Clearing the Smoke: California Supreme Court Expands Scope of Activities Subject to CEQA Review

Holland & Knight LLP

Holland & Knight LLP

The California Supreme Court in Union of Medical Marijuana Patients v. City of San Diego (Medical Marijuana) cut through the hazy smoke that sometimes obscures whether an activity would be subject to environmental review under the California Environmental Quality Act (CEQA).

According to the court's decision on Aug. 19, 2019, in Medical Marijuana, CEQA generally defines a project as an activity that is "... (1) undertaken or funded by, or subject to the approval of a public agency and (2) may cause 'either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.' " See Public Resources Code Section 21065. Until Medical Marijuana, there was ambiguity as to whether the adoption of zoning ordinances and other similar entitlements were conclusively presumed to be projects pursuant to Public Resources Code Section 21080(a).

Background and Court Ruling

In this case, the city of San Diego approved an ordinance regulating the location and operation of medical marijuana dispensaries without conducting any environmental review since the city stated that the ordinance was not a "project." The petitioner argued that separate and apart from Public Resources Code Section 21065, the medical marijuana ordinance was subject to CEQA pursuant to Public Resources Code Section 21080(a) which states that CEQA applies "... to discretionary projects proposed to be carried out or approved by public agencies, including, but not limited to, the enactment and amendment of zoning ordinances."

The high court gave a huge exhale of relief, at first, to all public agencies that approve zoning ordinances, zone variances, conditional use permits – all entitlements addressed under Public Resources Code Section 21080(a) – by holding that these type of entitlements do not automatically require CEQA review as a project. Zoning ordinances and other similar type of entitlements addressed in Public Resources Code Section 21080(a) are subject to the Public Resources Code Section 21065's threshold question of whether the proposed public agency action would have a reasonably foreseeable indirect physical change in the environment.

Creating more of a letdown than a high for the city of San Diego, as well as many others across the state, the court held that the city's ordinance was the sort of activity that may cause a direct or indirect physical change in the environment and set out a refined test for determining when a project is subject to CEQA:

  • whether the activity's potential for causing environmental change is sufficient to justify the further inquiry into its actual effects
  • if the proposed activity is the sort that is capable of causing direct or reasonably foreseeable indirect effects on the environment, some type of environmental review is necessary

Conclusion and Takeaways

By shifting the analysis from whether actual impacts would occur to the merely potential for impacts to occur to make the threshold determination as to whether an activity is a project, the high court has once again expanded the scope and extent of activities that would potentially be subject to CEQA. So long as there is a theoretical possibility of an environmental impact, even a speculative impact, the activity undertaken or funded by a public agency would be considered a project subject to environmental review unless an exemption applies. Developers, and public agencies, in particular, should be aware that it would be very easy for potential project opponents to argue that actions with a potential theoretical environmental impact, as opposed to actually causing an environmental impact, are now considered projects under CEQA.  

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Holland & Knight LLP

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