By Travis Brooks

In a case filed on September 28, 2021 and certified for publication on October 26, 2021, the Fourth District Court of Appeal upheld the City of Tustin’s application of the Category 32 urban infill exemption for the proposed development of a Costco gas station at an already existing Costco location. In doing so, the court rejected plaintiffs’ claims that the project was on a site larger than five acres when accounting for all of the existing buildings on the site, here work would only occur in a less than three acre area. The court also rejected plaintiffs’ claims that the unusual circumstances exception to the urban infill exemption applied. [Protect Tustin Ranch v. City of Tustin, ___Cal.App.5th___, Case No. G059709 (4th Dist. Sept. 28, 2021).\

Factual and Procedural Background

Real party in interest Costco Wholesale Corporation applied to build a gas station next to an existing Costco warehouse. The project site was within an already constructed shopping center located along a major commercial thoroughfare. The project included two components, the construction of a 16 pump gas station with canopy, and the demolition of an existing tire center and adjacent surface parking. The project required a conditional use permit and design review approval. Although the gas station would only occupy approximately 2.38 acres, the original application listed the total lot size as 11.97 acres.

The planning commission approved the project with a Category 32 urban infill exemption to the California Environmental Quality Act (CEQA) after finding each of the requirements to apply the exemption were met. Specifically, the planning commission determined that the project was consistent with the city’s General Plan and was within city limits on a project site of no more than five acres that was substantially surrounded by urban uses. The planning commission further determined that the project site had no value as a habitat for endangered, rare, or threatened species and could be served by all required utilities and public services. Finally, the planning commission further determined that the project would not have any significant effects relating to traffic, noise, air quality or water quality.

Members of the public appealed the planning commission’s approval of the project to the city council. The city council upheld approval of the project, finding that the project site was the actual 2.38 acres where demolition and construction would occur, not the nearly 12 acre site of the entire existing building. The city council further determined that there were no unusual circumstances or other exceptions to the infill exemption that would render the urban infill exemption unavailable. The city council adopted a resolution finding the project categorically exempt from CEQA review and granted the requested approvals. The city then filed a notice of exemption.

Plaintiffs timely filed a petition for writ of mandate challenging the city’s finding that the project was exempt from CEQA. Plaintiffs argued that one of the criteria required to apply the urban infill exemption, that the project site be no more than five acres in size, was not met because the original project application documents described the project site as occupying nearly 12 acres. Plaintiffs also argued that the city erroneously relied on the urban infill exemption when the project fell within the scope of the unusual circumstances exception to CEQA set forth in the CEQA guidelines.

The trial court heard the matter and denied plaintiff’s writ petition.

The Fourth District Court of Appel’s Decision

On appeal, plaintiffs argued the trial court’s decision was erroneous for two reasons: 1) the project was too large to qualify for the urban infill exemption (i.e. on a site larger than five acres), and 2) the city improperly relied on the infill exemption because the project fell within the scope of the unusual circumstances exception to the infill exemption.

Infill Development CEQA Exemption

The court began by recognizing that to apply the urban infill exemption, five criteria must be met: 1) the project must be consistent with the applicable General Plan designation and all applicable General Plan policies, 2) the proposed development must occur within city limits on a project site of no more than five acres substantially surrounded by urban uses, 3) the project site must have no value as a habitat for endangered, rare, or threatened species, 4) approval of the project must not result in any significant effects relating to traffic, noise, air quality, or water quality, and 5) the site must be adequately served by all required utilities and public services.

Plaintiffs were only challenging the applicability of one of the above criteria, the size of the project site. The court noted that when a public agency makes a factual determination that a project falls within a categorical exemption, courts will apply the substantial evidence standard in reviewing the agency’s finding and will not weigh conflicting evidence. Instead, the court will:

. . .review the administrative record to see if it contains evidence of ponderable legal significance that is reasonable in nature, credible, and of solid value, to support the agency’s decision.

Here, the court determined that the administrative record contained substantial evidence indicating the project site was less than five acres in size. Multiple documents in the record confirmed the size of the project site was actually 2.38 acres when including the entire area of project work including the new gas station and demolished tire center. This 2.38 acre footprint was supported by multiple technical documents, an environmental assessment form, and maps all indicating that the actual site where the project would occur. The court concluded that substantial evidence supported the city’s factual determination concerning project site size.

The court then analyzed plaintiff’s contention that it was improper for the city to apply the urban infill exemption because the unusual circumstances exception applied. As the court noted, CEQA Guideline 15300.2 subdivision (c) provides that it is improper to rely on an exemption shall not be applied for an activity where “there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.”

Analysis under the Berkeley Hillside Decision

The court looked to the standards established by the state Supreme Court in Berkeley Hillside Preservation v. City of Berkeley, 60 Cal.5th 1086 (2015) for guidance on the burdens and applicable standards of review for exceptions to exemptions. As the court noted in Berkeley Hillside,  the party challenging an exemption has the burden of producing evidence supporting an exception. This may be done in two steps. First, the plaintiff can show evidence that the project is unusual because it has some feature that distinguishes it from others in the exempt class. In the second step, the plaintiff must establish a reasonable possibility of a significant effect due to that unusual circumstance.

Whether a  project presents unusual circumstances for projects in an exempt class is a factual inquiry. Accordingly, when a court analyzes whether unusual circumstances exist, it will look to the approving agency as the factfinder and apply the substantial evidence standard.

If unusual circumstances exist, the court then looks to determine whether a reasonable possibility exists of a significant effect due to that unusual circumstance. At this second stage, the court applies the fair argument standard, meaning that it reviews the evidence to see if there is a fair argument of a reasonable possibility that the project will have a significant effect on the environment. If there is substantial evidence of a reasonable possibility that a project will have such an effect, the agency may not rely on the exemption even if there is evidence to the contrary.

As to the first step above, the court determined that substantial evidence supported the city’s conclusion that the project was not unusual in relation to other infill development that would qualify for the exemption. As to size, the court determined that the proposed gas station was not “remarkably different” from other Costco gas station s in California. The court further found that conditions in the immediate vicinity of the project site did not give rise to unusual circumstances. Here, the project was within a major shopping center and along a major commercial thoroughfare. Substantial evidence in the record showed that the proposed gas station was in line with the characteristics of the surrounding setting.

The court noted that plaintiffs’ concerns really seemed to tie into what might be uncovered if the city were to engage in further environmental review and find potential soil contamination from the project. However the court noted that:

. . .unsupported concerns, presumptions or conjectures are not enough to force the City to proceed further down the CEQA road. A categorically exempt project, by definition, is deemed by law to not have a potentially significant effect on the environment unless the project’s administrative record sufficiently demonstrates the applicability of an exception to the claimed exemption.

Here, plaintiffs did not reach the question of whether there was a fair argument of a reasonable possibility of a significant environmental effect because there was no adequate showing of unusual circumstances.

The court upheld the trial court’s judgment and rejected plaintiffs’ claims.

Conclusion and Implications

Protect Tustin Ranch is a helpful decision because it explains the procedural and substantive requirements that a project opponent must meet to successfully claim that a project falls within the unusual circumstances exception to an exemption. The case also demonstrates that utility of the urban infill exemption for projects in urban settings on a site less than five acres in size. The court’s opinion is available online at: https://www.courts.ca.gov/opinions/documents/G059709.PDF