You are a helpful assistant generating synthetic data that captures *System 1* and *System 2* thinking, *creativity*, and *metacognitive reflection*. Follow these steps in sequence, using tags [sys1] and [end sys1] for *System 1* sections and [sys2] and [end sys2] for *System 2* sections.

1. *Identify System 1 and System 2 Thinking Requirements:*
   - Carefully read the text.
   - Identify parts of the text that require quick, straightforward responses (*System 1*). Mark these sections with [sys1] and [end sys1].
   - Identify parts that require in-depth, reflective thinking (*System 2*), marked with [sys2] and [end sys2].

2. *Apply Step-by-Step Problem Solving with Creativity and Metacognitive Reflection for System 2 Sections:*

   *2.1 Understand the Problem:*
   - Objective: Fully comprehend the issue, constraints, and relevant context.
   - Reflection: "What do I understand about this issue? What might I be overlooking?"
   - Creative Perspective: Seek hidden patterns or possibilities that could reveal deeper insights or innovative connections.

   *2.2 Analyze the Information:*
   - Objective: Break down the problem logically.
   - Reflection: "Am I considering all factors? Are there any assumptions that need challenging?"
   - Creative Perspective: Explore unique patterns or overlooked relationships in the data that could add depth to the analysis.

   *2.3 Generate Hypotheses:*
   - Objective: Propose at least 10 hypotheses, each with a Confidence Score (0.0 to 1.0) and Creative Score (0.0 to 1.0), reflecting originality, surprise, and utility.
   - Reflection: "Have I explored all possible explanations or approaches, both conventional and unconventional?"
   - Creative Perspective: Consider novel angles that might provide unexpected insights.

   *2.4 Anticipate Future Steps and Obstacles:*
   - Objective: Make predictions, accounting for potential outcomes and obstacles.
   - Reflection: "What challenges might I face? Is my plan flexible for different scenarios?"
   - Creative Perspective: Visualize unforeseen outcomes and adapt plans to make use of them effectively.

   *2.5 Evaluate Hypotheses:*
   - Objective: Assess hypotheses based on feasibility, risk, and potential impact.
   - Evaluation: Refine Confidence and Creative Scores as needed.
   - Reflection: "Am I unbiased in my assessment? Which options fit best with the overall objectives?"
   - Creative Perspective: Identify hidden opportunities or overlooked details in each hypothesis.

   *2.6 Select the Best Hypothesis:*
   - Objective: Choose the most promising, strategic hypothesis.
   - Reflection: "Why does this hypothesis stand out? How does it uniquely address the issue?"
   - Creative Perspective: Consider any underutilized potential in the selected approach.

   *2.7 Implement the Hypothesis:*
   - Objective: Outline actionable steps for testing the hypothesis.
   - Reflection: "Is this plan practical? What resources or preparation are required?"
   - Creative Perspective: Refine steps to maximize effectiveness and yield unexpected benefits.

   *2.8 Monitor and Review Progress:*
   - Objective: Review progress, noting areas for improvement.
   - Reflection: "What’s working well? What could be improved?"
   - Creative Perspective: Look for emerging patterns that could refine future approaches.

   *2.9 Reflect and Capture Insights:*
   - Objective: Summarize lessons learned and insights gained for future reference.
   - Reflection: "What new understanding has emerged from this process?"
   - Creative Perspective: Identify innovative insights or patterns that could be applied to similar challenges.

3. *Generate Text Output with Interleaved System 1 and System 2 Responses:*
   - Use the tags [sys1] and [sys2] throughout.
   - Aim for a lengthier, detailed response. Combine both direct, straightforward *System 1* insights and reflective, deeply analytical *System 2* segments to capture a blend of quick observations and thoughtful analysis.

---

### *Example Input Text:*

You are tasked with analyzing a sudden shift in customer preferences in a tech market. There has been a noticeable decline in demand for physical devices, with customers increasingly interested in digital-only options. The challenge is to understand this shift, generate hypotheses for why it might be occurring, and explore potential strategies for adapting to this new trend.

---

### *Processed Output with System 1 and System 2 Thinking:*

The tech market is experiencing a shift in customer demand, moving away from physical devices toward digital-only options.

[sys1]
Customer demand has shifted from physical devices to digital-only options.
We need to understand why this change is happening and find strategies to address it.
Key factors may include cost, convenience, and technological trends.
[end sys1]

[sys2]
**2.1 Understand the Problem:**
The goal is to understand the underlying reasons for the shift in demand from physical devices to digital-only options, then develop a strategy to adapt.

*Reflection:* 
"I understand that preferences are changing, but what might be driving this? Is it primarily cost, or are there other factors such as convenience or sustainability?"

*Creative Perspective:* 
"Could there be a larger trend in digital minimalism or a preference for eco-friendly solutions that we’re missing? What unseen motivations might explain this shift?"

**2.2 Analyze the Information:**
There are multiple possible factors driving this shift, from economic influences to cultural shifts. It’s essential to isolate each factor and understand its impact.

*Reflection:* 
"Am I fully considering the various economic and social influences? Could there be a technological factor, like better internet speeds, that makes digital-only products more accessible?"

*Creative Perspective:* 
"Are there patterns or trends in other markets that could shed light on this shift? Could this be part of a larger trend toward virtual experiences?"

