POWER: A Cautionary Tale for Local Agencies on Categorical Classification of Permit Decisions

A recent California Supreme Court opinion in Protecting Our Water and Environmental Resources v. County of Stanislaus (POWER), issued August 27, 2020, is a cautionary tale for local agencies categorically classifying an entire group of permits as ministerial.  The case involved issuance of well construction permits by Stanislaus County (County) pursuant to an ordinance that incorporated State well construction standards and categorically classified a subset of those projects as ministerial.  Plaintiffs challenged this “pattern of practice,” alleging the well permit decisions pursuant to the ordinance were discretionary projects that required CEQA compliance.  Plaintiffs claimed that the ordinance allowed the County to deny the permit or to require modifications, which involved the exercise of subjective judgment and thereby rendered the action discretionary.  The trial court found all well permit issuances under the ordinance to be ministerial, ruling for the County, but the court of appeal reversed, holding permit decisions under one of the four State standards to be discretionary.  On review, the Supreme Court split the proverbial baby – it held that while classifying all permit issuances as ministerial violated CEQA, plaintiffs did not show that all well permit decisions were discretionary.  

As background, CEQA requires lead agencies to conduct environmental review for discretionary projects while exempting ministerial projects from such requirement.  Courts apply a “functional test” to refine the distinction between the two kinds of projects, focusing on the scope of an agency’s discretion.   A project is discretionary when an agency is allowed or required to exercise judgment or deliberation as to the project’s environmental impacts and can require modifications to respond to any concerns that may be identified by environmental review.  Ministerial projects, on the other hand, involve little to no personal judgment by the public official as to the project, and the permit applicant may compel approval by the agency if the project satisfies applicable statutes, ordinances, or regulations.  Agencies classify ministerial projects on either a categorical (i.e., the agency’s conferred authority is solely ministerial) or individual, case-by-case basis.  

In this case, the Court determined that the plain language of one of the four State well construction standards incorporated into the County’s ordinance – Standard 8.A – authorized the County to exercise discretion when deciding whether to issue the permit.  Specifically, Standard 8.A provides that adequate horizontal distance depends on many variables and “[n]o set separation distance is adequate and reasonable for all conditions.”  For the County’s determination for each well, it is required to conduct a detailed evaluation of existing and future site conditions.  The Court rejected the County’s argument that the well permit regulatory process as a whole did not allow the County to exercise its judgment and deliberation as contrary to CEQA, which requires environmental review of projects that contain elements of both ministerial and discretionary actions.  Likewise, the Court disagreed with the County that permit decisions were ministerial because the County’s discretion under Standard 8.A was limited – the County conceded it had authority under some circumstances to deny the permit or require modifications in well location.  

The Court also addressed the County’s argument that its interpretation of its own laws should be afforded deference.  Legal interpretation of State well construction standards, incorporated into the County’s ordinance, and therefore the determination of the scope and meaning of this ordinance was the job for the Court.  The County did not establish that the “situational” factors under Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1 warranted the Court’s adoption of the County’s interpretation.  

While the Court rejected the County’s position that well permit decisions pursuant to the ordinance were always ministerial, it emphasized that “[p]ermits issued under an ordinance are not necessarily discretionary simply because the ordinance contains some discretionary provisions.”  The ordinance in question only requires the County to apply Standard 8.A (the standard that conferred discretion) when there is a contamination source near a proposed well.  If no contamination source is identified, no discretion is involved and, as a result, not all well construction permits are discretionary.  The opinion concluded with the Court’s rejection of the County’s argument of increased costs and delays in permit issuance – an individual permit may still be classified as ministerial, and those classified as discretionary may not require full environmental review.  

In the POWER opinion, the Court issued thorough and detailed guidance to lead agencies.  Such agencies should re-evaluate their application of existing ordinances categorically classifying an entire group of permits as ministerial for compliance with POWER.  They should also carefully consider POWER when enacting and applying future ordinances with categorical permit classifications.  

A New Dawn? CEQ Finalizes Updates to NEPA Regulations

On July 15, 2020, the Council on Environmental Quality (CEQ) announced its final rule (Rule) to “comprehensively update[], modernize[], and clarif[y],” for the first time in more than 40 years, the regulations that implement the National Environmental Policy Act (NEPA).[1]  NEPA, at its most basic, is one component of our national charter for the protection of the environment.  NEPA is a procedural statute that requires federal agencies to assess the potential environmental effects of proposed federal actions.[2]  The purpose of the Rule is to “codif[y] Supreme Court and other case law, update[] the regulations to reflect current technologies and agency practices, eliminate[] obsolete provisions, and improve[] the format and readability of the regulations.”[3]  The Rule was issued following CEQ’s investigation of the effectiveness and efficiency of the environmental review process and current NEPA regulations, as well as a public consultation process.[4]  The Rule has been, and continues to be, the subject of controversy.  Below, we summarize the key revisions to the Rule and their implications.

