California Supreme Court Decision on Environmental Law Presents Challenges, Opportunities

The Saint ReportNews, Planning and Zoning, Referendum/initiative, saintblog

By Ramsin Canon

The California Environmental Quality Act (CEQA) does not apply when City or County governments adopt a ballot initiative, according to a California Supreme Court opinion issued on August 7th.  The Court held in Tuolumne Jobs & Small Business Alliance v. Superior Court that a local government may adopt an ordinance proposed by citizens and signed by at least 10% of registered voters without first preparing an Environmental Impact Report (EIR) or otherwise complying with CEQA.

There were in essence two issues presented in the case: first, whether a city must comply with CEQA’s environmental review requirements prior to enacting a voter-sponsored initiative under Elections Code § 9214 (that is, whether CEQA’s exemption for “vote[s] of the people” exempts ballot initiatives adopted by City Councils); and, second, whether enactment of a voter-sponsored initiative under Elections Code § 9214 constitutes a “ministerial” action exempt from CEQA by virtue of a statutory exemption. The appellants/Real Parties in Interest James Grinnell (the petitioner who circulated the ballot initiative) and Walmart Stores, Inc., petitioned for Supreme Court review on the theory that CEQA could not apply to § 9214, as it would limit the initiative power and render parts of the Election Code meaningless, and that the decision to adopt the initiative was in essence ministerial, and so would be exempt from CEQA anyway, under CEQA’s own terms.

The Supreme Court agreed with the arguments Walmart and Grinnell advanced in their briefing. Reasoning from principles of statutory construction and legislative history, the Court held that although CEQA was the later, and more specific, law, parts of Elections Code § 9214 would be rendered meaningless if cities and counties had to abide by CEQA. The Court also considered the fact that the state legislature had rejected bills to amend CEQA to apply it direct-adoption of ballot initiatives. From a policy perspective, the Court saw no risk in allowing ballot initiatives that had not been put to a vote of the people to avoid CEQA:

[V]oters have statutory remedies if direct adoption of an initiative results in the enactment of an undesirable law. Section 9235 stays the effective date of most local ordinances for 30 days. During this 30-day period, voters may circulate a referendum petition. (See § 9237.) If a city receives a “petition protesting the adoption of an ordinance” signed by at least 10 percent of the city’s voters, the effective date is suspended and the city must reconsider the ordinance [or put its repeal to a vote]

What does this mean for project developers? In short, under the California Elections Code, a ballot initiative petition that seeks to amend a general or specific plan, rezone a property, and grant most other land use entitlements can be adopted by a majority of a City Council or Board of Supervisors without putting it to a vote of the people or undergoing the CEQA process.

The process is fairly straightforward. Once a property is identified and a sufficiently specific project proposal is developed, a developer would pursue a two-pronged strategy: first, work with local staff and elected officials to make the project more attractive, and identify and cultivate local allies capable of political action within the community.

A supportive local resident would need only do the following: (1) submit a notice of intent to circulate a petition with the city; (2) post notice in a newspaper of general circulation or equivalent; (3) gather the required number of signatures; (4) submit petitions to the city.

At that point, the city manager, city attorney, or other competent official certifies the petition and presents it to the Council. After whatever notice requirements are locally required for city agendas, the Council would be able to vote either at its next scheduled meeting or at a special session.

There is no real relevant limit to what the proposed initiative could do; it could effect a major rezoning, alter a General Plan, create specific area plans, repeal a smart growth ordinance, create tax incentive zones, etc. The ballot initiative power is considered as constitutionally coordinate with the legislature’s power—and the city council could not even amend or alter the resulting law at any point in the future. Only quasi-judicial acts—like granting a variance—are impermissible subjects of ballot initiatives.           

Generally speaking, the sunk-cost risk to developers of highly-impactful projects will be lower. Where a given market has high profit potential (and considerable tax benefits to a local government), it would be irrational to pursue a strategy other than a community-engagement plan that cultivates support from a sufficient number of local residents. By doing so, developers can by-pass costly and lengthy CEQA review, and write a new regulatory framework into the local general plan, specific plan, or both. Additionally, localities will face the risk of having direly-needed investment dollars simply going to the next town over should they decline to adopt an initiative where the neighboring city council is more friendly.

Perhaps most importantly, developers could gain the certainty of avoiding litigation. Development of impactful projects in California carry an inherent long-term risk because opponents of a project can rely on the insufficiency of CEQA review or clumsy procedural mistakes in the often-confusing CEQA process as grounds for litigation. Even well-planned projects are subject to lengthy CEQA litigation because of the somewhat nebulous standards related to issues of sufficiency. The cloud of litigation that could last years can be waved off with a deft community engagement campaign early in the process.