In an important opinion filed October 21, and later ordered published on November 18, 2024 (at the request of the California State Association of Counties and the Rural County Representatives of California), the Sixth District Court of Appeal interpreted key terms in the CEQA Guidelines Class 32 categorical exemption, which applies to “in-fill development” projects that meet specified criteria, including being “substantially surrounded by urban uses.” In doing so, the Court upheld a low-population city’s use of the exemption for a Grocery Outlet project near Highway 101. Working Families of Monterey County, et al. v. King City Planning Commission (Best Development Group, LLC, Real Party in Interest) (2024) ___ Cal.App.5th ___.
The Project, Administrative Proceedings, and Litigation
The project at issue is a Grocery Outlet store in a single-story, 18,187 square foot building with 72 parking spaces and 13,908 square feet of landscaping, on a 1.6-acre lot located within 1,000 feet of Highway 101, at 1023 Broadway Street, King City, population 13,332. The parcel’s General Plan land use designation is Highway Service Commercial (HSC); its zoning designation is Highway Service District (H-S); and it is surrounded on two sides (to the northeast and southwest) by commercial buildings, on a third side (to the southeast) by Monterey County Sheriff’s Department buildings adjoining a vacant lot, and on the fourth side (to the northwest) by a cemetery.
An environmental assessment submitted by the project developer in support of the project’s permit applications (for a CUP, architectural review, monument sign permit, and landscaping permit) concluded the project would not result in any significant environmental impacts relating to traffic, noise, air quality, water quality, or otherwise, and that it qualified for the CEQA Guidelines Class 32 exemption for in-fill development. The City’s Planning Commission agreed on all counts, and its decision approving the project entitlements and exemption was upheld by the City Council, which did the same on administrative appeal.
The trial court denied appellant Working Families’ writ petition challenging the project and Class 32 exemption on CEQA grounds (discussed below), and the Court of Appeal affirmed.
The Court of Appeal’s Opinion
To place the Court’s decision in context, it is necessary to consider the text of CEQA Guidelines § 15332, which states:
Class 32 consists of projects characterized as in-fill development meeting the conditions described in this section. [¶] (a) The project is consistent with the applicable general plan designation and all applicable general plan policies as well as with applicable zoning designation and regulations. [¶] (b) The proposed development occurs within city limits on a project site of no more than five acres substantially surrounded by urban uses. [¶] (c) The project site has no value, as habitat for endangered, rare or threatened species. [¶] (d) Approval of the project would not result in any significant effects relating to traffic noise, air quality, or water quality. [¶] (e) The site can be adequately served by all required utilities and public services.”
(Emph. added.)
The arguments made on appeal concerned the proper interpretation of the above-emphasized language of the exemption, thus posing issues of law for the Court’s de novo review. Appellant argued that because the exemption does not define “in-fill development” or “substantially surrounded by urban uses,” those terms must be interpreted using the CEQA definitions of “in-fill site,” “urbanized area,” and “qualified urban uses” contained in Public Resources Code §§ 21061.3, 21071, and 21072, respectively, and in CEQA Guidelines § 15387 (“urbanized area”). Public Resources Code section 21061.3 defines “infill site” as “a site in an urbanized area”; section 21071 defines “urbanized area” as an incorporated city or contiguous cities with a population “of at least 100,000 persons”; section 21072 defines “qualified urban uses” as “residential, commercial, public institutional, transit or transportation passenger facility, or retail use, or any combination thereof”; and Guidelines § 15387 defines “urbanized area” to mean a city or contiguous cities with 50,000 or more persons and adjacent areas with at least 1,000 persons per square mile. Appellant accordingly reasoned and argued that, due to King City’s low population (13,332 persons), the Class 32 exemption could not apply since the project site is not in an “urbanized area” and thus cannot be an “infill site” surrounded by “qualified urban uses.”
Applying well-settled principles of statutory interpretation (which also apply to administrative regulations), the Court of Appeal rejected appellant’s arguments. The key terms of Guidelines § 15332 were “in-fill development” and “substantially surrounded by urban uses.” To the extent these terms might be ambiguous, the Court looked to the intent of the Natural Resources Agency in issuing the regulation, and its initial statement of reasons indicated the driving policy was to exempt “in-fill” development in “already developed” areas which meets specific requirements and thus avoids the adverse environmental impacts of “sprawl” development. Further, OPR’s website definition of “infill development” refers to “building within unused and underutilized lands within existing development patterns, typically but not exclusively in urban areas.” (Emph. added.)
The terms “in-fill site,” “urbanized area,” and “qualified urban uses” do not appear in Guidelines § 15332, a significant omission in light of the rule of statutory interpretation “that a court ‘may not broaden or narrow the scope of the provision by reading into it language that does not appear in it or reading out of it language that does.’” (Slip Opn., at 16, citing Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 545.) Further, appellant’s arguments ran afoul of the principle that “where different words or phrases are used in the same connection in different parts of a statute, it is presumed the Legislature intended a different meaning.” (Slip Opn., at 17, quoting Branciforte Heights, LLC v. City of Santa Clara (2006) 138 Cal.App.4th 914, 936.) The Court was also “mindful” of Public Resources Code § 21083.1’s express directive that the CEQA statutes and Guidelines are not to be interpreted to impose procedural or substantive requirements beyond those explicitly stated; as relevant here, the Court observed appellant’s proposed interpretation would require environmental review of projects one could argue may have a significant environmental effect, but which OPR and the Secretary of the Natural Resources Agency, exercising their statutory authority, have already determined, in fact, do not have such an effect. (Id., citing Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, 1108.)
Having dispensed with appellant’s arguments regarding interpretation of the scope of Guidelines § 15332 as a matter of law, the Court proceeded to apply the substantial evidence standard of review to uphold the City’s factually based determination that the project at issue fell within the exemption, as properly interpreted. Per the Court: “Having reviewed the relevant portions of the environmental assessment, we determine that substantial evidence supports City’s finding that the location of the Grocery Outlet project is substantially surrounded by urban uses …. In particular, the aerial photographs show that the project location is surrounded on two sides by commercial buildings, on a third side by the Monterey County Sheriff’s Department buildings adjoining a vacant lot, and on the fourth side by the King City Cemetery. The photographs also show that the project location is adjacent to Highway 101.”
Conclusion and Implications
This case is important because it rejected hypertechnical arguments that are inconsistent with the plain colloquial meaning of and intent underlying CEQA’s Class 32 in-fill development exemption, and which would have materially limited the scope of that exemption. The case’s holding helpfully ensures that the infill development categorical exemption can apply as intended, even in small rural cities of low population, where its plain terms are met.
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