The California Supreme Court clarified an ambiguous statute and the test for what is considered a project under the California Environmental Quality Act in its recent decision in Union of Medical Marijuana Patients, Inc. v. City of San Diego (UMMP).  The Court held that certain activities listed in the statute are not considered projects under CEQA as a matter of law.  Instead, the activities must be analyzed to determine whether they meet the statutory definition of a project, just like other activities that are not listed in the statute.  This decision potentially reduces the number of activities that will per se be subject to environmental review in California.  Yet the actual impact is unknown because the Court reiterated the broad definition of project under CEQA, which includes activities that might impact the physical environment.

The UMMP case addressed the City of San Diego’s (City) adoption of an ordinance regulating the number and location of medical marijuana dispensaries.  The ordinance amended zoning regulations to identify where dispensaries could be located.  The City found that adopting the ordinance was not a project under CEQA and, accordingly, did not conduct environmental review.  An organization defending medical cannabis patients asserted that the City was required to conduct environmental review under CEQA when it adopted the ordinance and amended zoning regulations.

The organization argued that amending zoning ordinances qualifies as a project as a matter of law because “amendment of zoning ordinances” is specifically mentioned in Public Resources Code section 21080 as an activity to which CEQA applies.  The organization also argued that, in any event, the City’s ordinance is a project under CEQA.

First, the Court held that Section 21080 does not make amendments to zoning ordinances “projects” as a matter of law.  The Court stated that the statutory language is ambiguous, but when considered in context of CEQA as a whole, the statutory definition of a project must apply.  Thus, even if an activity is listed in Section 21080, the lead agency must analyze whether the activity meets the statutory definition of a project in order to determine whether CEQA applies.  To be a project under CEQA, the activity must be one that may cause “either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.”  Pub. Resources Code, § 21065.  The Court noted that from a policy perspective, there is no reason to subject a proposed activity to the costs of CEQA if the activity does not have the potential to affect the environment, making the definition of “project” an appropriate gatekeeper for CEQA.

Second, the Court analyzed whether the City’s adoption of the zoning ordinance qualifies as a project under CEQA.  The Court stated that based on case law precedent, to determine whether an activity is a project, an agency must consider the activity’s potential environmental effects regardless of whether the activity will actually have an environmental effect.  The question is whether the activity is one that could cause a direct or reasonably foreseeable indirect physical change to the environment.  Given this test, the Court held that the City incorrectly determined that adopting the ordinance was not a project.  The Court noted that establishing new businesses may cause indirect physical changes in the environment, including construction and traffic.  Thus, the Court held that the City must consider the adoption of the ordinance a project “and proceed to the next steps of the CEQA analysis,” remanding the case to the trial court for further proceedings.

The Court’s holding confirms that outside of specific statutory exemptions, there is no bright-line rule regarding CEQA’s applicability to any particular type of governmental action.  Instead, public agencies must examine the potential environmental effects of their discretionary actions in light of CEQA’s broad definition of a “project,” which requires only that an activity may cause a reasonably foreseeable indirect physical change in the environment.  The ultimate scope of an agency’s CEQA review will depend upon its fact‑based determinations, but UMMP emphasizes that its initial inquiry must take an expansive view and treat actions as projects where there is a plausible causal connection between the action and even “theoretical” physical changes in the environment.

For questions or additional information on this topic please contact Lauren Bernadett at lbernadett@somachlaw.com.

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