It’s An E-World: Governing in the Electronic Age

March 2015
Number 17

Technology often outpaces the law. Lozano Smith attorneys have emphasized this point at numerous presentations on technology legal issues over the past decade. Occasionally, the Legislature tries to catch up with changes in technology: in 2015, such legislative changes focused on school districts, which now must enact new policies on several fronts, as discussed below. However, the law on many other local government issues remains unsettled, and is not likely to be clarified by legislative action any time soon. Lozano Smith’s Technology & Innovation Practice Group was formed to help our clients navigate these murky legal waters for all California public agencies. This news brief summarizes some of the many challenging issues we are tackling in 2015.

Email, the Public Records Act and the Retention of Records. Public agencies often struggle with how to identify public records to be retained, as well as how and whether to preserve emails, and for how long. The California Public Records Act imposes obligations for managing and disclosing public records on all state and local agencies, but retention issues are proliferating. These issues are of particular public interest at the moment due to attention being paid to use of personal email accounts by prominent national political candidates.

As we previously reported in CNB No. 21 (2014), an appellate court ruled last year that public agency emails sent and received on personal devices and using personal accounts are not subject to disclosure under the California Public Records Act. The opinion in City of San Jose v. Superior Court (2014) 225 Cal. App. 4th 475 reversed a trial court ruling that such emails were subject to disclosure if they concerned public agency business, even when a public agency employee or official was using his or her personal account on a personal device. The case has been appealed to the California Supreme Court, and a ruling is likely in 2015. Lozano Smith is watching this case closely and will provide a news brief on the opinion when it comes down.

When it comes to record retention for school districts, regulations dating from the 1970s (before the advent of personal computers and, of course, email) govern how long to retain documents, including electronic documents. As discussed in detail in CNB No. 63 (2012), those regulations appear to require that some emails be retained indefinitely, and the California Department of Education has not pursued revisions to the regulations to make them current. To help educational agencies better evaluate their options for determining what email to retain and for how long, Lozano Smith has created “School District Email Retention”, which discusses possible policy solutions. A copy of this document can be obtained by contacting any of the authors identified below.

Cities and other local governmental agencies face their own records retention issues; many such agencies are turning to digital records to store security, library, police, and traffic data, along with many other uses. Of particular concern lately is the retention and storage of video images, including images from security and traffic cameras and police body and car cameras. Lozano Smith attorneys have developed the unique retention and management protocols these records require.

Contracting for Cloud Services. As summarized in CNB No. 78 (2014), school districts are now subject to three bills regarding technology services and student privacy that were passed by the California Legislature last year, two of which became effective as of January 1, 2015 (the third, affecting vendors of technology services, will not go into effect until January 1, 2016). Assembly Bill (AB) 1584 enacted new Education Code section 49073.1, requiring that educational agencies enact board policies governing new contracts with third parties for digital storage, management, and retrieval of pupil records (including cloud-based storage) or digital educational software related to pupil records. Education Code section 47603.1 also requires that such contracts contain nine provisions designed to protect student privacy.

Also effective on January 1, 2015, AB 1442 enacted Education Code section 49073.6, which places requirements on an educational agency when considering a program to gather or maintain student information obtained from social media. Such an agency must first conduct a public meeting on the issue and notify students and parents of the opportunity to comment on the program. If the program is enacted, the educational agency must adhere to certain privacy safeguards set out in the statute. Although this statute appears to have been drafted to target an agency’s widespread monitoring of its students’ social media activities, the statute may also apply to incidental review of social media — for instance, when a particular student’s alleged misconduct may be reflected on his or her social media account.

Lozano Smith attorneys can assist with model policy documents and contractual terms for compliance with these new laws. In addition, as reported in CNB No. 32 (2014), Lozano Smith attorneys Michael Smith and Manuel Martinez were contributors to the National School Boards Association’s Council of School Attorneys publication, “Cloud Computing and Student Privacy: A Guide for School Attorneys”. While the COSA Guide is not generally available to non-COSA members, our attorneys are available to provide similar guidance to our school district and municipal clients.

Purchasing and Installing Technology. Many school districts and public libraries are in the process of purchasing technology upgrades to assist in the implementation of the Common Core State Standards. Such projects are often funded by the federal E-rate program. When making such purchases, it is important to navigate both the federal E-rate rules and state laws regarding the purchase of goods and services by California public agencies. For school districts, one little-explored option is to use the “competitive negotiation” procedures set out in Public Contract Code section 20118.2. That statute permits a school district to purchase “computers, software, telecommunications equipment, microwave equipment, and other related electronic equipment and apparatus” using the detailed request for proposal procedures set out in the statute. This statute cannot be used for construction or “for the procurement of any product that is available in substantial quantities to the general public”.

