Discrimination Against Wal-Mart Is Legal
Politics Trump Property Rights In Turlock
A week after California's Fifth District Court of Appeals decided that it was not acceptable to discriminate against small stores, in Hernandez v. City of Hanford (Mar. 28, 2006, F047536) __ Cal.App.4th __ [2006 Cal.App.LEXIS 422] , the Fifth District held local governments had the right to discriminate against large stores, particularly Wal-Mart, in Wal-Mart Stores Inc. v. City of Turlock(April 5, 2006, F047372)
The Turlock city staff apparently initially encouraged Wal-Mart's planned "super store" project. Wal-Mart contended that the City changed its mind in response to intense political pressure from unions and local supermarkets. The City then adopted an ordinance that requires developers of discount stores and discount clubs to obtain a CUP (a conditional use permit) before constructing such stores and completely barred the development of discount superstores within the City.
Wal-Mart challenged the Ordinance as beyond the City’s police power and as not having a rational basis and also asserted the City had failed to comply with the requirements of CEQA (the California Environmental Quality Act).
Not surprisingly, the City had “substantiated” its ordinance with expert testimony stating conclusions regarding the negative impacts of “big box” stores on the local economy and environment. As with Hernandez decision of the week before, the Court of Appeal identified the deferential standard of review that applies, i.e. the legislation can be invalidated if it is “arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare." Yet, the Court of Appeal was far more deferential in its analysis. Unlike the Hernandez [see discussion], the Court did not look beyond the superficial conclusions to the underlying questionable logic of these conclusions and the planning decision. Under the Fifth District Court of Appeals' view, the naked assertion that Wal-Mart or other big box stores have a negative impact is enough to justify an outright ban on their development.
Perhaps in recognition of this apparent inconsistency with Hernandez, the Court specifically distinguished Hernandez in a footnote, offering only the conclusion that there is a “rational basis” for the legislation and the “less important” distinction that no equal protection challenge was raised in this case.
The Court’s effort to distinguish the two cases rings hollow. It is clear that the rational basis test was applied far more deferentially in a decision involving the politically unpopular Wal-Mart. Politics trump property rights once again.
Wal-Mart also challenged the adoption of the ordinance as a violation of CEQA, asserting that its adoption was a “project” requiring environmental review. The Court of Appeals concluded that the environmental impacts that Wal-Mart contended might occur because of physical changes within City's jurisdiction have not been shown to have reasonably foreseeable project-specific effects or "potentially significant off-site impacts” which is the standard for triggering the requirement of environmental review. This represents a relatively narrow interpretation of the scope of CEQA. The question is whether the Fifth District Court of Appeal would apply CEQA the same way for legislation it did not favor?