A city need not conduct an analysis of the potential environmental impacts of a proposed development if it chooses to directly adopt a voter-sponsored initiative for the project.
For developers of projects that are popular but likely to be challenged by a small minority, the California Supreme Court’s decision in Tuolumne Jobs & Small Business Alliance v. Superior Court is good news. A popular project can skip the preparation of an Environmental Impact Report (EIR) or other environmental document pursuant to the California Environmental Quality Act (CEQA). This strategy saves time and money in two ways. First, developers can save months – sometimes years – waiting for a city to prepare technical studies analyzing the environmental impacts of proposed projects. These studies are almost always prepared at the developer’s expense. Second, if there is no CEQA document, there is no CEQA litigation. The cost and delays that result from CEQA litigation are avoided. As a result, project opponents have one less arrow in their quiver to try to delay or kill a project by filing a CEQA lawsuit.
The facts of the case are straightforward. Walmart Stores, Inc. (Walmart) operated a store in the City of Sonora. Walmart sought to expand the store in order to convert it into a “Supercenter,” which would sell groceries and be open 24-hours every day. The city circulated for public comment a draft EIR for the expansion. After a hearing, the city’s planning commission recommended to the City Council that the EIR be certified and the project approved.
Before the matter was heard by the City Council, a citizen served the city with a notice of intent to circulate an initiative petition. The “Walmart Initiative” proposed to adopt a specific plan for the contemplated expansion. The City Council postponed its vote on the EIR and project approval while the initiative petition circulated. The petition was signed by more than 20 percent of the city’s registered voters, qualifying it for the ballot.
Under California law, when a city council receives a voter initiative petition with sufficient signatures, the city is required to do one of the following: (1) immediately adopt the initiative without change; (2) immediately submit it to a special election; or (3) order the preparation of a report within 30 days, which the city council uses to decide whether to adopt the initiative or submit it to a special election. In Tuolumne, the City Council ordered that a report be prepared to examine the initiative’s consistency with previous planning commission approvals for the Walmart expansion. At its next meeting, the City Council considered the report and adopted the proposed initiative as an ordinance without further complying with CEQA.
The Tuolumne Jobs & Small Business Alliance sought a writ of mandate, claiming, among other things, that the City Council violated CEQA by adopting the ordinance without first conducting a complete environmental review. The trial court denied the CEQA claim. The Court of Appeals reversed, holding that when a land use ordinance is proposed in a voter initiative petition, full CEQA review is required if the city council adopts the ordinance rather than submitting it to an election.
The California Supreme Court disagreed. CEQA does not apply to a city council’s action to adopt a voter-sponsored land use initiative. The language and legislative history behind the Elections Code statutes did not support the proposition that the city was required to comply with CEQA before adopting the voter-sponsored measure.
The project opponents argued that “developers could potentially use the initiative process to evade CEQA review, and that direct adoption by a friendly city council could be pursued as a way to avoid even the need for an election.” While that may be true, the Supreme Court was not convinced: “The initiative power may be used to thwart development [too]. . . . The process itself is neutral. The possibility that interested parties may attempt to use initiatives to advance their own aims is part of the democratic process.” What’s more, California’s election laws offer another protection from overreaching by the city: the referendum power. If voters disagree with a city council’s adoption of a voter-sponsored initiative, they can file a referendum petition and a vote to block the enactment of a land use measure.
The Tuolumne case can be an effective tool when both a city council and the public support a popular development project. However, a well-thought-out legal and political strategy is crucial for success. For example, a city must still hold a public hearing before adopting the voter measure, affording the public an opportunity to be heard. How city council and the developer prepare for this hearing is important. Wise city council members will order a report to help develop a record in support of their decision and to show that they have considered countervailing arguments. In addition, environmental protections are still afforded by California’s other environmental laws and regulations. It is crucial to develop a plan for project approvals that must be obtained from other regulatory agencies that may have permitting authority over the proposed project. Indeed, CEQA compliance may still be required in order to obtain permits or approvals from state agencies or other governmental authorities. Developers do not get a “free pass.” Before using the Tuloumne strategy, developers should consult counsel to understand the legal and political risks.