BERKELEY HILLSIDE PRESERVATION v. CITY OF BERKELEY

Respondents, City of Berkeley, City Council of the City of Berkeley, and Freada Kapor-Klein, and Real Party in Interest, Mitchell D. Kapor, Petition for Review

Cal.March 26, 2012

NO. é 6201116 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA BERKELEY HILLSIDE PRESERVATION, ET AL. Plaintiffs and Appellants, Vv. CITY OF BERKELEY, ET AL. Defendants and Respondents. MITCHELL D. KAPOR AND FREADA KAPOR-KLEIN | RealParties in Interest and Respondents. After a Published Decision by The Court of Appeal First Appellate District, Division Four CivilNo. A131254 After an Appeal From The Superior Court ofAlameda County Case No. RG10517314 Honorable FRANK ROESCH PETITION FOR REVIEW MEYERS, NAVE, RIBACK, SILVER & Zach Cowan, City Attorney (SBN: 96372) WILSON Laura McKinney, Deputy City Attorney Amrit S. Kulkarni (SBN: 202786) (SBN:176082) Julia L. Bond (SBN: 166587) 2180 Milvia Street, Fourth Floor 555 12th Street, Suite 1500 Berkeley, CA 94704 Oakland, California 94607 - Telephone: (510) 981-6998 Telephone: (510) 808-2000 Facsimile: (510) 981-6960 Kapor-Klein ‘Facsimile: (510) 444-1108 Attorneys for Respondents and Réal Parties Attorneys for Respondents and Real Parties in Interest City of Berkelgy and City in Interest Mitchell Kapor and Freada - Council of the City of Berkeley “ e e Il. II. IV. V. TABLE OF CONTENTS Page ISSUES PRESENTED FOR REVIEWQu.cccccecccesecceccsccceereeees 1 WHY REVIEW SHOULD BE GRANTED 2.ceceeecccceeeecseseeees2 STATEMENT OF FACTS AND PROCEDURAL HISTORY.......... 8 LEGAL DISCUSSION ....c.ccscscessssesesessssecssesesscseseeeseesesesssenseatereeneeass 11 A. The Court Should Determine Whetherthe Significant Effects Exception Requires a Finding That Effects Are Due To Unusual Circumstances 000.0... eee eeeceeeseeeeneeeeeereentees 11 1, A Long Line of Cases Holds That “Unusual Circumstances” Is a Separate Inquiry Under the Exception Based UponIts Plain Language. ............... 11 2. The Court of Appeal’s Reasoning Does Not Support Its Departure From Established Law............ 14 | 3. The Opinion Conflicts With CEQA’s Legal Framework for Exemptions. 0.0.0.0... esesseesseeeeeeeeeeeees 18 4. The Unusual Circumstances Issue Is an Important Issue with Significant Public Policy Ramifications. ..........ccccccccssecseesecececseecececeuscecsceesessceeees20 The Court Should Resolve That The Standard Of Review Applicable To Exceptions To Categorical Exemptions Is The Fair Argument Standard .........ccs22 The Court Should Resolve Whether Alleged Impacts of Project Elements Which Are Neither Proposed Nor Approved May Trigger A Requirement to Prepare an EIRwoeeeeseeeeesocersvsaneracenssonsesssoosoasvoanerscessatserensnessarbaceserenss 26 In The Event That The Court Grants Review On The Three Issues, The Court OfAppeal Also Erred In Application OfThese Rules To This Case ....... ee eceeereees28 CONCLUSION...secsuseessaeeseeesseeessonseseesdsceusssessesecesseenseeseeeses29 WORD CERTIFICATIONoececeeeesceeseesetsesseesresssssesssseseessssesesssseeeegs30 TABLE OF AUTHORITIES Page(s) CASES Associationfor Protection ofEnvironmental Values in Ukiah v. City of Ukiah (1991) 2 Cal.App.4th 720 (“Ukiah”) ....ccccscccsssssesseceseeeesesessees 13, 19, 23 Azusa Land Reclamation Co. v. Main San Gabriel Basin Watermaster (1997) 52 CalApp.4th 1165...eccccsecsccsrcetseseeesessessseseees 12, 13, 16 Banker’s Hill, Hillcrest, Park West Community Preservation Group v. City ofSan Diego . (2006) 139 Cal.App.4th 249oocccsecstecssceesecseceseeeseeeees 11, 12, 17, 18 California Farm Bureau Federation v. California Wildlife Conservation Board (2006) 143 CalApp.4th 173 oeeecssccsecsscssscesssssescssssssessessesseeens 19, 20 Citizensfor Responsible Development in West Hollywoodv. City of West Hollywood (1995) 39 Cal.App.4th 490 oo. eccescseesssssessesesesecsescessseeseesssessessesnees26 Committee to Save Hollywoodland Specific Plan v. City ofLos Angeles (2008) 161 CalApp.4th 1168.0... cccsessssssessesesesseseeessescasensteseeneens23 Communitiesfor a Better Environmentv. California Resources Agency (2002) 103 CalApp.4th 98ooecccsessscecstseressssessetessnsersesees 14, 15, 16 Davidon Homes v. City ofSan Jose (1997) 54 Cal.App.4th 106... cscessssesceseceseceeeeeeeseeseseetsssesnsens 20, 24 Fairbankv. City ofMill Valley (1999) 75 Cal.App.4th 1243icscsscsssccsssessceeeesesseseesesseseeeees 12, 23 Hines v. Coastal Commission (2010) 186 Cal.App.4th 830... ccccccccsesscesssesscesscesssenscesssssessesesesens 4,23 Lucas Valley Homeowners Assn. v. County ofMarin (1991) 233 Cal.App.3d 130... .cccscssesssessesecstsesceseecesesscesssacsscesesenees 6, 26 il Muzzy Ranch Co. v. Solano County Airport Comm. (2007) 41 Cal.4th 372...esccecsseesneeeeseneeeeenasseaceesssneseneeneeeas 5, 24, 25 Santa Monica Chamber ofCommercev. City ofSanta Monica (2002) 101 Cal.App.4th 786.0... ceccscesecersseecerscesersreesreesees 12, 13, 23 Valley Advocates v. City of Fresno (2008) 160 Cal.App.4° 1039 ooeecseeseseeessececsseeseeressecsecceseeseeenseneees25 Wildlife Alive v. Chickering (1976) 18 Cal.3d 190 (“Wildlife Alive”). (Opinion, 11.)............0. passim Wollmer v. City ofBerkeley (2011) 193 Cal.App.4th 1329ooescesessccsererersceeeeseseseeens 12, 13, 14 STATUTES CALIFORNIA CODE OF REGULATION TITLE 14 (CEQA GUIDELINES) Section 15061 (D)(3).....eescccsssesssecesssscetseeecsnseeeesenssseecsesaesseeessenaees 4,24 Section 15107............... ceeeeesseeeeeeseeeeeeseueceeeaaeseeseeeneeseuanseseesesseeesseaueeeeses 16 Section 15300.2 .......ceccscccssessssccseesecesaeenscssseeceneessseeesessssesenseeenees 8, 15,25 Section 15300.2(C).....cccccccscsescecssessecceeecsesesscceneeeseecesesseesseeeseeeses passim Section 15300.2(f) .....ccccsccccssscccesssssssscsesscssscceccssececsssecsesecsesessseaeeeteeeeesaes25 Sections 15300-15333 oo... eescssscsssccsscceseessceeesecessrecteeesensesreeseserseeseaeees21 Section 15301 weeeseeccsscsssecssecssecsseseecesseeesscecceeseeseseeeesteeseeseserseseness21 Sections 15301 — 15333... eceecssscscessseeseeecssssessessecsaeeceesseceeseesseseeeseneeees2 Section 15302(a)......ccsscccccssscccssssssssecsseseesececcsssessessessseesesesecseeceseeeeseeaes 21 Section 15303 vccccccccccssesscsscsessssessssscssscsssesessesecessssssssssssesssceteseecseasees21 Section 15303(a)......csscccccscesesescsecessecsssessecessessneeessesersesseesesseeseesesesenseenes 8 Section 15311ieecsssssccsessssscsssescccsssecessssssseeeecsseeecessaeecesseneescessneeees21 Section 15314 vccccscssecssscessssssceseessesscesscsssseeescsssssscseecsesecsessteasseceeees21 Section 15323 wc cesscccscccsssssescsssesececssseesesessesecsesssseeeessseeecessueeescssseeees21 Section 15327 ....ceeccccssssccssscccssssessseceesecesscecccsescsesestesseeecessesessseeceeaeeeess21 Section 15332 oceesssccssscsecesesseesseecseceessaeecsessseesseeeeeseeeensenaees 14, 15, 16 Section 15378 woo. ..cecscccsssssccssecccesscssecsccssscessnsecesseccceseesesueceesseecsssseeceseeeeaees6 Section 15378(a)(3) ........scesceesccsceseseceseesnececseessececscenacesseessnsesseeeneeesenes26 Section 15378(C).....cccsssssccssseccessesssececesscesseceesseeeeesesesessscecsssesessecessaeeeess26 CALIFORNIA RULE OF COURT Rule 8.500(b)(1) ccsescsecscsescsssececsccceseesssussecesecsssveccusccsssescesuesesnueceseecsssecessees2 ili PUBLIC RESOURCES CODE Section 21000 ef SCq.....cscssccscsscsssecsssssesseesssseseessesessesseessessecsaseesees passim Section 21065(C)......ccesscsssssssccsesssseccesseeessscsscessesesssssesesssessesessssesseesseases26 Section 21084 oo... ceesecscccsssccccsssscscecccssscccesscscsesseescsssssesecseeececessesers 15,17 Section 21084(a)......cccccsscccssccssessseccesscsssssesecessccessesseeseescssesssseeessensees 2, 16 OTHER AUTHORITIES 1 Kostka and Zischke, Practice Underthe California Environmental Quality Act (Cont.Ed.Bar January 2011) § 5.129eecccessssseseeeeeees24 1 Kostka and Zischke, Practice Under the California Environmental Quality Act (Cont.Ed.Bar January 2011) § 5.127 .....ccccesecseceeeeeeeeeeens23 iv TO THE HONORABLECHIEF JUSTICE AND THE ASSOCIATE JUSTICES OF THE SUPREME COURT OF CALIFORNIA Respondents City ofBerkeley and City Council of the City of Berkeley (“City”) and Respondents and Real Parties in Interest Mitchell Kapor and Freada Kapor-Klein (the “Kapors”) (collectively “Respondents”) respectfully petition for review of the decision of the Court ofAppeal (Certified for Publication), First Appellate District, Division 4,filed on February 15, 2012 (“Opinion”). Respondents sought rehearing in the Court ofAppeal, which was denied. The Opinion was modified (without any change in judgment) on March 7, 2012. A copy of the Opinion and a copy ofthe Order Denying Rehearing and Modifying Opinion [No ChangeIn Judgment] are attached hereto as Exhibit A. I. ISSUES PRESENTED FOR REVIEW 1. Fora project that is categorically exempt from review under the California Environmental Quality Act (“CEQA”),' does the significant effects exception to the exemption in CEQA Guideline section 15300.2(c)? require both a finding that there is a reasonable possibility of a significant environmental effect and a finding that the potentially significant effect is due to “unusual circumstances”? 2. Whatis the appropriate standard of review of whether the significant effects exception to a categorical exemption applies? ' All referencesto “CEQA” are to Public Resources Code § 21000 et seq. Unless otherwise indicated,all further statutory references are to the Public Resources Code. * All references to “CEQA Guidelines” or “Guidelines” are to California Code ofRegulation Title 14. 3. Whendetermining whether the significant effect exception applies, must a public agency consider alleged effects of activities that are not includedin the project.as proposed and approved? Il. WHY REVIEW SHOULD BE GRANTED California Rule of Court 8.500(b)(1) states that a ground for review is “[w]hen[it is] necessary to secure uniformity of decision or to settle an important question of law.” The Court of Appeal’s decision creates a need to settle three important questions of law relating to categorical exemptions, and the “significant effects” exception to the categorical exemptions, under CEQA. The Legislature directed the Secretary of the California Natural Resources Agency to adopta “list of classes of projects that have been determined not to have a significant effect on the environment and that shall be exempt” from CEQA. (§ 21084(a).) The Resources Agency has determinedthat 33 “categorically exempt” classes of projects do not have a significant effect on the environment, and therefore do not require further environmental review. (Guidelines §§ 15301 — 15333.) Activities so exempted include addition of up to ten classroomsto schools, construction of four new commercial buildings ofup to 10,000 square feet in urban areas, and construction of single-family houses and accessory structures such as pools, garages, and fences. The Resources Agencyhasalso established certain exceptions to the categorical exemptions, including the “significant effects” exemption in 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 environmentdue to unusual circumstances.” The focus ofthe significant effects exception is not to revisit whether activities within the exemptedclasses ofprojects will have a “significant effect on the environment.” The Resources Agency has already answered that question in the negative. Rather, the focusofthe significant effects exception is to provide for further review of projects when unusual circumstances would take a particular project out of the exempt category and physical impacts ofactivities that are atypical of the exempt category are potentially significant. This case concerns questions of whenthe significant effects exception must be applied. In this case, the City of Berkeley approved the Kapors’ plans to construct a single-family home. The City found the project exempt under the categorical exemptions for construction of small structures and urbanin-fill projects. In so finding, the City rejected the project opponents’ opinion that construction fill which was notproposed for the project would be subject to seismic shaking. Thetrial court upheld the City’s decision, holding that that evidence of a potentially significant impact wasinsufficient to preclude use of a categorical exemption unless the alleged impact was due to “unusual circumstances.” The Appellate Court reversed, finding that evidence of a potentially significant impact“is itse/fan unusual circumstance” which precludesreliance on a categorical -exemption. (Opinion,p. 13.) Thefirst issue raised by this case is whetheruse of a categorical exemption is precluded whenever significant impacts are credibly alleged, regardless of whether those impacts are related to circumstances whichare “unusual” for the exempted category. Until this case, all courts addressing this issue have conducted the two-part inquiry employed bythetrial court. These casesall require both a finding that there is a reasonable possibility of a significant environmental effect and a finding that the alleged effect is due to unusual circumstances with regard to the exempt category of projects. The Court of Appeal’s Opinion,that allegations ofsignificant impacts are per se unusual circumstancesthat preclude use of a categorical exemption, obviates the need for the second finding, and thereby contradicts a long line of established precedent. The Court of Appeal’s new rule would eviscerate the very concept of categorical exemptions. Under the Opinion,all types of projects would be subject to one, and only one, threshold inquiry — whetherthere is a credible allegation ofa potentially significant impact — regardless of whetherthe _ projectfits into an exempt category. The Opinion would therefore make an agency’s consideration of categorical exemptions identicalto its consideration of the non-categorical “commonsense” exemption in Guidelines section 15061(b)(3), for any project “[w]here it