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Appellate Court Rules In Favor Of Chico In Walmart Dispute

William Fulton on
Oct 6, 2019

Critics often claim that the California Environmental Quality Act sometimes does little more than allow project opponents to re-litigate the project approval process in court. In a case involving a proposed Walmart expansion in Chico, the Third District Court of Appeal agreed that this is what the Walmart project opponents were doing and rejected their appeal.

Chico approved an expansion to an existing Walmart in 2015, the purpose of which would primary be to add groceries to the store. A group called Chico Advocates for a Responsible Economy (CARE) sued, claiming that the urban decay analysis in the environmental impact report was defective and also the statement of overriding considerations was inadequate.

The project called for a 64,000-square-foot expansion of an existing 131,000-square-foot Wal-Mart on Highway 99 in Chico, effectively converting the store into a Super Walmart that sells groceries. The Walmart is situated in close proximity to many other retail stores, including a FoodMaxx store less than a mile away. FoodMaxx employees are unionized and represented by United Food and Commercial Workers, which often opposes Walmart expansions via CEQA challenges.

In 2009, Chico had rejected a 100,000-square-foot Walmart expansion on the same site, saying that it could not adopt statements of overriding considering concluding that the project’s benefits outweigh its significant and unavoidable impacts.

The EIR found that the Walmart expansion could reduce sales in nearby stores by a few percent, a “neglible” figure that did would not create serious urban decay and therefore did not constitute a significant impact under CEQA. In its lawsuit, CARE took exception to several specific aspects of the urban decay analysis, including:

  • Using storewide sales per square foot rather than a specific grocery-related sales per square foot assumption.
  • Underestimating the impact on Chico by assuming that Paradise residents will use the store rather than stores in their own community.
  • Assuming the impact will be spread among all stores in the area rather than focused on FoodMaxx, the closest store.

“The identified “flaws” with the EIR’s methodology amount to nothing more than differences of opinion about how the Project’s expected grocery sales should be estimated, how the Project’s market area should be defined, and which competitors are most susceptible to impacts from the Project,” the court wrote, adding: “The choice of one approach over the other does not render the City’s EIR unreliable.”

In addition, the court concluded: “Although the loss of close and convenient shopping could impact some Chico residents psychologically and socially, such impacts are not, by themselves, environmental impacts.”

CARE also argued that the city should not have approved a statement of overriding consideration in 2015 after having determined in 2009 that it could not do so. But the court disagreed, noting that the 2009 decision was on a different project

Said the court: “CARE’s argument is tantamount to a policy disagreement about whether the benefits of this Project outweigh its costs.”

The Case:

Chico Advocates for a Responsible Economy v. City of Chico, No. C087142 (filed September 5, 2019, certified for partial publication, October 3, 2019.)

The Lawyers:

For Chico Advocates for a Responsible Economy: Brett S. Jolley, Shore, McKinley, Conger & Jolley, bjolley@smcslaw.com 

For City of Chico: Stephen T. Owens, Alvarez-Glasman & Colvin, sowens@agclawfirm.com 

For Walmart: Arthur J. Friedman, Sheppard, Mullin, Richter & Hampton, afriedman@sheppardmullin.com 

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