In its July 21 decision in Walters v. City of Redondo Beach, the Second Appellate District rejected a challenge to the use of a Class 3 categorical exemption for a proposed car wash and coffee shop in the City of Redondo Beach. The decision is helpful for lead agencies, as it clarifies that the general effects of an operating business, such as noise, parking, and traffic, cannot serve as unusual circumstances in and of themselves.

Redondo Auto Spa filed an application with the City of Redondo Beach (City) to build a 4,080 square-foot, full-service car wash and small coffee shop on a property zoned for commercial uses. In approving the project, the City issued a conditional use permit (CUP), found that the project was categorically exempt from CEQA review under the Class 3 exemption for a “store, motel, office, restaurant or similar structure not involving the use of significant amounts of hazardous substances,” (CEQA Guidelines section 15303(c)), and imposed several conditions concerning noise, operating hours, and capacity (a vehicle limit of 10,000 cars per month).

Five neighboring homeowners filed a petition for writ of mandate challenging the City’s CEQA exemption determination and issuance of the CUP. The trial court upheld the City’s actions and denied the writ petition, and the neighbors appealed.

The Second District Court of Appeal began its analysis by clarifying the standard of review. The Court explained that where the argument turns only on the interpretation of language within the CEQA Guidelines, the issue is a question of law. Where the agency makes factual determinations as to whether the project fits within an exemption, the Court instead determines whether the record contains substantial evidence to support that decision.

The core dispute over application of the Class 3 exemption involved three issues:

1. Whether the project generally fits within the definition of “commercial buildings” as it is used in Guidelines section 15303;
2. Whether the exemption can be applied to a single commercial building in excess of 2,500 square feet; and
3. Whether the car wash and coffee shop would be utilizing “hazardous chemicals.”

As to the first issue, the appellants characterized the car wash operation as requiring the installation of industrial equipment such as blowers, vacuums, air nozzles, and waste treatment, which appellants contended removed the project from outside the purview of the exemption. Appellants also argued that the car wash use was not comparable to the example uses listed in Section 15303(c), which include stores, motels, offices, restaurants, or similar structures. The Court rejected appellants’ arguments, finding that the car wash and coffee shop combination qualified as a commercial use. The Court also held that the equipment needed for the car wash was not substantially different from the types of equipment associated with other commercial uses.

As to the issue of square footage limitations, appellants argued that Section 15303(c) could not be applied to a single commercial building that exceeds 2,500 square feet. Citing previous case law, the Court rejected that claim, stating that the exemption covers projects involving the construction of one to four buildings in an urbanized area where the total floor area does not exceed 10,000 square feet.

Finally, on the issue of the use of hazardous substances, appellants argued that the car wash would use hazardous chemicals that would disqualify it from coverage under the exemption, which only covers projects “not involving the use of significant amounts of hazardous substances.” The Court pointed out that appellants had presented no evidence suggesting that the soaps and detergents used by the car wash are hazardous or that any significant amount of hazardous substances would otherwise be used. Instead, the evidence showed that the soaps were biodegradable and verified as nonhazardous. For these reasons, the Court held that the project fit within the Class 3 categorical exemption.

Appellants also claimed that, even if the Class 3 categorical exemption otherwise applied to the project, the presence of “unusual circumstances” described in Guidelines section 15300.2(c) disallowed the use of that exemption. In assessing the application of this exception, the Court applied the two-part test described by the California Supreme Court in the Berkeley Hillside decision (discussed in a prior Downey Brand Legal Alert). In applying the first part of the test — i.e., determining whether any unusual circumstances are present—the Court found that “there is nothing particularly unusual about the proposed car wash and coffee shop,” that the evidence in the record established that there are many other car washes in the surrounding area, and that the site itself had been a car wash and snack bar for nearly 40 years. The Court also rejected appellants’ claim that the “large air blowers and other outdoor activities” made the car wash qualitatively different from the other uses provided in the Class 3 exemption. Finally, the Court stated that the “general effects of an operating business, such as noise, parking and traffic, cannot serve as unusual circumstances in and of themselves.”

Next, the Court looked at appellants’ arguments under the second prong of the test in Berkeley Hillside, to see whether there was “substantial evidence indicating (1) the project will actually have an effect on the environment and (2) that effect will be significant.” Appellants raised concerns regarding noise and traffic, claiming that the operation of the car wash would violate the City’s interior and exterior noise limits at the abutting property line and that the car wash would adversely impact local traffic and pose public safety concerns. The Court rejected both claims. On the issue of noise, the Court noted that the finding of environmental impacts must be based on the project as approved, and that here the condition of approval imposed by the City mandated that the project not exceed the City’s noise ordinance decibel levels. As to traffic, appellants argued that the car wash and coffee shop was “inefficient” and would cause backups “within the project property.” The Court summarily rejected this argument, finding that the claim was speculative and contradicted by facts in the record, and that there was no legal authority holding that parking or traffic issues occurring wholly within the project property qualify as transportation/traffic impacts under CEQA.