can be seen with certainty that there is no possibility” of a significant impact. It thereby would render all Guidelines defining exempt categories surplusage, and give no meaning to the Resources Agency’s finding that those classes of projects will not have a significant impact. In light of the Legislature’s direction that the Resources Agency designate just such categories of projects, this cannot be the correct result under CEQA. The second important issue is the appropriate standard of review for the significant effects exception. The Court ofAppeal held that the “fair argument”standard applies, holding that the exception is required wheneverthere is any credible evidence of a reasonable possibility of a significant effect, regardless of other evidence that no significant effect would occur. (Opinion, p. 16.) There is a long-standing split in authority on this issue, with some courts applying the fair argument standard, and others applying the more deferential substantial evidence standard, under which an agency mayrely on evidence showingthat there would be no significant impact. This split was most recently acknowledged by the First Appellate District, Division 2, in Hines v. Coastal Commission (2010) 186 Cal.App.4th 830, 855-856, and has also been acknowledged in CEQA practice guides. This case presents the standardofreview issue directly, since the Court ofAppeal applied the fair argumenttest to require the significant effects exception, despite substantial evidence showingthat the Project would not cause a significant impact. This issue also merits the Court’s consideration, since uncertainty regarding the standard of review for the significant effects exception militates against the use of categorical exemptions, even for projects that plainly fit the categories the Resources Agency has determined will not have significant impacts. Rather than risk judicial reversal, agencies will avoid reliance on categorical exemptions, and instead require EIRs for even the smallest projects, if project opponents so muchasassert the potential for significant impacts. A rule that the fair argument standard applies would also sow confusion among agencies making exemption determinations under CEQA. It is well established that the substantial evidence standard applies to an agency’s determination that a project is categorically exemptin the first instance. It is fundamentally inconsistent to apply the non-deferentialfair argument standard to the secondary question of whetherthat exemption determination should be negated because ofalleged potential for significant effects, regardless of evidence that no significant impact would occur. Even more confusingly, a rule that the fair argumenttest applies to the significant effects exception would run counter to the ruling in Muzzy Ranch Co. v. Solano County Airport Comm. (2007) 41 Cal.4th 372. In that case, this Court upheld use of the “commonsense exemption”so long as substantial evidence supports a determination that no significant impact will occur. Thus, under the Appellate Court’s ruling, if an agency has substantial evidence that no impact will occur, and opponents submit evidenceto the contrary, reliance on a categorical exemption would likely be overruled underthe significant effects exception, whereas (under Muzzy Ranch) reliance on the commonsense exemption wouldlikely be upheld — for the very same project. Requiring project applicants and public agenciesto sort through this myriad of standards of review undermines the whole concept of categorical exemptions for classes of projects that the Resources Agency has determined will not havea significant effect on the environment. The Court of Appeal’s decision will have major adverse consequencesandfar- reaching implications by forcing routine, minor developmentactivities to undergo expensive and unnecessary environmental review without furthering the Legislature’s intent in enacting CEQA. Thethird issue for the Court’s review is whether an agency,in deciding whether an EIR should be prepared for a project, mustconsider evidencethat a potentially significant impact might result from an aspect of a project that is alleged, but is neitherproposed nor approved. In Lucas Valley Homeowners Assn. v. County ofMarin (1991) 233 Cal.App.3d 130, the court upheld a negative declaration, under the “fair argument” standard of review, despite opponents’ claimsthat it failed to analyze significant impacts of future expansion of the project. The Court rejected those claims, because such expansion wasnotincludedin the project as proposed and approved, andtherefore the alleged impacts were not impacts ofthe “project,” defined in CEQAas “the activity being approved.” (Guidelines § 15378.) Here, by contrast, the Appellate Court held that opinion evidence of potentially significant seismic impacts of allegedly required “side-hill fill” — which was notincluded in either the proposed or approved Projectplans — required the City to prepare an EIR. This holding would allow opponents to defeat categorical exemptions simply by asserting their own misconception of a project and asserting that the misconception, rather than the actual project, may result in significant impacts. This cannotbethe rule under CEQA. The Opinion would cause a sea change, and would tremendously and needlessly burden the processing of minor projects under CEQA. By imposingthe significant effects exception even where alleged impacts are not tied to unusual circumstances; where those impacts are unrelated to the Project as proposed and approved; and where evidence showsthose impacts would not occur, the Opinion would decimate agencies’ use of categorical exemptions as intended by the Legislature. The Opinion, ifleft to stand, would force agencies to require full-blown EIRs for single-family homes, desperately needed urbanin-fill projects, and other minor projects which the Resources Agency,at the behest of the Legislature, has already determined should not require further CEQA review. Therefore, this case presents pressing issues crucial to the proper functioning of CEQA. This. caseis the right vehicle for considering these issues. Petitioners concede for purposesofthis case that the Project fits within two categorical exemptions, and the dispute whetherthe significant effects exception applies is clearly presented. The standard ofreview issue, and the issue ofwhether evidence of significant impacts mustrelate to the project proposed and approved,are directly presented by this dispute over applicability of the exception. Noris this a case where depublication will makethe issues go away. Rather, the Court ofAppeal’s reasoning on the significant effects exception has been echoed in other court of appeal decisions. Moreover, the long- standing split in the standard of review for the significant effects exception would remain unresolved, subjecting project applicants and public agencies to significant uncertainty in applying categorical exemptions. Andthe issue whether evidence of a potentially significant impact mustrelate to the project as proposed and approved would alsoremain unresolved. This Court should grant review to consider these important issues. Il. STATEMENT OF FACTS AND PROCEDURAL HISTORY The Project in this case is a request for permits to demolish existing structures and construct a two-story, 6,478 square foot, single-family home, with a 3,394 square foot garage, on a 29,714 square foot parcel at 2707 RoseStreet in Berkeley’s Single Family Residential District — Hillside Overlay (the “Project”).? (1 AR 3.)* The proposed homecovers 16 percent of the property, leaving 84 percent in openspace. (1 AR 127.) On January 28, 2010, the Zoning Adjustment Board (“ZAB”) held a public hearing and approvedthe Project. (1 AR 3, 144-146; 2 AR 516.) The City found that the Project was categorically exempt under Guidelines sections 15303(a) (“New Construction”) and 15332 (“In-Fill Development Projects”). (1 AR 5, 30, 34, 40.) The City also found that the Project did not trigger any of the exceptions to the exemptions in Guidelines section 15300.2, and that the Project was exempt from further review under CEQA. (1 AR 5, 34, 40.) Petitioners appealed the ZAB decision to the City Council. (1 AR 3, 193-206.) On April 27, 2010, the City Council affirmed the ZAB’s decision and dismissed the appeal. (1 AR 3.) | Appellants filed this action in May 2010. (Appellants’ Appendix (“AA”):1.) The Superior Court, the Honorable Frank Roesch presiding, > Petitioners opposed the demolition ofthe existing structures, arguing that they were historical resources. The Court of Appeal denied Petitioners’ petition for writ of supersedeas, and the Kapors demolishedthe existing structures. Thus, the only remaining issues relate to the construction of the proposedProject. * Cites to “AR”are to the Administrative Record. held a hearing on the merits on December2, 2010, and, in a detailed, 19- page decision, denied the Petition on December30, 2010. (AA:140-159.) Thetrial court held that there was substantial evidence of a fair argument that the Project would cause significant environmental impacts. However, the trial court held, the Project did not trigger the significant effects exception in Guidelines section 15300.2(c), because the possible significant impacts were not due to “unusual circumstances.” The Court ofAppeal issued its decision, certified for publication, on February 15, 2012. The Court of Appeal disagreed with thetrial court’s use of the two-step inquiry and held: Wherethere is substantial evidence that proposedactivity may havean effect on the environment, an agencyis precluded from applying a categorical exemption. (Wildlife Alive, supra, 18 Cal.3d at pp. 205-206.) Thetrial court concluded that the relevant exception did not apply becauseit found no “unusual circumstances” present; however, the fact that proposed activity may have an effect on the environment is itselfan unusual circumstance, because such action would not fall “within a class of activities that does not normally threaten the environment,” and thus should be subject to further environmental review. ([Azusa Land Reclamation Co. v. Main San Gabriel Basin Watermaster (1997) 52 Cal.App.4th 1165], at p. 1206.) (Opinion,p. 13, italics by court.) In support of this conclusion, the Court ofAppeal cited to this Court’s decision in Wildlife Alive v. Chickering (1976) 18 Cal.3d 190 (“Wildlife Alive”). (Opinion, 11.) The Court of Appeal acknowledgedthat ‘courts haveinterpreted the significant effects exception as involving two _ separate inquiries, the first being whether the Project presents unusual circumstances. (Opinion, p. 12.) The Court of Appeal also acknowledged that the trial court’s approach was consistent with the two-step approach applied in those cases. (/d. at p. 13.) However, the Court of Appealtried to distinguish those cases and arguethat they “did not actually employ such a two-step procedure”but instead “streamlined its approach by “proceeding directly to the question of whether, applying the fair argument standard, there is a reasonable possibility of a significant effect on the environment due to any... . purported unusual circumstances.” (/bid, citation omitted.) The Court further acknowledged “that it may be helpful to analyze — the applicability of the unusual circumstances exception as part of a two- step inquiry...” (d. at p. 15.) However, the Court concluded,“onceit is determined that a proposedactivity may havea significant effect on the environment, a reviewing agency is precluded from applying a categorical exemption to the activity.” ([bid.) The Court held that the fair argument standard applied to the agency’s determination under Guidelines section 15300.2(c). (Opinion,p. 16.) The Court then purported to apply the two-step inquiry for the exception to the facts of this case. The Court held that the proposedsingle- family residence was unusual, based onits size. (Opinion, p. 17.) In making this determination, the Court held that whether a circumstanceis unusualis judged relative to the typically exempt project, as opposedto the typical circumstancesin a particular neighborhood. (/d.at 17-18.) Finally, the Court found that there was substantial evidence of a fair argumentthat the Project wouldresult in significant environmental geotechnical impacts to construction fill for the Project. (Opinion, p. 18.) However, the Court did not determine that any significant effects would result from the “unusual circumstance” of the Project’s size. Rather, the Court accepted the opponents’ assertion that the Project would require construction fill that was not proposed by the applicant and was not found necessary by the City. (/bid.) It was the alleged potentially significant impacts of “seismic lurching”to this allegedly required constructionfill which the Court found to require preparation of an EIR. (/bid.) -10- Respondents sought a rehearing in the Court of Appeal, which was denied. The Opinion was modified (without any change in judgment) on March 7, 2012. IV. LEGAL DISCUSSION A. The Court Should Determine Whetherthe Significant Effects Exception Requires a Finding That Effects Are Due To Unusual Circumstances 1. A Long Line of Cases Holds That “Unusual Circumstances” Is a Separate Inquiry Underthe Exception Based UponIts Plain Language. The Court ofAppeal’s Opinion contradicts a long line of cases holding that whether allegedly significant effects would result from “unusual circumstances” is a separate and necessary inquiry underthe exception. Thesecasesrely on the plain language of Guideline section 15300.2(c),which provides: A categorical exemption shall not be used for an activity wherethere is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances. (Emphasis added.) In Banker’s Hill, Hillcrest, Park West Community Preservation Group v. City ofSan Diego (2006) 139 Cal.App.4th 249, 278, the court explained that: The application of Guidelines section 