Ballot measures generated and placed before voters by a public agency are not exempt from environmental review, a unanimous state Supreme Court has ruled. In the closely watched case of Friends of Sierra Madre v. City of Sierra Madre, the court said a ballot measure sponsored by a public agency should be treated differently than a voter-backed initiative. "As the Attorney General suggests, the distinction between initiatives generated by a city council and voter-sponsored initiatives serves a significant governmental policy," Justice Marvin Baxter wrote for the court. "Voters who are advised that an initiative has been placed on the ballot by the city council will assume that the city council has done so only after itself making a study and thoroughly considering the potential environmental impact of the measure. For that reason a preelection EIR should be prepared and considered by the city council before the council decides to place a council-generated initiative on the ballot." The case marks the state Supreme Court's first CEQA decision since 1997, when the court ruled that de-listing an endangered species is not exempt from CEQA review (Mountain Lion Foundation v. Fish & Game Comm'n, 16 Cal.4th 105, see CP&DR Legal Digest, August 1997). Susan Brandt-Hawley, attorney for Friends of Sierra Madre, called the ruling a needed clarification because some public officials believed that all ballot measures — whether sponsored by the city or by voters —need not comply with the California Environmental Quality Act. But attorneys for the city contended that state's high court has reversed many years of case law. "I definitely do think the case broke new ground in a significant way because there had been a line of Court of Appeal cases that had held that the submission of measures to the voters was not subject to CEQA," said Michael Zischke, a lawyer for the City of Sierra Madre. "Several of those cases were about council-sponsored measures, in part Lee v. Lompoc and the City of Albany case." In Lee v. City of Lompoc, (1993) 14 Cal.App. 4th 1515 (see CP&DR Legal Digest, May 1993), an appellate court ruled that CEQA did not apply to a city-sponsored ballot measure to permit a shopping center development. The Lee court said CEQA would apply to the ultimate project if voters approved the zone change. Citizens for Responsible Government v. City of Albany, (1997) 56 Cal.App. 4th 1199 (see CP&DR Legal Digest September 1997), built on Lee. In that case, an appellate court ruled that the city's submission of a development agreement to voters was subject to CEQA, but that the city could place a zoning amendment on the ballot without CEQA review. Sanford Svetcov, the attorney who argued the City of Sierra Madre's case at the state supreme court, said the high court read the CEQA Guidelines narrowly and effectively reversed the Lee and Albany decisions. "For 20 or more years, cities and counties have been putting measures on the ballot without CEQA review," Svetcov said. "It's a procedural decision." But Brandt-Hawley said that while the Guidelines might be in dispute, it is clear that there is no statutory authority to exempt public agency-sponsored ballot measures from CEQA. "I think it was just a very logical decision," she said of the state Supreme Court's ruling. The Supreme Court held that Lee was different from the Sierra Madre case because, in fact, an EIR was prepared on the project before it went to the voters. But the Supreme Court specifically repudiated a basic holding of Lee, that how a matter reached voters — whether by city council sponsorship or by voter petition — was irrelevant for CEQA. The case at hand involves preservation of 29 old homes in Sierra Madre, a small city in the San Gabriel Valley. In 1987, the city established a Cultural Heritage Commission and a regulatory process for protecting structures of cultural and historic significance. In 1997, the city repealed its ordinance and made future listings on the city's Register of Historic Landmarks voluntary. However, properties already listed on the registry remained on the list. Later in1997, a group of property owners petitioned the city to remove their homes from the register. City planners said delisting would require a review of historic resources under CEQA at a cost of about $2,500 per property. Neither the city nor property owners were willing to pay for a review, so city staff members recommended placing the issue before voters as a way of avoiding CEQA. In April 1998, 63% of voters approved Measure I-97-1, which removed the 29 homes from the city's historic register. Friends of Sierra Madre filed suit, alleging that the city should have completed an EIR on each of the 29 properties and contending that the city violated the Elections Code by not adequately informing voters of city amendments to Measure I-97-1 made after the sample ballot was printed. A trial court rejected the CEQA arguments but ruled that the city had violated the Elections Code. Both sides appealed. The Second District Court of Appeal ruled that the city had not run afoul of the Elections Code but did violate CEQA. The appellate panel invalidated the election results (see CP&DR Legal Digest, January 2000). The state Supreme Court accepted the case, generating a great deal of attention. About 80 cities and several development groups filed amicus briefs on the city's side. Attorney General Bill Lockyer and historic preservation advocates submitted briefs supporting the Friends. The city contended that CEQA (Public Resources Code § 21000 et seq.) and the CEQA Guidelines adopted by the Resources Agency do not distinguish between ballot measures a public agency originates, and measures that a public agency places on the ballot as a ministerial action after citizens have submitted an adequate number of petition signatures. Friends contended that CEQA does indeed distinguish between the two types of ballot measures and that agency-sponsored measures are subject to CEQA review. The state Supreme Court accepted the Friends' argument. Part of the decision was based on 1998 revisions of the Guidelines, specifically the Guidelines' notice of Stein v. City of Santa Monica, (1980) 110 Cal.App.3d 458. In Stein, an appellate court held that CEQA did not apply when a city, acting ministerially, placed on the ballot a citizen initiative to amend the city charter. "The addition of the citation of Stein to Guidelines § 15378 (b)(3) is more indicative of the agency's intent with respect to initiative ballot measures, suggesting the agency intended that the exemption apply only in the Stein situation, i.e., when placing an initiative measure on the ballot was a ministerial act compelled by law," Justice Baxter wrote. The Guidelines, plus language in Public Resources Code § 21080, subdivision (b)(1), which expressly excepts "ministerial projects," create a clear distinction between voter-sponsored and city council-sponsored initiatives, Baxter wrote. The state high court ruled that the city did not violate the Elections Code, but that the ordinance approved by voters still must be thrown out. "Since the petition adequately alleges noncompliance [with CEQA], failure to comply is not disputed by respondents, and the record confirms noncompliance, the appropriate relief is invalidation of the ordinance," Baxter wrote. The Case Friends of Sierra Madre v. City of Sierra Madre, No. S085088, 01 C.D.O.S. 2523, 2001 Daily Journal D.A.R. 3150, filed March 29, 2001. The Lawyers: For Friends: Susan Brandt-Hawley, Brandt-Hawley & Zoia, (707) 938-3908. For the city: Sanford Svetcov, Milberg, Weiss, Bershad, Hynes & Lerach, (415) 288-4545.