Art Coon: A court can't invalidate a lead agency's subsequent CEQA reviews and approvals of a changed project based on its own abstract and inherently subjective assessment that the project is entirely “new,” rather than a modified version of the original project. CEQA's subsequent review rules apply to changed projects initially approved by negative declaration, as well as when there has been a prior environmental impact report. Whether the previous CEQA document retains some relevance is now the key threshold question. And that question, as well as whether that document will require major revisions to adequately analyze the changed project, are factual determinations within the purview of the lead agency subject to judicial review for substantial evidence support. The Court also recognized that negative declarations are entitled to a statutory presumption of finality just like EIRs, and that proposed changes in an already approved project do not call for restarting the CEQA process or revisiting environmental issues already laid to rest by the prior document, be it a negative declaration or EIR.

GlobeSt.com: What implications does this case have for the real estate industry?

Coon: It provides needed certainty in an area where courts had been split, and enhances lead agencies' and project developers' ability to rely on subsequent negative declarations and addenda rather than starting the CEQA process completely anew when a project is revised, which would likely lead to an increase in unnecessary EIRs. Real estate development projects, particularly large, phased developments that are anticipated to be built out over a very long time period, are often modified significantly prior to full buildout due to changing market needs or economic conditions. Accordingly, it is important to have assurance that an agency's decision to proceed under CEQA's subsequent review rules and procedures will receive judicial deference and not arbitrarily be set aside by a court.

GlobeSt.com: Is there anything else we should know about this case and its implications for future development?

Coon: It reflects a Supreme Court with a make up including several new, young and smart justices who are just getting their feet wet with regard to how CEQA and California's other complex laws governing land use operate. While the Court announced that a substantial evidence standard governs the lead agency's decisions as to how extensively a prior CEQA document must be revised or what type of new CEQA document (if any) must be prepared for a modified project, its opinion was a bit mushy in parts and made some arguably inconsistent statements about that standard in the situation where the prior document is a negative declaration as opposed to an EIR. So, while the decision enhances lead agencies' ability to rely on subsequent negative declarations and addenda in the subsequent review process after an initial negative declaration, the extent to which it does so continues to be uncertain to some degree–as usual, CEQA review remains complex and challenging for local agencies and the development community, and future litigation may be needed to further clarify the standards governing subsequent review of changed projects originally approved by negative declaration. Lead agencies and project applicants faced with issues in this area should consult with experienced CEQA counsel in determining how best to proceed.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

SAN MATEO,CA—The California Supreme Court rendered its highly anticipated opinion this week in the case, Friends of the College of San Mateo Gardens v. San Mateo County Community College District. The crux of the case centered on the impacts of any modifications done to real estate projects after initial CEQA review. In this exclusive, Art Coon, co-chair of Miller Starr Regalia's land use practice group and a CEQA litigator, says the unanimous opinion this week was significant for lead agencies and project proponents who consider approval of changes to a development project.

The key issue argued was when a lead agency performs a subsequent environmental review and prepares a subsequent environmental impact report, is this simply a modification of the project or a new project altogether. The significance of the issue is huge: beginning the CEQA process completely anew is an onerous, expensive and time consuming endeavor. While the Court rejected the plaintiff's threshold of a “new project” test, Coon says there were murky aspects that may lead to further litigation.

While the Court noted that the agency's environmental review obligations depend on the effect of the proposed changes on the decision-making process, rather than on any abstract characterization of the project as “new” or “old” (a major victory for developers) the Court's ruling regarding negative declarations were ambiguous and arguably contrary to its earlier statements, inviting further litigation, says Coon. He addressed some of the finer points of the ruling with GlobeSt.com.

GlobeSt.com: What are the most significant takeaways from the California Supreme Court's ruling on this case?

Art Coon: A court can't invalidate a lead agency's subsequent CEQA reviews and approvals of a changed project based on its own abstract and inherently subjective assessment that the project is entirely “new,” rather than a modified version of the original project. CEQA's subsequent review rules apply to changed projects initially approved by negative declaration, as well as when there has been a prior environmental impact report. Whether the previous CEQA document retains some relevance is now the key threshold question. And that question, as well as whether that document will require major revisions to adequately analyze the changed project, are factual determinations within the purview of the lead agency subject to judicial review for substantial evidence support. The Court also recognized that negative declarations are entitled to a statutory presumption of finality just like EIRs, and that proposed changes in an already approved project do not call for restarting the CEQA process or revisiting environmental issues already laid to rest by the prior document, be it a negative declaration or EIR.

GlobeSt.com: What implications does this case have for the real estate industry?

Coon: It provides needed certainty in an area where courts had been split, and enhances lead agencies' and project developers' ability to rely on subsequent negative declarations and addenda rather than starting the CEQA process completely anew when a project is revised, which would likely lead to an increase in unnecessary EIRs. Real estate development projects, particularly large, phased developments that are anticipated to be built out over a very long time period, are often modified significantly prior to full buildout due to changing market needs or economic conditions. Accordingly, it is important to have assurance that an agency's decision to proceed under CEQA's subsequent review rules and procedures will receive judicial deference and not arbitrarily be set aside by a court.

GlobeSt.com: Is there anything else we should know about this case and its implications for future development?

Coon: It reflects a Supreme Court with a make up including several new, young and smart justices who are just getting their feet wet with regard to how CEQA and California's other complex laws governing land use operate. While the Court announced that a substantial evidence standard governs the lead agency's decisions as to how extensively a prior CEQA document must be revised or what type of new CEQA document (if any) must be prepared for a modified project, its opinion was a bit mushy in parts and made some arguably inconsistent statements about that standard in the situation where the prior document is a negative declaration as opposed to an EIR. So, while the decision enhances lead agencies' ability to rely on subsequent negative declarations and addenda in the subsequent review process after an initial negative declaration, the extent to which it does so continues to be uncertain to some degree–as usual, CEQA review remains complex and challenging for local agencies and the development community, and future litigation may be needed to further clarify the standards governing subsequent review of changed projects originally approved by negative declaration. Lead agencies and project applicants faced with issues in this area should consult with experienced CEQA counsel in determining how best to proceed.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.