15300.2(c) involves twodistinct inquiries. First, we inquire whether the Project presents unusual circumstances. Second, we inquire whether there is a reasonable possibility of a significant effect on the environment due to the unusual circumstances. (Italics original.) The unusual circumstancestest set forth in the Guidelinesis satisfied “where the circumstancesof a particular project (i) differ from the general circumstancesofthe projects covered by a particular categorical exemption, and (ii) those circumstances create an environmental risk that does not exist -11- for the general class of exemptprojects.” (/bid, emphasis added; see also Azusa Land Reclamation Co. v. Main San Gabriel Basin Watermaster (1997) 52 Cal.App.4th 1165, 1207; Wollmerv. City ofBerkeley (2011) 193 Cal.App.4th 1329, 1350; Santa Monica Chamber ofCommercev. City of Santa Monica (2002) 101 Cal.App.4th 786, 800 [“[a] negative answer to either question means the exception does not apply.” (emphasis added)].) Asheld by the First Appellate District in Fairbank v. City ofMill Valley (1999) 75 Cal.App.4th 1243, 1260-1261, “in the absence of any evidence ofunusual circumstancesnullifying the grant of categorical exemption, there can be no basis for a claim of exception under Guidelines section 15300.2(c).” As the court explained in Fairbank, without the two separate inquires, no project that satisfies the criteria under the exemption could ever befound to be exempt. In that case, the court held that a retail/office building was exempt under a categorical exemption for new construction of small commercial structures in urbanized areas. The court rejected an “unusual circumstances” argument based on claims of inadequate parking facilities and increasedtraffic flows as follows: The shortcoming in Fairbank’s argumentis that she has made no showing whatsoeverof any “unusual circumstances” surrounding the construction of this small commercial structure giving rise to any risk of “significant” effects upon the environment. (Guidelines, 15300.2(c).) While the addition of any small building to a fully developed downtown commercial area is likely to cause minor adverse changes in the amountand flow oftraffic and in parking patterns in the area, such effects cannot be deemed “significant” without a showing of somefeature of the project that distinguishes it from any other small, run-of-the-mill commercial building or use. Otherwise, no project that satisfies the criteria set forth in Guidelines section 15303(c) could ever be found to be exempt. There is nothing about the proposed 5,855-square- foot retail/office building that sets it apart from any other small commercial structure to be built in an urbanized area, ~12- without the use of hazardous substances and without any showing of environmentalsensitivity. (Id. at 1260, emphasis added.) Thus, the court acknowledged there could be adverse changes to parking andtraffic from the project, but rejected the claimed exception because no unusual circumstances were shown. In Santa Monica, the court held there were no unusual circumstances within the meaning of the exception where the project created a large parking district requiring residential parking permits. Rather, the court held there were only the “normal and common considerations” any city might face when deciding best how to allocate its limitedparking facilities. (Santa Monica, supra, 101 Cal.App.4th at 801-803.) Similarly, in Associationfor Protection ofEnvironmental Values in Ukiah v. City of Ukiah (1991) 2 Cal.App.4th 720 (“Ukiah”), the court held that concerns about height, view obstruction, privacy and water runoffwere normal and commonconsiderations in construction of a single-family hillside residence; therefore, these concerns did not amount to “unusual circumstances.” In Azusa, supra, 52 Cal.App.4th at 1198, the court found that the board’s findings established a reasonable possibility that the project would havea significant adverse effect (/bid.) Under the Court of Appeal’s interpretation of the exception at issue in this case, the Azusa court would not have needed to make any further inquiry. However, the court in Azusa expressly recognized “the second requirement” of the exception, and went on to find that the threat to the environmentin that case “[wa]s due to numerous circumstancesthat are unusual in comparison with existing facilities in general.” (Ud. at 1206-1209.) Mostrecently, in Wollmer, supra, 193 Cal.App.4th 1329, 1350, the First Appellate District, Division 4, cited the well-established rule for -13- determining that unusual circumstances exist and comparedthe circumstancesofthe project with the exemption for “In-Fill Development Projects” under Guidelines section 15332, which required that a project be substantially surrounded by urban uses and adequately served by public services. The court stated that locating an in-fill project at the intersection of two majorcity streets is “well within the range of characteristics one would except for class 32 projects and precisely what the law encourages.” (Id. at 1351.) Accordingly, the court held, the location was not an “unusual circumstance.” (/bid.) Thus, there is a long line of established cases from multiple Appellate Districts, including the District from which this decision was issued, holding that “unusual circumstances”is a separate and necessary inquiry underthe exceptionin Guidelines section 15300.2(c). 2. The Court of Appeal’s Reasoning Does Not Support Its Departure From Established Law. The Court ofAppeal reachedits result based on this Court’s statement in Wildlife Alive, supra, 18 Cal.3d at 205-206 that: “The Secretary [of the California Resources Agency] is empoweredto exempt only thoseactivities which do not havea significant effect on the environment. [Citation.] It follows that where there is any reasonable possibility that a project or activity may have a significant effect on the environment, an exemption would be improper.” (Opinion, 11, italics added by Court ofAppeal.) The Court of Appeal here relied on this statement to eliminate the use of categorical exemptions wheneverthere is any credible evidence ofa potentially significant impact, regardless of whether the impact is due to “unusual circumstances.” However, prior courts have refused to read this Court’s statement in Wildlife Alive so broadly. In Communitiesfor a Better Environmentv. California Resources Agency (“CBE”) (2002) 103 Cal.App.4th 98, 127, the -|4- court stated that “[t]his admonition from [Wildlife Alive] cannot be read so broadly as to defeat the very idea underlying CEQAsection 21084 of classes or categories of projects that do not have a significant environmental effect.” (Italics original.) The Court of Appeal misconstrued the CBE case, which involved a challenge to certain revisions to the CEQA Guidelines, including section 15332 which created a categorical exemption for urban in-fill projects. In that case, CBE argued that the environmental impacts listed in the section 15332 categorical exemption “necessarily foreclose the consideration of other effects such as aesthetics, cultural resources, water supply, and health and safety.” (Ud. at 129.) The court responded: That is not correct. An important exception to categorical exemptions[is the exception in Guidelines section 15300.2, subdivision (c)]. These other environmental effects that CBE mentions would constitute “unusual circumstances” under this exception for a project that otherwise meets the Guidelines section 15332 criteria. This is because a project that does meet the comprehensive environmentally protective criteria of section 15332 normally would not have other significant environmental effects; if there was a reasonable possibility that the project would have such effects, those effects would be “unusual circumstances” covered by the section 15300.2, subdivision (c) exception. In this way, these other effects would fall within the concept of unusual circumstancesset forth in Azusa: “unusual circumstancesofa particular project(i) differ from the general circumstances of the projects covered by a particular categorical exemption, and (ii) those circumstances create an environmentalrisk that does not exist for the general class of exempt projects.” (bid, emphasis added.) Thus, the CBE court did not hold that “unusual circumstances” in section 15300.2 means nothing different than “significant effects.” Rather, as the complete discussion illustrates, the court was responding to a contention by the petitioner that certain types of environmental impacts that were nottypical ofthe exempt category would escape review under the -15- terms of the categorical exemption in section 15332. The court’s discussion, viewed in its entire context, provides that “those effects” not typical of the category, and the reasonable possibility that those atypical effects would be significant, could be reviewed under the unusual circumstances exception. Moreover, the CBE court expressed its agreement with the definition of “unusual circumstances”set forth in Azusa and the host of other cases applying the two-pronged inquiry under Guidelines section 15300.2(c). Thus, the Court of Appeal was simply wrong in claiming that CBE changedthelaw set forth in a long line of established cases applying the unusual circumstances exception. The Court ofAppeal’s reliance on Wildlife Alive, supra, 18 Cal.3d 190, is also wrong. In Wildlife Alive, this Court held that CEQA applied to the Fish and Game Commission’s setting of hunting and fishing seasons. Amicusin that case argued that the categorical exemption in then-Guideline section 15107 applied. At the time, that section exempted actions taken by regulatory agencies to assure the maintenance, restoration, or enhancement of a natural resource where the regulatory process involves proceduresfor protection of the environment. (/d. at 204-205.) The Court observed that this categorical exemption applied to wildlife preservation activities of the State Department of Fish & Game, and that the fixing ofhunting seasons by a commission could notfairly be characterized as within the scope of the exemptionin thefirst instance. (/d. at 205.) The Court went on to state that, even if the exemption was intended to cover the commission’s hunting program, such an exemption would not be authorized under the statute. Here, by contrast, there is no dispute that the Kapor’s single-family homefalls within two exempt categories designated by the Resources Agencyasclasses of projects “that have been determined not to have a significant effect on the environment,” and whosevalidity is not at issue in this case. (§ 21084(a).) -16- Relying on this Court’s decision in Wildlife Alive, the Resources Agency adopted the significant effects exception in Guidelines section 15300.2(c). That exception states that a categorical exemption shall not be used “where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” (Guidelines § 15300.2(c).) Clearly then, the Resources Agency interpreted the Legislature’s directive to designate categories of projects without significant impacts (section 21084), together with the Court’s decision in Wildlife Alive that such categories not include activities which would cause a “significant effect on the environment,” to craft an exception where circumstancesthat are unusual with respect to exempt categories would present the reasonable possibility of a significant effect. Nothing in the CEQAstatute or Wildlife Alive precludesthis definition of the exception. Contrary to the Court of Appeal’s assertion, the Opinionis also directly inconsistent with Banker’s Hill, supra 139 Cal.App.4th at 278. In that case, the court upheld a determination that a 14-story residential building project was categorically exempt andthat the significant effects exception did not apply. The court in Banker’s Hill expressly adopted the two-step inquiry that was determined unnecessary by the Court of Appeal. (Banker’s Hill, supra 139 Cal.App.4th at 278.) The Court ofAppeal claims that the court in Banker’s Hill streamlined its approach by proceeding directly to the question ofwhether there was a reasonable possibility of a significant effect on the environment. (Opinion, p. 13.) However, the court in Banker’s Hill did not hold that it was unnecessary to determine whetherallegedly significant impacts were due to “unusual circumstances” underthe exception. Rather, it found that there was no substantial evidence of a reasonable possibility of a significant effect “due to any of those purported unusual circumstances” identified by the project opponents. (Banker’s Hill, supra 139 Cal.App.4th -17- at 278.) Thus, the court employed the two-step inquiry required by the Guidelinesto find allegedly significant impacts were due to “unusual circumstances.” (/d. at 279, fn. 26.) Consequently, the Court of Appeal’s decision is in direct conflictwith Banker’s Hill. 3. The Opinion Conflicts With CEQA’s Legal Framework for Exemptions. The fundamental problem with the Opinionis that it has collapsed the legal framework for analyzing categorical exemptions and the exceptions into a one-question inquiry that is duplicative ofthe framework for analyzing the non-categorical, “commonsense” exemption. In applying the significant effects exception, according to the Court of Appeal, the only meaningful question is whetherthere is substantial evidence that the proposedactivity may havean effect on the environment. If that is the case, then an agencyis precluded from applying a categorical exemption, regardless of whetherit falls within a class of projects determined by the Resources Agencyto not have significant effect on the environment. The Court of Appeal’s interpretation of the significant effects exception is almost identical to the language of the commonsense exemption: In the language of the Guidelines’ commonsense exemption: “Where it can be seen with certainty that there is no possibility that the activity in