Lozano Smith has also taken the lead in developing contracts for public agency shared acquisition, website design and management, and data management services by and between municipalities. This cutting edge undertaking presents cost-effective, immediate functionality to the user groups.

Finally, public agencies should carefully consider whether their technology installation contracts are governed by prevailing wage laws. As reviewed in CNB No. 43 (2014), sweeping changes to prevailing wage law now require, among other things, that contractors on public works projects register with the Department of Industrial Relations. Where a contract calls for significant installation on public property, it may be subject to these requirements.

Lozano Smith’s Technology & Innovation Practice Group can offer guidance on these and many other technology legal issues facing local public agencies. If you are attending the CASBO Annual Conference next week, you can catch Lozano Smith partners Harold Freiman and Devon Lincoln presenting on Technology Legal Issues on Wednesday, April 1 beginning at 1:45. Also, in the coming year, our clients will begin to receive our new quarterly publication on law and technology for public agencies. If you have questions on a technology legal issue, please contact one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Harold M. Freiman
Partner
Walnut Creek Office
hfreiman@lozanosmith.com

Devon B. Lincoln
Partner
Monterey Office
dlincoln@lozanosmith.com

William P. Curley III
Senior Counsel
Los Angeles Office
wcurley@lozanosmith.com

Manuel F. Martinez
Associate
Walnut Creek Office
mmartinez@lozanosmith.com

©2015 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

OSEP Opines that Parents may Request Publicly-Funded IEEs for Areas Not Covered by District’s Assessment

March 2015
Number 16

On February 23, 2015, the Office of Special Education Programs (OSEP) issued a letter indicating that a parent may request a publicly funded independent educational evaluation (IEE) to assess an area that was not covered by the school district’s evaluation. Under 34 C.F.R. section 300.502, parents may request a publicly funded IEE if they disagree with a district’s assessment of their student. In general, if a parent requests an IEE at public expense, the public agency must, without unnecessary delay, either (1) initiate a hearing to show that its evaluation is appropriate; or (2) ensure that an IEE is provided at public expense unless the agency can demonstrate at a hearing that the evaluation obtained by the parent did not meet agency criteria. According to OSEP’s new letter, when a student has been assessed by a school district, if a parent disagrees with that evaluation because the assessment did not include a particular area of assessment, the parent may request an IEE in order to assess the child in that area to determine whether the child has a disability and the nature and extent of services needed.

OSEP’s position appears to be contrary to prior analysis in California. The Office of Administrative Hearings (OAH), the agency tasked with hearing disputes of this type, has consistently interpreted state and federal law as not requiring a publicly funded IEE prior to a district’s completion of an assessment, including where the area of assessment that parents are requesting has not yet been assessed. OSEP’s letter is not legally binding, so it remains to be seen whether this letter will have any effect on OAH’s analysis, including requests for independent assessment in more specific areas, such as neuropsychology or central auditory processing, for example.

Note that the situation addressed by OSEP’s letter may be distinguished from a situation where a school district has not yet assessed a student. In such cases, OAH has expressly stated that a parent may not request an IEE and OSEP’s new informal guidance does not address this situation. Nonetheless, the OSEP letter serves as a good reminder that districts should be sure to include all areas of suspected disability at the outset in offering assessment. It also emphasizes the importance of conducting comprehensive assessments in order to address any areas related to a child’s suspected disabilities. Additionally, districts should pay close attention to parental input when planning a student’s assessments. It appears that, should OSEP’s letter be strictly interpreted, if a comprehensive district assessment is not performed, a district may forego its right to assess in the parent’s requested area, leaving a parent-initiated IEE as the only word on the subject.

If you have any questions regarding a parent or student’s IEE rights or assessment questions in general, please contact one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Summer D. Dalessandro
Senior Counsel
San Diego Office
sdalessandro@lozanosmith.com

Maryn Oyoung
Associate
Walnut Creek Office
moyoung@lozanosmith.com

©2015 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

No FEHA Violation for Releasing Employee Who Was Unable to Perform Essential Job Functions

March 2015
Number 15

In Nealy v. City of Santa Monica (January 21, 2015) 2015 Cal.App. Lexis 139, the Second District Court of Appeal affirmed a judgment in favor of the City of Santa Monica (City) finding that because an employee was unable to perform the essential job functions even with reasonable accommodations, the City did not violate the California Fair Employment and Housing Act in releasing the employee from employment. Specifically, the court found the City was not required to eliminate an essential function of a job or reassign the employee to a position for which he was not qualified in ordr to accommodate him.

