September 26, 2021

Volume XI, Number 269

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September 23, 2021

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California Supreme Courts Holds Categorical Classification of Well Permits As Exclusively “Ministerial” Does Not Hold Water

After a nearly two-year wait, in Protecting Our Water and Environmental Resources v. County of Stanislaus (2020) __ Cal.5th ____ (POWER), the California Supreme Court unanimously rejected the County of Stanislaus’s (County) bright-line categorization that all groundwater well construction permits are ministerial, and therefore not subject to the California Environmental Quality Act (CEQA).  In an interesting twist, the Supreme Court also rejected the petitioner’s alternative “all or nothing” position that, if the permits are not ministerial, they must be discretionary and conditioned on CEQA compliance.  Instead, the Supreme Court held the decision of whether each permit is ministerial or discretionary hinges on the specific language of the governing ordinance and regulatory controls.[1]

For those in urban settings, it may seem that a determination related to well permits has limited application.  However, this decision has been long awaited throughout the State, particularly in jurisdictions with thriving agricultural and energy generation industries, and has the potential to upset the long-standing practice in many areas that administer similar well programs.  Additionally, POWER has broad statewide application to any permitting scheme categorized as ministerial, potentially ending the practice of treating a class of permits as CEQA-exempt and, instead, forcing a case-by-case analysis.[2]  Such a requirement could introduce significant uncertainty and additional burdens on local governments that historically relied on the ministerial exemption from CEQA for decades worth of permit decisions.  Applicants (and lead agencies) should expect new delays, expenses and opposition when applying for permits subject to a blanket “ministerial” classification.

Background

Like many local governments throughout the state, the County implemented an express ordinance related to the issuance of well construction permits.  Part of this ordinance – County Code Chapter 9.36 – incorporates well standards set forth in a State Department of Water Resources Bulletin No. 74, including Standard 8.A.  Standard 8.A provides specific standard setback distances for proposed wells located near sources of potential contamination.  However, these “standard” distances are not intended to be rigidly applied.  Instead, an agency retains discretion to alter the setback distances based on a myriad of variables.  Additionally, via the ordinance, the County is authorized to exercise “judgment or deliberation when [it] decides to approve or disapprove” a well construction application.

In 2014, petitioner brought suit against the County’s “pattern and practice” of issuing well permits which, it contended, was discretionary and without proper CEQA review.  Specifically, petitioner alleged Bulletin No. 74 conferred discretion upon the County to deny or condition a permit application based on environmental impacts.  After the trial court disagreed, finding the ordinance only required review of technical standards, the Fifth District Court of Appeal overturned the trial court, finding Standard 8.A necessitates the County’s subjective judgment.[3]

However, just two months prior, the Second District Court of Appeal reached a contrary conclusion in California Water Impact Network v. County of San Luis Obispo (2018) 25 Cal.App.5th 666 (CWIN).  Consistent with earlier cases, the court in CWIN held that the County of San Luis Obispo’s well-related permitting scheme was ministerial and exempt from CEQA.  The Second District found that this local ordinance, which incorporates State standards, requires assessment of only technical criteria and does not require discretion that will “shape the project” in a way that warrants CEQA review.

The Supreme Court then granted review of POWER, recognizing the conflict created by the appellate courts, but tabled any action on the CWIN and Coston decisions pending resolution of POWER.

Supreme Court Decision

Petitioner maintained its argument that, because Standard 8.A authorizes the County to exercise discretion, CEQA should apply to every well permit application.  Conversely, the County argued its well regulatory scheme is ministerial because it is only permitted to mitigate any potential effects related to location adjustments.  According to the County, this authorization does not rise to a level that triggers a meaningful analysis of CEQA-related concerns.  The Court’s unanimous decision rejected both positions, holding that a wholesale designation of “ministerial” or “discretionary” is inconsistent with the implementation of a regulatory scheme in which only some permit decisions require discretion – such as County Code Chapter 9.36.

