelines is not whether the environmental effects of the modification are significant, but whether the modification requires major revisions to the negative declaration because of the involvement of new, potentially significant environmental effects that had not previously been considered in connection with the earlier environmental study.”  (1 Cal.5th at 958, fn. 6.) The cited portions of the Supreme Court’s Opinion further teach that “when 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.  (CEQA Guidelines, § 15162.)  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.” (Id. at 958, fn. omitted.)  The Guidelines provision cited in the Court’s Order defines “substantial evidence” as “enough relevant information and reasonable inferences from this information that a fair argument can be made to support a conclusion, even though other conclusions might also be reached.”  (Guidelines, § 15384(a).)

The Supreme Court’s action appears to signal an interpretation of the law that differs from that expressed in much of the prior published legal commentary on Friends of the College of San Mateo Gardens, which had posited that the traditional deferential substantial evidence standard of review would still be applied in determining the appropriate CEQA document, even to modified projects initially approved by negative declaration (ND).  It now appears fairly clear (to this commentator, at least) that that standard, which allows an agency discretion to draw its own environmental conclusions from competing substantial evidence, is not intended by the Supreme Court to apply when the initial document was a negative declaration instead of an EIR.  Rather, in cases where the initial CEQA document was a negative declaration, the Supreme Court appears to intend that a modified “substantial evidence” standard should be applied to the subsequent review – one which operates in much the same manner as the “fair argument” standard applied to review of Mitigated Negative Declarations (MNDs), albeit with the important qualification that the scope of review will be limited to the potential incremental effects of the project modification.  While many (including myself), had advocated and hoped for application of the traditional substantial evidence test in this context, it now appears (again, to me, at least, and despite the “mushiness” I previously noted in the Friends of the College of San Mateo Garden opinion) that the Supreme Court has held to the contrary.

This is not to say that the Court has eviscerated all significant benefits of proceeding under the subsequent review rules where the initial project is an ND or MND.  However, as I see it, the chief advantage of proceeding under the subsequent review rules in that context will not be one of avoiding the “fair argument” test, but of not having to reopen study of the originally approved project, for which CEQA review is deemed final and presumptively valid, and which (whether built out or not) should thus be considered part of the environmental “baseline.”