question may havea significant effect on the environment, the activity is not subject to CEQA.” (Guidelines, $ /5061, subd. (b)(3), italics added; see No Oil, supra, 13 Cal.3d at p. 74 [discretionary activity having no possibility of causing significant effect not subject to CEQA].) If; however, there is a reasonable possibility that a proposed project will have a significant effect upon the environment, then the lead agency must conductaninitial study. (Wildlife Alive v. Chickering (1976) 18 Cal.3d 190, 206 [132 Cal. Rptr. 377, 553 P.2d 537]; Pistoresi v. City of Madera (1982) 138 Cal. App. 3d 284, 285 [188 Cal. Rptr. 136].) -18- (California Farm Bureau Federation v. California Wildlife Conservation Board (2006) 143 Cal.App.4th 173, 194.) Indeed, the cases citing the commonsense exemptionrely on the same statementin Wildlife Alive that the Court of Appeal did here in construing the significant effects exception (Opinion, p. 11). (See CaliforniaFarm Bureau Federation, supra, 143 Cal.App.4th at 194.) Thus, the Court of Appeal has effectively equated the test for categorical exemptions with the test for the commonsense exception under CEQA. There are several fundamental problems with this holding. First, it eviscerates the Resources Agency’s determination ofclasses of projects that are categorically exempt. Underthe Court of Appeal’s decision, there is no longer any purposein finding that a project fits within a categorical exemption. By removing the inquiry into whether alleged impacts are due to “unusual circumstances,” the Court has made the “significant effects” inquiry the only relevant questionandit is effectively the same question that is asked under the commonsense exemption. However,as explained in multiple cases, there is a fundamental! difference between the two exemptions: A categorical exemption is based on a finding by the Resources Agencythat a class or category of projects does not havea significant effect on the environment. ( Pub. Resources Code, § 21083, 21084; Guidelines, § 15354.) Thus an agency’s finding that a particular proposed project comes within one of the exempt classes necessarily includes an implied finding that the project has no significant effect on the environment. (Ukiah, supra, 2 Cal. App. 4th atp. 732.) In [categorical exemption cases], the agency first conducted an environmental review and basedits determination that the project was categorically exempt on evidencein the record.It is appropriate under such circumstances for the burden to shift to a challenger seeking to establish one of the exceptions -19- to produce substantial evidence to support “a reasonable possibility” that the project will have a significant effect on the environment. (Guidelines, § 15300.2, subd. (c).) In the case of the commonsense exemption, however, the agency’s exemption determination is not supported by an implied finding by the Resources Agencythat the project will not have a significant environmental impact. Without the benefit of such an implied finding, the agency mustitself provide the support for its decision before the burden shifts to the challenger. Imposing the burden on membersofthe public in the first instance to prove a possibility for substantial adverse environmental impact would frustrate CEQA’s fundamental purpose of ensuring that governmentofficials “make decisions with environmental consequencesin mind.” (Bozung v. Local Agency Formation Com. (1975) 13 Cal. 3d 263, 283 [118 Cal.Rptr. 249, 529 P.2d 1017].) (Davidon Homes v. City ofSan Jose (1997) 54 Cal.App.4th 106, 115-116. See also California Farm Bureau Federation, supra, 143 Cal.App.4th at 184-186.) Thus, the Court ofAppeal’s decision ignores the Resources Agency’s implied finding that the project will not have a significant environmental impact. Indeed, it essentially vitiates the whole concept of categorical exemptions. Accordingly, the Court should grant review to considerthis issue, and clarify the use of categorical exemptions and the significant effects exception under CEQA. 4, The Unusual Circumstances Issue Is an Important Issue with Significant Public Policy Ramifications. The real-world implications of the Court ofAppeal’s decision are far-reaching and significant. Under the decision, no single-family house would be found categorically exempt if opponents produced any credible evidence to support a hypothesis under which impacts typical of such projects could be construed potentially significant, even if the lead agency had evidence which showed that would not be the case. Under the Opinion, -20- such evidence,by itself, would be enough to require an EIR for a single- family home. CEQA clearly was not intended to be applied in this manner. . Moreover, the implications of the Opinion go far beyondsingle- family homes. Thesignificant effects exception applies to all 33 classes of categorically exempt projects in CEQA Guidelines §§ 15300-15333. Accordingly, when faced with any reasonable possibility of a significant impact—even an impact typical of an exemptclass of projects—an agency would have to prepare EIRs for the following classes of projects: Operation, repair, maintenance, or minoralteration of existing structures or facilities. (Guidelines § 15301.) Replacementor reconstruction of existing schools and hospitals to provide earthquakeresistant structures which do not increase capacity by more than 50 percent. (Guidelines § 15302(a).) Accessory structures including garages, carports, patios, swimming pools and fences. (Guidelines § 15303.) Construction or placementof lifeguard towers, mobile food units, portable restroomsin publicly owned parks, stadiumsor other facilities designed for public use. (Guidelines § 15311.) Minor additions to schools within existing grounds where they do not increase student capacity by more that 25% or ten classrooms. (Guidelines § 15314.) Normaloperationsoffacilities such as racetracks, stadiums, convention centers, auditoriums, amphitheaters, planetariums, swimming pools and amusementparks, for public gatherings. (Guidelines § 15323.) . Leasing of newly constructed or previously unoccupied privately ownedfacility by a state or local agency which doesnotresult in a traffic increase of greater than 10% of front access road capacity. (Guidelines § 15327.) The Court of Appeal’s decision allows the significant effects exception to swallowall the categorical exemptions. This Court should grant review to consider this importantissue. -2]- B. The Court Should Resolve That The Standard Of Review Applicable To Exceptions To Categorical ExemptionsIs The Fair Argument Standard This Court should also grant review to consider and resolve the long- standing judicial split over the standard ofreview applicable to the significant effects exception. The Court ofAppeal applied the fair argument standard to the question of whetherthere is a reasonable possibility that the activity will have a significant effect on the environmentunderthe significant effects exception. (Opinion, p. 16.) However, there is a long-standing split in authority over the correct standard of review for this inquiry. As recently as 2010, Division 2 of the First Appellate District acknowledgedthat: There is a split of authority on the appropriate standard of _ judicial review of a question of fact whenthe issue is whether a project that would otherwise be found categorically exempt is subject to one of three general exceptions (significant impacts due to unusual circumstances, significant cumulative impacts, and impacts on a uniquely sensitive environment) to the categorical exemptions set forth in Regulation section 15300.2, subdivisions (a) through (c). (1 Kostka and Zischke, supra, § 5.127, p. 297; San Lorenzo Valley CARE, supra, 139 Cal.App.4th at p. 1390, 44 Cal.Rptr.3d 128; Fairbank v. City ofMill Valley (1999) 75 Cal.App.4th 1243, 1259, 89 Cal.Rptr.2d 233.) “Some courts haverelied on cases involving review of a negative declaration, holding that a finding of categorical exemption cannotbe sustainedifthere is a ‘fair argument’ based on substantial evidence that the project will have significant environmental impacts, even wherethe agencyis presented with substantial evidence to the contrary. [Citation.] Other courts apply an ordinary substantial evidencetest ..., deferring to the express or implied findings of the local agency that has found a categorical exemption applicable. [Citation.]” (Fairbankv. City ofMill Valley, at pp. 1259-1260, 89 Cal.Rptr.2d 233; accord, San Lorenzo Valley CARE, at p. 1390, 44 Cal.Rptr.3d 128; see 1 Kostka and Zischke, § 5.127, pp. 297-299.) -22- (Hines v. Coastal Commission, supra, 186 Cal.App.4th at 855-856.) One of the cases acknowledgingthe split in authority was a decision bythe First District Court of Appeal, Division 4 (Fairbank, supra, 75 Cal.App.4th 1259-1260), the same court as the Court of Appeal here. This judicial split is acknowledged in CEQApractice guides. (See 1 Kostka and Zischke, Practice Under the California Environmental Quality Act (Cont.Ed.Bar January 2011) § 5.127, pp. 297-299. Many ofthese courts have not resolved this dispute because the petitioner failed to meet the burden ofproving the exception applied even under the moreliberal “fair argument”standard of review. (Hines, supra, 186 Cal.App.4th at 856; Fairbank, supra, 75 Cal.App.4th at 1260; Santa Monica, supra, 101 Cal.App.4th at 796-797; see also Ukiah, supra, 2 Cal.App.4th at 728, fn. 7 [court applied fair argument standard becausethe parties agreed uponthat standard, but observed that “the traditional substantial evidence standard of review may be more appropriate.”]; Committee to Save Hollywoodland Specific Plan v. City ofLos Angeles (2008) 161 Cal.App.4th 1168, 1187 [court recognized split in authority and found evidence that exception applied was sufficient under either standard].) _ This Court should consider and resolve this long-standing judicial split over the standard of review, for numerousreasons. First, the standard is critically important for public agencies and applicants processing projects under CEQA. The on-going judicial split regarding the appropriate standard of review leads to uncertainty and confusion about whether use of a categorical exemption would be upheld if subjected to judicial challenge. This uncertainty militates against the use of categorical exemptions even projects in categories the Resources Agency has determined do not have a significant effect on the environment. -23- Second, application of the fair argumenttest to the significant effects exception would create conflict with this Court’s ruling on the standard of review for the commonsense exemption (Muzzy Ranch, supra, 41 Cal.4th at 386-387), raising even more uncertainty during the administrative process. In Muzzy Ranch, this Court held that whether a particular activity qualifies for the commonsense exception “presents an issue of fact, and [] the agency invoking the exemption has the burden of demonstrating it applies.” (Muzzy Ranch, supra, 41 Cal.4" 372, 386.) This Court expounded: An agency’s duty to provide such factual support “is all the more important where the record shows,as it does here, that opponents of the project have raised arguments regarding possible significant environmental impacts.” .. . “[{T]he agency’s exemption determination must[rely on] evidence in the record demonstrating that the agency considered possible environmental impacts in reachingits decision.” (Ud. at 386-387, citing Davidon Homesv. City ofSan Jose, supra, 54 Cal.App.4th at p. 117. See also 1 Kostka and Zischke, Practice Under the California Environmental Quality Act (Cont.Ed.Bar January 2011) § 5.129, pp. 302 [Under Muzzy Ranch, substantial evidence standard applies to review agency’s application of commonsense exemption].) The Court of Appeal’s interpretation of the significanteffects exception, combined with its application of the fair argument standard, creates an inconsistency for agencies and applicants applying exemptions. Here, under the Court ofAppeal’s decision, because the Court found substantial evidence of a fair argumentofpotentially significant seismic impacts, the City was precluded from finding the Project to be categorically exempt. However, because there wasalso substantial evidence in the record supporting a determination that there was nopossibility that the Project would havea significant seismic effect, the City could also have found the Project exempt under the commonsense exemption in Guidelines section 15061(b)(3). Underthis Court’s decision in Muzzy Ranch, sucha -24- determination by the City would be upheld under the substantial evidence standard. Thus, the Court of Appeal’s decision not only collapses the categorical exemptions and exception determinations into one inquiry that is essentially identical to that for the commonsense exemption, it did so in a way that would result in different outcomes under the sameset of facts. As such,it is inconsistent with this Court’s decision in Muzzy Ranch and wrong as a matter of law. It would also create significant confusion and uncertainty for project applicants and public agencies trying to navigate the legal framework for categorical exemptions for what are supposed to be minor projects under CEQA. Theresult will be expensive and unnecessary environmental review documents and processes for routine, minor developmentactivities, all without furthering the Legislature’s intent in enacting CEQA. Third, it is well established that the substantial evidence standard applies to the determination of whether a project is categorically exempt in the first instance. It is fundamentally inconsistent with the legal framework for categorical exemptions to apply the substantial evidence standard to the exemption determination, and then turn around and review the samefacts under the fair argument standard when decidingifthe exception applies. Project applicants and agencies are subjected to an inconsistent and confusing