**2.3 Generate Hypotheses:**
1. Customers prefer digital options due to lower costs. (Confidence: 0.8, Creative: 0.4)
2. There’s a growing trend toward minimalism and reduced physical clutter. (Confidence: 0.7, Creative: 0.7)
3. Digital products offer greater flexibility and ease of use. (Confidence: 0.6, Creative: 0.6)
4. Environmental concerns are pushing consumers away from physical goods. (Confidence: 0.6, Creative: 0.8)
5. Advances in tech make digital-only options more functional. (Confidence: 0.8, Creative: 0.5)
6. Pandemic-era remote work increased demand for digital solutions. (Confidence: 0.7, Creative: 0.6)
7. Media coverage of the environmental impact of physical devices affects preferences. (Confidence: 0.5, Creative: 0.7)
8. There’s an increase in global digital literacy, expanding market access. (Confidence: 0.6, Creative: 0.6)
9. Customers view digital as more convenient and scalable for future needs. (Confidence: 0.7, Creative: 0.5)
10. Younger consumers prefer the aesthetics and convenience of digital products. (Confidence: 0.6, Creative: 0.6)

*Reflection:* 
"Have I considered all possible influences? Are there any surprising factors that could explain this shift?"

*Creative Perspective:* 
"Could specific social trends, like the rise of influencer culture or digital-first lifestyles, be influencing customer choices?"

**2.4 Anticipate Future Steps and Obstacles:**
*Objective:* Anticipate possible challenges, such as resistance from segments still preferring physical products.

*Reflection:* 
"What market obstacles might we face if we shift our focus to digital-only? Are there sub-segments that still prioritize physical products?"

*Creative Perspective:* 
"Could expanding digital options help us reach a more global audience? Are there emerging trends that we could leverage in our strategy?"

[end sys2]

[sys1]
To address this shift, consider a strategy that incorporates both digital-only offerings and educational campaigns about the benefits of digital solutions.
Use insights from customer feedback and current trends to guide product development.
Focus on flexibility and adaptation to cater to different customer segments.
[end sys1]


Filed 8/12/16
                            CERTIFIED FOR PUBLICATION


                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              SIXTH APPELLATE DISTRICT


FRIENDS OF THE WILLOW GLEN                             H041563
TRESTLE,                                              (Santa Clara County
                                                       Super. Ct. No. CV260439)
        Plaintiff and Appellant,

        v.

CITY OF SAN JOSE et al.,

        Defendants and Appellants.



        “A project that may cause a substantial adverse change in the significance of an
historical resource is a project that may have a significant effect on the environment.”
                                                     1
(Pub. Resources Code, § 21084.1, italics added.) “If there is substantial evidence, in
light of the whole record before the lead agency, that the project may have a significant
effect on the environment, an environmental impact report shall be prepared.” (§ 21080,
subd. (d).) “If a lead agency determines that a proposed project . . . would not have a
significant effect on the environment, the lead agency shall adopt a negative declaration
to that effect. The negative declaration shall be prepared . . . [¶] . . . [if] [t]here is no
substantial evidence, in light of the whole record before the lead agency, that the project
may have a significant effect on the environment.” (§ 21080, subd. (c).) “ ‘Substantial



1
       Subsequent statutory references are to the Public Resources Code unless otherwise
specified.
evidence’ . . . means enough relevant information and reasonable inferences from this
information that a fair argument can be made to support a conclusion, even though other
conclusions might also be reached. Whether a fair argument can be made that the project
may have a significant effect on the environment is to be determined by examining the
whole record before the lead agency.” (Cal. Code Regs., tit. 14, div. 6, ch. 3, § 15384,
              2
subd. (a).)
       Appellant City of San Jose (the City) proposed a project to demolish the Willow
Glen Railroad Trestle (the Trestle) and replace it with a new, steel truss pedestrian bridge
to service the City’s trail system. The City found that the Trestle was not a “historical
resource,” and therefore the project would not have a significant effect on the
environment. It adopted a mitigated negative declaration (MND) under the California
Environmental Quality Act (CEQA) (§ 21000 et seq.). Respondent Friends of the
Willow Glen Trestle (Friends) challenged by a petition for writ of mandate the City’s
determination that an environmental impact report (EIR) was not required. The trial
court issued a peremptory writ of mandate invalidating the City’s approval of the project.
It held that the City’s adoption of an MND was invalid because there was a “fair
argument” that the Trestle was a historical resource. The court ordered the City to
prepare and certify an EIR in compliance with CEQA.
       On appeal, the City contends that the trial court applied the wrong standard of
judicial review. The City claims that it had discretion to determine whether the Trestle is
a historical resource and that its discretionary determination was not subject to review



2
       This chapter contains the California Environmental Quality Act guidelines.
Subsequent references to “Guidelines” will be to this chapter. “In interpreting CEQA, we
accord the [CEQA] Guidelines great weight except where they are clearly unauthorized
or erroneous.” (Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho
Cordova (2007) 40 Cal.4th 412, 428, fn. 5 (Vineyard).)


                                             2
under the “fair argument” standard but was instead to be reviewed under a deferential
substantial evidence standard of judicial review. Friends argues that the trial court
correctly applied the fair argument standard of judicial review. It relies on this court’s
decision in Architectural Heritage Assn. v. County of Monterey (2004) 122 Cal.App.4th
1095 (Monterey). We conclude that our decision in Monterey did not accurately state the
appropriate standard of judicial review that applies in this case. The statutory scheme
created by the Legislature requires application of a deferential substantial evidence
standard of judicial review in this case. Therefore, we will reverse and remand for the
trial court to conduct its judicial review of the administrative record under the correct
standard.


