On remand following a landmark California Supreme Court decision, the First District Court of Appeal filed its opinion affirming the trial court’s judgment on September 23 and later ordered it published on October 15, 2015. Berkeley Hillside Preservation, et al. v. City of Berkeley (1st Dist., Div. 4, 2015) ___ Cal.App.4th ___, 2015WL 6470455. Readers can refer to my previous post for a complete treatment of the case’s facts and the Supreme Court’s rulings. Key aspects and points of the Court of Appeal’s 19-page opinion on remand include:

• Consistent with the Supreme Court’s opinion, the court of appeal refers to the exception to categorical exemptions under Guidelines § 15300.2(c) as “the unusual circumstances exception.” (Terminology matters, and appellants had consistently referred to the exception as the “significant effects” exception.) The court of appeal opinion’s recitation of the case’s relevant factual and procedural background also quotes liberally from the Supreme Court’s opinion throughout.
• Material to the opinion’s analysis were (1) a significant concession made by appellants regarding the existence of evidentiary support for the City’s initial finding that the Kapors’ single-family residence project qualified for CEQA’s Class 3 and 32 categorical exemptions, and (2) a legal argument made by appellants only in passing in the original appeal, and not addressed therein or by the Supreme Court, but elevated on remand to consume about one-third of the legal analysis in appellants’ supplemental brief, i.e., that the City’s imposition of a traffic-management plan condition on the project permits below constituted a “mitigation measure” that precluded application of any categorical exemptions as a matter of law.
• Summarizing and quoting literally from the Supreme Court’s legal analysis, the opinion states that a party challenging a categorical exemption decision by seeking to establish the unusual circumstances exception cannot prevail merely by providing substantial evidence that the project may have a significant environmental effect. Rather, such a party must either establish an unusual circumstance distinguishing the project from others in the exempt class and giving rise to such a potential impact, or alternatively produce evidence that the project will have a significant effect (which would, itself, tend to prove some circumstance of it was unusual).
• In reciting the corresponding “bifurcated” standard of review for prejudicial abuse of discretion under Public Resources Code § 21168.5, the opinion states: ““[B]oth prongs of section 21168.5’s abuse of discretion standard apply on review of an agency’s decision with respect to the unusual circumstances exception. The determination as to whether there are ‘unusual circumstances’ [citation] is reviewed under [the] substantial evidence prong. However, an agency’s finding as to whether unusual circumstances give rise to ‘a reasonable possibility that the activity will have a significant effect on the environment’ [citation] is reviewed to determine whether the agency, in applying the fair argument standard, ‘proceeded in [the] manner required by law.’” [¶]“Whether a particular project presents circumstances that are unusual for projects in an exempt class is an essentially factual inquiry, ‘”founded ‘on the application of the fact-finding tribunal’s experience with the mainsprings of human conduct.’”’ (Quoting from Supreme Court’s opinion.)
• In sum, the lead agency is the fact finder and the deferential substantial evidence standard of review applies to its determination of the factual issue whether the project presents unusual circumstances; when there exist unusual circumstances, the inquiry regarding whether there is a reasonable possibility of a significant effect due to them is answered by the agency under the “fair argument” test.
• Applying the relevant legal standards to the case before it, the court of appeal “beg[a]n with appellants’ concession that the record contains substantial evidence supporting the applicability of the relevant categorical exemptions.” Given this concession, the court reasoned that appellants had necessarily conceded that substantial evidence supported each of the qualifying elements of the exempt classifications, i.e., that the project was a single-family residence in an urbanized area, consistent with the applicable general plan and zoning, within City limits on a site not more than 5 acres and surrounded by urban uses, in an area adequately served by utilities and with no threatened species value, and would have no significant traffic, noise, air quality or water quality impacts. (City Guidelines §§ 15303(a), 15332.) Per the Court: “Where this court previously erred was in accepting appellants’ concession but then proceeding to separately analyze the unusual circumstances exception to the exemptions, without sufficiently appreciating how the two are related. This led to the analytical mistake of using the de novo standard of review to consider whether unusual circumstances were present.”
• Instead, the court noted, it is required by the Supreme Court’s decision to apply the “relatively deferential” substantial evidence standard to review of the “unusual circumstances” determination, to resolve all evidentiary conflicts and indulge all reasonable inferences in favor of the lead agency’s determination on this issue, and to uphold that determination if there is any substantial evidence – whether contradicted or uncontradicted – to support it. Per the Court: “[T]o concede that substantial evidence supports the applicability of the Class 3 and Class 32 exemptions on this record, thereby putting the proposed project within a class that presumptively does not have an effect on the environment, is to concede, in effect, that there is no feature distinguishing it from the exempt class.” Further, appellants “fail to come to grips with the stringent [substantial evidence] standard of review that [the Supreme Court’s decision] directs us to apply at this stage of the proceedings[,]” i.e., resolving all conflicts and inferences in favor of the agency’s finding and upholding it where any substantial evidence – contradicted or not – supports it.
• In a footnote, the court noted that appellants had chosen not to attempt to establish unusual circumstances by providing evidence that the project will have a significant impact despite otherwise being included in an exempt class. It observed that there are “certainly [such] scenarios … such as a residence [that would] be built on an environmentally sensitive area that could be environmentally impacted by the construction of a single home.” (Citing Salmon Protection & Watershed Network v. County of Marin (2004) 125 Cal.App.4th 1098, 1103, 1106-1107 [“SPAWN”])
• Reviewing the evidence on the relative size of the home, lot, and FAR as compared to other homes in the immediate vicinity, the court upheld the City’s conclusion that neither the size nor location of the home were unusual: “To be sure, Kapor and Kapor-Klein propose to build a home that certainly could be considered unusually large, as that term is generally understood by a lay person.… But we may not substitute our judgment on this point.” The court similarly applied the deferential substantial evidence standard in rejecting appellants’ claims that the project’s environmental setting was unusual due to seismic and geotechnical concerns, as such claims ignored “evidence pointing in the other direction” and improperly relied as a factual matter on an expert opinion “based on the potential effects of unapproved activities that [the expert] believed would be necessary because the project, as approved, could not be built as described.”
• Based on its affirmance of the City’s determination that there were no unusual circumstances, there was no need for the court to reach the next step in the analysis, i.e., it did not “need [to] consider appellants’ contention on remand that there is a fair argument of a reasonable possibility of a significant effect on the environment due to unusual circumstances.”
• The final issue “flagged” for the court’s consideration by the Supreme Court, but previously unresolved, was appellants’ argument “that the implementation of the [City’s required] traffic-management plan precludes application of categorical exemptions.” The court of appeal stated that a “close review of the relevant traffic measures undermine[d]” this argument. A memo from the City Manager stressed that the conditions of approval (with the exception of one notice condition unrelated to any potential environmental impact) were “standard conditions” imposed on all residential developments in the hills and were not intended to address any specific impacts of this project. While recognizing that the distinction between project components and measures designed to mitigate project impacts is not always clear, the court held that “[h]ere, however, it is clear the traffic-management plan was not a mitigation measure that precludes application of categorical exemptions.” In so holding, the court discussed several cases and distinguished SPAWN – the case relied on by appellants – as a case involving a home construction project within a designated “environmental resource of critical concern” and where “the project was specifically conditioned on measures meant to mitigate impact on a habitat for a threatened species, meaning the activity might have a significant effect on the environment, thus precluding application of a categorical exemption.”
• In concluding its analysis, the court noted the traffic plan condition was “not proposed subsequent action taken to mitigate any significant effect of the project, and therefore is not a mitigation measure that precludes application of a categorical exemption.” (Citing Save the Plastic Bag Coalition v. City and County of San Francisco (2013) 222 Cal.App.4th 863, 882-883.) Rather, the case was more akin to Association for Protection etc. Values v. City of Ukiah (1991) 2 Cal.App.4th 720, 736, where the First District concluded the unusual circumstances exception did not apply to an exempt single-family home project since the challenger’s expressed concerns with “[s]urface and groundwater runoff are common and typical concerns with sloping lots and in this context … cannot be considered unusual circumstances.” Similarly, the court observed with respect to the instant case that: “Managing traffic during the construction of a home is a common and typical concern in any urban area, and especially here given the narrow roads in the area and the volume of dirt to be removed”.

