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Filing a Notice of Exemption Triggers a 35-day Statute of Limitations for CEQA-Based Challenge to the Project Approval

The California Supreme Court ruled yesterday that filing a Notice of Exemption triggers CEQA’s 35-day statute of limitations and that plaintiffs cannot avoid the limitations period by claiming defects in the underlying project approval process.In a lengthy opinion for Stockton Citizens for Sensible Planning v. City of Stockton, the Court’s comprehensive discussion led to a simple, straightforward conclusion – where a lead agency files a Notice of Exemption, the statute of limitations is 35 days for all CEQA challenges to the exemption determination.

This case involved City approval of a Wal-Mart store in a master-planned mixed use development. In a complicated permitting structure, and a series of EIRs, the City had previously approved a Master Development Plan (MDP) that identified possible patterns of uses through a land use summary. With an intent to provide maximum flexibility to respond to changing economic circumstances, Conceptual Plans contained a range of land use options. Among the options was retail commercial space, up to 225,000 sq. ft., for parcels otherwise identified primarily for multifamily residential development. Under the MDP provisions and the City’s zoning regulations, the City Community Development Director could approve specific projects that were determined to be consistent with the MDP criteria, goals and purposes.

The developer submitted detailed plans for a 207,000 sq.ft. retail store, which the Director determined to be in substantial conformance with the MDP. The Director sent a “status report” letter to the developer, advising of his determination, but did not file a CEQA Notice of Exemption (NOE) until nearly two months later. The NOE described the project as a retail use to be constructed in two phases of 138,722 and 68,888 sq.ft., respectively. The NOE stated that the project was consistent with the MDP, general plan and zoning, and also advised that the conformity determination was a ministerial action, not subject to CEQA review under CEQA section 21080(b)(1) and CEQA Guidelines section 15369.

Plaintiffs filed their lawsuit challenging the validity of the NOE seven months after the Director’s action and five months after the NOE was filed. The trial court ruled that the NOE was not valid because the Director’s action was not a valid approval by a public agency. Thus, the NOE did not trigger the 35-day statute of limitations. The Third District Court of Appeal affirmed in a split decision.

The Court rejected the plaintiff’s arguments and appellate majority on a number of grounds. The Court noted that short limitations periods for land use and CEQA challenges ensure finality and predictability in land use decisions and ensure prompt resolution of lawsuits. The shortest CEQA limitations periods apply where an agency has given public notice of its decision in a form required or permitted by the statute, in this case, the NOE. In general, where the agency does not provide public notification of its action, CEQA’s 180-day statute of limitations applies. However, when the agency files an NOE, this period is shortened to 35 days. The Court noted that through the NOE, members of the public are informed of the environmental evaluation process and the nature of the decision, and can decide whether they wish to challenge it. Similarly, the Court rejected the notion that the lack of notice for the Director’s decision was relevant to the case, since the CEQA statutory scheme relies on constructive notice to the public through the NOE to trigger the limitations period. Finally, the Court ruled that the NOE was not defective or misleading. Implying that the NOE could have been clearer or more informative, the Court nevertheless found that it minimally complied with CEQA and was thus effective to trigger the 35-day limitations period.

Through this decision, the Court concluded that even if there were procedural or substantive flaws in the project approval process, any CEQA-based challenge to the process must be taken within 35 days after the City filed its NOE. Unlike a Notice of Determination, which is mandatory, and triggers a 30-day statute of limitations for non-exemption CEQA challenges (see previous e-alert regarding the Committee for Green Foothills v. Santa Clara County case), in most situations, filing a NOE is optional. However, if a lead agency wishes to get the shortest possible CEQA challenge period for exemption determinations, it should file an NOE. The NOE form is Appendix E in the CEQA Guidelines.

For more information about the Stockton Citizens case, CEQA or land use matters, please contact Julia Bond at 800-464-3559.