                                      I. Background
       The Trestle is a wooden railroad bridge that was built in 1922 as part of a “spur
line” to provide “rail freight access” to “canning districts” near downtown San Jose. In
2004, the City obtained a one-page “BRIDGE EVALUATION SHORT FORM” from
“Consulting Architectural Historian” Ward Hill regarding the Trestle in connection with
a proposed City trail project that did not threaten the Trestle’s existence. Hill opined that
“[t]he [Trestle’s] design is based on standard plans for wood trestle bridges,” and “the
trestles and superstructure were likely replaced during the last 30 to 40 years.” He
concluded that the Trestle “is a typical example of a common type and has no known
association with important events or persons in local history.” The City also obtained a
one-page letter from a State Historic Preservation Officer stating that the City’s proposed
2004 project would not affect any “historic properties.”
       The City acquired ownership of the Trestle in 2011. In 2013, the City proposed a
project to demolish the Trestle and replace it with a new steel truss pedestrian bridge as a
component of the City’s Three Creeks Trail system. The City determined that it would



                                              3
cost about the same amount to replace the Trestle as to restore and retrofit it. A new steel
bridge would present less of a fire hazard and have lower maintenance costs.
       In March 2013, the City approved the project after concluding that it was not a
                                                     3
project and therefore did not require CEQA review. Eight months later, in November
2013, the City published a notice of intent to adopt an MND supported by an initial study.
The initial study relied on the two 2004 documents to support its finding that there would
be no impact on historical resources because “the bridge is an example of a common type
of trestle, and was not associated with important events or persons in local history.” The
initial study emphasized that the Trestle was not distinctive or unique. The initial study
took note of “the role of the railroad spur and the trestle in the incorporation of Willow
Glen and activism regarding roadway-railroad grade separations.” It “acknowledge[d]
the history of the trestle and the former Western Pacific Railroad alignment through
Willow Glen” and the fact that the Trestle was “locally important,” but it concluded that
this history did not make the Trestle a historical resource.
       The City received numerous comments on the proposed MND. Jean Dresden, a
local historian, submitted extensive comments describing the uniqueness and historic
                                                                 4
importance of the Trestle. Marvin Bamburg, a “CHRIS-listed” historical architect,
agreed with Dresden that the Trestle “is an important historical icon of the past” and “that



3
       The City’s actions in approving the project before preparing and adopting the
MND violated CEQA. “Prior to carrying out or approving a project for which a negative
declaration has been adopted, the lead agency shall consider the negative declaration
together with comments . . . .” (§ 21091, subd. (f), italics added.) The City’s 2012
feasibility study explicitly acknowledged that the project would require a new initial
study and a “new CEQA document.” This CEQA violation was not raised by Friends
below nor is it addressed by either party on appeal.
4
       “CHRIS” is the California Historical Resources Information System, which is
operated by the State of California’s Office of Historic Preservation.


                                              4
                                                                          5
it qualifies for listing in the California Register under Criteria 1 and 3.” Susan M.
Landry, an environmental architect, agreed, and she noted that the 2004 documents relied
on by the City were “outdated” and that “reports and documents” had been uncovered
after 2004 demonstrating that the Trestle had long been considered historic.
       In January 2014, the city council adopted the MND based on the initial study. The
city council found that “the existing wood railroad trestle bridge is not a historic
resource” because “the design is based on standard plans for wood trestle bridges and has
no known association with important persons; the bridge materials were likely replace[d]
during the last 30 or 40 years; the trestle is not unique and is unlikely to yield new,
historically important information; and the trestle did not contribute to broad patterns of
California’s history and cultural heritage.” The city council therefore concluded that the
project would have no significant impact on the environment.
       In February 2014, Friends filed a writ petition challenging the City’s approval of
the project and adoption of the MND. Friends asserted that there was substantial
evidence to support a fair argument that the Trestle was a historical resource and
                                6
therefore an EIR was required. Friends also argued that “there is not substantial
evidence that the Trestle is not historic.” The City, relying on Valley Advocates v. City of
Fresno (2008) 160 Cal.App.4th 1039 (Valley Advocates), contended that the fair
argument standard did not apply. It alternatively argued that Friends had failed to satisfy
the fair argument standard. The City also argued that Friends was “estopped from
challenging the conclusion that the trestle is not a historic resource” due to the City’s
2004 conclusion in the MND for the earlier project.


5
       See footnote 14, post.
6
        In May 2014, the superior court issued a preliminary injunction barring the City
from taking any action that “may physically alter” the Trestle during the pendency of this
action.


                                              5
         In July 2014, the trial court found that the fair argument standard applied and that
                                                                                              7
substantial evidence supported a fair argument that the Trestle was a historical resource.
In August 2014, the court entered judgment granting Friends’ petition and issuing a
peremptory writ of mandate directing the City to set aside its approval of the project and
its adoption of the MND. The court ordered the City to “refrain from further action to
approve the demolition of the Willow Glen Trestle pending preparation and certification
of an EIR and compliance with the requirements of the California Environmental Quality
     8
Act.” In October 2014, the City timely filed a notice of appeal from the judgment.


                                        II. Discussion
                                         A. Mootness
         Friends asks us to dismiss this appeal as moot because the City has already
certified an EIR for this project. The trial court ordered the City to vacate its approval of
the project, prepare an EIR, and comply with CEQA. The City has not vacated its
approval of the project and reconsidered the project in light of the EIR as would be
required by CEQA. If the City succeeds in this appeal, it might not be required to vacate


7
        Although Friends cites in its appellate brief to a supplemental administrative
record, no such record has been lodged in this court. There was a dispute between the
parties in the trial court regarding a supplemental administrative record prepared by
Friends. However, at the hearing on the petition, counsel for Friends stated: “[T]o just
be clear that the record is, I think we all agree, the certified administrative record that the
City . . . has provided . . . . We do have supplemental documents we’d ask be part of the
record as well.” The trial court’s order stated that it “assumed that [the] record certified
by the City (designated ‘CAR’) is the correct record.” The administrative record lodged
in this court is the one “designated ‘CAR’ ” that the trial court considered, and we
therefore consider it to be the appropriate one for us to consider in reviewing the trial
court’s decision.
8
       The City was ordered to file its return on or before November 6, 2015, and the
court retained jurisdiction over the case.


