​California Supreme Court Issues Key CEQA Decision

The California Supreme Court ruled this week that evidence that a project may have a significant effect on the environment does not, in and of itself, preclude the use of a categorical exemption under the California Environmental Quality Act (CEQA).

The March 2 decision is a significant victory for the development community and ensures that lead agencies can continue to rely on categorical exemptions, even when the exempt projects may have a significant impact on the environment.

Disputed Project

The case, Berkeley Hillside Preservation v. City of Berkeley, stemmed from the City of Berkeley’s approval of a large house in Berkeley. The residence would be built on two floors, would include an open-air lower level, and would cover about 16 percent of the lot.

The city’s zoning adjustment board (board) approved the use permit for the house, and found that the project was exempt under two categorical exemptions in the CEQA Guidelines, which, respectively, exempt from CEQA single-family residences in urbanized areas and infill development that meets certain criteria.

Several groups and individuals appealed the board’s determination, arguing that the city should have prepared an environmental impact report (EIR) for the project. The city council affirmed the permit approval, dismissed the appeal, and determined that the project was exempt from CEQA.


Berkeley Hillside Preservation, a citizens group, filed suit, asserting that the city was precluded from relying on the categorical exemptions because an “exception” to the exemptions applied. Specifically, the group argued that the city could not rely on categorical exemptions because, according to the CEQA Guidelines, “[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.”

The trial court rejected the group’s contentions, holding that the exception did not preclude application of the categorical exemptions because, notwithstanding evidence that the project would have a potentially significant environmental impact, the project did not present any unusual circumstances.

The appellate court reversed, holding that that the mere fact that the project may have an impact on the environment is itself an unusual circumstance that precludes use of the exemptions.

Supreme Court Ruling

The California Supreme Court reversed the appellate court ruling and held in favor of the city. Specifically, the Supreme Court held that the plain language of the exception supports the view that, for the exception to apply, it is not alone enough that there is a reasonable possibility the project will have a significant environmental impact; instead, in the words of the Guideline itself, there must be “a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.”

According to the Supreme Court, Berkeley Hillside Preservation’s interpretation of the exception would give no meaning to the phrase “due to unusual circumstances.” The court noted that had that been the actual intent, “the phrase ‘due to unusual circumstances’ would, no doubt, have been omitted from the regulation; rather than confuse the issue with meaningless language, the regulation would clearly and simply provide that the exception applies ‘if there is a reasonable possibility that the activity will have a significant effect on the environment’” without the phrase “due to unusual circumstances.”


Had Berkeley Hillside Preservation prevailed in this case, lead agencies would no longer have the ability to rely on categorical exemptions because the legal interpretation for which the group was arguing, if adopted, would have set such a low bar to overcome that categorical exemptions would have been rendered meaningless.

Instead, lead agencies would have been required to prepare an environmental impact report, a much more expensive and complicated level of environmental review, even for projects that would otherwise clearly fit within the definition of categorical exemptions.

A copy of the Supreme Court’s decision can be found here.

Staff Contact: Anthony Samson