On August 19, 2019, the California Supreme Court issued a decision in Union of Medical Marijuana Patients, Inc. v. City of San Diego holding that while zoning amendments are not, as a matter of law, always a project under the California Environmental Quality Act (“CEQA”), the City of San Diego’s ordinance regulating the siting and operations of certain cannabis-related activity was potentially subject to CEQA review under Muzzy Ranch Co. v. Solano County Airport Land Use Commission (“Muzzy Ranch”). Concluding the Court of Appeal misapplied the Muzzy Ranch test for determining whether a proposed activity has the potential to cause an environmental change as described in Public Resources Code § 21065, the Court remanded the case for further consideration.
San Diego Ordinance Regulating Cannabis Dispensaries
In 2014, the City of San Diego (“City”) enacted Ordinance No. O-20356 (“Ordinance”) authorizing medical cannabis dispensaries to be established within the City and imposed certain restrictions on the siting and operation of the dispensaries by amending the City’s zoning code.
Under the Ordinance, dispensaries were restricted to two of six types of commercial zones, two of four types of industrial zones, and certain planned districts. Dispensaries were prohibited in residential and agricultural zones, within 1,000 feet of parks and schools, and within 100 feet of residential zones. Furthermore, the City limited the number of dispensaries to four in each of the City’s nine districts. The zoning restrictions had the effect of limiting two districts to a maximum of three dispensaries and foreclosed one district from having any dispensaries. In addition to these locational limits, the Ordinance imposed restrictions on signage and hours of operation.
Patient Advocacy Group’s Appeal for CEQA Review
Prior to the adoption of the Ordinance, patients’ rights group, Union of Medical Marijuana Patients (“UMMP”), submitted two comment letters to the City requesting a CEQA review of the then-proposed Ordinance because of its potential impacts on the environment. UMMP’s letters alleged potential impacts on the environment including: increased emissions from medical cannabis users having to travel further due to the siting restrictions, an increase in the “inherently agricultural practice” of medical cannabis users growing their own cannabis as a result of the siting restrictions, and the “unique development impacts” and intensification of impacts because of the limited permissible dispensary locations.
The City adopted the Ordinance with the finding that the Ordinance was not a project under CEQA and that “adoption of the ordinance does not have the potential for resulting in either a direct physical change in the environment, or reasonably foreseeable indirect physical change in the environment.” UMMP then challenged the adoption of the Ordinance under CEQA.
Zoning Amendments Are Not Necessarily CEQA Projects as a Matter of Law
CEQA review is required for “projects” contemplated by a public agency. “Project” is defined in Public Resources Code § 21065 as an activity that is undertaken by, funded by, or requiring the approval of a public agency that “may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.”
UMMP argued that in addition to this definition, zoning amendments are
“projects” per se because they are one of the types of “discretionary projects” enumerated in Public Resources Code § 21080. The Court rejected this theory that zoning amendments and other types of activities listed in Public Resources Code § 21080 are subject to CEQA as a matter of law. To support this conclusion, the Court looked to the CEQA Guidelines’ interpretation of what constitutes a “project” for purposes of CEQA. CEQA Guidelines § 15378 interprets a “project” to be made up of two distinct elements: (1) an activity undertaken by a public agency, that (2) has an actual or potential to cause a change to the environment.
The court found that interpreting Public Resources Code § 21065 to mean that all activity listed thereunder to always be a project as a matter of law ignored the two-step analysis of whether an activity is a “project” under Public Resources Code § 21080. Based on this, the Court determined that not all activities listed in Public Resources Code § 21065, including zoning amendments, always require CEQA analysis.
Court Used Muzzy Ranch Test to Determine Whether a Project Has the Potential to Cause a Change in the Environment
Under Muzzy Ranch, when determining whether an activity is a project under CEQA, the public agency must consider the potential environmental effects of the activity without considering whether the activity will actually have that environmental effect. The Court restated this test as follows:
A proposed activity is a CEQA project if, by its general nature, the activity is capable of causing a direct or reasonably foreseeable indirect physical 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.
The Court found that this abstracted analysis of the potential for impacts was consistent with the preliminary nature of a public agency determining whether an activity was a project as a first step in determining whether CEQA’s analysis is warranted. The Court also noted that the specific type of activity contemplated by the public agency is irrelevant to the analysis of the potential for a significant environmental effect, so long as one of the triggering conditions listed in Public Resources Code § 21065(a)-(c) was met.
In applying the Muzzy Ranch test, the Court considered hypothetical impacts that could result from the adoption of the ordinance. The Court hypothesized that because the Ordinance would permit a new type of business in the City where previously there were no legally permitted dispensaries, the Ordinance could “result in new retail construction to accommodate the businesses” and could “cause a citywide change in patterns of vehicle traffic from the businesses’ customers, employees, and suppliers.” The Court agreed with UMMP’s argument that these potential impacts were sufficiently plausible to conclude that the Ordinance’s adoption may cause a reasonably foreseeable indirect physical change in the environment.” Therefore, the Court concluded that the City erred in adopting the Ordinance without evaluating its environmental impacts.
Key Takeaways
The Court’s conclusions in this case are significant for public agencies for several reasons. First, the Court’s determination that zoning amendments are not necessarily CEQA projects as a matter of law reaffirms the long-followed practice of determining whether a particular zoning amendment is subject to CEQA on a case-by-case basis based on the considerations laid out in Public Resources Code § 21065.
Second, the Court’s holding that the City’s ordinance regulating dispensaries necessitated CEQA review has the potential to broaden the scope of activities that may be subject to CEQA. In this decision, the Court laid out generic hypothetical impacts that could be caused by the Ordinance and deemed those sufficiently plausible, leaving the door open for project opponents to raise the potential of similarly generic hypothetical impacts where a public agency is considering taking an action without CEQA review. To minimize the risk of this, public agencies should ensure that any determination that an activity is not a project under CEQA, and therefore not subject to environmental review, should be based only on clear findings supported by the specific facts surrounding the decision.
Questions
If you have any questions regarding this Legal Alert, please contact the following attorneys from our office, or the attorney with whom you typically consult.
Mona Ebrahimi
mebrahimi@kmtg.com | 916.321.4597
Andreas Booher
abooher@kmtg.com | 916.321.4372