In an opinion by Justice Kruger, the Supreme Court of California unanimously reversed the Court of Appeal in Friends of the College of San Mateo Gardens v. San Mateo County Community College District, Cal. Supreme Court, Case No. S214061 (September 19, 2016). The Court concluded the Court of Appeal erred in its application of a “new project” test in determining whether a subsequent or supplemental environmental impact report (EIR) is appropriate.

The Court held that the California Environmental Quality Act (CEQA) does not authorize courts to invalidate an agency’s CEQA action when it proposes changes to a previously approved project, based solely on the court’s own independent evaluation of whether the agency’s proposal is a new project, rather than a modified version of an old one. Instead of focusing on a possibly abstract characterization of whether the project is “new” or “old,” the court must evaluate the lead agency’s determination of whether the previous environmental document retains any relevance in light of the proposed changes, and if any major revisions to the document are required due to the involvement of new, previously unstudied significant environmental effects. Importantly, the Court clarified that these public agencies when challenged in litigation are subject to the “substantial evidence” judicial review. This is more deferential to the public agency and provides that the decision is to be upheld by the court if there is some evidentiary support for the agency’s decision, even if there is equal or greater conflicting evidence before the public agency.

Our previous blog post shows an account of the oral arguments before the California Supreme Court in the Case.

Factual and Procedural Background

In 2006, San Mateo Community College District (the District) adopted a facilities master plan (Plan) proposing nearly $1 billion in new construction and facilities renovations at the District’s three college campuses. At the College of San Mateo (College), the Plan included a proposal to demolish certain buildings and renovate others, including the College’s “Building 20 complex” which includes a garden, an interior courtyard, and a classroom and lab structure. The District published an initial study and mitigated negative declaration (MND), which stated that the Plan would not have a significant effect on the environment with the implementation of certain mitigation measures. In 2007, the District certified its initial study and adopted the MND.

The District later failed to obtain funding for the planned Building 20 complex renovations, and in May 2011, the District issued a notice of determination, indicating that it would demolish rather than renovate the complex and replace it with a parking lot and landscaping improvements. The District concluded that a subsequent or supplemental EIR was not required. The District addressed the change in an addendum to its 2006 initial study and MND, concluding that the project changes would not result in a new or substantially more severe impact than previously disclosed.

Plaintiff Friends of the College of San Mateo Gardens filed suit challenging the approval. The District rescinded its original addendum and issued a revised addendum in August 2011, bolstering the analysis in the original addendum. After public comment and discussion, the revised addendum was adopted and the demolition of the Building 20 complex was reapproved. Plaintiff dismissed its prior suit, and challenged the revised addendum and reapproval of the demolition for failure to fully comply with CEQA.  The trial court found that the demolition project was inconsistent with the previously approved plan, and that its impacts were not addressed in the 2006 MND. The trial court thus granted Plaintiff’s petition for a writ of mandate, ordering full compliance with CEQA.

The Court of Appeal affirmed, relying primarily on Save Our Neighborhood v. Lishman (2006) 140 Cal.App.4th 1288, concluding that as a threshold matter, the proposed building demolition was a new project, rather than a project modification. Therefore, the Court of Appeal concluded that the agency is required to engage in an initial study of the project to determine whether an EIR is required under section 21151.

The “New Project” Test

Acknowledging a split in authority arising from Lishman’s criticism in Mani Brothers Real Estate Group v. City of Los Angeles (2007) 153 Cal.App.4th 1385 (Mani Brothers), the Supreme Court addressed the proper inquiry for whether proposed changes to a project’s EIR or negative declaration require the preparation of a subsequent or supplemental EIR. Under Mani Brothers, the court applied the standards outlined in section 21166 to determine that substantial evidence supported the agency’s decision that an SEIR was not necessary for the modified project, but for the issue of police services. Under Lishman, the court determined that section 21166 does not apply to the review of an agency’s reliance on an addendum to a negative declaration rather than an independent environmental review. Instead, the inquiry is whether the modified project involves an entirely “new” project.

Plaintiff Friends of the College of San Mateo Gardens argued, based on the reasoning in Lishman, that implicit in CEQA’s statutory and regulatory scheme is a threshold question of law inquiry that determines whether the subsequent review provisions properly apply in the first place. Plaintiff argued that because Public Resources Code section 21166 and CEQA Guidelines section 15162[1]refer to substantial changes to “a project,” a court reviewing an agency’s proposed approval of project changes must first satisfy itself that the project remains the same project as before, instead of an entirely “new” project requiring an EIR, before proceeding to evaluate whether the changes call for a subsequent or supplemental EIR under CEQA’s supplemental review provisions.

While the Court noted that Plaintiff was correct that subsequent review provisions only apply if a project has been subject to initial review, the Court rejected Plaintiff’s overall approach, noting that it would assign courts the obligation to determine whether an agency’s proposal qualifies as a new project, without any standards to govern the inquiry. Likewise, neither Lishman nor the Court of Appeal offered standards to guide the inquiry. Absent a benchmark for measuring the newness of a given project, such a test would invite arbitrary results. The Court reiterated the Mani Brothersreasoning, stating that while drastic changes to a project might be viewed by some as transforming the project to a new project, others may view it as a dramatically modified project, and in either case such labeling is not helpful to a court’s analysis.

