[author: Arthur F. Coon]

In a case notable for its unique conception of “meaningful discretion” for purposes of triggering CEQA review, the Fifth District Court of Appeal has created a split in authority that will undoubtedly require Supreme Court review (or depublication) to resolve. In its partially published opinion in Tuolumne Jobs & Small Business Alliance v. Superior Court of Tuolumne County (Wal-Mart Stores, Inc., RPI) (5th Dist.10/30/12) ___ Cal.App.4th ___ 2012 WL 5350450, the Court of Appeal granted a writ of mandate directing the Superior Court to overrule a demurrer it had sustained without leave to two causes of action of a CEQA writ petition. The petition challenged the City of Sonora’s action approving without alteration a qualified citizen-initiated ballot proposal — dubbed the “Walmart Initiative” — that would enact the necessary legislative approvals (general plan, specific plan and zoning enactments) to expand an existing 130,000-square foot Walmart store into a larger “Supercenter” that sold groceries and operated 24 hours a day, seven days a week.

The relevant legal context is straightforward: Elections Code § 9214 provides a city with strictly-circumscribed options when presented with a qualified initiative petition signed by 15% or more of its registered voters: “(a) Adopt the ordinance, without alteration, at a regular meeting at which the certification of the petition is presented, or within 10 days after it is presented; (b) Immediately order a special election, … at which the ordinance, without alteration, shall be submitted to a vote of the voters of the city; (c) Order a report pursuant to Section 9212, at the regular meeting at which the certification is presented. When the report is presented to the legislative body, the legislative body shall either adopt the ordinance within 10 days or order an election pursuant to subdivision (b).” The § 9212 report must be presented within 30 days and may address topics, including environmental considerations, as specified by the statute. As the statutory scheme makes clear, the City has no authority or discretion to either deny or modify the proposed initiative measure and, in the event it does not promptly enact it without change, it has no choice but to promptly place it on the ballot as is for a vote of the electorate.

Rejecting a contrary Fourth District authority it acknowledged was “squarely on point,” Native American Sacred Site & Environmental Protection Assn. v. City of San Juan Capistrano (2004) 120 Cal.App.4th 961, the Fifth District Court of Appeal held as a matter of law that the City needed to comply with CEQA if it exercised its Elections Code § 9214(a) option of adopting the ordinance without alteration, rather than putting the measure on the ballot. Stating that “environmental review can be avoided when the voters choose to bypass it, not when the lead agency chooses to bypass the voters[,]” the Court expressed the view that: “Developers’ strategy of obtaining project approvals without environmental review and without elections threatens both to defeat CEQA’s important statutory objectives and to subvert the constitutional goals of the initiative process.”

The Court reasoned that the electorate’s constitutional initiative power did not compel a different result because no “constitutional principle allows 15% of a city’s voters plus a majority of the city council to defeat state law.”  It further held that what it coined CEQA’s “ministerial-projects exemption” did not apply because the city’s decision to adopt the Walmart Initiative had not “merely conformed to a ministerial duty.” Rather, it reasoned, in this situation “[t]he council makes a choice to authorize the project — a choice based on its policy preferences regarding the desirability of an election and the nature of the project — and this is a discretionary action.” The Court opined that CEQA Guidelines § 15369 defining “ministerial” was not to the contrary, because the council’s decision whether to adopt the measure or hold an election was “political,” unlike decisions to issue building permits, automobile registrations, dog licenses, and marriage licenses; further, the Guidelines section “specified that an action is ministerial if public officials cannot use discretion or judgment in deciding whether or how the project should be carried out[.]” (Emph. in orig.) The Court’s reasoning was encapsulated in its rhetorical question: “After all, how can the making of a policy choice be ministerial, even when the choice must be made?”

In a long footnote, the Court noted Walmart’s counsel had cited and quoted key language from a seminal CEQA case — Friends of Westwood, Inc. v. City of Los Angeles (1987) 191 Cal.App.3d 259, 272 — for the first time at oral argument; the quoted language explained that requiring EIRs for ministerial actions would be a wasteful gesture where the agency did not possess enough discretion to deny or modify the project based on environmental concerns raised by the EIR. The Court rejected the applicability of this language, stating that just because the universe of discretionary options described was different — i.e., deny or modify a project versus approve or order an election on a project as presented in a citizen initiative — does not mean the latter universe of choices is not discretionary for CEQA purposes.

In a later part of its opinion, the Court acknowledged that even under the longest time limits established by Elections Code sections 9212 and 9214, in typical situations (i.e., where CEQA review had not already somehow begun well before the petition was presented) “it would be impossible to comply with CEQA before the time for making a decision expired, since an EIR cannot be prepared, made available for public comment, and certified within 40 days.” It further acknowledged that because under its decision “CEQA compliance is required if there is to be no election, and … CEQA compliance may often be impossible before the deadline [to act]” this effectively “means that a City council will be compelled to hold an election in all cases in which environmental review has not begun when the voters’ petition is presented.”

Nonetheless, the Court rejected Walmart’s argument that CEQA review would be a meaningless gesture: “It is true that the city could not alter the initiative by adding mitigation measures, but that does not mean the city could do nothing meaningful in response to the findings in an EIR. It could withhold an endorsement of the project by choosing to hold an election instead of adopting the initiative, and it could inform the electorate of its objections.” How it could do so in the typical case where, as the Court acknowledged, no EIR would be available until long after the City was required to make its “adoption or election” decision, is left unexplained.

