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

Environmental/Land Use Alert (September 15, 2020)

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.

[This alert does not constitute legal advice and no attorney-client relationship is created by viewing or responding to this alert.  Legal counsel should be sought for answers to specific legal questions.]