The statute of limitations in CEQA cases never begins to run, the Third District Court of Appeal held, if the underlying approval is flawed. And so the merits of the challenged action must be heard simply to determine whether the lawsuit is time-barred. Not so, wrote the California Supreme Court on April 1 (no fooling), in a case argued by Briscoe Ivester & Bazel for real party A.G. Spanos Company. Stockton Citizens for Sensible Planning v. City of Stockton, Cal. Sup. Ct. Case No. S159690 (April 1, 2010). In its fourth CEQA decision in as many months, the Court voted unanimously to enforce CEQA’s short, 35-day statute of limitations and bar a group of plaintiffs opposed to the development from challenging the city’s approval of a Wal-Mart Supercenter at the Spanos Park West development in North Stockton.

Originally approved in 1989 as a 1,200-acre mixed-use development straddling the I-5 Freeway, much of the area east of the freeway had been developed through the 1990’s. In 2002, the city approved a supplemental Environmental Impact Report (“EIR”) and an amended Spanos Park West Master Development Plan (“MDP”) for 138-acres lying west of the freeway. The MDP envisioned a new mix of retail, commercial, office, and residential, with zoning that would remain flexible enough to continue to adapt to changing economic conditions. So long as future projects were within the density and intensity of uses already approved, no further environmental review or amendments to the MDP would be required. Although not specifically identified in the amended MDP, Wal-Mart in 2003 began processing its entitlements for a 207,000 square-foot Supercenter on 22 acres within the MDP Area. After submitting building and site plans to the Design Review Board and the city’s Community Development Department, the Department’s Director issued a letter to the project applicant affirming that the Supercenter conformed to the standards in the Spanos Park West MDP. The Director filed a Notice of Exemption with the county clerk describing his conformance determination as a “ministerial” action not subject to CEQA. Typically, the filing of such notices starts the 35-day clock on “[a]ny action or proceeding alleging that a public agency has improperly determined that a project is not subject” to CEQA. (Pub. Res. Code, § 21167(d).)

Some months after the Notice—and well beyond the 35-day limitations period—a group calling itself “Stockton Citizens for Sensible Planning” filed suit challenging the Supercenter under CEQA. The group complained that the Director did not have authority to administratively approve the Wal-Mart Supercenter, and that the Supercenter should have been reviewed by the city council. Defendants A.G. Spanos Company, Wal-Mart, and the city of Stockton argued on demurrer and at trial that the suit was barred by CEQA’s 35-day statute of limitations. The trial court, however, ruled that the Director’s Notice—the only public notice of the project—was invalid. The Notice, the judge reasoned, had failed to trigger the statute of limitations because the Director’s conformance determination was not an “approval” of a project, a procedural predicate to a valid notice. On appeal, the majority agreed, and added that the Director’s letter was not a valid approval by a public agency because the Director did not follow agency procedures in issuing the letter and he did not have authority to approve projects that require environmental review under CEQA. In a sharp dissent, Judge Nicholson complained that the majority had improperly ruled on the merits and effectively nullified the statute of limitations. According to the dissent, the Director’s letter “committed the City to a definite course of action” and was thus “an approval” within the confines of CEQA.

In a rebuke of the lower courts’ reasoning, the California Supreme Court said that it matters not whether the claims may be “meritorious” or “unmeritorious.” So long as the notice is properly filed and complies in form with the statutory requirements, courts cannot look behind the notice. Courts must instead honor CEQA’s short, 35-day limitations period without evaluating the validity or correctness of the underlying approval. The Court emphasized that, although unusually short, the limitations period in CEQA is necessary to “ensure finality and predictability in public land use planning decisions,” and to prevent CEQA challenges “from degenerating into a guerrilla war of attrition by which project opponents wear out project proponents.” The Court ultimately found that the Notice complied with CEQA’s procedural requirements, and that the group’s claims were barred.

In its ruling, the California Supreme Court provided some guidance for applicants and lead agencies that will undoubtedly inform future cases. First, notices must adhere to the statute and guidelines, even minimally so, in order to withstand scrutiny. For example, while notices need not “disclose and explain all the arguable environmental implications, or all the grounds upon which such a challenge to the exemption determination might be based,” notices must not obfuscate the issues. Second, even if an applicant or lead agency properly files the requisite notice, that notice is not itself a complete defense against all future claims. The previously controlling case on this issue, County of Amador v. El Dorado County Water Agency (1999) 76 Cal.App.4th 931, held that notices filed before rather than after project “approval” are invalid. In making its decision, the Third Appellate District necessarily looked behind the notice issued by the water agency and evaluated the character of the underlying action—in that case, authorization to simply begin negotiations. In Stockton Citizens, the California Supreme Court appeared to confine County of Amador to its facts. The Court nonetheless declined to overrule that prior decision. Consequently, County of Amador stands, and notices filed before project approval may still be vulnerable to attack.

Third, while the courts and practitioners have noted that extra-record evidence is generally excluded in CEQA cases (see, e.g., Western States Petroleum Ass’n v. Superior Court (“WSPA”) (1995) 9 Cal.4th 559), the Court signaled in Stockton Citizens that it may be appropriate to consider extra-record evidence when addressing notice and statute of limitation issues. While not necessarily a departure from the Court’s previous statements in WSPA, it is nonetheless a harbinger of evidentiary disputes to come.

The California Supreme Court’s April 1 ruling falls in line with other recent decisions of the Court restoring the procedural limits of CEQA set by the Legislature. (See, e.g., Sunset Sky Ranch Pilots Ass’n v. County of Sacramento (2009) 47 Cal.4th 902 (lead agency’s denial of a use permit fell squarely within one of CEQA’s exemptions, and thus environmental review was not be required); Committee for Green Foothills v. Santa Clara County Board of Supervisors (2010) 48 Cal.4th 32 (action was time-barred because the filing of a valid notice of determination triggers the 30-day statute of limitations regardless of the nature of the alleged violation).) These case decisions will provide added certainty to the development process. Still, project applicants and public lead agencies would do well to adhere strictly to the statutory guidelines to ensure that late-filed suits will forever be barred by the statute of limitations.

Christian Marsh
Briscoe Ivester & Bazel LLP
155 Sansome Street, 7th Floor
San Francisco, CA 94104
Telephone: (415) 402-2700
Fax: (415) 398-5630

Disclaimer: In our Newsletters and Bulletins, Briscoe Ivester & Bazel LLP intends to present general information to the public and does not intend to provide legal advice pertaining to a particular situation.


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