As recognized in the POWER opinion, the CEQA Guidelines encourage local governments and public agencies to identify which actions can be categorically deemed ministerial (i.e., building permits).  Like the County, many local governments determined well-related permits were not discretionary and were, therefore, exempt from CEQA because the local decisionmaker could not shape the proposed action in a way that responded to environmental concerns.[4]  However, here, the Court found that the County’s reliance on “Standard 8.4 gives County sufficient authority, at least in some cases,” to make the issuance of well permits discretionary.

Because there was no particular permit approval at issue, the Supreme Court’s decision was more general, finding that limitations on an agency’s ability to mitigate environmental impacts does not render environmental review meaningless where at least some authority exists, such as the ability to relocate a project to avoid sensitive circumstances.  Because this language gave the County discretion to identify environmental issues and to condition the wells’ construction to avoid those issues, the County’s issuance of well permits was, in these circumstances, discretionary.  In this instance, the Court denied deference to the County’s legal interpretation of its governing authority.

The Court also found that the approvals anticipated under the ordinance are not de facto discretionary – “[p]ermits issued under an ordinance are not necessarily discretionary simply because the ordinance contains some discretionary provisions.”  Thus, the County’s well permit applications may be subject to ministerial review “[i]f the circumstances of a particular project do not require the exercise of independent judgment,” – or, more particularly, when there is no known contamination source near a proposed well.  Despite not awarding deference previously, the Court stated that any factual determination by the County that a particular decision is ministerial would be “entitled to great weight.”

It is worth noting that, in rejecting County’s argument that the decision reached by the Court would “result in increased costs and delays,” the Court stated: “But CEQA cannot be read to authorize the categorical mischaracterization of well construction permits simply for the sake of alacrity and economy.”


FOOTNOTES

[1]  “Whether County’s issuance of the challenged permits is discretionary or ministerial depends on the circumstances.  As a result, County may not categorically classify all these projects as ministerial.  For the same reason, plaintiffs have not demonstrated that all issuance decisions are properly designated as discretionary.”

[2]  “In summary, when an ordinance contains standards which, if applicable, give an agency the required degree of independent judgment, the agency may not categorically classify the issuance of permits as ministerial.  It may classify a particular permit as ministerial (CEQA Guidelines, § 15268, subd. (a)), and develop a record supporting that conclusion.”

[3]  Coincidentally, on the day of the POWER appellate decision, the Fifth District issued a nearly identical opinion in Coston v. Stanislaus County (2018 WL 4042821), finding Standard 8.A renders the permit approval process discretionary, even if the individual permit in question does not require a spacing determination.

[4]  As explained by the Supreme Court (citations and punctuation omitted): “If the agency is empowered to disapprove or condition approval of a project based on environmental concerns that might be uncovered by CEQA review, the project is discretionary.  In a ministerial decision, the laws, regulations, and other standards are policy decisions made by the enactors.  The agency’s role is to apply those standards as adopted.  If an agency refuses to approve a ministerial project, an affected party may seek a writ of mandate, ordering that approval be granted because the enacted standards have been satisfied.  For discretionary decisions, on the other hand, the policy makers have empowered the agency to make individualized judgments in light of the particular circumstances involved.”

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume X, Number 248
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About this Author

Whitney Hodges, Attorney, Sheppard Mullin, Real Estate, Natural Resources
Associate

Whitney Hodges is an associate in the Real Estate, Land Use and Natural Resources practice group in the firm's San Diego office.  She also serves on the firm's Diversity and Inclusion Committee, the Recruiting Committee, and the Latin Business Team.

Areas of Practice

Ms. Hodges's practice focuses on general business litigation with an emphasis on land use litigation, real estate litigation, business torts/contracts, intellectual property, and litigation involving internet usage.  Ms. Hodges handles all aspects of litigation, including administrative, trial...

714-424-8257
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