California Supreme Court Rejects “New Project” Argument

Friends of the College of San Mateo Gardens v. San Mateo County Community College District (No. S214061, September 19, 2016)

Why It Matters: As land developers and investors know all too well, so-called “fully-entitled” projects in California can command massive premiums. Their high prices reflect both their scarcity and the value placed on avoiding a costly re-entitlement process. But what if the buyer of such a project was required to begin the California Environmental Quality Act (CEQA) process anew because minor changes were proposed to that approved project? The California Supreme Court answered this question and provided a measure of comfort for those seeking project modifications. In Friends of the College of San Mateo Gardens v. San Mateo County Community College District, the Court rejected the argument that even substantial changes to a previously-approved project triggers an inquiry into whether such changes constitute a "new" project requiring "new" CEQA review. In its unanimous decision, the Court focused on substance—the relevancy of the environmental information—and not form, i.e., whether a modification is a “new project,” and upheld reliance upon CEQA’s existing mechanisms for addressing changes to previously-approved projects. Leading up to this case, the California Courts of Appeal were split, with some courts holding that modifications to approved plans constitute a “new” project requiring new CEQA review while others upheld an agency’s decision to rely on previously-approved CEQA documents to support approval of a modified project. This decision settles that conflict.

Facts: In 2006, the San Mateo Community College District and its Board of Trustees (District) adopted a three-college-campus master plan proposing nearly $1 billion in new construction and facilities renovations. The master plan called for renovation of the Building 20 complex on the College of San Mateo campus. That complex consisted of a small classroom and lab structure, greenhouse, lath house, surrounding garden space and an interior courtyard. In 2007, the District adopted a Mitigated Negative Declaration (2006 MND) to evaluate the environmental impacts of implementing the master plan on the College campus. Like the master plan, the 2006 MND anticipated the renovation of the Building 20 complex.

Years passed, and the District’s anticipated funding for the renovation of the Building 20 complex never materialized. The District was forced to re-evaluate its plans and, in 2011, issued a notice of determination for the demolition—not renovation—of the Building 20 complex. The District also proposed to renovate two other buildings that had previously been slated for demolition. To comply with CEQA, the District prepared an Addendum to the 2006 MND in May 2011. In response to objections, however, the District then prepared and adopted a new Addendum in August addressing the concerns raised (August 2011 Addendum).

Notwithstanding the District’s late effort to bolster the earlier Addendum, controversy ensued. Friends of the College of San Mateo Gardens, a group devoted to the preservation of the gardens at the Building 20 complex, challenged the District’s reliance on the August 2011 Addendum. The trial court ruled in favor of Friends, finding that the demolition of the Building 20 complex was inconsistent with the District’s master plan and that its impacts were not addressed in the 2006 MND.

The Court of Appeal affirmed the trial court finding that the District’s demolition of Building 20 was not merely a change to the project evaluated in the 2006 MND, but a "new project" altogether for which use of the August 2011 Addendum was inappropriate. According to the Court of Appeal, the District was required to consider whether a whole new CEQA analysis was required in connection with the Building 20 demolition.

The Decision: The Supreme Court rejected Friends’ claim that lead agencies must make a threshold inquiry as to whether a given project constitutes a change to its previously approved project, or a "new project" altogether. Without any standards to govern such an inquiry, the Court expressed concern that the inquiry would inevitably lead to arbitrary conclusions. The better approach, the Court reasoned, is to stay focused on the environmental impacts of any proposed changes and whether the original environmental document retains some informational value. “If the proposed changes render the previous environmental document wholly irrelevant to the decisionmaking process, then it is only logical that the agency start from the beginning under section 21151 by conducting an initial study to determine whether the project may have substantial effects on the environment.” In other words, the Court had faith that CEQA’s existing mechanisms for addressing changes to a previously-approved project (i.e., Public Resources Code Section 21166 and CEQA Guidelines Sections 15162-15164) were sufficiently protective and that Friends’ “new project” inquiry was not necessary.

The lead agency’s determination whether to rely upon a previously-approved CEQA document and what type of document is required (addendum, supplement, or subsequent EIR or Negative Declaration) must be based on substantial evidence in the record. The Court noted that, if the project is deemed a “new” project, the fair argument standard applies as to whether or not an EIR must be prepared. The deferential substantial evidence test only applies to determinations under CEQA Section 21166 and CEQA Guidelines Sections 15162-15164.

The Supreme Court’s decision also rejected various alternative theories proffered by Friends. Among them, the Court upheld the application of CEQA’s subsequent review provision (Public Resources Code section 21166) to Negative Declarations, as well as to EIRs. The Court’s support for this common practice reinforces the CEQA Guidelines which clearly contemplate that addenda, supplements and subsequent CEQA documents can be prepared for EIRs, MNDs and Negative Declarations.

Practice Pointers:

• When preparing an addendum, supplement, or subsequent EIR or Negative Declaration, lead agencies are advised to provide clear and continuous connections between the project as modified and the project as originally approved. The decision whether the proposed change is a modification of a previously-approved project or a "new project" is a question of fact for the lead agency to which the Court will grant deference.
• If the CEQA analysis fails to establish the ongoing relevance of the original CEQA document, or fails to support that relevance with substantial evidence, then even under the beneficial Friends of the College of San Mateo Gardens decision, such modifications could suggest the existence of a "new project" for which a new EIR or Negative Declaration would be required.