Tony Nealy worked for the City as a solid waste equipment operator. Mr. Nealy injured himself while on the job and subsequently took multiple injury-related leaves of absence. He was eventually released to return to work with restrictions. Mr. Nealy expressed his desire to return to work in his former solid waste equipment operator position. The City and Mr. Nealy participated in multiple meetings to engage in an interactive process. During this process, the City determined it could not place Mr. Nealy in this position because there were essential functions of the solid waste equipment operator position that Mr. Nealy could not perform with or without accommodations. However, the City did identify alternative vacant positions for which Mr. Nealy could be considered. Although Mr. Nealy applied for a couple of these vacant positions, the City ultimately denied his applications because he was not qualified to meet the requisite application criteria. The City subsequently ended Mr. Nealy’s employment.

Mr. Nealy filed a lawsuit against the City alleging disability discrimination, failure to provide reasonable accommodation, failure to engage in an interactive process, and retaliation. The trial court dismissed all allegations and the Court of Appeal affirmed.

The court found that Mr. Nealy could not perform the essential functions of the solid waste equipment operator position even with accommodations. The court found that the City was not required to eliminate an essential function of the position, despite Mr. Nealy’s request that the City do so to accommodate him. The court further found that while a reasonable accommodation may include reassignment to a vacant position, the City was not required to reassign Mr. Nealy to a vacant position for which he was not qualified.

This case affirms the importance for employers of engaging in a meaningful interactive process with employees, which may include considering alternate job placements for the employee. However, the court recognized that it would be an unreasonable accommodation to require employers to eliminate essential functions of positions or assign employees to positions for which they are not qualified.

For further information about this case, accommodating employees, or the interactive process, please contact one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Dulcinea Grantham
Partner
Walnut Creek Office
dgrantham@lozanosmith.com

Maryn Oyoung
Associate
Walnut Creek Office
moyoung@lozanosmith.com

©2015 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

California Supreme Court Confirms that Employees May Be Terminated While on Leave, But Questions Remain Unanswered

March 2015
Number 14

An employer may dismiss an employee who is on medical leave if the employee violates company policy during the leave. In Richey v. Autonation, Inc. (2015) 60 Cal. 4th 909, a case that applies both to school and municipal employers, the California Supreme Court reversed the court of appeal and upheld an arbitrator’s award in favor of an employer that terminated the employee while he was on an approved medical leave because he violated the company policy that prohibited working during a leave.

Avery Richey began working at Power Toyota in Cerritos in 2004. He was aware that outside employment while on California Family Rights Act (CFRA) leave was not allowed. Employees that violated this policy in the past had been fired. In October 2007, Mr. Richey decided to open a restaurant while he was still working at Power Toyota. In March 2008, Mr. Richey injured his back at home and he was unable to work as a result of his injury. Mr. Richey filed for leave under the CFRA and the federal Family Medical Leave Act (FMLA) and Power Toyota granted the leave.

While Mr. Richey was on leave, Power Toyota sent him a letter stating that employees were not allowed to engage in outside employment while on leave and he could contact them if he had questions. Mr. Richey failed to respond to the letter. After receiving information that Mr. Richey was working while on leave, Power Toyota conducted an investigation and determined that Mr. Richey was working at his restaurant. Just prior to the conclusion of Mr. Richey’s leave Power Toyota terminated him. Mr. Richey began legal action against Power Toyota. An arbitrator granted an award in favor of Power Toyota and Mr. Richey sought to vacate the award in court.

The CFRA (Gov. Code § 12945.2) and the FMLA (29 U.S.C. 2601, et. seq.) allow employees to take up to 12 weeks of leave in a 12 month period to care for an employee’s family member or for the employee’s own medical condition. An employee is entitled to reinstatement in the same, or a comparable position, at the end of their leave. Defenses to reinstatement exist under both the CFRA and the FMLA. One such defense provides that “[a]n employee has no greater right to reinstatement or to other benefits . . . of employment than if the employee had been continuously employed during the CFRA leave period.” An employer has the burden of proving that an employee would not have been employed at the time of reinstatement even if they had not taken leave. (Cal.Code Regs., tit. 2, § 11089, subd. (c)(1); see also 29 C.F.R. § 825.216(a).)