                                               6
its approval of the project or consider the impact of the demolition of the Trestle.
Consequently, this appeal is not actually moot.


                            B. Standard of Appellate Review
       “An appellate court’s review of the administrative record for legal error and
substantial evidence in a CEQA case, as in other mandamus cases, is the same as the trial
court’s: the appellate court reviews the agency’s action, not the trial court’s decision; in
that sense appellate judicial review under CEQA is de novo.” (Vineyard, supra, 40
Cal.4th at p. 427.)


                             C. Standard of Judicial Review
       The key dispute in this case concerns the identification of the standard for judicial
review of a lead agency’s determination that a project will not have an adverse impact on
                       9
a “historical resource.” The City contends that the trial court erroneously utilized the
“fair argument” standard of judicial review. Friends maintains that the trial court
properly employed the “fair argument” standard of judicial review. Friends alternatively
argues that, even if the “fair argument” standard does not apply, the City’s decision was
                                           10
not supported by “substantial evidence.”




9
        The City asserts in its opening appellate brief: “One of the critical issues before
this Court is whether the trestle is a historic resource as defined by CEQA.” This is not
true. As the trial court acknowledged, “I’m not deciding whether the structure is historic
or not . . . .” The issue before this court concerns the process for determining whether the
Trestle is a historic resource. The actual question of whether the Trestle is or is not a
historic resource is not a question for this court or any court.
10
      An agency abuses its discretion under CEQA if it makes a decision that “is not
supported by substantial evidence.” (§ 21168.5.)


                                                7
                         1. Hillside Did Not Resolve This Issue
       At the outset, we reject the City’s claim that we are bound to adopt the holding in
Valley Advocates on this issue because the California Supreme Court allegedly approved
of the holding of Valley Advocates on this issue in Berkeley Hillside Preservation v. City
of Berkeley (2015) 60 Cal.4th 1086 (Hillside). In Valley Advocates, the Fifth District
Court of Appeal held, among other things, based on its construction of section 21084.1,
“that the fair argument standard does not govern a lead agency’s application of the
definition of an historical resource.” (Valley Advocates, supra, 160 Cal.App.4th at
p. 1072.)
       Hillside concerned the “unusual circumstances exception” to the application of a
categorical exemption from CEQA. (Hillside, supra, 60 Cal.4th at p. 1097.) One issue
before the California Supreme Court in Hillside was whether “in reviewing the City’s
conclusion that the [unusual circumstances] exception is inapplicable” the appropriate
standard of judicial review was “whether there was substantial evidence in the record to
support that conclusion” or instead “whether the record contains evidence of a fair
argument of a significant effect on the environment.” (Ibid.) The California Supreme
Court construed the Guidelines, which set forth both the categorical exemptions and the
unusual circumstances exception, and the statutes by which the Legislature had
authorized categorical exemptions. It concluded that both the exemptions and the
exception would be meaningless if the exception meant that the exemptions did not apply
if a fair argument could be made that the project would have a significant effect on the
environment. (Hillside, at pp. 1097-1104.) “[T]o 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, because that is the inquiry
CEQA requires absent an exemption.” (Hillside, at p. 1105.)
       The California Supreme Court proceeded to consider what was the appropriate
standard of judicial review for the agency’s decision in the case before it. (Hillside,

                                              8
supra, 60 Cal.4th at pp. 1112-1114.) It pointed out that the fair argument standard
indisputably applied to the lead agency’s decision on “whether to prepare an EIR for a
nonexempt project.” (Hillside, at p. 1112.) Consequently, a bifurcated standard of
judicial review applied. The agency’s decision regarding the applicability of a
categorical exemption was reviewed under the fair argument standard; the agency’s
decision regarding the applicability of the unusual circumstances exception was reviewed
under a deferential standard that asked only whether the agency’s decision was supported
by substantial evidence. (Hillside, at pp. 1114-1115.)
       It was in this context that the California Supreme Court referenced Valley
Advocates. “Finally, and again contrary to respondents’ [the agency’s] assertion, our
approach is fully consistent with—and is, indeed, affirmatively supported by—the
decision in Valley Advocates v. City of Fresno (2008) 160 Cal.App.4th 1039. At issue
there were the following CEQA provisions: (1) section 21084.1, which provides that ‘[a]
project that may cause a substantial adverse change in the significance of an historical
resource is a project that may have a significant effect on the environment’; (2) section
21084, subdivision (e), which provides that ‘[a] project that may cause a substantial
adverse change in the significance of a historical resource, as specified in Section
21084.1, shall not be exempted from [CEQA] pursuant to subdivision (a)’; and (3)
Guidelines section 15300.2, subdivision (f), which provides that ‘[a] categorical
exemption shall not be used for a project which may cause a substantial adverse change
in the significance of a historical resource.’ The court held that, in applying these
provisions, ‘the fair argument standard does not govern’ an agency’s determination of
whether a building qualifies as a ‘historical resource.’ (Valley Advocates, supra, at
p. 1072.) However, the court continued, ‘once the resource has been determined to be an
historical resource, then the fair argument standard applies to the question whether the
proposed project “may cause a substantial adverse change in the significance of an
historical resource” [citation] and thereby have a significant effect on the environment.’

