Daily Development for Friday, November 18, 2005
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri
ENVIRONMENTAL LAW; ENVIRONMENTAL IMPACT; RETAIL DEVELOPMENT: California
courts wrestle with question of environmental impact of supercenter.
Maintain Our Desert Environment v. Town of Apple Valley, 124 Cal. App.
4th 430, 15 Cal. Rptr. 3d 322 (2004); Bakersfield Citizens for Local
Control v. City of Bakersfield, 22 Cal. Rptr. 3d 203 (Cal. App. 2004)
As some readers are aware, a major political battle is being waged in
some parts of America between Wal Mart and a group of political
interests, including community activists and union groups, who are
hostile to Wal Mart essentially because its business practices have been
so effective that they have had massive social consequences. The
motives for the "antis" range from traffic concerns and other
environmental impacts to concerns about wages and benefits, impact on
competing stores and, for that matter competing development,
contribution to urban sprawl when Wal Mart abandons a location and no
other retailer can afford to occupy the deserted space, etc. etc.
California has one of the most involved land use processes in the
nation, with a requirement for an elaborate environmental impact report
layered upon any major land use decision. Recently, the "antis" have
attempted to use the environmental impact report process to delay or
otherwise hinder Wal Mart from locating facilities in various California
neighborhoods. The two above cited cases are the latest appellate
reports stemming from this continuing gunfight.
The first case, Maintain Our Desert Environment (yes - the felicitously
named Apple Valley is indeed a desert community), dealt with a land use
request to construct a 1.2 million square foot distribution center. The
local planning authorities identified the project as having potentially
significant environmental impact, commissioned a study and a report and,
when all was said and done, approved the project after considering the
Shortly thereafter, plaintiffs, joined by the California Attorney
General, sued to set aside the approval because the environmental
report was flawed in that it did not identify that the likely user of
the distribution center was Wal Mart. The issue was joined as to
whether the identity of a tenant of such a distribution center was a
central factor to be considered in the preparation of an environmental
impact statement. The plaintiff argued that Wal Mart's identity should
have been disclosed in the report and in notices concerning the hearing
on the report. The city concluded that this was not required, and the
court of appeals here agreed.
"So long as the proct is approved, [the California Environmental Quality
Act] has no concern about who uses it. If CEQA compliance required the
identification of the project end user, a new EIR would need to be
considered every time property was sold or a different tenant moved into
a building, regardless of the use to which the property was to be put."
The plaintiffs argued that, by disguising the identity of Wal Mart, many
avid opponents of Wal Mart projects were not given the opportunity to
protest at the hearings. But the court concluded that any basis for
opposing the project related to the fact that Wal Mart was a tenant
would entirely speculative and inadmissable in court.
"The crux of the issue is that the project itself, and therefore its
environmental impact, is identical regardless of who will operate it.
The only possible reasons for the public to object to accepting Wal Mart
but not a competitor under these circumstances have noting whatsoever to
do with the aims and purposes of CEQA."
The court acknowledged that identity of an end user might be relevant if
it had an unsatisfactory environmental record elsewhere in the country.
But plaintiffs here had not tried to justify their opposition to Wal
Mart by reference to Wal Mart's environmental history. The plaintiffs
also argued that it might be important to name the end use because the
community deserves to know whether the applicant end user will have the
wherewithal to deal with environmental issues as they come up. The
court ridiculed that notion, pointing out that land use decisions ought
not to be made on the basis of relative wealth.
The sweep of the Maintain Our Desert Environment case is limited
somewhat by the Bakersfield case, decided a few months later.
Bakersfield made plain that, whatever might be the case with a
distribution center, it certainly is appropriate to identify the end
user of a project if the proposal is for a "supercenter." The court
defined a "supercenter" as the combination of a traditional Wal Mart
discount store with a full-size grocery store. The opinion is somewhat
vague as to whether a "supercenter" in the view of the court is always a
Wal Mart, or whether some other operator could be viewed as a
"supercenter" operator if it combined discount and grocery operations.
Although the court was very careful to indicate that the economic
battles Wal Mart has with unions is not relevant to the environmental
impacts addressed in an EIR, it concludes that other impacts
considerations of the impact of a "supercenter" store operation make it
vital that the EIR identify the proposed o!
rs of the center. California courts ought not to approve EIR's for
shopping centers with "stealth" supercenter.
In Bakersfield, there were proposals for two regional shopping centers,
only about 3.6 miles apart. One developer did list the future tenants,
including a Wal Mart supercenter, the other did not identify any
tenants, stating that no tenants had as yet been selected. In fact the
developers of the other center also were negotiating with Wal Mart to
locate a supercenter there. (Two such centers 3.6 miles apart???