The California Supreme Court found that the evidence overwhelmingly supported the arbitrator’s factual findings that Mr. Richey was fired because he pursued outside employment while on CFRA leave, not because he decided to take CFRA leave for his injury. The California Supreme Court was persuaded by evidence such as Power Toyota’s notice to Mr. Richey of company policy that prohibited outside employment, including self-employment, while on leave and Mr. Richey’s failure to respond to his employer’s concerns. The court acknowledged that even if the arbitrator was correct in finding that Power Toyota’s employee handbook was “poorly written,” Mr. Richey was clearly informed that he was not supposed to pursue outside employment while he was on CFRA leave. The court stated that to decide otherwise would undermine the defense included in the CFRA that an employee does not have “greater right to reinstatement” because they have taken leave.

This case demonstrates that employee protections under the CFRA are not absolute, when ample evidence exists that they have violated a clear, known policy of their employer. When there is suspicion that an employee is abusing leave, the employer should conduct a thorough investigation with supporting documentation. Here the court found it significant that the employee was fully aware of the policy prohibiting outside employment while on leave and he was reminded of the same but disregarded it.

The California Supreme Court did not decide whether policies prohibiting outside employment while on leave are generally legal because Mr. Richey did not raise this argument until the appeal. How California courts will address the legality of these policies remains to be seen. An important lesson from this decision is that school districts and other public entities should have clear policies with unambiguous language, ensure that employees are notified of the policy, and ensure that policies are consistently enforced before considering whether to discipline or terminate an employee under the policy.

If you have any questions regarding the Richey decision and how it may impact your existing leave policies, or if you have questions regarding employee leave rights in general, please contact one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Roberta L. Rowe
Partner
Fresno Office
rrowe@lozanosmith.com

Ameet K. Nagra
Associate
Fresno Office
anagra@lozanosmith.com

©2015 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

PERB Expands the Definition of “Protected Activity” Under the EERA

March 2015
Number 13

The Public Employment Relations Board (PERB) recently expanded the definition of “protected activity” under the Educational Employment Relations Act (EERA), holding that the term is to be broadly construed to include activities related to both an employee’s professional and employment relationships. Specifically, PERB held that the protections for employees under the EERA are intended to “protect the right of certificated employees to be ‘afforded a voice in the formulation of educational policy.'”

In the case at issue, PERB Dec. No. 2411, Brian Crowell, a certificated employee of the Berkeley Unified School District (District) engaged in several activities that PERB found to be “protected activities” under the EERA. Specifically, Mr. Crowell filed a complaint with the District regarding the content of the 9th grade curriculum, its compliance with state standards, and the viability of the 9th grade history textbook. In his complaint, which was submitted to the District as an email that contained references to the California State Standards for History curriculum, Mr. Crowell stated that it was being filed both for him and on behalf of two other colleagues who were unwilling to bring a complaint forward for fear of retaliation, and for purposes of providing a better education for students. As evidence of another protected activity, Mr. Crowell alleged that he, along with two other employees, had been conducting an investigation of Berkeley Peer Assistance and Review (BPAR) since 2011 related to alleged discriminatory practices associated with assignment of teachers and administrators to that program.

Mr. Crowell alleged that following his filing of the complaint, the District engaged in a series of retaliatory actions against him, including raising issues about his grading and attendance practices and issuing him a Notice of Unprofessional Conduct and Unsatisfactory Performance and an unsatisfactory performance evaluation. Mr. Crowell alleged that the evaluation was based on several observations of his performance, one of which was conducted on a day when he told the evaluator he was feeling ill and may go home. According to Mr. Crowell, it was highly unusual for the District to conduct an observation of a teacher who had told the observing administrator that he or she was feeling under the weather.

Mr. Crowell filed an unfair practice charge against the District alleging that the District retaliated against him in issuing him an unsatisfactory evaluation, referring him to BPAR, and issuing the notice. PERB’s Office of General Counsel, which conducts an initial review of unfair practice charges, dismissed the charge on the basis that Mr. Crowell had not engaged in a protected activity under the EERA because his complaints pertained to educational objectives, not allegations regarding the District’s conduct as an employer.

On review, PERB adopted an expansive definition of “protected activity” under the EERA, determining that the EERA’s protections allowing educational employees to consult on the definition of educational objectives, determination of course content and curriculum and the selection of textbooks was evidence that these employees are protected when engaging in activities to enforce professional and/or academic standards, not simply rights under a collective bargaining agreement or pertaining to workplace violations.