                                              9
(Ibid.) This discussion supports the conclusion that, if ‘unusual circumstances’ are
established, an agency should apply the fair argument standard in determining whether
there is ‘a reasonable possibility’ that those circumstances will produce ‘a significant
effect’ within the meaning of CEQA. (Guidelines, § 15300.2, subd. (c).)” (Hillside,
supra, 60 Cal.4th at p. 1117.)
       The California Supreme Court did not consider in Hillside the validity of the
Valley Advocates court’s holding regarding the standard of judicial review applicable to
an agency’s decision as to whether a resource is a historical resource. The California
Supreme Court cited Valley Advocates solely to reject the agency’s claim that the fair
argument standard had no role to play whatsover. The California Supreme Court relied
on Valley Advocates to support its conclusion that a bifurcated standard could apply
where one part of the agency’s decision was subjected to the substantial evidence
standard and another part to the fair argument standard. Since the California Supreme
Court did not resolve in Hillside the issue of whether the fair argument standard applies
to an agency’s decision as to whether a resource is a historical resource, nothing in
Hillside requires us to follow the holding in Valley Advocates. We must ourselves
resolve the issue raised in this case.
                                 2. Statutory Construction
       Selection of the correct standard of judicial review necessarily depends on our
construction of the statute that governs the lead agency’s determination, section 21084.1.
“We apply well-settled principles of statutory construction. Our task is to discern the
Legislature’s intent. The statutory language itself is the most reliable indicator, so we
start with the statute’s words, assigning them their usual and ordinary meanings, and
construing them in context. If the words themselves are not ambiguous, we presume the
Legislature meant what it said, and the statute’s plain meaning governs. On the other
hand, if the language allows more than one reasonable construction, we may look to such
aids as the legislative history of the measure and maxims of statutory construction. In

                                             10
cases of uncertain meaning, we may also consider the consequences of a particular
interpretation, including its impact on public policy.” (Wells v. One2One Learning
Foundation (2006) 39 Cal.4th 1164, 1190.)
       We begin with the statutory language. “A project that may cause a substantial
adverse change in the significance of an historical resource is a project that may have a
significant effect on the environment. For purposes of this section, an historical
resource is a resource listed in, or determined to be eligible for listing in, the California
Register of Historical Resources. Historical resources included in a local register of
historical resources, as defined in subdivision (k) of Section 5020.1, or deemed
                                                                                 11
significant pursuant to criteria set forth in subdivision (g) of Section 5024.1[ ], are
presumed to be historically or culturally significant for purposes of this section, unless
the preponderance of the evidence demonstrates that the resource is not historically or
culturally significant. The fact that a resource is not listed in, or determined to be eligible
for listing in, the California Register of Historical Resources, not included in a local
register of historical resources, or not deemed significant pursuant to criteria set forth in
subdivision (g) of Section 5024.1 shall not preclude a lead agency from determining
whether the resource may be an historical resource for purposes of this section.”
(§ 21084.1, italics added.)
       The parties do not dispute that the Trestle had not been (1) “listed” in the
California Register, (2) “determined to be eligible” for listing in the California Register,
(3) “included in a local register of historical resources,” or (4) “deemed significant” under
section 5024.1, subdivision (g). Thus, under section 21084.1, the Trestle was not a


11
        Section 5024.1, subdivision (g) provides: “A resource identified as significant in
an historical resource survey may be listed in the California Register if the survey meets
all of the following criteria . . . .” It is undisputed in this case that the Trestle was not
identified as significant in a historical survey.


                                              11
resource that the lead agency was required to find to be a historical resource or was
required to presume to be a historical resource. The lead agency’s determination as to
whether the Trestle was a historical resource rested on the final sentence of section
21084.1. A “lead agency” is “not prelude[d] . . . from determining” whether the Trestle
“may be an historical resource for purposes of this section.”
       This final sentence of section 21084.1 clearly permits a lead agency to make a
determination as to whether a resource that is neither deemed nor presumed to be a
historical resource is nevertheless a historical resource for CEQA purposes. However,
the statutory language does not affirmatively identify the standard that the lead agency is
to utilize in making this determination, and, as a result, it does not indicate the standard
of judicial review that applies to such a determination.
       Nonetheless, the statute’s treatment of “presumed” historical resources provides
substantial guidance in determining the standard of judicial review that applies to a
determination under the final sentence of section 21084.1. A resource included in a local
historical register is “presumed” historical “unless the preponderance of the evidence
demonstrates” that it is not. The fact that a lead agency may find even a presumptively
historical resource not to be a historical resource if “the preponderance of the evidence”
supports the lead agency’s finding necessarily establishes that such a finding would not
be reviewed under the fair argument standard. The inclusion of a resource in a local
historical register will by itself generally create a fair argument that the resource is
historical, yet the statute plainly permits the lead agency to conclude that it is not. It
would make no sense for the statute to permit the lead agency to make a finding based on
a preponderance of the evidence that a resource is not a historical resource if the fair
argument review standard would generally result in the invalidation of that finding. By
allowing the lead agency to eliminate the presumption by making a contrary finding
supported by a “preponderance” of the evidence, the statute expressly selects an
evidentiary standard for the lead agency’s decision that is inconsistent with that

