A California appellate court has affirmed that the Sierra Club and other environmentalists did not exhaust their administrative remedies before filing a lawsuit to challenge the San Joaquin County Local Agency Formation Commission's annexation of the Gold Rush City property to Lathrop. However, the appellate court justices said that they consider the rule on which they based their decision "outmoded" and urged the California Legislature or the California Supreme Court to overturn it. Gold Rush City is a large development project proposed on an island in the Sacramento-San Joaquin Delta. In 1996, the San Joaquin County LAFCO approved annexation of the Gold Rush City property to Lathrop and adopted a statement of overriding considerations in certifying the environmental impact report. After the LAFCO action, Eric Parfrey, an environmental consultant who has been critical of the Gold Rush City project, notified the LAFCO that requesting reconsideration and indicating that he would soon submit the required $700 fee. The following day he withdrew the request and then joined with the Sierra Club, the San Joaquin County Farm Bureau, and others in filing a lawsuit challenging the statement of overriding consideration. San Joaquin County Superior Court Judge Bob McNatt dismissed the case, claiming that Parfrey and the other plaintiffs failed to exhaust their administrative remedies because they did not follow through on their motion for reconsideration. The Third District Court of Appeal affirmed McNatt's ruling, relying on a rule first laid down in Alexander v. State Personnel Board, 22 Cal.2d 198 (1943) - even though, the court said, the rule is outmoded. The Alexander rule emerged from a personnel case, in which two fired state employees sought a court hearing, rather than a re-hearing before the State Personnel Board, because they believed the Personnel Board hearing was "irregular". But the California Supreme Court ruled that where a rehearing is permitted under law it is a necessary step in exhausting administrative remedies. Even while following the Alexander rule, the Third District called it "wooden" and pointed to dissents from California Supreme Court justices - including the eminent Roger Traynor - that a permissive rehearing option, rather than a mandatory rehearing requirement, should not trigger a requirement for a rehearing to exhaust administrative remedies. "Justice Traynor notes that in he long run such a rule would avoid unnecessary litigation and impel the Legislature to make the policy decision concerning the requirement of seeking rehearing for each statutory scheme," the Third District wrote, "Not surprisingly, the majority opinion in Alexander has been criticized by commentators." The appellate court rejected, however, the plaintiff's argument that Alexander has already been rendered not binding because it is in conflict with Code of Civil Procedure ยง1094.6, which has an apparent inconsistency over when the time period for reconsideration ends. The court also rejected the environmentalists' argument that they should be excused from the exhaustion requirement under the futility exception. "An exception that swallows the rule is no exception," the court wrote. In a short concurring opinion, Justice Puglia disagreed with the majority's call for a review of the Alexander rule, which he called "readily understood" and "easy to comply with". Noting that the environmentalists' lawyers were apparently not aware of the Alexander rule, Puglia wrote: "The Supreme Court must have better things to do than to reconsider long established rules simply to accommodate inattentive or parsimonious counsel". The Case: Sierra Club v. San Joaquin LAFCO, No. C027361, 98 Daily Journal D.A.R. 6712 (issued June 19, 1998). The Lawyers: For Sierra Club: Susan Brandt-Hawley, Brandt-Hawley & Zoia, (707) xxx-xxxx. Forf Califia Development Group (real party in interest): Steven A. Herum, Herum, Crabtree, Dyer, Zolezzi & Terpstra, (209) xxx-xxxx.