The Court held that for purposes of determining whether an agency may proceed under CEQA’s subsequent review provisions, the question is not whether the agency’s proposed changes render a project new in an abstract sense, nor does the inquiry turn on the identity of the project proponent, the provenance of the drawings, or other matters unrelated to the environmental consequences associated with the project. Rather, the agency’s environmental review obligations turn on the value of the new information to the still pending decision making process. The subsequent review provisions are designed to ensure that an agency proposing changes to a previously approved project explores environmental impacts not considered in the original environmental document. This assumes that some of the environmental impacts of the modified project are considered in the original environmental document, such that the original document retains some relevance to the decision making process. If the document is wholly irrelevant, then it is only logical that the agency start over from the beginning under Public Resources Code section 21151.

Standard of Review – Independent Judgment or Substantial Evidence?

Plaintiff Friends of the College of San Mateo Gardens further argued that an agency’s determination of whether a proposal qualifies as a new project is a question of law for courts to decide based on their independent judgment. Plaintiff likened the new project inquiry to the inquiry into whether a particular activity qualifies as a project within the meaning of CEQA. The Court held the Court of Appeal erred in treating the new project inquiry as a question for the court’s independent determination under a de novo standard, noting that whether an initial environmental document remains relevant despite changed plans or circumstances, is a predominantly factual question. Thus, it is a question for the agency to answer in the first instance, drawing on its particular expertise and the facts of the case, and it is a court’s task to decide whether the agency’s determination is supported by substantial evidence. Where an agency has determined that project changes will not require major revisions to its initial environmental document, as the District did, the reviewing court must ask whether substantial evidence supports that determination.

Alternatively, Plaintiff argued that Public Resources Code section 21166 applies only to projects where an initial EIR was prepared, and CEQA Guidelines section 15162 is invalid to the extent it extends section 21166’s subsequent review framework to projects initially approved via negative declaration, such as the campus improvement project. The Court disagreed, noting that despite section 21166’s failure to refer to negative declarations, EIRs were the only type of environmental document explicitly referenced in CEQA at the time of section 21166’s enactment, and the Legislature did not use the phrase “environmental impact report” with any specific intent to exclude negative declarations from its scope. Plaintiff additionally argued that application of the substantial evidence standard to projects approved via negative declaration creates a loophole in the statutory scheme, allowing agencies to evade their obligation to prepare an EIR based on the more demanding “fair argument” standard, so long as the potential environmental effects of the projects are caused by changes in the project after a negative declaration had been approved.

The Court rejected this argument, noting that the substantial evidence test in the Guidelines does not refer to substantial evidence that the project as modified will have significant environmental effects. Instead, the Court held that the test is whether there is substantial evidence that the proposed modifications will involve “substantial changes” requiring major revisions of the previous EIR or negative declaration due to the involvement of new or significantly more severe environmental effects. The Court explained this distinction by noting that when a project is initially approved by a negative declaration, a major revision to the negative declaration will necessarily be required if the proposed modification may produce a significant environmental effect that had not previously been studied. Thus, it does not permit agencies to avoid their obligation to prepare subsequent or supplemental EIRs to address new, and previously unstudied, potentially significant environmental effects. Therefore, CEQA Guidelines section 15162 constitutes a valid “gap-filling measure” to projects initially approved via negative declaration, and supports CEQA’s intent that both EIRs and negative declarations are entitled to a presumption of finality once adopted.

Additional Arguments

Finally, Plaintiff contended that both Public Resources Code section 21166 and CEQA Guidelines section 15162 were inapplicable because the District’s initially approved project at issue was akin to a program rather than a simple project. Plaintiff argued that the proposed changes to the Building 20 complex should be treated as a new site-specific project that riggers environmental review under CEQA’s provisions for “tiered” EIRs. The Court rejected this argument because the initial study and MND were not a tiered EIR because they did not purport to defer analysis of certain details of later phases of a complex project until those phases are up for approval. The District’s documents expressly concluded that “all potential impacts” of the entire project were mitigated to a point where no significant impacts would occur.  The Court stated that to treat the prior MND as a tiered EIR now would completely ignore the substance of the District’s conclusions to allow Plaintiff to raise an untimely challenge to the adequacy of the MND.

Conclusion

The Court reversed the judgment of the Court of Appeal, and remanded for further proceedings. However, the Court noted that its opinion did not end the case because the Court of Appeal did not address certain questions raised by the Plaintiff, including: (i) Plaintiff’s argument that the District abused its discretion in approving the Building 20 complex demolition based on the 2006 MND and the 2011 addendum; and (ii) Plaintiff’s argument that CEQA Guidelines sections 15162 through 15164 improperly authorize lead agencies to approve certain proposed project modifications through the use of addenda without public comment.