As 2013 came to a close, the California court of appeal in Parker Shattuck Neighbors v. Berkeley City Council (1st Dist., Div. 4, 12/30/13, A136873) ___Cal.App.1st___, 2013, upheld the City of Berkeley’s decision not to require an EIR in connection with a mixed use development project for two reasons: (1) appellants Parker Shattuck failed to identify substantial evidence to create a fair argument that the disturbance of contaminated soil would have a significant effect on the environment; and (2) the site’s inclusion on the Cortese list did not automatically trigger the preparation on an EIR.

The Project

As proposed, the Park Place project would consist of 155 residential units and over 20,000 square feet of commercial space. The site is currently occupied by a car dealership, and prior uses had included service stations and a service garage.

Prior to acquiring the site, the developer commissioned three environmental assessments. A Phase I report noted the site’s history of containing underground storage tanks (“USTs”) and recommended further soil investigations. A Phase II report followed, which identified a UST beneath the sidewalk, collected soil samples and recommended further soil and water sampling. The resulting supplemental Phase II report identified certain contaminants that exceeded the Regional Board environmental screening level for commercial/industrial use, but noted that the contamination was probably “naturally occurring” and “not likely” to “require cleanup.”

The UST identified in the Phase II report was removed in 2006, along with 75 tons of contaminated soil. The site was subsequently placed on the Cortese list, which includes sites with “underground storage tanks for which an unauthorized release report is filed” (Gov. Code §65962.5, subd. (c)(1)). In January 2007, the Regional Board found that no further remedial action was necessary and issued a closure letter for the site.

The CEQA Challenge

As the project moved forward, the City circulated a proposed mitigated negative declaration (“MND”) for public comment in November 2011. The MND noted that the site was listed on the Cortese list, but due to prior remediation efforts, the site posed no significant risk to the public or the environment. The City’s Zoning Adjustment Board adopted the MND, and after a timely appeal, the City Council approved the project in January 2012. Parker Shattuck challenged the project, arguing that an EIR was required because the MND failed to adequately address the potential health risks to the project’s construction workers and future residents posed by soil contamination.

An EIR is required “whenever substantial evidence supports a fair argument that a proposed project may have a significant effect on the environment.” Laurel Heights Improvement Assn. v. Regents of University of California (1993) 6 Cal.4th 1112, 1123.  Parker Shattuck argued that the disturbance of contaminated soil constituted a physical change in the environment that might have an adverse impact on the project’s workers and future residents, and therefore constituted a “significant effect on the environment” requiring the preparation of an EIR. The appellant’s argument was supported by expert testimony identifying various levels of contamination in the soil and suggesting that a vapor-intrusion study be conducted. Parker Shattuck also argued that an EIR was automatically required for projects listed on the Cortese list.

The Decision

Although this case seems to have broad CEQA implications, the court ruled on narrow grounds and refused to decide the broader CEQA issues. Preliminarily, the court rejected the appellant’s argument that an EIR was necessarily required for projects to be constructed on sites on the Cortese list. The court clarified that while a site’s inclusion on the list prevented it from being categorically exempt from CEQA, it did not establish that a project would have a significant effect on the environment requiring the preparation of an EIR.

Next, after considering the evidence in the record, the court found that “even if health risks confined to a project’s construction workers and future residents could ever trigger CEQA review, substantial evidence was not identified in the record to create a fair argument that the disturbance of contaminated soil may have a significant effect on the environment.” Specifically, the court found that the appellant’s expert’s mere suggestion to further investigate was not evidence at all, and “much less” the “substantial evidence” required by CEQA.

CEQA Implications

The court found it significant that the only people who would potentially be impacted by the project were the project’s construction workers and future residents. Though the court refused to decide on the issue, it noted “it is far from clear that adverse effects confined only to the people who build or reside in a project can ever suffice to render significant the effects of a physical change.” The court’s opinion then discussed a line of cases supporting the broad application of CEQA to environmental impacts affecting the public at large, not just particular persons.

The court also discussed but made no ruling on the continued debate over whether CEQA review can apply to the environment’s impact on a project, versus only a project’s impact on the environment.