mix of standards in trying to determine if minor projects are even subject to CEQA. Fourth, courts have also applied the substantial evidence standard to another exception in Guideline section 15300.2; specifically, the historical resources exception in subsection (f). (See Valley Advocates v. City of Fresno (2008) 160 Cal.App.4" 1039, 1071-1074.) Thus, there is an inconsistency in the standards of review being applied to the exceptions to the categorical exemptions. -25- Forall ofthese reasons, this Court should grant review to resolve this long-standing dispute. C. The Court Should Resolve Whether Alleged Impacts of Project Elements Which Are Neither Proposed Nor Approved May Trigger A Requirement to Prepare an EIR The Court should also grant review to resolve whether an agency must prepare an EIR based on evidence of potential significant impacts related to elements of a project that are neither proposed by an applicant, nor approved by an agency. Under CEQA,a “project” refers “to the activity which is being approved ...” (Guidelines § 15378(c); See also Lucas Valley Homeowners Assn. v. County ofMarin (1991) 233 Cal.App.3d 130, 164 [‘‘We have emphasizedthat the focus must be on the use, as approved, and not the feared or anticipated abuse.”].) A “project” means the whole of an action and,in this case,is “[a]n activity involving the issuance to a person of a lease, permit, license, certificate, or other entitlement for use by one or more public agencies.” (Guidelines § 15378(a)(3); § 21065(c).) Courts have held that evidence ofpotentially significant impacts which doesnotrelate to the project proposed or approved is not capable of supporting a “fair argument” that an EIR must be prepared. In Lucas Valley HomeownersAssn., supra, the First Appellate District, Division 4, upheld the county’s approval of a negative declaration and conditional use permit to convert a single-family homeinto a synagogue. The court rejected claims by project opponents that the synagogue wouldbelarger than what was approved,holding that such claims “ignored the reality of the permit as approved and accepted.” (Lucas Valley Homeowners Assn., supra, 233 Cal.App.3d. at 162.) The court held that “the focus must be on the use, as approved, and not the feared or anticipated abuse.” (/d. at 162- 164; see also Citizensfor Responsible Development in West Hollywoodv. -26- City of West Hollywood (1995) 39 Cal.App.4th 490, 501 (evidence of historical significance oftwo buildings not included in the proposed project to demolish and restore structures was not substantial evidence to support a fair argumentofa potentially significant impact.) The Court ofAppeal departed from this established precedent. The Opinion foundthat letters submitted by Lawrence Karp “amountedto substantial evidence of a fair argument that the proposed construction would result in significant environmental impacts.” (Opinion, p. 18.) The Opinion held that where there is a disagreement among experts over the significance of an effect of the project, the agencyis to treat the effect as | significant. (Opinion, p. 19.) However, there was no disagreement over the significance of an effect ofthe project or the proposed construction of the project. Rather, Mr. Karp’sletters presented his misconception over whatthe project wasin thefirst instance. Asthe Court ofAppeal noted, Mr. Karp asserted that the Project would not be constructed as proposed and approved by the City, but would instead require additional construction activities, including the placement of “side-hill fills.” (Opinion, p. 4-5.) Mr. Karp further opined that the allegedly required side-hill fills would be subject to “seismic lurching” impacts. Mr. Karp’s opinion was contradicted by the applicant’s geotechnical engineer, Mr. Kropp, who explained that Mr. Karp had misread the project plans, and that the Project would maintain the existing ground surface, and would not require any side-hill fill. (Opinion, p. 5.) Mr. Kroppalso explained that because the Project did not call for side-hill fill, none of the concerns raised by Mr. Karp applied to the Project proposed for approval. (/bid.) The seismic impacts to the allegedly required side-hill fills were the only potentially significant impacts which the Appellate Court identified as triggering the “significant effects” exception. (Opinion, p. 18.) -27- Underthe Appellate Court’s holding, agencies must consider evidence purporting to show that the project will not be constructed in the mannerproposed for approval, but rather will be constructed in a manner that raises the specter of potentially significant impacts. The Court should grant review toresolvethis issue, raised by this case, whether evidence that is not related to any elementofthe Project as proposed and approved, but rather to elements which Project opponents “fear or anticipate” may occur, is capable oftriggering a requirement to prepare an EIR. D. In The Event That The Court Grants Review On The Three Issues, The Court Of Appeal Also Erred In Application Of These Rules To This Case In the event that the Court grants review on these three important issues, the Court of Appeal also committed several errors in the application of the significant effects exception to the facts of this case. Although these sub-issues are fairly included in the three issues addressed above, they are briefly listed herein: First, in determining whetherthere are unusual circumstances relating to a project, may a court consider the particular neighborhood in whichit is proposed to be located or should it be judged relative to a “typical exempt project” statewide? Second, does evidence of a potential adverse impact of the existing environment on the project constitute evidence of potentially significant “environmental impacts” that require review under CEQA? Third, after setting aside an agency’s finding thata projectis categorically exempt from CEQA, maya court order the agency to prepare an EIR instead of ordering the agencyto exercise its discretion to determine how to comply with CEQAin light of the court’s opinion? -28- V. CONCLUSION Respondents respectfully request that the Court grant review ofthe Court ofAppeal Opinion. DATED: Marche2y, 2012 MEYERS, NAVE, RIBACK, SILVER & WILSON By: Lfovr Sy Amrit S. Kuen Attorneysfor ndents and Real Parties in Interest Mitchell Kapor and Freada Kapor-Klein ZACH COWAN,City Attorney By: ¢ oN LAURA McKINNEY Attorneys for Respondents.CITY OF BERKELEY -29- WORD CERTIFICATION I hereby certify that, as counted by my MS Word word-processing system, this brief contains 8349 words exclusive of the tables, signature block andthis certification. Executed this© day of March, 2012 at Oakland, California. LLsere Amrit -30- Filed 02/15/12 CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OFCALIFORNIA FIRST APPELLATE DISTRICT DIVISION FOUR Court of Appeal First Appellate District BERKELEY HILLSIDE FEB I PRESERVATIONet al., . . EB 15 2012 Plaintiffs and Appellants, Diana Herbert, Clerk - byDeputy. Clarkv. Ai3i254. ey CITY OF BERKELEYetal., (Alameda C : Alameda County Defendants andRespondents; Super. Ct. No. RG10517314) DONN LOGANet al., Real Parties in Interest and Respondents. Appellants Berkeley Hillside Preservation and Susan Nunes Fadley challenge the denial oftheir petition for a writ ofmandate to set aside the approval of use permits to construct a large residence in the Berkeley hills. They claim that the proposed construction was not categorically exempt under the California Environmental Quality Act (CEQA)(Pub. Resources Code, § 21000 et seq.),! and that environmental concerns should be reviewed in an environmental impact report (EIR). We agree and reverse. I. FACTUAL AND PROCEDURAL BACKGROUND Real parties in interest and respondents Mitchell Kapor and Freada Kapor-Klein own a 29,714 square-foot lot on Rose Street in Berkeley. The lotis on a steep slope (approximately 50 percent grade) in a heavily wooded area. On May 19, 2009, Donn 1 All statutory references are to the Public Resources Code unless otherwise specified. Logan of Wong-Logan Architects filed an application for a use permit to demolish the existing two-story, single-family dwelling on the lot, and to construct a 6,478 square-foot home with an attached 3,394 square-foot, 10-car garage designed to address lack ofstreet parking in the area (the proposed construction). The residence would be built on two floors, plus an open-air lower level, and would cover about 16 percent ofthelot (less than _ the 40 percentlot coverage permitted by respondentCity ofBerkeley (City) rules, according toan architect involved with the proposed construction). The application stated that the immediate neighbors ofthe affected lot supported the proposed construction, and the record reveals that those neighbors, as well as other Berkeley residents (including those wholive in the surrounding neighborhood), supported the proposed construction throughout proceedings below. The application stated that the proposed construction would provide a turnaround for vehicles at the end ofthe dead-end street where the lot was located, an addition that was welcomedby the neighbors. A revised application was submitted on October 13, 2009. After providing notice, Berkeley’s Zoning Adjustment Board (Board) held a public hearing on January 28, 2010, received comment aboutthe proposed construction, and approved the use permit for the proposed construction by a vote of sevento zero, with one Board member absent and one abstaining. The Board found, consistent with a Boardstaff report, that the proposed construction was categorically exempt from the provisions ofCEQA pursuant to Guidelines sections 15332? (“In-Fill Development Projects”) and 15303, subdivision (a) (“New Construction or Conversion of Small Structures,” single-family residence). The Board also determined that the proposed construction did not trigger any of the exceptions to exemptions, as set forth in Guidelines, section 15300.2. In particular, the Board concluded that the proposed construction would not have any significant effects on the environment due to unusual ? “Guidelines”refers to the Guidelines for Implementation of CEQA,which are found in California Code of Regulations,title 14, section 15000 et sequitur. All subsequent regulatory citations to the Guidelinesare to title 14 ofthe Code of Regulations. 2 circumstances.° (Guidelines, § 15300.2, subd. (c).) The Board approved (1) a use permit to demolish the existing dwelling on the lot, (2) a use permit to construct the proposed unit, (3) an administrative use permit to allow a 35-foot average height limit for the main building (with 28 feet being the maximum), and (4) an administrative use permit to reducethe setbackof the front yard to 16 feet (with 20 feet usually required). The Board imposed various “standard conditions”on the proposed construction, including requiring the permit applicant to secure a constructiontraffic managementplan, comply with storm water regulations for small construction activities, and take steps to minimizeerosion and landslides when construction takes place during the wet season. Appellant Susan Nunes Fadley, a Berkeley resident, filed an appeal to the City Council on February 19, 2010. Thirty-three other Berkeley residents also signedthe appeal. Appellants stressed that the proposed dwelling and attached 10-car garage would result in a single structure of 9,872 square feet, which would makeit “oneofthe largest housesin Berkeley, four times the average housesize in its vicinity, and situated in a canyon where the existing houses are of a much smaller scale.” They submitted evidence that, of more than 17,000 single-family residences in Berkeley, only 17 are larger than 6,000 squarefeet, only 10 exceed 6,400 square feet, and only one other residence exceeds 9,000 square feet. In a responseto the appeal, the City’s director of planning and developmentstated that 68 Berkeley “dwellings” are larger than 6,000 squarefeet, nine are larger than 9,000 squarefeet, andfive are larger than 10,000 square feet, and that 16 parcels within 300 feet of the proposed construction had a greater floor-area-to-lot- area ratio than the proposed dwelling. An addendumto the appeal dated April 18, 2010, first challenged the Board’s declaration that the proposed construction was categorically exempt from CEQA, arguing 3 The Board also found that the proposed construction would not have any cumulatively significant impacts (Guidelines, § 15300.2, subd. (b)), and that it would not adversely impact any designatedhistorical resources (Guidelines, § 15300.2, subd. (f)), findings that were later affirmed by respondent Berkeley City Council (City Council) and thetrial court. Because appellants do not challenge these findings, we do not address them further. that “the project’s unusualsize, location, nature and scope may havesignificant impact on its surroundings.” The addendumstated that the proposed construction exceeded the maximum allowable height under Berkeley’s municipal code, and wasinconsistent with the policies of the City’s general plan, and that an EIR was appropriate to evaluate the proposed construction’s potential impact on noise, air quality, and neighborhoodsafety. The City Council received numerous letters and e-mails both supporting and opposing the appeal. Among the submissions in support of the appeal wereletters from Lawrence Karp,a geotechnical engineer specializing in foundation engineering and construction, who had more than 50 years of experience with design and construction in Berkeley, and who had previously prepared feasibility studies and provided engineering services during construction of “unusual projects.” Karp first submitted a one-pageletter to the City Council dated April 16, 2010, stating that hewas familiar with the site of the proposed construction, and had been involved with new residencesin the area for 50 years. Based on a review of the architectural plans and