A lawsuit challenging the San Joaquin County Local Agency Formation Commission's approval of a large annexation has been reinstated by the California Supreme Court. The state's high court overturned a decision by the Third District Court of Appeals against the Sierra Club and the San Joaquin Valley Farm Bureau. The appellate court ruled that the environmentalists and farmers did not exhaust their administrative remedies because they had not requested a LAFCO rehearing. Thus, under the "Alexander rule," they did not have standing to sue, the court ruled. At the same time, two of the three justices on the appellate panel urged repeal of the 56-year-old Alexander rule. A unanimous state Supreme Court did just that, calling the Alexander rule unnecessary and often-overlooked. The controversy in this case started in 1996, when the San Joaquin LAFCO approved annexation of an island in the Sacramento-San Joaquin Delta to the City of Lathrop, about 10 miles south of Stockton. In certifying the EIR, LAFCO adopted a statement of overriding considerations. Califia Development Group sought annexation to accommodate the proposed Gold Rush City — a 5,800-acre project that includes two theme parks, nine "themed villages," a golf course, and a shopping district. The Lathrop City Council adopted both a specific plan and an EIR in February 1996 and annexed the land later that year. The project is nearly as big as the existing city. Project proponents contend Gold Rush City will attract up to 8 million visitors annually and create 15,000 to 20,000 new jobs in San Joaquin County. The Sierra Club, local farm bureau and others sued LAFCO. They alleged that substantial evidence to support the overriding considerations was lacking, and that LAFCO failed to follow statutory provisions for the annexation. The trial court granted a motion to dismiss because the project opponents had not sought a rehearing before LAFCO. An appellate court affirmed the decision based on the Alexander rule. The Alexander rule emerged from a personnel case in which two fired state employees sought a court hearing, rather than a rehearing before the State Personnel Board. The California Supreme Court ruled that where a rehearing is permitted under law, it is a necessary step in exhausting administrative remedies. Alexander v. State Personnel Bd. (1943) 22 Cal.2d 198. Writing for the unanimous court, Justice Kathryn Werdegar said the Alexander rule "serves little practical purpose and is inconsistent with procedure in parallel contexts." In cases where circumstances have not changed and there is neither new evidence nor new legal arguments, the requirement to seek rehearing is a waste of time, the court said. "The likelihood that an administrative body will reverse itself when presented with only the same facts and repetitive legal arguments is small. Indeed, no court would do so if presented with such a motion for reconsideration, since such filing is expressly barred by statute," Werdegar wrote. Furthermore, although the Legislature has never specifically repealed the Alexander rule, its continued applicability was unclear to many people, the court said. Some legal practice guides say the Alexander rule is no longer good law, or the mandate to seek rehearing is no longer commonly applied. "[E]ven an alert legal practitioner could overlook the necessity of seeking rehearing as a condition of judicial review …," Werdegar wrote. The court rejected the LAFCO's argument that recent action by the state Legislature affirmed the Alexander rule. The court said there is not enough evidence to determine legislative approval, or disapproval, of the Alexander rule. "As best we can surmise, the considered public policy judgement of the Legislature is that the exhaustion of administrative remedies doctrine is adequately safeguarded by the requirement that the administrative proceedings must be completed before the right to judicial review arises," Werdegar wrote. Still, in cases where there is new evidence, changed circumstances or new legal arguments, parties should seek a re-hearing. Parties also should seek a new hearing to note "errors or omissions of fact or law in the administrative decision itself," the court ruled. The Case: Sierra Club v. San Joaquin Local Agency Formation Commission, No. S072212, 99 C.D.O.S. 6719, Daily Journal D.A.R. 8553, filed August 19, 1999. The Lawyers: For Sierra Club: Susan Brandt-Hawley, Brandt-Hawley & Zoia, (707) 938-3908. For LAFCO and Califia Development: Steven Herum and Thomas Terpstra, Herum, Crabtree, Dyer Zolezzi & Terpstra, (209) 472-7700.