Supreme Court Confirms CEQA Exemption for Voter-Sponsored Initiatives

by Stoel Rives LLP
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In Tuolumne Jobs & Small Business Alliance v. Superior Court, No. S207173 (Supreme Court, Aug. 7, 2014), the California Supreme Court ruled that the California Environmental Quality Act (CEQA) does not apply when a lead agency receives a voter initiative petition that qualifies under the Elections Code and the lead agency chooses to adopt the initiative without putting the decision to the voters.  In doing so, the Court reversed the Court of Appeal for the Fifth Appellate District and kick-started speculation as to how wide-reaching the impacts of its decision may be. 

Background

In 2007, Wal-Mart sought to expand an existing Wal-Mart store to a Wal-Mart Supercenter in the City of Sonora and submitted a petition supported by the signatures of more than 20 percent of the city’s 2,489 registered voters.  The City Council then chose not to submit the measure to an election, and instead, adopted the initiative as an ordinance on its own authority under California Elections Code Section 9214(a). Although an EIR was prepared in advance of the adoption of the petition, it was never certified by the City Council.

Under Section 9214[1], when a project applicant submits a voter-sponsored initiative petition to the legislative body of a public agency, signed by at least 15 percent of registered voters, with a request that the ordinance be immediately submitted to a special vote, that body must either: (a) adopt the ordinance, without alteration; (b) immediately order a special election; or (c) order a report pursuant to Elections Code section 9212, which allows for abbreviated environmental review.

In 2004, the Court of Appeal for the Fourth Appellate District concluded that a lead agency’s approval of a voter initiative was exempt from CEQA.  (Native American Sacred Site & Environmental Protection Assn. v. City of San Juan Capistrano (2004) 120 Cal.App.4th 961.)  Notwithstanding that caselaw, the Tuolumne Jobs & Small Business Alliance (Tuolumne Alliance) filed a petition for writ of mandate alleging that the City violated CEQA by adopting the ordinance before conducting a complete CEQA review.  The trial court sustained a demurrer filed by Wal-Mart and the City, and in turn, Tuolumne Alliance sought a writ from the Court of Appeal for the Fifth Appellate District.  The Court of Appeal disagreed with the City of San Juan Capistrano decision, and held that the City’s adoption of the initiative was a discretionary act that required CEQA review.

In light of the conflicting holdings from the two Courts of Appeal, the California Supreme Court granted certiorari on two questions, but its decision focused on this one question:  “(1) Must a city comply with the California Environmental Quality Act [CEQA] (Pub. Resources Code, § 21000 et seq.) before adopting an ordinance enacting a voter initiative pursuant to Elections Code section 9214, subdivision (a)?”

After oral argument before all seven Supreme Court justices (for a summary of the oral argument, see our blog post here), the Court issued its decision, unanimously reversing the lower court’s judgment.

The Supreme Court’s Decision

The Court based its ruling on the plain language and legislative intent behind the Elections Code. The Court found it significant that the initiative procedures make no mention of CEQA review, but more importantly, even if an argument could be made that CEQA review is required for initiative petitions, this interpretation would effectively nullify the application of section 9214(a) and (c). (Slip Op. at pp. 5-8.) Specifically, the court compared time limitations for review under section 9214 against the time limitations for CEQA review and found an inherent conflict because CEQA imposes longer review periods. (Id. at p. 7.) The Supreme Court refused to apply an interpretation that would render statutory language meaningless.

The Court also observed that the limited environmental report permitted under Sections 9212 and 9214(c) would be “duplicative and unnecessary” if CEQA review were also required. (Slip Op., p. 8.) According to the Court, the Legislature, presumed to be aware of all laws in existence, could have expressly required CEQA review if it intended it. (Id. at p. 9.) Moreover, it noted that even if CEQA is a later enacted and a more specific statute, the Court could not reconcile a later statute that would inherently conflict with the Elections Code. The Court afforded great deference to the Legislature’s ability to expressly require CEQA application if it intended to do so.

The Court concluded that the Legislature’s intent behind Section 9214 did not support Tuolumne Alliance’s interpretation, particularly the Assembly Bills that would have required more extensive environmental review for initiative measures, but had failed to pass. This legislative history supported the Court’s determination that the Legislature did not intend to impose limited environmental review for initiatives.

The Court also took pains to state that public policy supports its conclusion because the Legislature has always afforded local governments the power to enact a qualified initiative, without the need for an election. (Slip Op. at p. 13.) Accordingly, even if developers could potentially use the initiative process to avoid CEQA review, the same can be said for the power to thwart development, possibilities which are part of the democratic process. (Id. at p. 14.) Accordingly, said the Court, Tuolumne Alliance’s public policy concerns should be addressed to the Legislature, not to the Court.

Observations about the Tuolumne Decision

It will take time for the full range of implications of the Tuolumne decision to come to light, but some initial observations suggest that it may not be widely employed as an end-run around CEQA as has been debated. First, the City of San Juan Capistrano decision was the only judicial authority on this question from 2004 to 2012, when the Fifth Appellate District’s decision in this case created a split. In that intervening eight year period, we did not observe significant use of Section 9214 to avoid CEQA review.

Second, land use decisions are an intensely local process. Accordingly, whether project advocates and opponents will attempt to have the lead agency approve or reject it directly under Elections Code Section 9214 will be highly variable across the state and will depend entirely on the local political climate.

Third, while the Section 9214 process may exempt a lead agency’s land use decision from CEQA, that exemption may not extend to subsequent discretionary permits that may be required from other responsible agencies required to comply with CEQA themselves.

Finally, Wal-Mart’s employment of the Section 9214 process may be illustrative of its use by other entities in the future. An EIR was prepared for the Wal-Mart Supercenter and only lacked the certification of the City Council when Wal-Mart chose instead to present an initiative petition. While the maneuver served ultimately to be a bar to CEQA litigation, it did not entirely foreclose CEQA analysis.

[1] All future statutory references are to the Elections Code, unless otherwise noted.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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