Calif. Supreme Court Puts Kybosh on Coastal Project

SAN FRANCISCO (CN) — The California Supreme Court unanimously rejected the environmental impact report Thursday prepared by the city of Newport Beach in approving a controversial mixed-use development on 401 acres of ecologically sensitive coastline known as Banning Ranch.

The ruling is yet another blow to the long-delayed plan to build homes, stores and hotels on the former oilfield, one of the state’s largest parcels of undeveloped coastal land still in private hands. In September last year, the California Coastal Commission voted to turn down a scaled-back plan for the project.

The developer, Newport Banning Ranch LLC, said it was undeterred by the court’s decision. “The ruling today may cause a delay of a year or two for our project, but Newport Banning Ranch is not going away,” company spokesman Sam Singer said in an emailed statement.

Environmental groups — as well as Newport Beach voters in 2006 — have sought to have the oilfield cleaned up and preserved as open space. Despite decades of oil drilling, the Banning Ranch site still contains wetlands and habitat for rare and endangered wildlife, including the California gnatcatcher, the burrowing owl and the San Diego fairy shrimp.

The city issued its impact report allowing the development in 2012, but the Banning Ranch Conservancy, a local environmental group that had tried to buy the land, challenged the report in court in 2015.

Reversing two lower courts, the Supreme Court held Thursday that the city’s EIR was flawed because it avoided any mention or analysis of several high-risk portions of the field that qualify as “environmentally sensitive habitat areas” under the California Coastal Act. The act effectively prohibits any development from disturbing or impinging on especially sensitive habitats.

“The omission resulted in inadequate evaluation of project alternatives and mitigation measures,” Justice Carol A. Corrigan wrote in her 28-page opinion for the court. “Information highly relevant to the Coastal Commission’s permitting function was suppressed. The public was deprived of a full understanding of the environmental issues raised by the Banning Ranch project proposal.”

Coastal Commission Executive Director Jack Ainsworth said in a statement that he was pleased by the court’s “very strong decision.”

“The primary reason the commission voted to deny the project was because of the impacts to the burrowing owl and gnatcatcher habitat, and loss of wetlands and sensitive vegetation,” Ainsworth said. “This decision underscores the requirements for local governments to thoroughly evaluate potential impacts to sensitive habitat, which is increasingly rare along the California coast.”

Newport Beach City Attorney Aaron Harp said the Coastal Commission has the final responsibility to designate sensitive habitat areas. He said in a statement that there is “a longstanding rule” that environmental impact reports “should not engage in speculation,” such as what habitat areas might be identified. He said the ruling will help the city proceed in the future.

Developer spokesman Singer said the opinion marks “a dramatic change in how coastal projects will have to be analyzed in the future” under the California Environmental Quality Act. The holding that the city must identify environmentally sensitive habitat areas in its impact report “is an unprecedented action that will significantly complicate future coastal land use processing,” he said.

But the lawyer for the plaintiff-appellant, a law professor, and an attorney for a pro-development public interest group all said Thursday’s ruling is in line with previous decisions interpreting the California Environmental Quality Act and with the language of the 47-year-old law.

“This is going back to CEQA first principles,” said John G. McClendon of Leibold McClendon & Mann in Irvine, who represents the Banning Ranch Conservancy.

A major pillar of CEQA is that an environmental impact report should provide an integrated examination of a proposed development, according to UC Irvine School of Law professor Alejandro Camacho.

It should be “a broad look at all the relevant environmental laws that will affect a project,” including viewpoints and concerns from different agencies and interests. One goal is “to get relevant agencies to talk, discuss, coordinate, maybe even disagree about,” Camacho said.

In this case, the supreme court said, Newport Beach did not factor the Coastal Act’s requirements about sensitive habitat areas into its impact report, nor did it coordinate with the Coastal Commission.

Although there is “ample evidence” that there are environmentally sensitive habitat areas (ESHA) on the Banning Ranch property, including two specifically identified in 2010 by a commission ecologist, the city’s environmental impact report “omitted any analysis of the Coastal Act’s ESHA requirements,” the court said. “As a result, the EIR did not meaningfully address feasible alternatives or mitigation measures.”

Newport Beach argued that it was not obligated to consider the act’s requirements and that it could pass off the job of identifying sensitive habitat areas to the Coastal Commission.

“Essentially, the City claims it was entitled to ignore the fact that Banning Ranch is in the coastal zone,” the supreme court said. “The City’s position is untenable.”

The court found the city abused its discretion in adopting the environmental impact report, which must be set aside.

McClendon predicted that the opinion will spell the end of a $490 million lawsuit the developer and landowners filed against the Coastal Commission in November for rejecting the project.

“I think their whole takings case just collapsed because it’s not ripe,” he said.

UCI’s Camacho said the ruling will delay any development by at least one or two years.

“It’s back to the drawing board with the city,” he said. “They’ve got a long way to go.

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