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City Adoption of Voter Initiative Qualifying For Ballot Is Subject to CEQA

It is well settled that projects placed on the ballot by voter initiative are exempt from the requirements of the California Environmental Quality Act (“CEQA”).  In Tuolumne Jobs and Small Business Alliance v. Superior Court (“TJSBA”),the Fifth District Court of Appeal held that CEQA’s ballot initiative exemption does not apply when lead agencies directly adopt a project after it qualifies for the ballot by voter initiative, rather than placing the project on the ballot for voter approval. 

Election Code Section 9214 allows cities to directly adopt voter initiatives that qualify for the ballot without submitting the initiative to the voters.  Under this provision, the City of Sonora approved the expansion of a Wal-Mart after it qualified for the ballot.  The City determined that the project was exempt under CEQA as a voter-sponsored initiative.  The City relied on Native American Sacred Site & Environmental Protection Assn. v. City of San Juan Capistrano (2004) 120 Cal.App.4th 961 (“Native American Sacred Site”), where the Fourth District upheld San Juan Capistrano’s determination that a project approval under Elections Code Section 9214 was exempt from CEQA.  The TJSBA court squarely disagrees with Native American Sacred Site and holds that “[e]nvironmental review can be avoided when the voters choose to bypass it, not when the lead agency chooses to bypass the voters.”  TJSBA sets up a direct conflict between the Fourth and Fifth appellate districts, which makes this case a strong candidate for Supreme Court review.     

The project at issue in TJSBA is the expansion of a Wal-Mart into a Wal-Mart Supercenter by increasing building size, adding grocery sales, and increasing store hours to 24 hours a day, seven days a week.  The City and the applicant prepared an Environmental Impact Report (“EIR”).  The Planning Commission held a public hearing and recommended approval of the project to the City Council.  Prior to City Council action on the item, the applicant served the City with a notice of intent to circulate an initiative petition.  The initiative qualified for the ballot after the applicant obtained signatures in support of the petition from more than 15 percent of the City’s registered voters.  Once the initiative qualified for the ballot, the City Council had two choices: approve the project exactly as it is described in the ballot initiative, or place it on the ballot for voter approval.  The Council chose to approve the project and claimed CEQA’s exemption for ballot initiatives. 

Petitioner’s sought a writ of mandate alleging CEQA’s voter-initiative exemption does not apply when the lead agency approves the project without submitting it to voters.  The trial court ruled the City adoption of the voter initiative was exempt from CEQA.  Petitioner appealed the decision.

In reaching its decision, the appellate court looked at rationale behind CEQA’s voter-initiative exemption.  In Friends of Sierra Madre v. City of Sierra Madre (2001) 25 Cal.4th 165 (“Sierra Madre”), the California Supreme Court dealt with application of CEQA to ballot initiatives.  The rule that emerged from Sierra Madre, and subsequent amendment of CEQA Guidelines Section 15378(b), was that ballot measures initiated by voters are exempt from CEQA.  The court held that the City’s act of placing the initiative on the ballot is ministerial, and thus exempt from CEQA.  The court also held that imposing CEQA requirements on voter-initiated ballot measures would be an impermissible burden on the people’s power to legislate by initiative.  Sierra Madre also held, however, that ballot measures initiated by public agencies are not ministerial and therefore not exempt from CEQA. 

Sierra Madre did not directly address whether public agency approval of a voter-initiated ballot measure, without putting the measure on the ballot, is exempt from CEQA.  That question was addressed in a 2004 court decision – Native American Sacred Site & Environmental Protection Assn. v. City of San Juan Capistrano (2004) 120 Cal.App.4th 961 .  In that case, the court held the such City approvals are ministerial actions exempt from CEQA because the lead agency has no discretion to modify the project under Elections Code section 9214. 

Applying the principles discussed in Sierra Madre, the TJSBA court disagreed with Native American Sacred Site.  The court held the agency decision to approve the ballot measure without putting it on the ballot is a discretionary determination, and therefore not exempt from CEQA. While the agency lacks the discretion to modify the project, the court held the agency has discretion regarding whether to approve the project itself, or place it on the ballot.  The court also held that requiring CEQA compliance in these circumstances does not frustrate the people’s power to legislate by initiative because the alternative is simply to put the project on the ballot.  The court held that the CEQA exemption for voter initiatives should only apply when a majority of the electorate votes to bypass CEQA in approving a project.  The court recognized that, due to the time limits in the Election Code, its holding essentially means that all voter-initiatives that may have a potential impact on the environment must go to the voters.  Lead agencies simply will not be able to utilize the direct approval option because they will not have time to conduct environmental review.  The court held that while imperfect, its solution is the better one “because it avoids the anomalous consequence of allowing a small fraction of a local electorate, combined with a majority of a city council, to nullify a state law [CEQA] under conditions in which the local electorate as a whole has not been given a voice.” 

TJSBAand Native American Sacred Site are in direct conflict, leaving lead agencies with yet another area of uncertainty in CEQA.  We will see if the Supreme Court takes up the case to resolve the conflict.  In the meantime, an agency’s decision to adopt a voter-qualified initiative without complying with CEQA is subject to challenge under the ruling in TJSBA.