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Given the conflicts in the evidence in this case, its outcome was essentially preordained by the standard of review – substantial evidence – that the Supreme Court’s decision required to be applied to the City’s “unusual circumstances” determination. Under the now-settled standards for application of the “unusual circumstances” exception, the construction of single-family homes and other small structures in urbanized areas will typically be exempt from CEQA – as the legislature no doubt intended.

Apart from the “main event” issue, another interesting and important issue highlighted by this case involves the not-always-clear distinction between mitigation measures – which typically disqualify a project from using a categorical exemption – on the one hand, and environmentally conscious project components and standardized conditions of project approval, on the other hand. In analyzing this issue, practitioners should focus on whether an aspect of the project was originally proposed by the project proponent as an integral part of the project, as opposed to being subsequently developed and imposed by the lead agency during and as a result of concerns arising from the environmental review process. The court’s decision indicates that generic and standardized conditions of approval that are uniformly imposed on all projects of the type at issue are less likely to be viewed as “mitigation measures” that disqualify a project from claiming an exemption, presumably because such standard conditions are imposed automatically across-the-board, and not as the result of any individualized, ad hoc finding that the particular project under review may have any significant impact that is required to be addressed by mitigation. There are a number of reasons and contexts in CEQA practice that require distinguishing between components of the originally proposed project and subsequently imposed mitigation measures, and it is probably safe to say that practitioners in the area can expect more litigation over the nature of “mitigation measures” in the future.