topographical survey filed with the Board, as wellasvisits to the proposedconstruction site, Karp statedthat portions of the “majorfill for the project are shownto be placed on an existing slope inclined at about 42° (~1.1h:1v) to create a new slope more than 50° (~0.8h:1v).” He opined that “{t]hese slopes cannot be constructed by earthwork andall fill must be benched and keyed into the slope which is not shown in the sections or accountedfor in the earthwork quantities. To accomplish elevations shownon the architectural plans, shoring and major retaining walls not shown will have to be constructedresulting in much larger earthwork quantities than now expected.” Karp further opined that the “massive grading”necessary would involve “extensive trucking operations,” and that such work “has never before been accomplished in the greater area of the project outside of reservoirs or construction on the University of California campus and Tilden Park.” He also emphasizedthat the project site was “located alongside the major trace of the Haywardfault and it is mapped within a state designated earthquake-induced landslide hazard zone.” It was Karp’s opinion that “the project as proposedis likely to have very significant environmental impacts not only during construction but in service due to the probability of seismic lurching of the oversteepened side-hill fills.” Karp submitted another one-pageletter dated April 18, 2010, stating that after he wrote his April 16 letter, he had the opportunity to review a geotechnicalinvestigation done by geotechnical engineer Alan Kropp, dated July 31, 2009. Karp stated that no “fill slopes” were shown in Kropp’s plan, and that “the recommendationsfor retaining walls do notinclude lateral earth pressures for slopes with inclinations ofmore than 2h: lv (~27°) or for wall heights more than 12 feet.” Karp also noted that the architectural plans he reviewed “include cross-sections and elevations that are inconsistent with the Site Plan and limitations in the 7/31/09 report (there have been significant changes).” He stated that “all vegetation will have to be removed for grading, and retaining walls totaling 27 feet in height will be necessary to achieve grades. Vertical cuts for grading and retaining walls will total about 43 feet (17 feet for bench cutting and 26 feet for wall cutting). [{] A drawing in the report depicts site drainage to be collected and discharged into an energydissipater dug into the slope, whichis inconsistent with the intended very steep fill slopes.” Karp reiterated that it was his opinion that ‘the project as proposed is likely to have very significant environmental impacts not only during construction,butin "service ducto the probability of seismic lurching of the oversteepened side-hill fills.” Geotechnical engineer Kropp, who had conducted the 2009 geotechnical investigation, submitted a response to Karp’s environmental concerns. According to Kropp, opponents had misread the project plans, because the proposed construction would not involve “side-hill fill,” and the current ground surface, along with the vegetation, would be maintained on the downhill portion ofthelot. According to Kropp, “the only fill placed by the downhill portion of the homewill be backfill for backyard retaining walls and there will be no side-hill fill placed for the project. The current ground surface, along with the vegetation, will be maintained on the downhill portion of the lot.” Because there would be nosteep, side-hill fill constructed as Karp claimed, none of the concerns Karpraised in his letter applied to the proposed construction, according to Kropp. Asfor claims that the project site fell within the boundaries of an area that requires investigation for possible earthquake-induced landslides, Kropp stated that although the site was in an area wherean investigation was required to evaluate whether there was a potential for a landslide, Kropp’s investigation revealed that no such landslide hazard was in fact presentat the site. Another engineer (Jim Toby) also submitted a letter in support of the proposed construction, and opinedthat nofills would be placed directly on steep slopes, as Karp claimed. The director ofthe City’s planning and development departmentfiled a supplemental report to the City Council, in part to respond to Karp’s letters. According to the director, “A geotechnical report was prepared and signed by a licensed Geotechnical Engineer and a Certified Engineering Geologist. This report concluded that the site was suitable for the proposed dwelling from a geotechnical standpoint and that no landslide risk was presentat the site. Should this project proceed, the design ofthe dwelling will require site-specific engineering to obtain a building permit.”* The City Council considered the appeal on April 27, 2010, and allowed each side 10 minutes to speak.” Geotechnical engineers Karp and Kropp made statements consistent with their written submissions. The City Council adopted the findings made by the Board, affirmed the decision to approve the use permit, adopted the conditions enumerated by the Board, and dismissed the appeal by a vote ofsix to two, with one councilmember absent. The City Planning Departmentthereafterfiled a notice of ‘ At the hearing on appellants’ writ petition in the trial court, counsel for respondent City represented that if inspections during construction revealed the geotechnical concerns that Karp raised, the City would issue a stop-work notice and investigate those issues. Appellants’ counsel objected that the assertion was outside the scope ofthe record, and the trial court apparently agreedthat it was impossible to know what the City would do under such circumstances. > Appellants repeatedly emphasizethat, although certain people were allowed to address the City Council for 10 minutes, the council did not hold a public hearing on the appeal. However, no public hearing is required before an agency decides a projectis categorically exempt under CEQA. (San Lorenzo Valley Community Advocatesfor Responsible Education vy. San Lorenzo Valley Unified School Dist. (2006) 139 Cal-App.4th 1356, 1385.) exemption, stating that the proposed construction was categorically exempt from the provisions ofCEQA (Guidelines §§ 15332, 15303, subd. (a)), and that the proposed construction did not trigger any of the exceptions to the exemptions (Guidelines, § 15300.2). Appellants Fadley and Berkeley Hillside Preservation® sought judicial review of the decision by filing a petition for a writ of mandatein the trial court on May 27, 2010. Following a hearing, the trial court denied the petition by written order dated December 30, 2010. Thetrial court first concluded that there was substantial evidence in the administrative record to support the City’s determination that the in-fill and new construction categorical exemptions applied to the proposed construction (Guidelines, §§ 15332, 15303, subd. (a)). (Fairbank v. City ofMill Valley (1999) 75 Cal.App.4th 1243, 1251.) As for whether appellants had established any exceptions to the exemptions, the trial court concluded that there was substantial evidence offair argument that the proposed construction would cause significant environmental impacts. The court nonetheless concluded that the proposed construction did not trigger the exception to the exemptions set forth in Guidelines section 15300.2, subdivision(c), because the possible significant impacts were not due to “unusual circumstances.” Appellants timely appealed from the subsequent judgment. They filed a motion for a temporary stay and a petition for a writ of supersedeas in this court, seeking to prevent the demolition of the existing structure and the commencementofconstruction of the new homeduring the pendency of the appeal. This court denied both the request for a temporary stay and petition for writ of supersedeas by orders dated March 28 and ® Accordingto the petition, “Berkeley Hillside Preservation is an unincorporated association formed in the public interest in May 2010,”after the City approved the proposed construction on Rose Street. The association includes “City residents and concerned citizens who enjoy and appreciate the Berkeley hills and their environs and desire to protect the City’s historic, cultural, architectural, and natural resources.” Association membersfiled the petition “on behalf ofall others similarly situated that are too numerous to be named and brought before”the court. Appellant Fadley is a “founding member”ofthe association, whose members include Berkeley resident Lesley Emmington Jones (the only other association member to be namedin the petition). April 26, 2011. Appellants represent that the existing cottage on the relevantsite has been demolished, and they seek nofurtherrelief relating to the demolition.’ Respondents Kapor, Kapor-Klein, City, and City Council have filed a single respondents’brief. II. DISCUSSION Appellants ask this court to order the trial court to issue a writ ofmandate directing City to set aside its determination that the proposedconstruction is exempt from CEQA.“In considering a petition for a writ ofmandate in a CEQAcase, ‘[o]ur task on appealis “the same asthetrial court’s.” [Citation.] Thus, we conduct our review independentofthetrial court’s findings.’ [Citation.] Accordingly, we examine the City’s decision, notthe trial court’s.” (Banker’s Hill, Hillerest Park West Community Preservation Group v. City ofSan Diego (2006) 139 Cal.App.4th 249, 257 (Banker’s Hill).) | A. Overview ofCEQA Process and Consideration of “Unusual | Circumstances, ” 1. Purpose of CEQA “The Supreme Court has repeatedly observed that the Legislature intended CEQA to be interpreted to afford the fullest possible protection to the environment within the reasonable scope ofthe statutory language. [Citation.] Central to CEQAis the EIR, which has as its purpose informing the public and governmentofficials of the environmental consequencesofdecisions before they are made, [Citation.]” (Sierra Club v. County ofSonoma (1992) 6 Cal.App.4th 1307, 1315.) “An EIR must be prepared on any ‘project’ a local agency intends to approve or carry out which ‘may have a 7 Although the denial of the request for a temporary stay and a petition for a writ of supersedeas enabled respondent owners to demolish the existing structure and to proceed with construction at their own risk, they later voluntarily agreed to suspend any construction activity when they requested a continuanceoforal argument from December6, 2011, to January 10,2012. By order dated January 5, 2012,this court onits own motion ordered that any and all construction be stayed pending further order of the court, or until the filing of the remittitur in this case. significant effect on the environment.’ (§§ 21100, 21151; Guidelines, § 15002, subd.(f)(1).) The term ‘project’ is broadly defined and includes any activities which have a potential for resulting in physical changes in the environment, directly or ultimately. (§ 21065; Guidelines, § 15002, subd. (d), 15378, subd.(a); [citation].)” (Ibid., fn. omitted.) A “ ‘significant effect on the environment’ ” is definedas “‘a substantial, or potentially substantial, adverse change in any ofthe physical conditions within the area affected by the project including land, air, water, minerals, flora, fauna, ambient noise, and objects of historic or aesthetic significance.” (Guidelines, § 15382.) 2. Categorical exemptions Notall proposedactivity is subject to environmental review, however. “CEQA authorizes the resources agency to adopt guidelines that list classes of exempt projects, namely projects ‘which have been determined notto have a significant effect on the environment and which shall be exempt from this division.’ (Pub. Resources Code, § 21084, subd. (a).) These classes ofprojects are called ‘categorical exemptions’ and are detailed in Guidelines section 15300 et seq. Guidelines section 15300.2 in turn specifies exceptions and qualifications to the categorical exemptions.” (Wollmerv. City of - Berkeley (2011) 193 Cal.App.4th 1329, 1347 (Wollmer), original italics.) Where a public agency decides that proposed activity is exempt and that no exceptions apply,a notice of exemptionis filed, and no further environmental review is necessary. (Guidelines, § 15062, subd. (a); No Oil, Inc. v. City ofLos Angeles (1974) 13 Cal.3d 68, 74; Apartment Assn. ofGreater Los Angeles v. City ofLos Angeles (2001) 90 Cal.App.4th 1162, 1171.) Here, the Board found, and the City agreed, that the proposed construction was subject to two categorical exemptions. They found that the proposed construction satisfied the elements of the urban in-fill development exemption (Guidelines, § 15332), because (1) it was consistent with the applicable general plan designation and applicable general plan policies, as well as with the applicable zoning designation and regulations, (2) the proposed construction was within City limits on a project site of no more than five acres, surrounded by urbanuses, (3) the site had no value as a habitat for endangered, rare, or threatened species, (4) the proposed construction would notresult in any significant effects relating to traffic, noise, air quality, or water quality, and (5) the site was already served by requiredutilities and public services, which also would serve the proposed construction. The Board and City also found that the proposed construction was exempt becauseit involved the construction of one single-family residence (Guidelines, § 15303, subd. (a)). Acknowledgingthat the relatively deferential substantial evidence standard ofreview applies to the City’s conclusion that the proposed construction was categorically exempt (e.g., Fairbank v. City ofMill Valley, supra, 75 Cal.App.4th at p. 1251), appellants concede, for purposesofthis appeal, that the proposed construction is subject to the two CEQAcategorical exemptions. 