The planning authorities concluded that both proposed projects posed a
risk of significant adverse environmental impacts, and ordered EIRs.
Both EIR's identified significant adverse impacts, but the agencies
found the impacts to be within an acceptable range and approved each
project. Opponents then challenged both EIR's in court, seeking an
injunction halting construction. By the time of the lawsuit, the fact
that Wal Mart had a supercenter going into both locations was known, and
the court found the EIR's deficient in that one did not identify the Wal
Mart proposal and that neither took into account the impact of a
combination of two supercenters so close together, which the court
suggested could contribute to "urban decay." This decay would result,
the court concluded, both from the closing of a nearby Wal Mart to be
replaced by a supercenter and the impact on other "general retail
businesses" in the area. The court decertified the EIR's. It refused
to enjoy all con!
ion on the two regional shopping centers, but did enjoin construction of
the supercenters at both locations.
The appeals court started off the discussion with a general disclaimer,
which strikes the editor as somewhat unusual for a court at this level,
so he has quoted it below:
"At the outset, it is necessary to explicitly reject certain
philosophical and sociological beliefs that some of the parties have
vigorously expressed. For the record, we do not endorse BCLC's elitist
premise that so-called "big box" retailers are undesirable in a
community and are inherently inferior to smaller merchants, nor do we
affirm its view that Wal-Mart, Inc. (Wal-Mart), is a destructive force
that threatens the viability of local communities. Wal-Mart is not a
named party in these actions and we rebuff [plaintiff's] transparent
attempt to demonize this corporation. We do not know whether Wal-Mart's
entry into a geographic region or expansion of operations within a
region is desirable for local communities. Similarly, we do not know
whether Wal-Mart is a "good" or a "bad" employer. We offer no comment on
Wal-Mart's alleged miserly compensation and benefit package because
[plaintiff] did not link the asserted low wages and absence of
affordable health insurance cover!
direct or indirect adverse environmental consequences.
Likewise, we will not dignify with extended comment [defendant's]
complaint that [plaintiff] is just a "front" for a grocery worker's
union whose disgruntled members feel threatened by nonunionized
Wal-Mart's entry into the grocery business. As will be explained,
[plaintiff] has standing to pursue this litigation and it exhausted its
administrative remedies. This is sufficient. We do not know whether
Wal-Mart adversely affects the strength of organized labor and we have
not considered this question.
In sum, we have no underlying ideological agenda and have strictly
adhered to the accepted principle that the judicial system has a narrow
role in land use battles that are fought through CEQA actions. "The only
role for this court in reviewing an EIR is to ensure that the public and
responsible officials are adequately informed ' "of the environmental
consequences of their decisions before they are made." ' "
We then come to the elaborate tap dance by which the court, having
denied an interest in Wal Mart's economic and social impacts, then
reached the conclusion that indeed economic such issues are
environmental issues and need to be evaluated. The court first states
that the EIR process requires the identification of "both primary
(direct) and 'reasonably foreseeable' secondary (indirect) consequences
be considered in determining the significance of a project's
environmental effect." Further, the court noted that state guidelines
for the CEQA state that "the economic or social effects of proposed
projects are outside the Act's purview." But then the court winds round
again: "[I]f the forecasted economic or social effects of a proposed
project directly or indirectly will lead to adverse physical changes in
the environment, then CEQA requires disclosure and analysis of these
resulting physical impacts."
The court cited prior California cases, included some of its own
decisions, supporting the conclusion that closure of competing
businesses as a consequence of competition from a new business brought
in by a real estate development project was an "adverse environmental"
effect, at least if the competing businesses were not likely to be
replaced by other businesses. The only interruption in the steady
drumbeat of cases moving toward judicial economic policy making through
EIR's was a case in which a court refused to require analysis of the
impact of a Border's book store on existing local bookstores, since it
appeared that if the local bookstores closed down, other retail
businesses could take their place.
The planning agencies, of course, had taken into account the question of
whether the proposed new centers would lead to "environmental impacts,"
including "urban decay," and concluded that it should approve the
projects anyway. But the court states that the studies did not give
reasons for those conclusions, and did not specifically address the
combined impact of the two new shopping centers so close together.
Further, of course, the studies did not address the impact of two Wal
Mart supercenters because one of the reports didn't identify Wal Mart or
even the existence of a second supercenter.
In the final analysis, the court really didn't even need the existence
of the supercenters. It concluded that the EIR analysis was indequate
because the discussion of urban decay did not specifically address a
number of issues raised by the opponents of the projects - relating both
to business closures and the shut down of old Wal Mart facilities, which
rarely are repopulated by other businesses.
