Public Agencies Must Prepare an Environmental Impact Report if Substantial Evidence Exists in the Record of a Significant Environmental Impact

In 2008, two private companies sought to construct the Parker Place Project consisting of 155 residential units and over 20,000 square feet of commercial space in the City of Berkeley. The proposed project site used to house a car dealership with a service garage and a service station. Environmental assessment reports prepared a few years earlier showed the land had contained underground storage tanks that contained hazardous substances, such as gasoline. Ground-penetrating-radar studies and ground-contamination investigations detected various volatile organic compounds in the soil, but the VOCs did not exceed levels permitted by the San Francisco Regional Water Quality Control Board (Regional Board). Reports showed the existing contamination was not likely to require cleanup and the Regional Board found no corrective action was required at the project site.

In 2010, the City approved a use permit to begin construction and found that the California Environmental Quality Act (CEQA) did not apply as the project fell under a regulatory exemption for an urban in-fill development project. Parker Shattuck Neighbors (Parker) brought a challenge to the City's approval of the project. The trial court agreed with Parker and ordered the City to overturn the approval as it failed to hold a public hearing regarding the project.

A second round of administrative proceedings began. In 2011, the City released a proposed Mitigated Negative Declaration (MND) for the project. A public agency may issue a negative declaration instead of preparing an Environmental Impact Report (EIR) when there is no substantial evidence that the project may have a significant effect on the environment. The City found the site had undergone adequate remediation and relied upon the Regional Board's finding that the site poses no significant hazard to the public or the environment. In 2012, the City approved the project. Parker brought another challenge to compel the City to set aside approval of the MND and to prepare an EIR. Parker contended that the City must prepare an EIR to address the health threat of the toxic soil contamination to construction workers and future residents of the project. The trial court denied Parker's challenge and it appealed. The Court of Appeal affirmed the denial.

Parker has the burden of proof to demonstrate, by citation to the record, the existence of substantial evidence supporting a fair argument of a significant environmental impact. If this evidence is not in the administrative record, Parker cannot argue that an EIR is necessary. Parker failed to identify any substantial evidence supporting its argument that potential health risks to workers and future residents might constitute a significant environmental impact. The Court of Appeal found that the existence of toxic soil contamination, without any accompanying disturbance, was not a significant impact requiring CEQA review and mitigation.

The Court of Appeal also rejected Parker's argument that the project posed a health threat to construction workers and future residents of the project. CEQA only applies if a project would affect the environment of the public at large, not if it would affect only specific people. Parker cited no legal authority that a significant effect confined to people associated with a project, such as construction workers and future residents is sufficient. The Court of Appeal also confirmed that Parker did not identify substantial evidence in the record to create a fair argument that the disturbance of contaminated soil may have a significant effect on the environment.

Public agencies must prepare an EIR if substantial evidence supports a fair argument that a proposed project may have a significant effect on the environment, which affects the public at large. A third party may challenge a decision to not prepare an EIR by citing to substantial evidence in the administrative record that the project may have a significant effect on the environment.

Parker Shattuck Neighbors v. Berkeley City Council (2013) 222 Cal.App.4th 768 [166 Cal.Rptr.3d 1].