In considering whether Mr. Crowell’s complaint about the curriculum was a protected activity, PERB found that the right to file complaints on such matters is of a legitimate concern to educational employees so as to come within the scope of representation under the EERA. PERB found that the EERA protects not only an employee’s right to representation in their employment relationship with the District, but also in their professional relationship including their right to “have a voice in the formulation of educational policy.”

On Mr. Crowell’s activities related to BPAR, PERB disagreed with the Office of General Counsel’s determination that Mr. Crowell’s investigation activities were not protected under the EERA. PERB found that the investigation of BPAR was made on behalf of a group of employees and referenced a specific provision of the collective bargaining agreement in support of his requests to the administration to make modifications to the BPAR program.

PERB also considered whether the circumstances surrounding Mr. Crowell’s evaluation and the issuance of the Notice satisfied the other elements necessary to establish a prima facie case of an unfair practice by the District. Here, PERB found that the District was aware of Mr. Crowell’s protected activities because District administrators were copied on the complaints he made prior to the issuance of the evaluation and notice. PERB also found that the issuance of the notice and the unsatisfactory marks on the performance evaluation constituted adverse action under the EERA. Finally, PERB found that there was a nexus between Mr. Crowell’s protected activity and the District’s adverse employment actions. In making this last determination, PERB considered both the timing and alleged inconsistency of the District’s actions as significant. PERB found that the protected activities and adverse action all occurred within a 5 month period. PERB also found that because the District issued the notice 15 days after it was dated, the action could be proof of an unlawful motive on the part of the District. Finally, PERB found that because the District’s actions were inconsistent, initially telling Mr. Crowell that he would not be referred to BPAR, then six days later telling him he could be referred to BPAR and finally making the referral eight days later.

Because PERB found that Mr. Crowell had provided sufficient evidence to raise a question of whether the District’s actions violated his rights under the EERA, PERB ordered its General Counsel to issue a complaint in the case.

This case is significant in that it is the first time that PERB has directly interpreted the meaning of the term “protected activity” under the EERA. Because PERB has taken a very broad interpretation of this term, employers should be mindful of an employee’s right to comment on educational policies, and to carefully avoid taking actions in a manner that could be misconstrued as retaliation for protected activity.

If you have any questions regarding this case, please contact one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Dulcinea Grantham
Partner
Walnut Creek Office
dgrantham@lozanosmith.com

©2015 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

California Supreme Court Restores the Integrity of Categorical Exemptions Under CEQA, But Questions Remain

March 2015
Number 12

The California Supreme Court has reversed a 2012 appellate court decision that, if allowed to stand, would have significantly narrowed the application of categorical exemptions under the California Environmental Quality Act (CEQA). (Berkeley Hillside Preservation v. City of Berkeley (March 2, 2015) 2015 Cal. Lexis 1213 (“Berkeley Hillside“).) The Supreme Court’s decision in Berkeley Hillside preserves the ability of a public agency to exempt itself from CEQA’s requirements when relatively routine projects are at issue, thus avoiding delay and expense.

Lozano Smith represented the California School Boards Association (CSBA) as amicus curiae in support of the City of Berkeley (City). Our brief in the matter was joined by the Regents of the University of California and the Board of Trustees of the California State University. Six additional amicus briefs were filed on behalf of the City, including by the California League of Cities, other public agency organizations, and home building organizations. Additional amicus briefs were filed in opposition to the City, while the California Attorney General also submitted an amicus brief that took issue with both sides. The number of amicus briefs and attention to this case underscores the significance of the issues at stake.

The CEQA Guidelines (14 Cal. Code Regs., §§ 15000, et seq.) contain 33 categories of relatively routine project types which are presumed not to have a significant effect on the environment and are therefore exempt from further CEQA review. These categories are referred to as “categorical exemptions”. However, the CEQA Guidelines also contain limited exceptions to these exemptions. One such exception states that a public agency may not rely on a categorical exemption when there is a reasonable possibility that the activity will have a significant effect on the environment due to “unusual circumstances.”

This “unusual circumstances” exception has historically been subject to a two-prong test. First, the agency determines whether the project involves unusual circumstances. If not, the categorical exemption stands. If there are unusual circumstances, the second prong is to determine whether there is a reasonable possibility that those unusual circumstances will result in a significant effect on the environment. Where both prongs of the test are met, and there are potentially significant impacts, the agency can no longer rely on the categorical exemption.

