California Supreme Court: Adoption of Marijuana Dispensary Ordinance Constitutes a Project Under CEQA

Environmental/Land Use Alert (September 2019)

On August 19, 2019, the California Supreme Court issued its decision in Union of Medical Marijuana Patients, Inc. v. City of San Diego, Case No. S238563, reversing the Court of Appeal and concluding the City of San Diego’s adoption of a zoning ordinance relating to marijuana dispensaries constituted a project subject to environmental review under the California Environmental Quality Act (CEQA).

In 2014, the City of San Diego adopted an ordinance limiting the number of medical marijuana dispensaries, specifying where the dispensaries could be located, and imposing conditions on their operation. The City did not conduct CEQA-based environmental review prior to the ordinance’s enactment because the City determined the ordinance was not a project as defined under CEQA and thus was not subject to review.

The Union of Medical Marijuana Patients (UMMP) challenged the City’s decision not to conduct environmental review under CEQA. First, UMMP argued the ordinance should be deemed a project under Public Resources Code section 21065, which defines a “project” for CEQA purposes as an activity undertaken or funded by a public agency that may cause either a direct or a reasonably foreseeable indirect physical change in the environment. Second, UMMP argued the ordinance also should be considered a project as a matter of law under Public Resources Code section 21080, which provides that CEQA applies to “discretionary projects proposed to be carried out or approved by public agencies, including, but not limited to, the enactment and amendment of zoning ordinances.” UMMP argued section 21080 conclusively classifies zoning ordinance amendments as projects subject to CEQA environmental review.

The Court of Appeal rejected UMMP’s arguments, finding the ordinance not to be a project under section 21065 because there were no direct environmental changes or foreseeable indirect changes. The Court of Appeal also disagreed that section 21080 per se designates a zoning ordinance amendment as a project subject to CEQA review. UMMP appealed to the California Supreme Court.

On review, and to resolve competing understandings of section 21080, the California Supreme Court asked: Does section 21080 conclusively declare that an amendment of a zoning ordinance is a CEQA project?

Answer: No.

According to the Supreme Court, section 21080 simply lists activities, like the amendment of a zoning ordinance, that are examples of discretionary activities carried out by public agencies. This does not mean the activity is a “project” or that the activity necessarily causes direct or foreseeable indirect environmental changes. Therefore, the City’s amendment of the ordinance was not a project as a matter of law under section 21080.

The Supreme Court then considered whether the ordinance has a direct or foreseeable indirect change on the environment, thus qualifying as a project under section 21065. The Supreme Court concluded there were no direct changes on the environment, but there were foreseeable indirect changes. The Supreme Court explained that an activity causes foreseeable indirect changes on the environment if the activity is “capable, at least in theory” (emphasis added) of causing such a change.

In determining this theoretical possibility, the Supreme Court stated that “a proposed activity is a CEQA project if, by its general nature, the activity is capable of causing a direct or reasonably foreseeable indirect change in the environment. This determination is made without considering whether, under the specific circumstances in which the proposed activity will be carried out, these potential effects will actually occur.” Stated somewhat differently, the Supreme Court held that the “likely actual impact of an activity is not at issue in determining its status as a project” (emphasis in original), but rather considered during later tiers (i.e., eligibility for a CEQA exemption and actual environmental review) of the CEQA process. Applying these standards, the Supreme Court concluded the ordinance was likely to cause foreseeable environmental changes, such as construction and vehicular traffic. Thus, the City erred in determining the ordinance was not a project under CEQA.

[This case 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.]