3. Exceptions to exemptions Appellants claim that the “unusual circumstances” exception to the CEQA exemptions applies here. (Guidelines § 15300.2; subd.(c).*) “ ‘In categorical exemption cases, where the agency establishes that the project is within an exemptclass, the burden shifts to the party challenging the exemption to show that the project is not exempt because it falls within one ofthe exceptionslisted in Guidelines section 15300.2. The most commonly raised exception is subdivision (c) of section 15300.2, which provides that an activity which would otherwise be categorically exempt is not exemptif there are ~ “unusual circumstances” whichcreate a “reasonable possibility”that the activity will have a significant effect on the environment. A challenger must therefore produce substantial evidence showing a reasonablepossibility of adverse environmental impact sufficient to remove the project from the categorically exempt class. [Citations.]’ [Citations.]” (Fairbank v. City ofMill Valley, supra, 75 Cal.App.4th at p. 1259.) Where, as here, a proposed activity meets “the comprehensive environmentally protective criteria of [Guidelines] section 15332,” the project “normally would not have other significant environmental effects.” (Communitiesfor a Better Environmenty, ® The Guidelines providein full: “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.” 10 California Resources Agency (2002) 103 Cal.App.4th 98, 129.) The requirementthat unusual circumstances bepresentin order to satisfy the exception to the exemption “was presumably adopted to enable agencies to determine which specific activities—within a class of activities that does not normally threaten the environment—should be given further environmental evaluation and hence excepted from the exemption.” (Azusa Land Reclamation Co. v. Main San Gabriel Basin Watermaster (1997) 52 Cal.App.4th 1165, 1206 (Azusa).) The concept apparently wasfirst mentioned in Friends ofMammoth v. Board ofSupervisors (1972) 8 Cal.3d 247, where our Supreme Court observed that “commonsense tells us that the majority ofprivate projects for which a government permitor similar entitlement is necessary are minor in scope—e.g., relating only to the construction, improvement, or operation of an individual dwelling or small business— and hence, in the absence of unusual circumstances, havelittle or no effect on the public environment.” (/d. at p. 272, disapproved on other grounds in Kowis v. Howard (1992) 3 Cal.4th 888; see also Azusa, supra, at pp. 1206-1207.) The Supreme Court expanded on the concept of exceptions to categorical exemptions in Wildlife Alive v. Chickering (1976) 18 Cal.3d 190 (Wildlife Alive), which held that CEQA applies to the Fish and Game Commission’ssetting of hunting and fishing seasons. (Wildlife Alive at pp. 194-195, 204.) The court rejected the argument that the commission’s activity was included within one of CEQA’scategorical exemptions. (Wildlife Alive at p. 204.) Even ifa regulation was intended to exempt the activity at issue in Wildlife Alive, however, such a regulation would be invalid, because “It]he Secretary [of the California Resources Agency] is empowered to exempt only those activities which do not have a significant effect on the environment. [Citation.] It follows that where there is any reasonable possibility that a project or activity may have a significant effect on the environment, an exemption would be improper.” (Jd. at pp. 205- 206,italics added.) In other words, a categorical exemption does not apply where thereis any reasonable possibility that proposed activity may have a significant effect on the environment. 1] Relying on Wildlife Alive, supra, 18 Cal.3d 190 as authority, the secretary for the Resources Agency adopted the unusual circumstances exception that is now set forth in Guidelines, section 15300.2, subdivision (c).’ (See Note and Authority cited, foll. Guidelines, § 15300.2.) Courts have interpreted that section of the Guidelines as applying “where the circumstances ofa particular project (i) differ from the general circumstances of the projects covered bya particular categorical exemption, and (ii) those circumstances create an environmental risk that does not exist for the general class of exemptprojects.” (Azusa, supra, 52 Cal.App.4th at p. 1207; see also Wollmer, supra, 193 Cal.App.4th at p. 1350.) Effects on aesthetics, cultural resources, water supply, health, and safety are among theeffects that fall within the concept of “ “unusual circumstances.’ ” (Communitiesfor a Better Environmentv. California Resources Agency, supra, 103 Cal.App.4th at p. 129.) “{W]hether a circumstanceis ‘unusual’ is judged relative to the typical circumstancesrelated to an otherwise typically exempt project.” (Santa Monica Chamber ofCommercev. City ofSanta Monica (2002) 101 Cal.App.4th 786, 801, originalitalics.) In Banker’s Hill, the court held that the application of Guidelines, section 15300.2, subdivision (c), involves “two distinct inquiries. First, we inquire whetherthe Project presents unusual circumstances. Second, we inquire whetherthere is a reasonable possibility of a significant effect on the environment dueto the unusual circumstances. [Citation.] ‘A negative answer to either question meansthe exception doesnot apply.’ [Citation.]” (Banker’s Hill, supra, 139 Cal.App.4th at p. 278, original italics.) Here, the » We hereby grant appellants’ unopposed request for judicial notice of materials surrounding the implementation of Guidelines, section 15300.2, subdivision(c). However, “f{e]ven though we will grant motions for judicial notice of legislative history materials without a showingof statutory ambiguity, we do so with the understanding that the panelultimately adjudicating the case may determinethat the subject statute is unambiguous, so that resort to legislative history is inappropriate.” (Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc. (2005) 133 Cal.App.4th 26, 30.) Our understanding of the relevant section of the Guidelines is based primarily on the unambiguous language of the Guidelines and judicial interpretation of CEQA. Accordingly, we need not resort to documents underlying its implementation in reaching our conclusionthat it applies to the proposed construction. 12 trial court found that there was substantial evidence ofa fair argument that the proposed construction could have a significant environmental impact. Because there was a “ ‘negative answer’ ” to the question of whetherthe project presented unusual circumstances(ibid. ), however, the trial court concluded that the unusual circumstances exception did not apply here. Respondents arguethat this conclusion was appropriate under the two-step approach ofBanker’s Hill. Wedisagree with the trial court’s approach. Where there is substantial evidence that proposed activity may have an effect on the environment, an agency is precluded from applying a categorical exemption. (Wildlife Alive, supra, 18 Cal.3d at pp. 205-206.) Thetrial court concluded that the relevant exception did not apply because it found no “unusual circumstances” present; however, the fact that proposedactivity may have an effect on the environmentis itse/fan unusual circumstance, because such action would notfall “within a class of activities that does not normally threaten the environment,” and thus should be subject to further environmental review. (Azusa, supra, 52 Cal.App.4th at p. 1206.) Althoughthetrial court’s conclusion arguably is consistent with the two-step approachset forth in Banker’s Hill, we note that the Banker’s Hill court did not actually employ such a two-step procedure. Instead,it “streamlined” its approach by “proceed[ing] directly to the question of whether, applying the fair argument standard, there is a reasonable possibility ofa significant effect on the environment due to any... purported unusual circumstances.” (Banker’s Hill, supra, 139 Cal.App.4th at p. 278, italics added.) Indeed, much ofthe court’s opinion focused onall the reasons an agency must apply the fair argument approach in determining whetherthere is no reasonable possibility of a significant effect on the environment due to unusual circumstances (Guidelines, § 15300.2, subd. (c)). (Banker’s Hill, supra, 139 Cal.App.4th at pp. 264- 265.) Relying on Wildlife Alive, supra, 18 Cal.3d at pages 205-206, the Banker’s Hill court emphasized that an agency is precluded under the Guidelines from “relying ona categorical exemption whenthere is a fair argument that a project will have a significant effect on the environment.” (Banker’s Hill, supra, at p. 266.) In other words, the court 13 acknowledged “ ‘that where there is any reasonable possibility that a project or activity may havea significant effect on the environment, an exemption would be improper.’ ” (bid., italics added by Banker’s Hill.) Our conclusion that the unusual circumstances exception does not apply wheneverthere is substantial evidence ofa fair argumentof a significant environmental impact is thus not inconsistent with Banker’s Hill. Other courts likewise have addressed the Supreme Court’s statement in Wildlife Alive, supra, 18 Cal.3d at pages 205-206, that projects may not be categorically exempt where there is any reasonable possibility that the project may have a significant environmental effect. For example, in upholding a challenge to the categorical exemption for in-fill developmentprojects (Guidelines, § 15332), the court in Communitiesfor a Better Environmentv. California Resources Agency, supra, 103 Cal.App.4th 98, summarized the relevant history of the unusual circumstances exception to the exemption: “This admonition from Chickering cannot be read so broadly as to defeat the very idea underlying CEQA section 21084 of classes or categories of projects that do not have a significant environmental effect. So subsequent case law hasstated that ‘[t]o implementth[is] rule laid out in Chickering, Guidelines section 15300.2, subdivision (c), was adopted ....’ [{]] Thus, a categorical exemption authorized by CEQA section 21084 is an exemption from CEQAfor a class of projects that the Resources. Agency determines will generally not have a significant effect on the environment.” (/d. at p. 127, original italics, fns. omitted.) Respondents apparently would have this court read the forgoing excerpt from Communities as cautioning against applying the unusual circumstances exception too “ “broadly.’ . In fact, the quoted passage simply sets forth the relevanthistory of the unusual!circumstances exception. The Communities court went on to emphasize that effects on aesthetics, cultural resources, water supply, health, and safety “would constitute ‘unusual circumstances’ under this exception for a project that otherwise meets the Guidelines 15332 [in-fill development] criteria. This is because a project that does meet the comprehensive environmentally protective criteria of section 15332 normally | would not have othersignificant environmental effects; if there was a reasonable 14 possibility that the project would have such effects, those effects would be ‘unusual circumstances’ covered by the section 15300.2, subdivision (c) exception.” (Communitiesfor a Better Environmentv. California Resources Agency, supra, 103 Cal.App.4that p. 129,italics added.) Werecognize that the proposed construction here fell within two categorical exemptions, meaningthat it belonged to classes of projects that generally do not have a significant effect on the environment. (Jd. at p. 127.) However,once it is determined that there is a reasonable possibility that a specific activity may have significant effects on aesthetics, cultural resources, or other areas not covered by the in-fill exemption (such as geotechnical impacts), application of a categorical exemption no longer is appropriate, because such a projectis different from activity that generally does not have environmentaleffects. ([bid.) In sum,the trial court erred insofar as it concluded that appellants had provided substantial evidence ofa fair argumentof a significant environmental impact, yet declined to apply the unusual circumstances exception. We acknowledge that it may be helpful to analyze the applicability of the unusual circumstances exceptionas part of a two-step inquiry (as we do below), separately inquiring as to whether unusual circumstances exist, and whetherthere is a risk of significant environmental impact due to those unusual circumstances. (Banker’s Hill, supra, 139 Cal.App.4th at p. 278.) This approachassists with the determination of whether the circumstances surrounding a proposedactivity “differ from the general circumstancesofthe projects covered by a particular categorical exemption.” (Azusa, supra, 52 Cal.App.4th at p. 1207.) However, once it is determined that a proposed activity may have a significant effect on the environment, a reviewing agency is precluded from applying a categorical exemption to the activity. 4. Standard of review “{A]ny factual determinationrelating to the existence of a certain circumstanceis reviewed as a question of fact under the substantial evidence standard, but ‘the question whetherthat circumstance is “unusual” within the meaning of the significant effect exception would normally be an issue of law that this court would review de novo.’ 15 [Citations.}” (Banker’s Hill, supra, 139 Cal.App.4th at p. 261-262, fn. 11; see also Azusa, supra, 52 Cal.App.4th at p. 1207.) “{AJn agency must apply a fair argument approach in determining whether, under Guidelines section 15300.2(c), there is no reasonable possibility of a significant effect on the environment due to unusual circumstances, Accordingly, as a reviewing court we independently review the agency’s determination under Guidelines section 15300.2(c) to determine whether the record contains evidence ofa fair argumentof a significant effect on the environment.’”