City Violated California Environmental Quality Act By Approving Wal-Mart Supercenter Proposal For Phase Two Of A Two-Part Project Without Requiring Supplemental Environmental Review

In American Canyon Community United for Responsible Growth v. City of American CanyonCal.Rptr.3d —, 2006 WL 3337146, Cal.App. 1 Dist., Nov. 17, 2006, ordered published December 12, 2006), a California Court of Appeal addressed the issue of whether a city prejudicially violated the California Environmental Quality Act (“CEQA”) by approving a proposed Wal-Mart supercenter for phase two of a two-part development project without requiring supplemental environmental review.

The Court of Appeal found that the city violated CEQA because its determination that the project changes would not substantially impact traffic was not supported by substantial evidence and the city erred when it failed to consider the urban decay that might result from store closures due to the economic competition of the supercenter.


The City of American Canyon (“City”) adopted a mitigated negative declaration (“MND”) for a two-phase multi-use development project. Phase one of the project consisted of a hotel, multi-family residences and 32,000 square feet retail space. Phase two was to include 165,000 square feet of retail space. The site plan submitted by the developers contained a detailed layout of phase one but the phase two area was a blank space with notations that said “163,000 SF developable area” and dotted lines indicating a future road.

After the City approved the MND, Wal-Mart proposed to build a supercenter in the phase two area of the project. The proposed supercenter would include a 173,653 square-foot building and a 12,676 square-foot outdoor garden center. Public concern about the supercenter emerged and the American Canyon Community United for Responsible Growth (“Community”) formed and demanded a CEQA review. The City’s planning commission found that further environmental review was not required. The City Council ultimately approved Wal-Mart’s design permit application and sign program.

Community filed a lawsuit in superior court seeking revocation of the City’s approval of the proposed supercenter. The trial court denied Community’s request and found that City’s determination that supplemental environmental review was not necessary was supported by substantial evidence. Community appealed.


The Court of Appeal found that the City’s determination that the supercenter proposal would not have substantially new or increased effects on the environment which would warrant supplemental environmental review was not supported by substantial evidence. Accordingly, it found that the City violated CEQA by not conducting supplemental environmental review.

If a local agency intends to carry out a project that is covered by CEQA, “the agency must prepare and certify the completion of an environmental impact report (“EIR”) if the project may have a significant effect on the environment.” If there “‘is no substantial evidence, in light of the whole record before the lead agency, that the project may have a significant effect on the environment,’ the lead agency must prepare a negative declaration to that effect.”

Public Resources Code section 21166 provides that, when an EIR has been prepared for a project, no subsequent or supplemental EIR shall be required unless (1) substantial changes are proposed to a project that will require major revisions to the EIR; (2) substantial changes occur regarding the circumstances under which the project is being undertaken which will require major revisions to the EIR; or (3) new information that was not known, or could not have been known at the time the EIR was completed, becomes available. CEQA Guidelines provide that section 2166 applies to “project changes following an agency’s adoption of a negative declaration or a mitigated negative declaration as well as an EIR.” The Court concluded that section 21166 governed whether further environmental review was required under CEQA for the proposed supercenter.

The Court found that the City did not accurately identify the changes in the project from those that were considered in the original environmental document. The Court concluded that “the supercenter proposal substantially changed the type and size of the retail component” of the second phase. The original project proposal stated phase two would consist of smaller retail buildings and larger retail “box” tenants. The “box” retailers depicted in the plan appeared to be less than one-third of the size of the supercenter. The Court opined that a “supercenter is a unique type of retail operation” because supercenters usually operate 24 hours a day seven days a week and “draw from a larger regional market than more typical shopping centers with the same total square footage of retail space and thus may have unique traffic impacts.”

The Court noted that the most significant change in the project was an increase in square footage. The proposed 173,653 square-foot building represents a 6.5 percent increase in size of the proposed retail space. In addition to the building, the proposed supercenter would include a 12,676 square-foot garden center and a 7,625 square-foot seasonal sales area, for a total of 193,954 square feet.

The Court additionally noted that the City arbitrarily excluded 32,255 square feet of stockroom and employee use area from its calculation of square footage with no reasonable explanation for the exclusion. The Court found that the City’s low calculation of the supercenter’s square footage also undermined its conclusion that the supercenter would have no significant effect on traffic.

The Court further concluded that the City did not properly consider the possibility of urban decay that might arise if the supercenter is built. The Court noted that the City gave short consideration to any urban decay within the vicinity of the supercenter and gave absolutely no consideration to the effects in neighboring jurisdictions. The Court concluded that the City violated section 21166 and ordered the City to “redetermine, based on an accurate identification of the project changes, whether subsequent environmental review of the project is required under section 21166.

The Court additionally held that the City violated its own ordinance by approving the supercenter without requiring a major modification application. One of City’s zoning ordinances provides “that a major modification of a previous Planning Commission approval must be approved by the Planning Commission following a public hearing.” Another ordinance provides that the definition of a major modification includes an increase of greater than 5% in square footage of an approved structure. The City tried to get around this requirement by excluding the stockroom and employee use area from the supercenter’s square footage. However, the Court found that under the plain language of the ordinance, a major modification application was required.

The Court reversed and remanded the case back to the trial court to issue an Order requiring the City to comply with CEQA and the City’s Zoning Code. The Court also directed the trial court to determine whether an Order staying and halting construction and repair activities should be issued, pending compliance with CEQA.

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