BY JOHN T. SCHREIBER
LACK OF DEFERENCE
Examining the Ways Cities May Take Official Action
From June 19, 1995 Daily Journal. Copyright 1999 Daily Journal Corp. Reprinted with Permission.
The U.S. Supreme Court=s decision in Dolan v. City of Tigard, 114 S.Ct. 2309 (1994), underscores the significance of the different ways that local public agencies enact ordinances. The Dolan Court struck down as an unconstitutional taking a Tigard, Ore., city ordinance that conditioned approval of Florence Dolan=s building permit to enlarge her plumbing and electric supply store upon the dedication of part of her property for flood control and traffic improvements. Dolan at 2313-2315.
The Court shifted the burden to the city to show Arough proportionality@ between the required dedication and the impact of the proposed development. Dolan at 2319-2320. This burden is a drastic change in the burden of proof normally imposed in land use cases. Such cases are Aa species of business regulation that heretofore warranted a strong presumption of constitutional validity.@ Dolan at 2325.
However, the majority in Dolan justified shifting the burden of proof in part because of the capacity in which the city acted. The city imposed the dedication on a specific piece of property, not as a general zoning regulation affecting entire areas of the city. The Court found that the city acted in an adjudicatory manner rather than in a legislative capacity.
When agencies take official action, they usually do so either in an adjudicatory or quasi-legislative manner. The agency acts in an adjudicatory manner when it applies a rule to a specific set of existing facts (as judge and jury do in an ordinary trial). It acts in a quasi-legislative mode when it enacts rules of general application (as a legislature does when it passes laws).
The difference is subtle but carries much weight: It affects the standard of review used by both trial and appellate courts to determine the validity of local agency actions.
If the agency acts in its legislative capacity, an appellate court reviews the agency=s actions under a more lenient standard based on the agency=s presumed expertise in nits field than if the agency acts in an adjudicatory fashion. Rivera v. Division of Industrial Welfare, 265 Cal.App.2d 576, 594 (1968). The more lenient the standard, the more likely the agency=s action will be upheld. The differing standard therefore greatly affects an appellate court=s willingness to reverse a trial court=s decision.
In cases where a local agency acts in a legislative or quasi-legislative manner, i.e., in ordinary mandamus situations, courts will generally defer to the agency=s presumed expertise in the subject matter regulated by the agency.
In specific instances an agency will act in a legislative or quasi-legislative manner, yet courts will use the substantial evidence standard. This standard asks whether the record as a whole demonstrates enough evidence in support of an appealed order or judgment. Bowers v. Bernards, 150 Cal.App.3d 870, 873-874 (1984). For example, matters handled by Local Agency Formation Commissions (LAFCOs) or governed by the California Environmental Quality Act (CEQA) are evaluated under the substantial evidence standard. In both cases, the agency acts in a legislative capacity but is under specific statutory provisions calling for use of the substantial evidence standard. See Government Code Section 56006; Simi Valley Recreation & Parks Dist. v. Local Agency Formation Comm. of Ventura County, 51 Cal.App.3d 648, 685-686 (1975); Public Resources Code Sections 21168, 21168.5.
Other than when agencies are subject to such specific statutory provisions, courts both at trial and on appeal will defer to the agency=s expertise. See Lewin v. St. Joseph Hospital of Orange, 82 Cal.App.3d 368, 387 (1975).
Even in CEQA cases employing the substantial evidence standard of review, the distinction between an agency=s quasi-legislative and quasi-adjudicative actions remains vital. In Western States Petroleum Association v. Superior Court, 9 Cal.4th 559 (1995), the California Supreme Court held that evidence not contained in the administrative record is inadmissible to challenge a quasi-legislative action under Public Resources Code Section 21168.5 as an abuse of discretion. Id. at 564-565.
Where the agency acts in an adjudicative, or quasi-judicial capacity, judicial review is stricter. In those cases where fundamental rights are involved, such as conditioning a building permit that had already been approved, courts can exercise their independent judgment to determine whether the weight of the evidence supports the agency=s findings. California Code of Civil Procedure Section 1094.5(c); Goat Hill Tavern v. City of Costa Mesa, 6 Cal.App.4th 1519 (1992) (refusal to renew a conditional use permit); Elizabeth D. v. Zolin, 21 Cal.App.4th 347 (1993) (driver=s license suspension). Where fundamental rights are not involved, courts may use the substantial evidence standard. This is consistent with the distinction drawn by the Dolan Court.
What appears to be different from the norm, however, is that the Dolan Court, in a case that may have involved fundamental rights, went beyond the independent review standard and placed the burden of proof on the local agency in situations where the agency acted in a judicial or quasi-judicial manner. The majority opinion states, AThe second part of our analysis requires us to determine whether the degree of the exactions demanded by the city=s permit conditions bear the required relationship to the projected impact of petitioner=s proposed development.@ Dolan at 2318. In this situation, the question becomes whether the Dolan standard pre-empts the substantial evidence standard.
For instance, this new burden could arise in the school facilities fees context. When a school district acts in a quasi-legislative manner by enacting fees under the legislative authority granted it by Government Code Sections 53080 and 65995, the district is entitled to deference from courts in reviewing its actions. See, Shapell Industries Inc. v. Governing Board of the Milpitas Unified School District, 1 Cal.App.4th 218 (1991).
Government Code Section 53080.1(e)(2) requires local agencies, in cases of commercial and industrial development, to provide a hearing for the public to appeal the imposition of such fees. In this situation the agency would be acting in an adjudicatory manner because it is making a decision requiring findings and a hearing on a particular piece of property.
Even in this context, the statute still places the burden of proof on the developer: AThe party appealing the imposition of the fee, charge, dedication or other requirement shall bear the burden of establishing that the fee, charge, dedication or other requirement is improper.@ A broad reading of Dolan=s new burden would seem to supplant the burden language in Section 53080.1(e)(2).
However, the impact may be less than is first apparent. The majority in Dolan pointed out that in addition to the agency=s adjudicative conduct, another reason to distinguish this case is that Athe conditions imposed were not simply a limitation on the use petitioner might make of her own parcel, but a requirement that she deed portions of the property to the city.@ Dolan at 2316.
Therefore, the new burden on cities may only apply where the agency acts in an adjudicative manner in a case requiring the property owner to dedicate a part of his or her parcel as a condition of approval. Using this reading, in the case of school facilities fees, the new standard of proof would apply only where the developer seeks a hearing under Section 53080.1(e)(2) and a dedication is involved.
The Court=s holding in Dolan imposing the burden on cities to justify their land use decisions in certain circumstances is in some ways consistent with well-established distinctions between the capacities in which a local agency acts. The Dolan majority seemed to acknowledge the deference of courts to local agencies when the latter act in a legislative or quasi-legislative manner. These distinctions apply in the school facilities fee and other situations involving local agency actions. Exceptions to the norm appear to be specific statutory creations. Where the local agency acts in a adjudicative or quasi-adjudicative manner, however, courts will give the agency much less deference. Dolan would seem to be the ultimate example of that lack of deference.
What remains in doubt is the extent of Dolan=s reach. The majority provides clues to support either a broad reading that would apply the burden whenever an agency acts in ad adjudicative manner, or a more restrained reading applying the new burden where the agency requires the property owner to dedicate a part of the property as a condition of approval.
John T. Schreiber practices in Walnut Creek and specializes in civil appeals. He was co-counsel for the Milpitas Unified School District in Shapell Industries Inc. v. Governing Board of the Milpitas Unified School District.