The Berkeley Hillside Preservation association wasn’t thrilled with a new neighbor’s plans to demolish an existing house and build a 6,478-square-foot house with an attached 3,394-square-foot 10-car garage on a slope in the Berkeley, California hills. The association challenged the plans asserting that the City of Berkeley violated the California Environmental Quality Act (CEQA) when it approved the building permit and determined that the project was categorically exempt from further environmental analysis.

The Superior Court agreed with the City, but the Court of Appeal invalidated the permit approval with reasoning that basically did away with CEQA categorical exemptions. The California Supreme Court recently ruled that the new neighbors can finally start pouring their foundation. See Berkeley Hillside Preservation et al., v. City of Berkeley et. al., S201116 decided 3/2/15 (Berkeley Hillside).

So what has been keeping this big house from being built? Some argued that the big house was “unusual “and therefore, should not qualify for a categorical exemption (CE). CEs are utilized quite often and can effectively streamline the environmental review process. The California Legislature directed the Secretary of the Natural Resources Agency to establish a list of projects that have been determined not to have a significant effect on the environment and therefore, are exempt from further analysis under CEQA. See Public Resources Code, section 21080 (b)(1) et seq. The City found that the big house met two CE categories: Class 3 having to do with residential homes and Class 32 for in-fill development projects.

As with every rule, there are exceptions. For CE exceptions, look to the Guidelines Section 15300.2(c): “A categorical exemption shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” (Emphasis added). In Berkeley Hillside, the Court of Appeal shook the foundation of the planned house by finding that the mere chance that a proposed activity may have a significant effect on the environment is itself an unusual circumstance that renders the CE inapplicable. See Opinion at page 2. If you are confused, you’re not alone. The Legislature says that CEs do not have a significant effect on the environment,unless there is an unusual circumstance. The Court of Appeal says the fact that the project may have a significant effect on the environment is itself an unusual circumstance. So can you ever use a CE?

The answer is “yes”, CEs are alive and well. The Supreme Court held that the Court of Appeal “erred by holding that a potentially significant environmental effect itself constitutes an unusual circumstance.” This reasoning conflicts with the purpose of CEs which by definition, do not have a significant effect. For an exception to a CE determination to apply, “a potentially significant effect must be “due to an unusual circumstance.” Opinion at 20.

The Supreme Court also disagreed with the Court of Appeal on the standard of judicial review required for an agency CE decision, holding that “while evidence of a significant effect may be offered to prove unusual circumstances, circumstances do not become unusual merely because a fair argument can be made that they might have a significant effect.” Opinion at 36. The agency determines, based on substantial evidence, whether there is an unusual circumstance and if so, then determines if there is a significant effect due to the unusual circumstance. The judicial review of that decision is limited to whether the determination is supported by substantial evidence

And there you have it, a strong CEQA foundation that enables the big house project to move forward. I still have one question: what vehicles are going to be housed in that 10-car garage?