                                              12
                                                                           12
decision’s being subject to a fair argument standard of judicial review.        If the lead
agency’s standard for its decision is “preponderance of the evidence,” the standard of
judicial review logically must be whether substantial evidence supports the lead agency’s
decision, not whether a fair argument can be made to the contrary.
       Since the standard of judicial review for a presumptively historical resource is
substantial evidence rather than fair argument, it cannot be that the Legislature intended
for the standard of judicial review for a lead agency’s decision under the final sentence of
section 21084.1 to be fair argument rather than substantial evidence. The final sentence
of section 21084.1 imposes no presumption and sets no standard for the lead agency’s
decision. The Legislature intended for the lead agency to have more, not less, discretion
under the final sentence, and it is inconceivable that the lead agency’s decision under that
sentence would be subject to less deferential review than its decision regarding a resource
                                                13
that is presumed to be a historical resource.
       The Guidelines are consistent with our construction of section 21084.1. “[T]he
term ‘historical resources’ shall include the following: [¶] . . . [¶] . . . Any object,
building, structure, site, area, place, record, or manuscript which a lead agency
determines to be historically significant or significant in the architectural, engineering,
scientific, economic, agricultural, educational, social, political, military, or cultural annals
of California may be considered to be an historical resource, provided the lead agency’s



12
        The legislative history of section 21084.1 is consistent with this construction of
the statute. An enrolled bill report notes that “for resources listed on a local register, the
lead agency would be allowed to declare a project [sic] not historically significant if a
‘preponderance of the evidence demonstrates that the resource is not historically or
culturally significant.’ ” (Governor’s Off. of Planning & Research, Enrolled Bill Rep. on
Assem. Bill No. 2881 (1991-1992 Reg. Sess.) Sept. 11, 1992, pp. 3-4.)
13
       The voluminous legislative history of section 21084.1 contains no indications to
the contrary.


                                                13
determination is supported by substantial evidence in light of the whole record.
Generally, a resource shall be considered by the lead agency to be ‘historically
                                                                                                  14
significant’ if the resource meets the criteria for listing on the California Register . . . .”
(Guidelines, § 15064.5, subd. (a)(3), italics added.) The Guidelines state that the lead
agency’s determination must be “supported by substantial evidence,” which is
inconsistent with a fair argument standard of judicial review, which does not look to the
evidence supporting the lead agency’s decision but to whether a fair argument can be
made. We conclude that the Legislature did not intend for the fair argument standard to
apply to a lead agency’s decision that a resource is not a historical resource under the
final sentence of section 21084.1.
                                      3. Case Authority
       None of the cases cited by the parties convinces us that our construction of the
statute is inconsistent with the Legislature’s intent.
       The earliest decision cited by the parties is Citizens’ Com. to Save Our Village v.
City of Claremont (1995) 37 Cal.App.4th 1157 (Claremont). The appellants in



14
        The Guidelines identify the criteria for the lead agency’s determination as “Public
Resources Code sections 5020.1(j) or 5024.1”; these statutes contain the same criteria set
forth in the Guidelines. (Guidelines, § 15064.5, subd. (a).) Section 5024.1 provides: “A
resource may be listed as an historical resource in the California Register if it meets any
of the following National Register of Historic Places criteria: [¶] (1) Is associated with
events that have made a significant contribution to the broad patterns of California’s
history and cultural heritage. [¶] (2) Is associated with the lives of persons important in
our past. [¶] (3) Embodies the distinctive characteristics of a type, period, region, or
method of construction, or represents the work of an important creative individual, or
possesses high artistic values. [¶] (4) Has yielded, or may be likely to yield, information
important in prehistory or history.” (§ 5024.1, subd. (c).) Section 5020.1, subdivision (j)
provides: “ ‘Historical resource’ includes, but is not limited to, any object, building,
structure, site, area, place, record, or manuscript which is historically or archaeologically
significant, or is significant in the architectural, engineering, scientific, economic,
agricultural, educational, social, political, military, or cultural annals of California.”


                                               14
Claremont contended that they had “raised a fair argument regarding historical resources,
thereby requiring an EIR, not an MND.” (Claremont, at p. 1168.) The Second District
Court of Appeal did not consider whether the fair argument standard was the correct
standard to apply. The court simply held that appellants had not satisfied even that
standard. (Claremont, at pp. 1168-1172.)
       In League for Protection of Oakland’s etc. Historic Resources v. City of Oakland
(1997) 52 Cal.App.4th 896 (League), the First District grouped into three categories the
resources referenced in section 21084.1. It identified those resources listed in or
determined to be eligible for listing in the California Register as “mandatory” historical
resources. Those listed in a local historical register or recognized by a local government
by ordinance or resolution to be historically significant were called “presumptive”
historical resources. It referred to the remaining resources as those “deemed historical
resources at the discretion of the lead agency.” (League, at pp. 906-907.) Because the
City of Oakland had designated the property involved in League as “historic” in its
general plan, the First District found that the property was a presumptive historical
resource and that the presumption was unrebutted. The First District did not consider
whether the fair argument standard applied to the issue of whether the property was
historic. (League, at p. 908.)
       In Monterey, supra, 122 Cal.App.4th 1095, this court, citing League and without
any substantive analysis, stated, “[i]n this case, the fair argument standard applies to all
three substantive issues—historicity, impact, and mitigation—since they all bear on the
question of whether an EIR is required.” (Monterey, at p. 1109.) The parties in Monterey
did not dispute that the fair argument standard applied to the “historicity” issue in that
case, and consequently this court did not consider whether the statutory scheme and the
legislative history required application of a deferential substantial evidence standard of
judicial review to the issue of whether the jailhouse, which would be demolished as a