In Berkeley Hillside, the City relied on categorical exemptions applicable to construction of certain infill development and limited numbers of single family residences in urban areas, and approved a project involving demolishing an existing home and replacing it with a larger home and an attached substantial 10-car garage. A suit was filed challenging the City’s use of the categorical exemption. The trial court found in favor of the City. In 2012, an appellate court disagreed and reversed the trial court’s decision, thus disallowing use of the categorical exemption. The appellate court essentially condensed the two-prong inquiry into one, broadening the scope of the exception and thereby narrowing the availability of all categorical exemptions. The court held that evidence of a “fair argument” that a project will have a significant impact “is itself an unusual circumstance” that invalidates a categorical exemption. This ruling would have greatly limited categorical exemptions. Public agencies would have been required to disprove any reasonable likelihood of a significant impact, and could have been forced to conduct extended analysis of impacts in order to rely on a categorical exemption. This would have greatly diminished the utility of the exemptions. The appellate court’s conclusion that someone need only raise a “fair argument” of a potential impact to establish the existence of an unusual circumstance would have made it rather easy to defeat use of any categorical exemption. For further discussion of the court of appeal’s decision, see Lozano Smith Client News Brief No. 16 (April 2012).

On March 2, 2015, the California Supreme Court reversed the court of appeal’s decision. The Supreme Court found that, if the court of appeal’s decision were allowed to stand, the categorical exemptions would serve no purpose as they would have little, if any, effect. The Court held that to establish the unusual circumstances exception, it is not enough for a challenger merely to provide substantial evidence that the project may have a significant effect on the environment. Under the plain language of the CEQA Guidelines, a potentially significant effect must be “due to unusual circumstances” for the exception to apply. The Court restored the two-part test, so that the “unusual circumstances” exception to the categorical exemption again generally relies on a finding both that there are unusual circumstances and that those circumstances will result in a significant impact. The Court determined that any other reading of “unusual circumstances” would inappropriately be “[r]eading the phrase … out of the regulation,” which was precisely one of CSBA’s central contentions.

The Supreme Court also discussed the standard of review that courts should use in construing the unusual circumstances exception. There are two such standards that could potentially apply. Under the “substantial evidence standard,” the agency’s finding of a categorical exemption is upheld if there is substantial evidence in the record to support the agency’s conclusion that there will be no significant effect resulting from unusual circumstances. Under the “fair argument test,” where there is a fair argument, based on substantial evidence, that the project may have significant impacts resulting from unusual circumstances, the exception defeats the exemption. The Supreme Court adopted a hybrid approach that uses different standards of review for different parts of the test. First, a court reviews an agency’s determination as to whether there are “unusual circumstances” based on the more deferential “substantial evidence standard.” If unusual circumstances are nevertheless found to exist, the public agency must apply the fair argument standard to its determination of whether there is a reasonable possibility of a significant effect on the environment due to those unusual circumstances. However, even as to that fair argument standard, the Court concluded that a court reviewing the agency’s decision should rely on the substantial evidence standard to consider whether the public agency properly found there to be no fair argument of a significant effect. Though complex, these standards as set forth by the Court preserve a relatively deferential standard, which generally favors the agency.

Despite the favorable ruling for public agencies, the Court left open a number of issues. In particular, the Court gave no clear guidance on what constitutes an “unusual circumstance.” The Court also indicated that if a significant impact will – not “may” – result from a project, that in itself can be evidence of unusual circumstances. This language in the decision is likely to cause confusion and debate, since it begins to swing back in the direction of the reversed appellate court decision. Finally, the Court remanded the case back to the lower court for reconsideration; depending on how the appellate court applies this decision in reconsidering the case, there may yet be further Supreme Court review in the future. For all of these reasons, public agencies should continue to proceed carefully in employing CEQA’s categorical exemptions, and may wish to consult with legal counsel for assistance in navigating these issues. We expect that additional litigation will be forthcoming as public agencies and CEQA plaintiffs test the parameters of this decision. One important take-away from this decision is the importance of having a solid record to support the application of a categorical exemption.

If you have any questions regarding this case or CEQA issues in general, please contact one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Harold M. Freiman
Partner
Walnut Creek Office
hfreiman@lozanosmith.com

Kelly M. Rem
Associate
Walnut Creek Office
krem@lozanosmith.com

©2015 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.