"The responses in the EIR's to these and other comments do not
meaningfully address the issue of urban decay. [One of the EIR's] states
that vacant buildings 'are part of the evolutionary change of the retail
environment.' It then asserts that further analysis is outside th scope
of CEQA because economic and social effects are not considered
environmental effects under CEQA. . . . [The other report] is similarly
incomplete. Ignoring the question of urban decay or deterioration, it
simply replies that 'blight' is a legal term that does not apply. It
also asserts that vacancy rates and business closures are purely
economic impacts and therefore outside of CEQA. Finally, it states that
a survey of vacant buildings ad been prepared and this survey
demonstrated that 'retailers entering or leaving the market,
relocations, re-leasing to new tenants or conversions to other uses is a
normal part of a dynamic market."
The court gets increasingly critical of the EIR process as the opinion
goes on. In response to the report's conclusion that the old Wal Mart
space "can" be relet to other tenants, the court states that this is not
a statement that the space "will" be relet.
In the end, although the court stated that "we do not quarrel" with the
Apple Valley decision, indeed it is difficult to see how this court
would have reached the same result, even had the case not involved a
retail operator. The kinds of analysis used in this case could
certainly have been mustered in opposition to a Wal Mart operation in
Apple Valley had the fact of Wal Mart's identity been known. A great
deal of the evidence analyzed here is extremely specific anecdotal
accounts of Wal Mart's massive impact nationwide. It is virtually a
revesal of Charley Brown's old statement about General Motors. Here,
the opponents are pretty much saying that Wal Mart is too big and too
powerful and "what's good for Wal Mart is bad for America."
The court then moved away from specific economic analysis and began
talking about air and water quality impacts of the two major projects.
In the end, in a few paragraphs, it bolstered its anti-Wal Mart decision
with other broader conclusions supporting the decertification of the
reports, so that it really is difficult to know what role the Wal Mart
discussion had in that decertification at all, a tactic which certainly
will influence the ability of the defendants to appeal, and will leave
in the books the extensive discussion of why EIR's have to be economic
Upon remand, the defendants pay all the legal costs (of course) and the
reports are to be decertified, and the trial court must evaluate whether
to enjoy all construction *and retail operations* at both centers
pending the final preparation of the report.
Comment 1: For decades in California, environmental interests have
played the "paper game" against targeted projects" with great success.
With a cooperative court, and the vast array of available environmental
commentators and experts, it is no great feat to muster a case that any
given environmental analysis failed to adequately account for why this
or that impact was not fully considered. Note that, once everything is
in fact fully considered, the public agency most often would be
permitted to go ahead with the project anyway, as it did here. But the
environmental interests never have to reach the point of challenging the
validity of the public decision - where they'd likely lose. Instead,
they simply have to show that the process of decision was flawed because
the report was flawed. It is not an adequate answer that the public
agency wouldn't give a damn anyway. It has to jump through the hoops.
Courts have been quite willing - given the proper cause - to contin!
erect hoops, and, incidentally - to impose all the costs of the hoop
building directly on the proponents. California has had a booming real
estate economy for all this time, and apparently has been able to
sustain the wealth redistribution resulting from this process. There is
some question as to whether this can continue.
Comment 2: One can make an argument that the environmental
"externalities" of land use decisions often are lost on public officials
who are looking at positive economic and social benefits to their
community presented by a new development project, and thus a rationale
exists for requiring such officials to study hard a careful scientific
analysis of these impacts before opting for the "quick buck."
But can the same policy analysis support the expansion of the EIR
process into economic and social issues themselves? Here, one would
assume that elected officials in fact are fully focussed on these
issues, both written and unwritten, proven and hypothetical, and have
made the proper balance. Is there the same argument for empowering
project opponents with the enormously powerful delaying tool that CEQA
provides to those with more traditional environmental concerns?
One suspects that the California legislature ultimately will have to
evaluate this question anew, and give the courts clearer instruction as
to the proper scope of these reports, because it is clear that current
courts are running a long way with the ball the legislature has handed
Comment 3: Of course, it can always be argued that local officials are
stupid blundering chamber of commerce types who respond only to economic
and political power considerations and have far less judgment as to the
economic and social issues presented by new development than that
possessed by nonprofit "public interest" groups and their lawyers and
financial supporters. If this is the case, however, is the remedy for
such a state of affairs lie with the legislature or the courts. Or does
it lie with the people? If elected officials make corrupt or stupid
decisions - turn the rascals out!!
The fundamental question presented by cases of this type is whether
economic or social policy will be made by the courts or the people. The
answer is not always as easy as it sounds. Constitutional issues belong
to the courts, of course, and environmentalists have managed to raise
their agenda virtually to Constitutional status, at least in California.
But how big can this bandwagon get? At some point, we must trust our
future to our political process, for better or worse.
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