California Court Clarifies 5-Acre Maximum Project Site Requirement Under CEQA Infill Exemption

In a recently published decision and a case of first impression, the California Court of Appeal has held that development limited to a 2.38-acre portion of an existing 12-acre shopping center qualified for the "infill exemption" from environmental review under the California Environmental Quality Act (CEQA) because the "project site" met the requirement under CEQA that it not exceed 5 acres. Prior to the decision by the Fourth Appellate District in Protect Tustin Ranch v. City of Tustin et al., Case No. G059709, there has been widespread confusion among local jurisdictions and developers as to the correct standard for meeting the 5-acre test under the exemption, particularly in those instances where the proposed development will be situated on only a portion of a larger site. The holding in this case may provide significant authority for local jurisdictions and developers to implement streamlined CEQA clearances for certain other projects that seek to repurpose abandoned or vacated retail or other commercial or residential areas within existing shopping centers or other older developments in urbanized areas.

Case Background

In Tustin, the proposed project consisted of the construction of a new 32-pump Costco gas station and ancillary facilities in an existing shopping center in the City of Tustin surrounded by other existing commercial and residential uses. The already-built center, located along a major commercial thoroughfare, included a Costco Warehouse (next to the proposed gas station), a McDonald's restaurant, Goodyear Tire Center, former K-Mart/Ansar Gallery retail space and other pad parcels. The project, for which Costco sought a conditional use permit (CUP) and design review approval from the city, included two components totaling 2.38 acres: 1) 1.74 acres where the gas station and ancillary facilities would be built; and 2) 0.64 acres that would include demolition of the existing Goodyear Tire Center and development of new surface parking spaces. Costco's original application (later modified) listed the "site size" as 11.97 acres, although no new development or construction activity or change of uses would occur in any portions of the shopping center other than the 2.38 acres.

City staff determined that the project was exempt from further CEQA review pursuant to the CEQA Class 32 Categorical Exemption for Infill Development Projects. In order to quality for this exemption, a project must meet five criteria:

a) it must be consistent with a city's General Plan and zoning

b) it must occur within city limits on a project site of no more than five acres substantially surrounded by urban uses

c) the project site has no endangered, rare or threatened species habitat value

d) project approval will not result in any significant effects relating to traffic, noise, air quality or water quality, and

e) the site must be adequately served by all required utilities and public services (CEQA Guidelines, § 15332)

Upon appeal from approval by the planning commission, the city council adopted a resolution finding the project categorically exempt under the infill exemption, with no exceptions, and granted the project approvals.

After the city approved the project and filed a notice of exemption, the plaintiff filed a petition for writ of mandate against the city to set aside the approvals due to an alleged erroneous finding that the project was exempt from CEQA review. The plaintiff argued that the 5-acre maximum project site criterion was not met because the original application described the project site as occupying nearly 12 acres, and also that the exemption should not apply because the project fell within the "unusual circumstances" exception to that exemption set forth in CEQA. The trial court denied the petition and, upon appeal by plaintiff, the Court of Appeal affirmed the trial court's decision.

Court of Appeal Decision

The Court of Appeal first found that there was no abuse of discretion by the city in deciding that the project fell within the scope of the infill exemption. As noted by the court, the administrative record contained substantial evidence indicating that the project site was less than 5 acres, including a revised development application, technical documents and multiple staff reports specifying the "area of work" to be "disturbed" as part of the project as being limited to the 2.38 acres.

The court then addressed the plaintiff's contention that the city improperly relied on the exemption because the "unusual circumstances" exception to the exemption should apply. Under CEQA, a categorical exemption cannot be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances. (CEQA Guidelines § 15300.2(c)). The plaintiff claimed such unusual circumstances were present due to the former operations at the Goodyear Service Center, the unusually large number of fueling pumps and proposed measures to reroute traffic during peak usage. Applying the standard of review for "unusual circumstances" previously established by the California Supreme Court in Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, the court in Tustin found that the plaintiff had failed to meet its burden of proof, based on facts in the record, to refute the city's conclusion that the project was not unusual in relation to other infill development that would qualify for the exemption, including evidence in the record relied upon by the city that the size of the gas station was "not remarkably different than other Costco gas stations in California."

The outcome could pave the way for faster development of portions of existing shopping centers or other older developments in urbanized areas impacted by changes in the retail market.  

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