California Supreme Court Clarifies What Constitutes a “Project” Under CEQA

In a decision released on August 19, Union of Medical Marijuana Patients, Inc. v. City of San Diego, the California Supreme Court addressed the definition of a “project” under the California Environmental Quality Act (“CEQA”) and clarified the appropriate scope of review for when an activity constitutes a “project.” As a practical matter, the decision will likely result in fewer findings that actions are not “projects” and a greater reliance on findings that projects are exempt from CEQA.

CEQA defines a “project” as an activity that (1) is a discretionary action by a governmental agency and (2) will either have a direct or reasonably foreseeable indirect impact on the environment. (Pub. Res. Code, § 21065.) Petitioners argued that a second CEQA statute controlled, which states that CEQA “shall apply” to a list of discretionary projects including, but not limited to, the “enactment and amendment of zoning ordinances.” Petitioners’ position was that this meant all zoning changes were subject to CEQA regardless of whether those changes would have any environmental impacts. (Pub. Res. Code, § 21080, subd. (a).)

• Actions Subject to CEQA — In the first part of the opinion, the Court concluded that the separate list of actions was not a list of actions that would automatically be subject to CEQA. Rather, the Court held, the specific definition of “project” controls, and actions by governmental agencies must both be discretionary and have a direct, or reasonably foreseeable indirect, impact on the environment.
• Test to Determine a “Project” — In the second part of the opinion, the Court clarified that the test for whether an action constitutes a “project” must take place in the abstract. The Court held that the “likely actual impact of an activity is not at issue in determining its status as a project.” Instead, “a proposed activity is a CEQA project if, by its general nature, the activity is capable of causing a direct or reasonably foreseeable indirect physical change in the environment. This determination is made without considering whether, under the specific circumstances in which the proposed activity will be carried out, these potential effects will actually occur.”

What It Means for Government Agencies
The much-anticipated decision arose in the context of whether proposed new or changed zoning ordinances must first undergo CEQA review, particularly those that concentrate or shift property uses within a jurisdiction. However, the decision has wider application. Following this opinion, government agencies examining whether an action constitutes a project under CEQA should be sure to focus on whether the activity could, in general, have a direct or indirect environmental impact and not on whether the action is likely to have specific impacts.

Additional Analysis and Insight
Meyers Nave Of Counsel Ed Grutzmacher also shared his perspective on the court’s decision in two news reports — “Zoning Shift Can Mean Review, Calif. Court Says in Pot Case” (Bloomberg Law: Environment, 8/19/2019) and “California Justices: San Diego’s Medical Pot Law Needs a Second Look” (The Recorder/Law.com, 08/20/2019).