                                              15
result of the Monterey project, was a historical resource within the meaning of CEQA.
(Monterey, at pp. 1112-1113.)
       Neither Claremont, nor League, nor Monterey explicitly considered whether the
fair argument standard of judicial review rather than the deferential substantial evidence
standard of judicial review was the standard that the Legislature intended to apply under
section 21084.1.
       The first substantive analysis of the appropriate standard of judicial review to
apply to a lead agency’s determination of whether a resource was a historical resource
under section 21084.1 was undertaken by the Fifth District Court of Appeal in Valley
Advocates. In Valley Advocates, the project proposed the demolition of a 90-year-old
apartment building. The City of Fresno’s Historic Preservation Commission had
nominated the building for placement on the local historic register. Fresno’s city council
had rejected the nomination. Fresno’s planning department then found the project to be
categorically exempt from CEQA. When the exemption was challenged before the city
council on the ground that the building was historic, the city council mistakenly believed
that its earlier decision to reject the nomination had already determined that the building
was not historic for CEQA purposes. The city council confirmed the categorical
exemption, and the planning department approved the project. (Valley Advocates, supra,
160 Cal.App.4th at pp. 1045-1050.)
       The superior court denied a petition challenging Fresno’s determination that the
building was not historic for CEQA purposes and its determination that the project was
categorically exempt. (Valley Advocates, supra, 160 Cal.App.4th at p. 1050.) The Fifth
District reversed on the ground that Fresno had improperly analyzed whether the building
was historic. (Valley Advocates, at pp. 1050-1051.) First, relying on League, the Fifth
District evaluated whether the building came within any of the three categories of
historical resources. The building was not a mandatory historical resource because the
State Historical Resources Commission had neither listed the building nor found it to be

                                             16
eligible for listing in the California Register. (Valley Advocates, at pp. 1051-1054.)
There was also no evidence that the building came within the presumptive category.
(Valley Advocates, at pp. 1054-1058.)
       The Fifth District then addressed the contention that the building came within
                                                                                   15
what the First District had described in League as the “discretionary” category.        (Valley
Advocates, supra, 160 Cal.App.4th at p. 1058.) It began with the statutory language.
“The last sentence of section 21084.1 is phrased in terms of what a lead agency is not
precluded from doing. This phrasing, as well as the lack of a reference to the lead agency
in the second sentence of section 21084.1, creates ambiguity as to (1) what, if anything, a
lead agency is required to do (i.e., its affirmative obligations) [fn. omitted] and (2) the
extent of its discretionary authority. The provisions of CEQA do not address these
ambiguities either in section 21084.1 or elsewhere.” (Ibid.)
       The Fifth District then proceeded to the Guidelines. “Guidelines section 15064.5,
subdivision (a)(3) [fn. omitted] addresses aspects of a lead agency’s discretionary
authority in two ways. First, it limits what the lead agency is allowed to do. Second, it
appears to impose an affirmative obligation on the lead agency. [¶] The limitation is
stated at the beginning of Guidelines section 15064.5, subdivision (a)(3): ‘Any object
[or] building . . . which a lead agency determines to be historically significant . . . may be
considered to be an historical resource, provided the lead agency’s determination is
supported by substantial evidence in light of the whole record.’ The Guidelines use the
word ‘may’ to identify discretionary authority. (Guidelines, § 15005, subd. (c); see § 15
[‘may’ defined].) Thus, Guidelines section 15064.5, subdivision (a)(3) confirms the lead


15
       The Fifth District distinguished Monterey on the grounds that the standard was not
in dispute in Monterey and the “circumstances” were different in Monterey because the
agency had initially identified the building as historic. (Valley Advocates, supra, 160
Cal.App.4th at pp. 1068-1069.)


                                              17
agency’s discretion to treat an object or building as an historical resource for purposes of
CEQA and limits that discretion to situations where substantial evidence supports the
lead agency’s determination of historical significance. [Fn. omitted.] [¶] The second
sentence of Guidelines section 15064.5, subdivision (a)(3) contains the following
mandatory language: ‘Generally, a resource shall be considered by the lead agency to be
“historically significant” if the resource meets the criteria for listing on the California
Register of Historical Resources . . . .’ [Fn. omitted.] (Italics added.) The word ‘shall’ is
used in the Guidelines to identify ‘a mandatory element which all public agencies are
required to follow.’ (Guidelines, § 15005, subd. (a).)” (Valley Advocates, supra, 160
Cal.App.4th at pp. 1059-1060.) Yet the court noted: “In contrast to this explicit
limitation, the Guidelines do not address the level of evidence, if any, that must support
the opposite determination—namely, that the object or building is not historically
                16
significant.”        (Valley Advocates, at p. 1059, fn. 15.)
       The Fifth District then considered the issue of whether the fair argument standard
of judicial review applied to the agency’s decision on whether a resource fell within the
                            17
discretionary category.          (Valley Advocates, supra, 160 Cal.App.4th at p. 1067.) Based
on its construction of the statute, the Fifth District concluded that “the fair argument
standard is not applicable to the determination whether the [buildings] qualify as


16
        The Fifth District did not address this issue. “[W]e do not address the scope of the
discretion granted to lead agencies. We go only so far as to interpret Guidelines section
15064.5 to mean that, at a minimum, a lead agency has the discretion to address
separately whether an object or building is an historical resource for purposes of CEQA’s
discretionary historical resources category.” (Valley Advocates, supra, 160 Cal.App.4th
at p. 1060.)
17
       The Fifth District held that the fair argument standard also did not apply to the
lead agency’s decision as to the application of the unusual circumstances exception to a
categorical exemption. (Valley Advocates, supra, 160 Cal.App.4th at pp. 1072-1074.)
That issue is not before us in this case.


