Voter-Approved Measure That Establishes A Competitive Bidding Process For Future Waste Service Contracts Is Not A “Project” And Is Not Subject To CEQA Review

A city council’s decision to place a measure on the ballot to establish competitive bidding for future trash service contracts did not require prior environmental review pursuant to the California Environmental Quality Act (“CEQA”).  (Chung v. City of Monterey Park (--- Cal.Rptr.3d ----, Cal.App. 2 Dist., October 23, 2012).

Facts

The City Council for the City of Monterey Park (“City”) directed its staff on November 3, 2010, to prepare a ballot measure requiring City to seek competitive bids for trash service when the current contract with Athens Services (“Athens”) expires in 2017.  The measure would additionally require City to competitively bid for trash services every five years.  On November 17, 2010, when the City Council met to address the issue further, Athens stated its opposition to the ballot measure asserting that the measure required environmental review because it is a “project” within the meaning of CEQA. 

The City Council unanimously voted to submit the measure, Measure BB, to the voters.  Athens submitted a letter to the City in which it argued that Measure BB was in violation of CEQA.  Although Measure BB would require the City Council to award the residential solid waste franchise to a single franchisee, it would allow the City Council at its discretion to award the commercial solid waste franchise to up to three franchisees.  Athens asserted that because of this provision, Measure BB raised concerns about noise pollution, air quality, and road damage from the increase in the size of the solid waste contractor fleet. 

City voters approved Measure BB on March 8, 2011.  Over 71 percent of the voters voted in favor of establishing a competitive bidding process.  Wing Y. Chung (“Chung”) was a signatory to the ballot arguments against Measure BB.  Prior to the election, Chung filed a petition for writ of mandate and complaint for declaratory relief alleging that Measure BB is a “project” subject to CEQA and City violated CEQA when it failed to make any decision regarding whether Measure BB would have a significant impact on the environment, to consider any alternatives or mitigating measures, or to conduct the required informed decision making.  The trial court found in favor of the City.   

Decision

The issue before the court of appeal was whether the decision of the City Council to place Measure BB on the ballot constitutes a “project” pursuant to the terms of CEQA.  The court of appeal held that the City Council’s decision was not a “project.” 

The court found that basic CEQA principles provide that the definition of a “project” does not include governmental fiscal activities that do not involve a commitment to a specific project.  A project is defined by CEQA as “an activity which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.”  CEQA Guidelines provide that “a project does not include the ‘creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.’” 

The court concluded that the adoption of competitive bidding for municipal contracts amounts to a fiscal activity that promotes competition and eliminates favoritism, corruption, and fraud in the awarding of public contracts.  The court opined that “the implementation of competitive bidding is a fiscal activity which conserves scarce revenues and promotes transparency in government.”  Measure BB established a competitive bidding process that will be used for future waste service contracts.  The manner of awarding the contracts constitutes a fiscal activity that does not involve any commitment to a specific project.  Therefore, Measure BB does not constitute a “project” within the meaning of that term under CEQA. 

City has not committed itself to any particular course of action.  Measure BB does not require City to select more than one service provider and it also does not prohibit City from itself providing the solid waste services.  The court of appeal concluded that the trial court properly found that Measure BB is not a “project” that is subject to CEQA review. 

Questions

If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Jeffrey L. Massey, Daniel J. O’Hanlon, Leslie Z. Walker | 916.321.4500

 

Published In: Administrative Agency Updates, Elections & Politics Updates, Energy & Utilities Updates, Environmental Updates, Government Contracting Updates

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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