"If the proposed activity is determined to be a project, the public agency must proceed to the second step of the process, which considers whether the project 'is exempt from compliance with California Environmental Quality Act (CEQA) under either a statutory exemption or a categorical exemption set forth in the regulations . A categorically exempt project is not subject to CEQA, and no further environmental review is required.'" (Save the Plastic Bag Coalition v. County of Marin (2013) 218 Cal.App.4th 209, 219 159 Cal. Rptr. 3d 763.) The categorical exemptions or "class exemptions" were created because the Natural Resources Agency determined some projects, per se, do not have a significant effect on the environment. (Muzzy, supra, 41 Cal.4th at p. 380.) An agency is precluded "from relying on a categorical exemption when there is a fair argument that a project will have a significant effect on the environment ... ." (Banker's Hill, Hillcrest, Park West Community Preservation Group v. City of San Diego (2006) 139 Cal.App.4th 249, 266 42 Cal. Rptr. 3d 537 (Banker's Hill); see Voices for Rural Living v. El Dorado Irrigation Dist. (2012) 209 Cal.App.4th 1096, 1105 147 Cal. Rptr. 3d 480 applying "fair argument" standard in a class 3 exemption analysis.) Thus, the agency evaluates potential environmental effects under the fair argument standard, but judicial review "is limited to determining whether the agency applied the standard 'in the manner required by law,'" which means the court reviews the record to determine if the agency's fair argument conclusion is supported by substantial evidence. (Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, 1115-1116 184 Cal. Rptr. 3d 643, 343 P.3d 834 (Berkeley).) Class 7 Exemption: The Class 7 exemption exempts CEQA projects that "consist of actions taken by regulatory agencies ... to assure the maintenance, restoration, or enhancement of a natural resource." (Cal. Code Regs., tit. 14, 15307.) Thus, the categorical exemption does not apply if there is a fair argument that the criteria refinement may have a significant effect on the environment--if there is a fair argument that the criteria refinement is not assuring the maintenance, restoration, or enhancement of a natural resource. (Banker's Hill, supra, 139 Cal.App.4th at pp. 266-267.) As explained, ante, we examine the record to determine if there is substantial evidence to support the Agency's application of the exemption. (Berkeley, supra, 60 Cal.4th at pp. 1115-1116.)