By Sarah Owsowitz, Best Best & Krieger LLP.

Life in the public sector is just that: public. With the California Public Records Act and countless local sunshine ordinances, most public employees are keenly aware that much of what they write — be it in a report, letter, memo or email — may be produced to the public. Further, for those public employees involved in litigation challenging the decisions agencies make under the California Environmental Quality Act, the compilation of the administrative record — the seemingly endless collection of every piece of paper about a project that has made its way into an agency’s files — is sometimes an unwelcome reminder that the somewhat cranky email you sent at 2 a.m. one day last year lamenting the mistakes you discovered in a CEQA document is now going to be Exhibit A in the lawsuit to challenge that CEQA document. Such is life and it is ever thus.

But there has always been one place of blessed silence and reserve: the realm of privileged communications with your attorney. The attorney-client privilege allows public employees to have fruitful and honest discussions with their attorneys about CEQA documents, without concern that these communications will be, as they say, used against them in a court of law. One facet of these attorney-client communications is often the discussion of the claims, arguments or information sent to the public attorney by outside attorneys who represent private clients seeking development entitlements. Public attorneys often welcome input from private applicant attorneys and have used the information they receive to assist public agencies in navigating the choppy water of CEQA. Some public attorneys treat the information exchanged between public attorneys and private attorneys about a CEQA review of a project as privileged under the so-called common-interest doctrine. The doctrine holds that there is no waiver of attorney-client privilege when privileged documents are shared with a third party (in this case, the applicant’s attorney) whose involvement is, in legal jargon, “reasonably necessary to further the purpose” of the attorney’s work for the public agency.

In 2009, this practice was validated by the Court of Appeal in California Oak Foundation v. County of Tehama, which held that counsel for a public agency could share documents with an applicant’s counsel without waiving the attorney-client privilege. The California Oak Foundation court held that such documents were not required to be included in the administrative record for a CEQA lawsuit. Specifically, it stated that “disclosing advice to a codefendant in the subsequent joint endeavor to defend the EIR in litigation can reasonably be said to constitute ‘involvement of third persons to whom disclosure is reasonably necessary to further the purpose of the [original] legal consultation.’” In other words, the public attorney and the private attorney share the common goal of preparing a CEQA document that will withstand subsequent legal challenge, and so they can disclose documents to each other without the documents becoming part of the administrative record.

The pendulum swung wildly the other way last year in Citizens for Ceres v. Superior Court (City of Ceres), a decision that holds, without exception, that communications between a public agency’s attorney and an applicant’s attorney before a project is approved can never be subject to common interest privilege, and thus can never be withheld from a CEQA administrative record. The Ceres court opined that “[t]here is no point in asking … whether the applicant and agency have a common interest simply in the development of a legally defensible environmental document. This is because the developer has no interest in the development of an environmental document that does not support the developer’s proposal.” With this bold pronouncement, the court then reasoned, “when environmental review is in progress, the interests of the lead agency and a project applicant are fundamentally divergent.” As such, “the applicant and agency cannot be considered to be advancing any shared interest when they share legal advice at the preapproval stage.”

Given the diametrically opposed holdings of Ceres and California Oak Foundation, we now have what we in the legal biz call a “split of authority.” This creates a pickle for public agencies because it means they can never know in advance whether the court they come before will follow Ceres or California Oak Foundation.

To date, there has only been one decision that includes a brief discussion of Ceres: Seahaus La Jolla Owners Association v. Superior Court. In a footnote, the Seahaus La Jolla court notes that questions have been raised regarding the legal reasoning in Ceres, stating that the “court’s application of [the common interest doctrine]” has been criticized by commentators.” The criticism referred to by the Seahaus La Jolla court is found in Miller & Starr’s treatise, “California Real Estate,” and concerns the Ceres court’s assertion that a developer can never have an interest in the development of a legally defensible environmental document, only in one that “supports” the project under review. Miller & Starr comment: “[w]hether the Fifth District’s across-the-board view of project developers’ motives and novel view of EIRs as advocacy — rather than informational — documents will be subjected to and survive further legal scrutiny remains to be seen.” In other words, other Courts of Appeal have begun to notice that the Ceres court’s view of CEQA documents as being something akin to propaganda for a project, rather than an informational document that must accurately disclose the environmental impacts of a project if it is to withstand legal scrutiny, is out of step with CEQA and CEQA case law.

But, until such time as, one hopes, other courts more expressly reject the reasoning in Ceres, public agencies may want to assume that any recorded communications between a public attorney and the developer’s attorney prior to the issuance of a project approval are public. Or, agencies can decide to continue to rely on the California Oak Foundation decision and assert the common interest doctrine to protect such communications. But, if that decision is challenged, a court could follow Ceres and require the disclosure of these communications. As an alternative to written communications with the developer during the approval process, public agencies (and their attorneys) might wish to consider in-person meetings or telephone calls when communicating issues of high-sensitivity to a developer (and the developer’s attorney).

Because common interest privilege is just that — the decision of two parties to announce that they have a common interest to which they wish to extend their individual attorney-client privilege — the Ceres decision will likely impact only a limited number of public agencies. The status of the law is unchanged for those public agencies that did not, in the past, agree with an applicant to assert to a common interest privilege with regard to pre-approval communications. The split of authority between Ceres and California Oak Foundation means that public agencies that have, in the past, agreed to assert a common interest privilege with regard to pre-approval communications may decide to continue to do so and rely on California Oak Foundation — especially if the applicant indemnifies the public agency for any legal costs associated with defending that position. This just leaves those public agencies that were never fully comfortable with asserting the common interest privilege and are considering whether or not to announce a specific policy with regard to pre-approval communication with applicants in light Ceres. For those public agencies, discretion may be the better part of valor and they may begin to take the position that the common interest privilege does not attach to pre-approval communications.

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