Christina O'Haver, The Union Democrat

A Tuesday appellate court ruling could further upset Walmart's plan to create a grocery-selling "Supercenter" in Sonora.

The Fifth District Court of Appeal overturned a Tuolumne County Superior Court ruling that blocked an argument made by a mostly anonymous opposition group - the "Tuolumne Jobs and Small Business Alliance."

The group argued the city of Sonora cannot exempt the mega-retailer from project review requirements under the California Environmental Quality Act without voter approval.

The city early on had prepared an initial environmental impact-report after Walmart submitted its expansion application, and circulated it for public comment.

Then, in June 2010, Sonora resident James Grinnell circulated an initiative petition, written by Walmart representatives, exempting the retailer from the review if adopted. Grinnell collected valid signatures from 541 of the city's 2,489 registered voters - more than the 15 percent required.

The City Council four months later decided to forgo a special election, saying it would cost the city $7,000, and adopted the initiative as Ordinance No. 796.

The state Elections Code allows the council to adopt the initiative instead of holding an election, but it must be done within 10 days of certifying the signatures. The period is extended to 40 days if the council opts to order a report.

The appellate court said the council could have satisfied both the California Environmental Quality Act requirements and Elections Code because it had already prepared an environmental impact report and was prepared to vote on it before the initiative petition was certified.

"Without an election, it simply is not possible to say that the people's will requires the important legislative objectives of CEQA to be set aside so a project can be expedited," the appellate court said. "Environmental review can be avoided when the voters choose to bypass it, not when the lead agency chooses to bypass the voters."

The case had been set for trial earlier this year, but was suspended pending the court's decision. The appellate court lifted the suspension Tuesday, so the case can now move forward in Tuolumne County Superior Court.

Court filings on Wednesday did not list a scheduled date for the next hearing.

Walmart hopes to expand its Sanguinetti Road store by 30,000 square feet, creating a "Supercenter" that would sell groceries and operate 24 hours per day.

Supporters say the expansion would bring in more job opportunities and sales tax revenue to a budget-strapped city. Opponents argue it would kill local business and destroy union-wage jobs at area grocery stores.

"We are committed to providing customers the broadest selection of products to meet their family's needs and will evaluate all options moving forward," Walmart spokeswoman Delia Garcia said in an email statement.