I will readily admit to having strong opinions about this case. While the Court obviously was concerned that the initiative statutes can be used to create a de facto exemption from CEQA, it appears to me that in rejecting a sister district’s existing precedent directly contrary to its conclusion, the Fifth District Court of Appeal’s opinion not only failed to respect existing precedent (leading to uncertainty in the law which is the bane of CEQA practice), but also failed to consider or adequately analyze numerous factors which might well be relevant to the California Supreme Court’s analysis upon any review of the case. These include:

• The City lacked any discretion at all to either deny the project, or to modify it in any way in response to CEQA review, and it thus lacked meaningful discretion to judge or shape the project in ways that could be responsive to the detailed review required by CEQA. The significance of this factor is not only underscored by the Second District’s seminal Friends of Westwood decision (which was relegated by the Court to a footnote) but by other more recent CEQA cases in numerous districts citing Supreme Court authority and holding that to trigger CEQA review, “discretion” must be of a relevant and meaningful kind. E.g., San Diego Navy Broadway Complex Coalition v. City of San Diego (4th Dist. 2010) 185 Cal.App.4th 924, 938-939 (agency’s limited discretion to require project modification with respect to aesthetic issues did “not demonstrate that [it] had the authority to modify the Project in accordance with a proposed updated EIR so as to reduce the impact of the Project on global climate change.”); see also Sierra Club v. Napa County Bd. of Supervisors (1st Dist. 2012) 205 Cal.App.4th 162, 178-179 (“‘The statutory distinction between discretionary and purely ministerial projects implicitly recognizes that unless a public agency can shape the project in a way that would respond to concerns raised in an [EIR] … environmental review would be a meaningless exercise.’”); Friends of Juana Briones House v. City of Palo Alto (6th Dist. 2010) 190 Cal.App.4th 286-302 (same; when private party can compel approval without design changes that might alleviate adverse environmental consequences, project is ministerial under “functional” test).
• The relevant CEQA Guideline (§ 15369) defining a ministerial decision — i.e., the opposite of a discretionary one for CEQA purposes – is consistent with the above case law in that it allows for such a decision to involve “little or no personal judgment by the public official as to the wisdom or manner of carrying out the project.” (emph. added.)
• The Court failed to cite or acknowledge the CEQA statute prohibiting courts from creating new substantive or procedural requirements not expressly required by the statute’s or Guidelines’ language (Pub. Resources Code, § 21083.1); here, the Court held that CEQA effectively precludes or renders meaningless two of the three strictly-limited options the Legislature provided to local legislative bodies confronted with a qualified citizens’ petition, i.e., according to the Court, the local body must now virtually always hold a special election and incur the related costs as a result of CEQA.
• The Court’s repeated pronouncements that the 15% “fraction of the electorate” is only an insignificant “small minority of voters” with no “right to have their decision implemented” are strangely unaccompanied by any empirical or other analysis of registered voter turnout. One must assume that the California Legislature had a rational basis for choosing the specific percentages, requirements and options that it did in implementing the people’s constitutional initiative and referendum rights, and that a Court decision overturning these basic policy choices would likely present very compelling arguments and statistics for doing so. (On a related note, it bears mention that the electorate also possesses the right to referend improvidently-enacted legislation — another point the Court expressly did not consider in its opinion.)
• The decision fails to appreciate the fundamental inconsistency of the CEQA process with both the mandatory timelines imposed by Elections Code §§ 9212 and 9214, and the nature of the report authorized by § 9214, which encompasses many areas that also is the subject of CEQA review.  Had the Legislature actually intended to require CEQA review, it would undoubtedly have eliminated both the report option and the option of legislative body adoption “as is” — leaving only the election option — because the delay and uncertainty inevitably created by CEQA review would unavoidably infringe on initiative rights of constitutional dimension; that it did not do so, and that it provided for the availability of an abbreviated report addressing, inter alia, environmental issues, indicate it made reasoned choices and did not view CEQA as applicable to the local legislative body’s “adopt as is” option.
• The Court’s short-shrift rejection of Walmart’s argument that the Election Code’s “adopt as is” option saves local governments from incurring the costs of holding unnecessary elections is disappointingly brief and superficial. It seems obvious that the Legislature intended to provide the option to local agencies in order to, among other things, save potentially significant election costs — which the Court also nowhere attempts to quantify — in situations where they perceive a measure has decisive popular support. (As noted above, but not by the Court, there is also always the referendum option in cases where that perception is wrong.) Theorizing (as the Court here did) that elected representatives who, when confronted with a qualified citizens’ initiative petition adopt it “as is” as allowed by law, are presumptively unsuited to determine the “will” of their constituents seems dubious. In fact, one could strongly argue that courts must apply the opposite presumption, i.e., that elected officials have unique competence in such situations to “take the political pulse” of their constituents and electors.

Whether it is ultimately overturned or upheld, the Fifth District’s decision represents a significant judicial expansion of CEQA into a realm where courts had previously expressly declined to extend it. For now (at least in Fifth District jurisdictions), CEQA will operate to impose added costs on local governments dealing with citizens initiatives by entirely foreclosing the “adopt as is” option provided by the Legislature and requiring the holding of special elections in essentially all cases. Supreme Court review of this decision to resolve the split of authority it creates appears virtually assured if a petition for review is filed.

Questions? Please contact Arthur F. Coon of Miller Starr Regalia.  Miller Starr Regalia has had a well-established reputation as a leading real estate law firm for over forty-five years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 3d, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. The firm has expertise in all real property matters, including full-service litigation and dispute resolution services, transactions, acquisitions, dispositions, leasing, construction, management, title insurance, environmental law, and redevelopment and land use. For more information, visit www.msrlegal.com.