No Common Interest In CEQA Compliance Prior To Project Approval, Holds Fifth District In City of Ceres Decision That Conflicts With Third District’s California Oak Decision And Common Practice

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In a partially-published appellate writ decision filed July 8, 2013, the Fifth District Court of Appeal held that while CEQA’s administrative record statute (Pub. Resources Code, § 21167.6) does not impliedly abrogate the lead agency’s attorney-client privilege (or any other privileges), any privilege is waived as to any documents shared with the project developer’s counsel prior to project approval. (Citizens For Ceres v. The Superior Court of Stanislaus County, City of Ceres, et al. (Real Parties) (5th Dist. 2003) _____ Cal.App.4th _____, Case No. F065690.)  According to the Court, such documents are not protected from disclosure – and consequent inclusion in the administrative record in CEQA cases – by the common interest doctrine (derived from Evid. Code, §§ 912 and 952) “because the interests of a lead agency and a project applicant diverge fundamentally while the project application is pending….” The Court’s decision left to another day the issue whether “administrative draft” documents may properly be excluded from the administrative record (because the trial court had not yet ruled on the issue), but appeared to express skepticism on that score in an unpublished portion of its opinion.

The Fifth District’s decision conflicts with prior precedent and common practice of land use counsel, and promises to have major impacts on both the CEQA review process and the way CEQA cases are litigated, at least in the Fifth District. The Court recognized that its decision conflicted with that of the Third District in California Oak Foundation v. County of Tehama (2009) 174 Cal.App.4th 1217, 1222-1223 which it found “ambiguous,” while also stating that decision the Court “arguably contains a holding contrary to ours.” California Oak had, in pertinent part, rejected an argument that the lead agency’s and project developer’s interests were too divergent to support application of the common interest exception to privilege waiver, with the Third District there stating: “[The appellant/project challenger] takes too crabbed a view of [the lead agency/County’s] purpose in considering the advice of the outside [CEQA] counsel. [¶] The purpose of achieving compliance with the CEQA law, reasonably viewed, entails a further purpose. It includes producing an EIR that will withstand a legal challenge for noncompliance. Thus, disclosing the advice to a codefendant in the subsequent joint endeavor to defend the EIR in litigation can reasonably be said to constitute ‘involvement of third persons to whom disclosure is reasonably necessary to further the purpose of the [original] legal consultation.’” (California Oak, supra, 174 Cal.App.4th at 1222-1223, citation omitted, last bracket in orig.)

The Fifth District takes a much different view than the Third District of the respective parties’ interests in the CEQA review process, viewing the lead agency’s and project proponent’s interests as fundamentally conflicting up to the point of project approval, and only thereafter becoming aligned in the common interest of a joint defense of the approvals. It reasons: “It is important to be clear at the outset that the common interest, if there is any, is in the creation of a legally defensible environmental document that supports the applicant’s proposal. There is no point in asking, as the city and developer in this case would have it, whether the applicant and agency have a common interest simply in the development of a legally defensible environmental document. This is because the developer has no interest in the development of an environmental document that does not support the developer’s proposal.”

Whether the Fifth District’s rather cynical across-the-board view of project developers’ motives and rather odd view of EIRs as advocacy – rather then informational – documents will be subjected to and survive further legal scrutiny remains to be seen. Like an earlier Fifth District decision in which review was granted by the California Supreme Court (see Supreme Court Will Review CEQA Decision From Fifth District In Wal-Mart Citizen Initiative Law, by Arthur F. Coon, posted 2/15/13), the City of Ceres case would appear to be an ideal candidate for depublication or a grant of review to resolve the conflict. In any event, if it stands, the Fifth District’s decision will – at least in that district – require fundamental changes in a previously common practice, i.e., land use counsel for lead agencies and project developers working together through privileged communications made in furtherance of their common interest in producing legally-adequate CEQA documents. It is safe to predict that the reaction to this decision by the CEQA/land use/municipal law bars will be swift and strong. Stay tuned….