High court well-permit ruling gets it right on CEQA’s scope

In resolving a dispute over Stanislaus County's blanket exemption of water well construction permits from review under the California Environmental Quality Act, the California Supreme Court addressed a significant limitation on CEQA's scope -- its exemption for "ministerial" projects -- and got it right. The court's August 26 opinion in Protecting Our Water and Environmental Resources v. County of Stanislaus, 2020 DJDAR 9454 (POWER), eschewed extreme positions on both sides, reversing the 5th District Court of Appeal's holding that all county well permits required CEQA review, while also rejecting the county's and trial court's position that none did. The case also provides important guidance to public agencies operating under similar types of permitting ordinances with both ministerial and discretionary elements that apply under different circumstances.

Like most California counties, Stanislaus had for decades issued hundreds of well construction permits annually under an ordinance that incorporates by reference state well construction standards. The state standards (which county ordinances must meet or exceed) are contained in Department of Water Resources bulletins containing technical specifications for water wells that focus solely on protecting water quality -- and notably, not other environmental impacts, such as ground water depletion, subsidence and drought impacts. While environmental groups have pushed for broad CEQA review of individual permits to assess a wide range of cumulative and other impacts relating to water extraction, most counties -- like Stanislaus -- treated the state standards as ministerial and CEQA-exempt. The 2nd and 5th Districts had reached opposite conclusions on the "ministerial or discretionary" well permit issue posed in POWER.

CEQA applies a "functional test" for distinguishing discretionary projects (which require use of the agency's subjective judgment in deciding whether or how to carry out or approve them) from ministerial projects (under which an agency exercises little or no personal judgment and merely determines conformity with applicable statutes, ordinances, regulations, or other fixed standards). The test's "touchstone" for a discretionary project is whether the approval process allows the agency to deny or shape the project in a way that could respond to environmental concerns CEQA review might identify. Conversely, with a ministerial project, a private party can legally compel approval without design changes that might alleviate adverse environmental impacts. The CEQA guidelines also encourage lead agencies to classify ministerial projects on either a categorical or individual basis, and afford some degree of deference to such classifications.

Plaintiffs argued that the state standards incorporated in the county's ordinance, and especially Standard 8.A, which requires all wells "be located an adequate horizontal distance" from potential contamination sources, conferred discretion so as to render all well permits subject to CEQA. The trial court disagreed and held that all of the county's non-variance well permits were ministerial, but the 5th District reversed, holding all such permits were discretionary based solely on the horizontal separation provision.

The Supreme Court held the issue "depends on the circumstances" of the individual permit under consideration. It found instructive, but had no occasion to "directly apply," the functional test because the case before it did not involve the status of any individual permit, but, rather, the county's categorical declaration as to all its non-variance permits. In holding the county's categorical classification of all such permits as ministerial violated CEQA, the court concluded Standard 8.A's plain language authorizes the county to exercise "judgment or deliberation when [it] decides to approve or disapprove" a permit. Despite setting out separation distances generally considered adequate, Standard 8.A "makes clear that individualized judgment may be required" by noting that "an adequate horizontal distance" may depend on "[m]any variables" and that "[n]o set separation distance is adequate and reasonable for all occasions." Because Standard 8.A gave the county health officer "significant discretion" to deviate from the general standards, either to relax or heighten them "depending on the circumstances," a permit issuance in which the county is required to exercise such judgment cannot be classified as "ministerial."

In rejecting the county's argument that the "limited options" under its ordinance "to mitigate environmental damage" rendered all its well permits ministerial, the court noted the county conceded it had authority, under some circumstances, to require a different well location or to deny the permit. It added: "Just because the agency is not empowered to do everything does not mean it lacks discretion to do anything." Significantly, however, the court noted the issue before it was "narrow" and it expressed no view on "the scope of County's authority once an environmental review process begins" -- an issue which may need to be resolved in future litigation.

The court also made clear that it was not simply ignoring the county's classification, but that the degree of deference due is "situational." The county was not here interpreting an ordinance it had drafted, but, rather, state standards incorporated by reference. Nor did its determination rely on factual determinations reviewed with deference for substantial evidence, but instead was a claim that an entire category of permits was ministerial, as a matter of law.

While holding the county's blanket classification violated CEQA, the court by the same token rejected the opposing position that issuance of a well permit is always a discretionary project: "The fact that an ordinance contains provisions that allow the permitting agency to exercise independent judgment in some instances does not mean that all permits issued under that ordinance are discretionary." The court explained the county's ordinance incorporates standards that may not "come into play" in issuing a particular permit, such as "Standard 8.A [, which] only applies when there is a contamination source near a proposed well. If no contamination source is identified during the permit approval process, the discretion conferred will not be included in that individual issuance decision."

In response to the county's argument that invalidating its categorical classification would increase costs and delays in well permitting, the court stated "CEQA cannot be read to authorize the categorical mischaracterization of well construction permits simply for the sake of alacrity and economy." Downplaying the predicted onerous consequences, the court noted "that an individual permit may still be properly classified as ministerial" (thus requiring no CEQA review) and that even if other individual permits were discretionary that would not mean full environmental review, including an environmental impact report, would always be required. Rather, the discretionary permits could potentially qualify for another CEQA exemption or some type of negative declaration, thus reducing the CEQA review burden.

The POWER decision ends the practice of counties categorically treating all well permits as ministerial approvals exempt from CEQA -- while leaving open the realistic possibility that most, or perhaps even the great majority, of individual well permit decisions may nevertheless continue to lawfully be treated as ministerial and exempt. It also provides guidance to other CEQA lead agencies operating under permitting ordinances or regulations that may be mostly ministerial, but also contain elements of discretion under specific circumstances. 