Court Applies “Fair Argument” Review to Agency Decision on Necessity of Supplemental EIR for Project First Studied in Negative Declaration

In a California Environmental Quality Act (“CEQA”) case remanded from the California Supreme Court, the First District Court of Appeal applied the non-deferential “fair argument” standard of judicial review to hold that the San Mateo County Community College District (“District”) must prepare either a Mitigated Negative Declaration (“MND”) or an Environmental Impact Report (“EIR”) to assess the impacts of a proposed change to its master plan project (“Plan”).  (Friends of the College of San Mateo Gardens v. San Mateo County Community College District, 2017 WL 1829176.)  Because prospects for success in a CEQA lawsuit depend heavily on the applicable standard of review, this decision is important for any agency considering a later or subsequent approval of a project which was previously analyzed.

The Supreme Court, in Friends of the College of San Mateo Gardens v. San Mateo County Community College District (2016) 1 Cal. 5th 937, held that the deferential “substantial evidence” standard of review applies to a determination whether changes to a project, after completion of a prior EIR, Negative Declaration or MND, constitute a “new project” for which an initial study is needed to determine whether the revised project requires supplemental CEQA review. The Supreme Court held that the appellate court overreached when, in its initial review of the case, it decided that the District’s proposed changes were not merely modifications to the previously approved Plan, but an entirely new project. The high court made clear that such a determination is a predominantly factual question for determination by the public agency, which the courts review only for supporting substantial evidence in the record.

Following the Supreme Court’s decision, the case was remanded for further proceedings under the clarified standard of review.  In the first step of its review on remand, the appellate court applied the substantial evidence standard to uphold the District’s decision that the proposed changes to the Plan did not constitute a “new project,” and that therefore review of the proposed changes should proceed under CEQA’s “subsequent review” provisions. In this step of review, the court upheld the District’s determination that the original MND retained some informational value, and could therefore serve as the basis for supplemental CEQA review of the proposed changes to the Plan.

In the second step of its review, the court held that the standard of review for an agency’s separate decision about how to proceed under CEQA’s “subsequent review” provisions depends on whether the initial project approval was based on an EIR, Negative Declaration or MND.  The court held that if the original approval was based on an EIR, the standard of review in evaluating whether the revised project requires a subsequent or supplemental EIR is substantial evidence.  Under that standard, an agency’s decision will be upheld if it is supported by any substantial evidence, regardless of contrary evidence in the record.  By contrast, the court held that if the original approval was based on an MND or Negative Declaration, the standard of review is whether substantial evidence in the record supports a “fair argument” that the project changes might have a significant environmental impact not previously considered.

Since the District had originally approved the Plan based on an MND, the court applied this “fair argument” standard. The court determined that comments from project opponents during administrative proceedings that removing a garden space would create a “sterile atmosphere” were substantial evidence that the proposed changes might result in a significant aesthetic impact.  Therefore, the court required the District to prepare either an EIR or (if, and only if, the District could identify measures to fully mitigate any potential aesthetic impact) a Mitigated Negative Declaration.

The appellate court’s decision, and the shifting standards of review it applies to different stages of supplemental environmental review, make clear the vital importance of close consultation with legal counsel at all steps of the CEQA process.