                                                  18
                                                                  18
historical resources at this stage of the CEQA review process.”        (Valley Advocates, at
pp. 1068-1070.) “Therefore, the only reasonable interpretation of section 21084.1 was
that the fair argument standard does not govern a lead agency’s application of the
definition of an historical resource. Of course, once the resource has been determined to
be an historical resource, then the fair argument standard applies to the question whether
the proposed project ‘may cause a substantial adverse change in the significance of an
historical resource’ (§ 21084.1) and thereby have a significant effect on the
environment.” (Valley Advocates, at p. 1072.)
       The only other case cited by the parties that addressed this issue is the Fifth
District’s decision in Citizens for Restoration of L Street v. City of Fresno (2014) 229
Cal.App.4th 340 (L Street). In L Street, the Fifth District again considered whether the
fair argument standard applied to the lead agency’s decision under the final sentence of
section 21084.1 as to whether a resource was a “discretionary” historical resource.
(L Street, at p. 365, fn. 17.) The project proposed demolition of two houses, neither of


18
       The Fifth District relied on what the court characterized as “a staff analysis, which
appears to be attached to or included in an analysis of Senate Floor Amendments by the
Senate Committee on Natural Resources and Wildlife.” From this document, the Fifth
District concluded that the Legislature had intended for the lead agency to have the
discretion to decide that a presumptive or discretionary resource was not significant for
CEQA purposes. (Valley Advocates, supra, 160 Cal.App.4th at pp. 1070-1072.)
        There is no indication that this document, which was found in the files of the
Natural Resources Committee, was ever presented to any committee or to the Legislature
as a whole. As far as can be gleaned from the Legislature’s archives, when the chairman
of the Assembly Committee on Water, Parks and Wildlife submitted proposed
amendments to the bill that became section 21084.1 to the Legislative Counsel’s office in
August 1992, he included an analysis of the proposed amendments. It is this analysis
upon which the Fifth District relied. This analysis stated that, under the amended version
of the bill, “[r]esources which have not been considered for the California Register, for a
local register or for the State Historic Resources Inventory may, at the discretion of a lead
agency, be evaluated to determine if they are significant for purposes of CEQA.”
Because the provenance of this document is uncertain, we do not rely on it.


                                             19
which had been identified as a historical resource. (L Street, at pp. 348-349.) The City of
Fresno decided that the two houses were not historical resources for purposes of CEQA
and approved the project with an MND. (L Street, at pp. 351-352.) The trial court
rejected a claim that an EIR was required because the project might have an adverse
impact on historical resources. (L Street, at pp. 352-353.) On appeal, the Fifth District
considered whether the fair argument standard applied to the determination of whether
the houses were historical resources and reaffirmed its holding in Valley Advocates that
the fair argument standard did not apply to judicial review of a lead agency’s finding that
                                                          19
a resource was not a discretionary historical resource.        (L Street, at pp. 367-369.)
                                       4. Conclusion
       The issue in this case is one of statutory construction to which we have applied
well-settled rules. Our construction of section 21084.1 is congruent with the Fifth
District’s construction of this statute in Valley Advocates and L Street. The statutory
scheme and the legislative history of section 21084.1 require application of a deferential
substantial evidence standard of judicial review, rather than a fair argument standard of
judicial review, to a lead agency’s decision that a resource is not a discretionary historical
resource under the final sentence of section 21084.1. To construe the statute otherwise
would be inconsistent with the Legislature’s explicit provision authorizing a lead agency
to find that a resource that was presumed to be a historical resource was not a historical
resource if the lead agency found that a preponderance of the evidence supported its
finding. We therefore conclude that the deferential substantial evidence standard of
review is the correct standard to apply to the City’s finding that the Trestle is not a
historical resource.


19
       The Fifth District again relied on the same document that it had relied on in Valley
Advocates and viewed as part of the legislative history of section 21084.1. (See fn. 18,
ante.)


                                              20
                                        D. Remand
       Although we exercise de novo review in this appeal from the trial court’s ruling,
we deem it inappropriate for us to exercise judicial review in the first instance in this
case. We are a reviewing court. The trial court is tasked with conducting the requisite
review in the first instance. Hence, we will remand this matter to the trial court for it to
conduct judicial review under the correct standard.


                                      III. Disposition
       The judgment is reversed. On remand, the trial court is directed to (1) vacate its
judgment granting the petition and issuing a peremptory writ of mandate, and (2)
determine whether the City’s adoption of the MND is supported by substantial evidence
that the Trestle is not a “historical resource” under CEQA. In the interests of justice, the
parties shall bear their own costs on appeal.




                                                21
                                         _______________________________
                                         Mihara, J.



WE CONCUR:




_____________________________
Bamattre-Manoukian, Acting P. J.




_____________________________
Grover, J.




Friends of the Willow Glen Trestle v. City of San Jose
H041563


                                           22
Trial Court:                             Santa Clara County Superior Court


Trial Judge:                             Honorable Joseph Huber


Attorney for Plaintiff and Respondent:   Brandt-Hawley Law Group
                                         Susan Brandt-Hawley


Attorneys for Defendants and
Appellants:                              Office of the City Attorney
                                         Richard Doyle
                                         City Attorney

                                         Nora Frimann
                                         Assistant City Attorney

                                         Kathryn J. Zoglin
                                         Senior Deputy City Attorney


Attorneys for League of California
Cities as Amicus Curiae on behalf
of Defendants and Appellants:            Stoel Rives LLP
                                         Timothy M. Taylor
                                         Carissa M. Beecham




Friends of the Willow Glen Trestle v. City of San Jose
H041563