In a concise 15-page opinion filed August 7, 2014, the California Supreme Court reversed the Fifth District Court of Appeal’s judgment which had held that a city may not adopt a voter-sponsored initiative with potential environmental impacts unless it conducts a CEQA analysis. Tuolumne Jobs & Small Business Alliance v. The Superior Court of Tuolumne County (Wal-Mart Stores, Inc., et al., Real Parties In Interest (2014) ___ Cal.4th ___, Case No. S207173. (For relevant case background, my initial post analyzing, criticizing, and predicting that the Supreme Court would grant review of the Fifth District’s decision can be accessed at the following link: “Impossible and Useless CEQA Review Is Required If City Opts Under Elections Code to Adopt Legislative Project Approvals Proposed by Qualified Citizen Initiative Petition – Fifth District’s Holding In Walmart Rejects Fourth District Precedent And Creates Split In Authority,” by Arthur F. Coon, posted November 8, 2012.)

The case’s facts are simple and undisputed.  In 2007, Wal-Mart sought to expand an existing store in the City of Sonora to a “Supercenter” that would sell groceries and be open 24 hours daily. In 2009, the City’s planning commission unanimously recommended certification of a draft EIR for the project. Before the City Council’s vote, it was served with a notice of intent to circulate a citizen initiative petition – the “Wal-Mart Initiative” – to adopt a specific plan for the project that would streamline approval for its construction and operation. The petition was ultimately signed by more than 20% of the City’s registered voters. The council ordered a report under Elections Code § 9212 to examine the initiative’s consistency with the previous planning commission approvals for the project, then at its next meeting considered the report and adopted the initiative ordinance. Plaintiff Tuolumne Jobs & Small Business Alliance sued, claiming the council’s action violated CEQA because it did not conduct a full CEQA review, and the trial court sustained the initiative proponent’s demurrer. The Fifth District reversed on appeal, however, holding the council was required to conduct a full CEQA review if it adopted the initiative measure rather than placing it on the ballot for a vote of the people.

In granting review and reversing, the Supreme Court made the following key points:

• Its earlier decision in Friends of Sierra Madre v. City of Sierra Madre (2001) 25 Cal.4th 165, which held local agencies must comply with CEQA before placing a land use initiative on the ballot, was inapposite because it dealt with city council-generated initiatives, which are clearly distinct from voter-sponsored initiatives. While voters may justifiably assume a city council has carefully studied the effects of any initiative it places on the ballot, they have no reason to believe the same is true of voter-sponsored initiatives and can therefore be expected to more carefully consider the potential environmental effects of the latter category before deciding whether to support such initiatives.
• The Elections Code provides the exclusive procedures for voter initiatives, and these implement the 1911 California Constitutional amendment reserving to the people the powers of initiative and referendum by creating an indirect process for city and county initiatives. Thus, “[t]hese can only be submitted to voters if they have been presented to, but not enacted by, the local legislative body.” (Citing Thompson v. Board of Supervisors (1986) 180 Cal.App.3d 555, 561; see Elections Code, §§ 9214, 9212 [establishing procedure whereby when local body receives initiative petition signed by at least 15% of its registered voters, it must (a) adopt initiative without alteration within 10 days, (b) immediately submit to vote at special election, or (c) order report examining initiative’s effects on land use, infrastructure, and other matters to be prepared and presented within 30 days, and then adopt or order election within 10 days of receipt of report].)
• Consistent with the well-established rule that CEQA compliance is not required before a legislative body submits an initiative to voters under this scheme, CEQA review is likewise not required when it directly adopts a citizen petition. To require CEQA review would be “contrary to the statutory language and legislative history pertaining to voter initiatives” and “policy considerations do not require a different result[.]”
• The plain language of Election Code § 9214 does not mention CEQA, and requiring CEQA review would be inconsistent with and nullify its provisions allowing direct adoption and providing for preparation and consideration of an abbreviated report. “Considering the time necessary for agencies to review the potential environmental impacts of a project and allow public review and comment, it would be impossible for a city to complete CEQA review within 10 days before adopting a voter initiative. (§ 9214(a)).” Moreover, since § 9214’s deadlines are mandatory, and “under no circumstances can a city delay action on a voter initiative beyond 40 days” under those deadlines, “if prior CEQA review is required, a city could never adopt a voter initiative under section 9214(a) if that initiative had any potential impact on the environment. Direct adoption would be severely curtailed and, for many initiatives, no longer an option, because it would be impossible for cities to comply with both CEQA and the section 9214 deadlines.” Moreover, “[i]f full CEQA review were required before [direct]… adopt[ion], the abbreviated report provided for by sections 9212 and 9214(c) would be superfluous.”
• The legislature is presumably aware of all laws in existence when it passes or amends a statute, and when it enacted CEQA in 1970, the statutory procedures for enacting voter initiatives had been “firmly in place… for nearly 60 years.” Had the legislature meant to change them to require CEQA review, it could easily have said so and did not. Moreover, “[t]here is a strong presumption against repeal by implication.”
• While not explicitly stating that the limited and strictly-circumstantial procedural options provided by the Elections Code prescribe a “ministerial” decision-making process that would thus be exempt from CEQA in any event, the Supreme Court essentially said as much in the following passage of its opinion: “Finally, even if time constraints permitted CEQA review, cities would be powerless to reject the proposed project or to require alterations in the project that would lessen its environmental impacts, no matter what the review showed.”
• The court buttressed its foregoing analysis with an exploration of legislative history which it concluded “confirms that ordinances enacted by initiative, either directly or by election, are not subject to CEQA review.”
• Finally, the court concluded that direct adoption without CEQA review does not offend public policy. “Direct adoption has… been available to local governments from the outset of legislation by initiative” and the “voters who amended the Constitution intended to empower their government to enact a qualified initiative immediately, without the need for an election and its attendant delay and cost.” Concerns about interested parties’ use of the process – whether to “evade CEQA review” or, conversely, “to thwart development” – “are appropriately addressed to the legislature. The process itself is neutral.  The possibility that interested parties may attempt to use initiatives to advance their own aims is part of the democratic process.”
• In closing, the Supreme Court also noted that “voters have statutory remedies [i.e., the referendum process] if direct adoption of an initiative results in the enactment of an undesirable law…. The legislature has outlined clear procedures for voters to overturn an ordinance adopted against the majority’s will. Whichever path a city chooses in dealing with a voter initiative, voters have the final say.”

The Supreme Court’s decision authoritatively reaffirms what appeared to be settled CEQA and Elections Code law in this context prior to the Fifth District’s aberrant decision. In sum: “Power to the people!”