!” (Banker's Hill at p. 264; see also Wollmer, supra, 193 Cal.App.4th at p. 1350.) With these general principlesin mind, we analyze whetherthe unusual circumstances exception applies to the facts of this case. B. Appellants Established Fair ArgumentofSignificant Effect on Environment Due to Unusual Circumstances. 1. Proposed construction presents “unusual circumstances” Asset forth above, the proposed construction is concededly subject to two categorical exemptions(the single-family residence exemption andthein-fill exemption, — Guidelines, §§ 15303, subd. (a), 15332). Asfor the single-family residence exemption, the Guidelines provide that this categorical exemption applies to the “construction and location of limited numbers ofnew, small facilities or structures; .... The numbers of structures described in this section are the maximum allowable on any legal parcel. Examples ofthis exemption include but are notlimited to: [{] (a) Onesingle-family residence, or a second dwelling unit in a residential zone. In urbanized areas, up to three single-family residences may be constructed or converted under this exemption.” (Guidelines, § 15303, subd. (a).) ’® Respondents contendthatthere is a “split in authority’ over whether we apply the fair argumentor substantial evidence standard of review to an agency’s finding that there was no reasonable possibility of a significant effect on the environment, but that appellants have not shown error under either standard. Our reliance on the fair argument standard is consistent with our recent decision in Wollmer, supra, 193 Cal.App.4th at page 1350, citing Banker ’s Hill, supra, 139 Cal.App.4th at page 261. 16 Appellants presented substantial, and virtually uncontradicted, evidence that the proposed single-family residence to be constructed was unusual, based onits size. . (Banker ’s Hill, supra, 139 Cal.App.4th at p. 261, fn. 11 [determination relatingto existence of certain circumstance reviewed as question of fact under substantial evidence standard].) Of more than 17,000 single-family residences in Berkeley, only 17—or a tenth of a percent—are larger than 6,000 square feet, whereas the proposed construction will result in a residence that is more than 9,800 square feet. On appeal, respondents highlight evidence that 68 City “dwellings” are larger than 6,000 square feet. First, it is unclear whetherall 68 “dwellings” are single-family residences. Second, even assuming arguendothattheyare,that still means that less than a half percent (or 0.4 percent) ofall Berkeley residences are more than 6,000 square feet, an indication that the approximately 9,800 square-foot proposed residence “ ‘differ[s] from the general circumstances of the projects covered by a particular categorical exemption.’ ” (Wollmer, supra, 193 Cal.App.4th at p. 1350.) Thetrial court found that there were no unusual circumstancespresenthere, because the proposed construction was “not so unusual for a single family residence, Particularly in this vicinity, as to constitute .. . unusual circumstances... .”(Italics added.) Respondents likewise highlight evidence that 20 housesin the area, including five “immediately surrounding the property,” range in size from 4,000 to 6,000 square feet. Again, however, whether a circumstance is unusual “is judged relative to the typical circumstancesrelated to an otherwise typically exemptproject,” as opposedto the typical circumstances in one particular neighborhood. (Santa Monica Chamber ofCommercev. City ofSanta Monica, supra, 101 Cal.App.4th at p. 801, seconditalics added; but see Associationfor Protection etc. Values v. City ofUkiah (1991) 2 Cal.App.4th 720, 736 (Ukiah) [size and height ofhouse not unusual “in the vicinity”].) Reviewing de novo the question ofwhether the circumstanceis “ ‘ “unusual” ’ ” within the meaningofthe significant effect exception (Banker's Hill, supra, 139 Cal.App.4th at p. 261, fn. 11), we conclude as a matter of law that the proposed construction, which would result in a 6,478 square-foot home withan attached 3,394 square-foot, 10-car garage, is “unusual” within 7 the meaning of the applicable exception, because the circumstancesofthe project differ from the general circumstances of projects covered bythe single-family residence exemption,andit is thus unusual whenjudgedrelative to the typical circumstances related to an otherwise typically exempt single-family residence. (Wollmer, supra, 193 Cal.App.4th at p. 1350; Santa Monica Chamber ofCommerce v. City ofSanta Monica, supra, 101 Cal-App.4th at p. 801.) 2. Fair argumentofsignificant effect on the environment Wenext inquire whetherthere is a reasonable possibility that the proposed construction will have a significant effect on the environment due to the unusual circumstanceofits size. (Banker’s Hill, supra, 139 Cal.App.4th at p. 278.) We agree with thetrial court that Karp’s letters submitted to the City Counsel amounted to substantial evidence of a fair argumentthat the proposed construction would result in significant environmental impacts. Asset forth above, Karp opined that the proposed construction would (1) require the excavation ofall vegetation and extensive trucking of earthwork in order to achieve grading, (2) result in steepening ofthe already existing steep slope, (3) necessitate 27- foot retaining walls, and (4) impactthe environment becauseofthe probability of “seismic lurching of the oversteepened side-hill fills” in a landslide hazard zone. These were certainly potential “direct physical change[s] in the environment,” which justified Karp’s opinion that the construction would result in a significant impact to the environment. (Guidelines, § 15378, subd. (a) [definition of“project”]; see also Bozungv. Local Agency Formation Com. (1975) 13 Cal.3d 263, 277-278, fn. 16.) Stated differently, Karp’s opinion provided substantial evidence upon which it could be fairly argued that the proposed construction may have significant environmental impact. (Sierra Club v. County ofSonoma, supra, 6 Cal.App.4th at p. 1316.) Two engineers opined that Karp’s conclusion that geotechnical issues were present at the site was based on a misreading ofthe relevant plans, and the director of the City’s planning and development departmentlikewise concluded that the site was suitable for the proposed dwelling from a geotechnical standpoint,and that no landslide risk was 18 present at the site. However, where there is substantial evidence ofa significant environmental impact, “contrary evidence is not adequate to support a decision to dispense with an EIR. [Citations.] Section 21151 creates a low threshold requirement for initial preparation and reflects a preference for resolving doubts in favor ofenvironmental review when the question is whether any such review is warranted. [Citations.] For example, ifthere is a disagreement among experts over the significance of an effect, the agency is to treat the effect as significant andprepare an EIR. [Citations.]” (Sierra Club v. County ofSonoma, supra, 6 Cal.App.4th at pp. 1316-1317, italics added; see also Guidelines, § 15064, subd. (g) [where there is disagreement in marginal case over significance of environmental effect, lead agency shall treat effect as significant and prepare EJR].) Ukiah, supra, 2 Cal.App.4th 720, upon which respondentsrely, is distinguishable. In Ukiah, an environmental association challenged the construction ofa single residence on the last undeveloped lot in a single subdivision. (/d. at p. 724.) The court rejected appellant’s argumentthat the unusual circumstances exception applied, concluding that “(nJeither the size of the house (2,700 squarefeet), nor its height, norits hillside site is so unusual in the vicinity as to constitute the type of unusual circumstance required to support application ofthis exception.” (Jd. at pp. 736.) The court emphasized that “[t]he potential environmental impacts which [appellant] posits seems to us to be normal and common considerations in the construction ofa single-family residence and are in no way due to ‘unusual circumstances.’ ” (Ibid., italics added.) Here, by contrast, we do not consider the potential massive grading and seismic lurching associated with the proposed construction to be “normal and commonconsiderations”associated with the construction ofa new home. Because there was substantial evidence in the record to support a fair argument that the proposed construction will have a significant effect on the environment (Guidelines, § 15300.2, subd. (c)), the application ofa categorical exemption was 19 inappropriate here, andthetrial court erred in denying appellants’ petition for a writ of mandate.'! Ii. DISPOSITION Appellants’ request for judicial notice is granted. The judgment is reversed, and the trial court is ordered to issue a writ of mandate directingthe City to set aside the approval of use permits andits finding of a categorical exemption, and to order the preparation of an EIR. Appellants shall recover their costs on appeal. "In tight of our conclusion, we need not consider appellants’ argument that the Board’s adoption of a traffic management plan wasa “mitigation measure[]” that precluded a finding of a categorical exemption. (Salmon Protection & Watershed Network v. County ofMarin (2004) 125 Cal.App.4th 1098, 1108.) 20 We concur: Ruvolo, P.J. Reardon, J. Berkeley Hillside Preservationv. City ofBerkeley (A131254) 21 Sepulveda, J. Trial Court: ‘Alameda County Superior Court Trial Judge: Honorable Frank Roesch Counsel for Appellants: Susan Brandt-Hawley Counsel for Respondents City Zach Cowan, City Attorney, Laura McKinney, Deputy of Berkeley and Real Parties in City Attorney Interest City of Berkeley and City Council of City of Berkeley: Counsel for Respondents and Myers, Nave, Riback, Silver & Wilson, Amrit S. Real Parties in Interest Mitchell Kulkarni, Julia L. Bond Kapor, Freada Kapor-Klein, and Donn Logan: Received FEB 16 2012 meyers\nave 22 Filed 3/7/12 CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FOUR BERKELEY HILLSIDE PRESERVATIONetal., Plaintiffs and Appellants, Vv. A131254 CITY OF BERKELEYetal., (Alameda C ; ameda County Defendants and Respondents; Super. Ct. No. RG10517314) DONN LOGAN etal., . ORDER DENYING REHEARINGReal Part Int dRespie s AND MODIFYING OPINION , [NO CHANGEIN JUDGMENT] THE COURT: Respondentandreal parties in interest’s petition for rehearing is denied. The opinion filed February 15, 2012, is modified by deleting the seventh paragraph underpart II.A.3. and replacing it as follows: Although the trial court’s conclusion arguably is consistent with the two- step approachset forth in Banker’s Hill, we note that the Banker’s Hill court did not actually employ such a two-step procedure. Instead,it “streamlined”its approach by “proceed[ing] directly to the question of whether, applying the fair argument standard,there is a reasonable possibility ofa significant effect on the environment due to any... - purported unusual circumstances.” (Banker's Hill, supra, 139 Cal.App.4th at p. 278, italics added.) Indeed, muchofthe court’s opinion focused onall the reasons an agency must apply the fair argument approach in determining whether there is no reasonablepossibility of a significant effect on the environment due to unusual circumstances (Guidelines, § 15300.2, subd. (c)). (Banker’s Hill, supra, 139 Cal.App.4th at pp. 264-265.) Relying on Wildlife Alive, supra, 18 Cal.3d at pages 205-206, the Banker’s Hill court emphasized that an agency is precluded under the Guidelines from “relying on a categorical exemption whenthereis a fair argumentthat a project will have a significant effect on the environment.” (Banker’s Hill, supra, at p. 266.) In other words, the court acknowledged “ ‘that where there is any reasonable possibility that a project or activity may have a significant effect on the environment, an exemption would be improper.’ ” ({bid., italics added by Banker’s Hill.) Our conclusion that the unusual circumstances exception applies wheneverthere is substantial evidenceof a fair argumentofa significant environmental impactis thus not inconsistent with Banker’s Hill. The above modification does not effect any change in the judgment. Trial Court: Trial Judge: Counsel for Appellants: Counsel for Respondents City of Berkeley and Real Parties in Interest City of Berkeley and City Council of City of Berkeley: Counsel for Respondents and Real Parties in Interest Mitchell Kapor, Freada Kapor-Klein, and Donn Logan: Alameda County Superior Court Honorable Frank Roesch Susan Brandt-Hawley Zach Cowan, City Attorney, Laura McKinney, Deputy City Attorney Myers, Nave, Riback, Silver & Wilson, Amrit S. Kulkarni, Julia L. Bond PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF ALAMEDA At the time of service, I was over 18 years of age and nota party to this action. I am employed in the County ofAlameda, State of California. Mybusiness addressis 555 12th Street, Suite 1500, Oakland, CA 94607. On March 26, 2012, I served true copies of the following document(s) described as PETITION FOR REVIEW ontheinterested parties in this action as follows: Susan Brandt-Hawley Esq. Brandt-Hawley Law Group 13760 Arnold Drive Glen Ellen, CA 95442 Alameda CountySuperior Court 1225 Fallon Street Oakland, CA 94612 Court ofAppeal First District Court ofAppeal 350 McAllister Street San Francisco, CA 94102 BY MAIL: I enclosed the document(s) in a sealed envelope or package addressed to the persons at the addresses listed in the Service List and placed the envelope for collection and mailing, following our ordinary business practices. I am readily familiar with Meyers, Nave, Riback, Silver & Wilson's practice for collecting and processing correspondencefor mailing. On the same daythat the correspondenceis placed for collection and mailing, it is deposited in the ordinary course ofbusiness with the United States Postal Service, in a sealed envelope with postage fully prepaid. I declare under penalty of perjury under the lawsofthe State of California that the foregoingis true and correct. Executed on March 26, 2012, at Oakjénd/ California. 1828596.1 -3]-