ASSOCIATED PRESS As Wal-Mart Stores Inc. moves to build dozens of its "Supercenters" in California, lawyers from opposition groups are using California's tough environmental laws to stall the nation's largest retailer. Above is Wal-Mart's first California Supercenter, in La Quinta.

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Cities must weigh
urban-decay potential
from Wal-Marts,
court says

Castle & Cooke Inc. faces
a setback in developing a
"Supercenter" in California

SACRAMENTO » For years, as Wal-Mart grew into the world's largest retailer, its critics said the towns that welcomed the discount stores too often traded low prices for the devastation of local businesses that closed, left buildings vacant and triggered a spiral of physical decay.

Now a California appeals court has validated the theory for the first time.

The Dec. 13 ruling by the Fifth District Court of Appeal -- called an "atomic bomb" for shopping center developers and a "home run" for Wal-Mart opponents -- is making California cities analyze the possible physical effects of approving Wal-Mart's new Supercenters.

"Experts are now warning about land use decisions that cause a chain reaction of store closures and long-term vacancies, ultimately destroying existing neighborhoods and leaving decaying shells in their wake," wrote the panel of three judges, all Republicans appointed by Republican governors. They agreed that California's strict environmental laws should require "analysis of the shopping centers individual and cumulative potential to indirectly cause urban decay."

The ruling ordered construction halted on one Wal-Mart Supercenter and blocked construction of another in Bakersfield. It also invalidated all city approvals for the two shopping centers housing them and ordered the city to consider their physical effects on other neighborhoods when making new decisions to approve or reject the centers, which are already open.

The range of legal possibilities includes tearing them down.

Steve Herum, the Stockton-based attorney who argued the case against Wal-Mart before the court last year, said "it's the first published opinion of its kind that Supercenters cause deterioration of older businesses, followed by urban decay." He said the ruling will have a national impact.

Peter Kanelos, a spokesman for Bentonville, Ark.-based Wal-Mart, said the ruling will have little effect outside Bakersfield, where the two shopping centers were opening less than four miles apart.

Nevertheless, the ruling, which upheld a Kern County superior court judge's earlier decision, is being cited by other lawyers as a precedent in challenges to the company's plans to build the 200,000-square-foot Supercenters in California.

Though little noticed outside Bakersfield, the ruling could force cities to give Wal-Mart a far rougher examination in California than it has received in states with less stringent environmental standards, said Walnut Creek attorney Stephen Kostka, an environmental law specialist.

The three judges ruled that examples of urban decay from other cities across the United States are valid considerations for a California city analyzing a Supercenter project. They quoted planning commission testimony from opponents of two Bakersfield Supercenters who cited dozens of empty former Wal-Marts in Texas, Georgia and Utah.

Herum said the court allowed Wal-Mart opponents to use examples in other cities instead of having to "show where it's happening here in this city." Herum has sued nine other cities for approving Wal-Mart Supercenters.

While it has encouraged Wal-Mart opponents throughout the country, the ruling has led to questions about the role of the California Environmental Quality Act in regulating development. Developers and home builders claim environmentalists use the law to delay their projects, drive up costs and frustrate them into quitting, and Republican Gov. Arnold Schwarzenegger is among those considering legislation to make it harder to use the law as a delaying tactic.

Eventually, Kostka said, the California Supreme Court will have to decide.

But attorneys for the Bakersfield developers said they won't appeal. Instead, they will add an economic study to the environmental impact report, said attorney Craig Beardsley, who represented the developer, Castle and Cooke Inc., in the case.

Other attorneys are using the ruling to help their cases, such as Laguna Hills attorney John G. McClendon, who is suing the city of San Jacinto over its approval of a Wal-Mart Supercenter.