Process:  Timeline, Page Limits, Authorship and Public Engagement.  A number of revisions to the regulations are geared toward expediting the NEPA process.  The Rule presumptively limits the time for the preparation of environmental documents – two years for an Environmental Impact Statement and one year for an Environmental Assessment – and sets presumptive page limits for both documents.[5]  The Rule expands the role of the project applicant by eliminating restrictions on who can prepare environmental documents, while retaining the requirement that lead agencies independently review and evaluate the analysis.[6]  The Rule also requires agencies to solicit public input earlier in the process to facilitate public participation, and promotes cooperation and coordination among the agencies involved in the process.[7]

Definition of “Environmental Effect.”  Arguably, the most controversial substantive revision presented in the Rule is CEQ’s refinement of the definition of “environmental effect.”  CEQ struck references to direct, indirect, and cumulative effects and clarified, consistent with the U.S. Supreme Court’s precedent, that – to be analyzed – “effects must be reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives; a ‘but for’ causal relationship is insufficient to make an agency responsible for a particular effect under NEPA.”[8]  In response to comments that the elimination of the “cumulative effect” definition would preclude consideration of impacts of a proposed action on climate change, CEQ explains that the Rule does not preclude such consideration and the analysis of the impact on climate change will depend on specific circumstances of the proposed action.[9]  The argument against this revision is that, while the regulations do not preclude climate change analysis, they do not require it, which arguably undermines the environmental analysis.

Definition of “Major Federal Action.”  Among other noteworthy revisions is the Rule’s updated definition of what constitutes a “major federal action.”  To give meaning to all words in the NEPA statute consistent with principles of statutory interpretation, CEQ revised the regulations to apply to “major Federal actions significantly affecting the quality of the human environment” (42 U.S.C. section 4332(2)(C)), rather than to “non-major Federal actions that simply have some degree of Federal involvement.”[10]  Opponents of the Rule argue that this revision will erroneously eliminate certain projects, such as pipelines, bridges, and roads, from review under NEPA.

Categorical Exclusions.  In the Rule, CEQ also addressed categorical exclusions, more than 2,000 of which have been developed by federal agencies and are applied to 100,000 federal actions each year.  The Rule has been modified to provide that even if an “extraordinary circumstance” is present that would otherwise preclude use of a categorical exclusion, the agency may nevertheless categorically exclude the proposed action if it determines that there are “circumstances that lessen the impacts” or other conditions sufficient to avoid significant effects. The Rule also allows an agency to adopt another agency’s determination that a categorical exclusion applies when the proposed action is substantially the same.[11]

Alternatives Analysis.  With respect to agencies’ consideration of alternatives, the Rule continues to require agencies to analyze reasonable alternatives that would meet the need of the proposed action and would avoid impacts or mitigate them to less than significant.  However, CEQ limits reasonable alternatives to those that are “technically and economically feasible and meet[ing] the purpose and need of the proposed action” and requires that each alternative considers the goals of the applicant when the action involves a non-federal entity.[12]

Takeaways.  The supporters of the Rule – primarily industry stakeholders – praise the revisions for streamlining the NEPA process and making it more efficient, flexible, and less costly.  Similarly, President Trump’s Administration describes the Rule as necessary to overhaul outdated and cumbersome environmental regulations, and as a pathway to economic prosperity.  Opponents, on the other hand, sound the alarm on the Rule’s negative implications, arguing that it would worsen global greenhouse gas emissions, make infrastructure less safe, and preclude public input on certain projects.

The Rule is set to go into effect on September 14, 2020, unless challenged in court or altered by Congress.  Federal agencies and project applicants should exercise caution in applying the Rule until any legal challenges are resolved, and the time for Congress’ action to reverse it expires.


[1] The NEPA regulations were first issued in 1978; for additional related information, see https://ceq.doe.gov/laws-regulations/regulations.html.

[2] The full text of CEQ’s Rule, titled an “Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act,” was published in the Federal Register on July 16, 2020, and is available at: https://www.govinfo.gov/content/pkg/FR-2020-07-16/pdf/2020-15179.pdf.

[3] CEQ Fact Sheet: Modernizing CEQ’s NEPA Regulations, available at: https://ceq.doe.gov/docs/laws-regulations/ceq-final-rule-fact-sheet-2020-07-15.pdf.

[4] See https://ceq.doe.gov/laws-regulations/regulations.html; see also the Rule, pp. 9-10 and 21-24 at: https://www.whitehouse.gov/wp-content/uploads/2020/01/CEQ-NEPA-Regulations-Final-rule-Pre-publication-Version.pdf.

[5] Please see the Rule, pp. 82, 93 at: https://www.whitehouse.gov/wp-content/uploads/2020/01/CEQ-NEPA-Regulations-Final-rule-Pre-publication-Version.pdf.

[6] Id. at pp. 135-137.

[7] Id. at pp. 40-42, 137-139.

[8] Id. at pp. 160-166.

[9] Id. at pp. 165-166.

[10] Id. at pp. 169-172.

[11] Id. at pp. 41-42, 75-78.

[12] Id. at p. 192.

An Unacceptable Probability of Actual Bias: When Decisionmakers Cross the Line in Administrative Appeals

The recently published opinion from the Third District Court of Appeal in Petrovich Development Company, LLC v. City of Sacramento (certified for publication on May 8, 2020) examines when city councilmembers impermissibly cross the line from neutral adjudicators to biased advocates when acting in a quasi-judicial role during their consideration of an appeal from an administrative body.

The case concerned an administrative appeal to the Sacramento City Council of the Planning Commission’s 8-3 decision to grant a conditional use permit for a gas station to Petrovich Development Company, LLC (Petrovich). Following an administrative appeal by two neighbors and the Sierra Curtis Neighborhood Association, the Planning Commission’s approval was overturned by the City Council with a 7-2 vote, with Councilmember Schenirer advocating against the gas station and making the motion to deny the requested conditional use permit. Petrovich sued, alleging among other things that Councilmember Schenirer demonstrated an “unacceptable probability of actual bias.” The trial court concurred that Schenirer was biased, and the appeal that culminated in the decision summarized here followed.

On appeal, the Court agreed Councilmember Schenirer demonstrated impermissible bias. While councilmembers are normally “policymakers and voices of their constituents,” when sitting in their quasi-adjudicatory capacity deciding an administrative appeal, councilmembers must be “neutral and unbiased,” meaning no conflict of interest, no prejudging of the facts, and freedom of prejudice against or in favor of any party.

Upon review of Schenirer’s conduct, the Court found the following actions did not demonstrate impermissible bias:

  • Membership in the Sierra Curtis Neighborhood Association.
  • Schenirer’s statement in a letter that the gas station would not fit in with the development as originally proposed, because the siting of the gas station was a matter of community concern and public importance.
  • The fact that Schenirer lived in a residential neighborhood adjacent to the proposed gas station as “[t]here was no evidence that Councilmember Schenirer’s particular residence would be impacted by the gas station more than any other in the neighborhood.”

However, the Court did find impermissible bias “in the run up to the City Council hearing and vote, [where] Councilmember Schenirer crossed the line into advocacy against the project.” Based on a number of emails and text messages, the Court specifically cited the following as evidence of impermissible bias:

  • There was evidence Schenirer was “counting—if not securing—votes” against the gas station and updating the Mayor to that effect. Schenirer had spoken to some of his colleagues about voting against the gas station, and had communicated to the Mayor’s advisor that he was confident he had a majority vote to deny the project prior to the hearing—which message the advisor conveyed to the Mayor by email.
  • Schenirer had prepared and circulated “talking points” to the Mayor and other councilmembers to assist in advocating against the gas station. The talking points were used by the Mayor at the hearing to carry the motion to deny the permit.
  • There was evidence Schenirer “coached” and assisted the opponents in how to prosecute the appeal. He texted one of the leaders to schedule a meeting to talk through the project prior to the hearing. He also offered up suggestions for meetings and prehearing presentations to other councilmembers. The “talking points” Schenirer prepared ended up in opponents’ opposition letters and emails to the gas station.
  • Schenirer organized the opposition and sequencing at the hearing. More specifically, Schenirer was the member to make the motion to reverse the Planning Commission decision in a planned sequence whereby Schenirer made the motion, which was then seconded by another councilmember, followed by talking points for denial.

For these reasons, the Court of Appeal held Schenirer acted as an advocate rather than a neutral and impartial decisionmaker. The proper course was for Schenirer to recuse himself from voting. Because he did not, Petrovich did not receive a fair hearing. The order invalidating the City’s decision and ordering a new hearing on appeal was affirmed.