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California Supreme Court Holds EIR For Project Located in the Coastal Zone Needed to Identify Potential ‘Environmentally Sensitive Habitat Areas’

In a unanimous decision, the California Supreme Court held that the California Environmental Quality Act (CEQA) requires an EIR for a project located within a coastal zone to identify areas in the project site that might qualify as “environmentally sensitive habitat areas” (ESHA) under the California Coastal Act and account for those areas in its analysis of project alternatives and mitigation measures. [Banning Ranch Conservancy v. City of Newport Beach, ___Cal.5th___, Case No. S227473 (Mar. 30, 2017). ]

Factual and Procedural Background

Banning Ranch is a privately owned 400-acre tract of land. A portion of the site is within the City of Newport Beach. The city’s general plan sets forth two options for the site. The preferred option is community open space. The second option allows for construction of up to 1,375 residential units, 75,000 square feet of retail facilities, and 75 hotel rooms. After the city was unable to raise funds to buy Banning Ranch for open space, Newport Banning Ranch, LLC (NBR) submitted a proposal for development consistent with the second option.

The Banning Ranch site is in a designated coastal zone under the Coastal Act. Under the Coastal Act, local governments within the coastal zone must submit a local coastal program for Coastal Commission approval. The program consists of a coastal land use plan (CLUP) and implementing regulations. The city has not yet adopted the regulatory component of its local coastal program, so the California Coastal Commission exercises permitting authority over the Banning Ranch development. Further, the Banning Ranch site is not included in the city’s CLUP.

Because the site is within the coastal zone, the Costal Act places limits on what can be developed at the site, particularly in areas designated as ESHA. The Coastal Act requires that ESHA “shall be protected against any significant disruption of habitat values, and only uses dependent on those resources shall be allowed within those areas.” (Pub. Resources Code, § 30240, subd. (a).)

The city prepared an Environmental Impact Report (EIR) for the Banning Ranch project. Although the EIR contained an extensive analysis of biological impacts, it did not identify potential ESHA or discuss the subject in substantive detail. Rather, it noted that the project would require a permit from the Coastal Commission, which would determine whether the site contained ESHA.

Comments on the draft EIR criticized the EIR for omitting an analysis of ESHA. The Coastal Commission itself submitted comments, suggesting that the EIR should address whether the project was consistent with the policies of the city’s CLUP and the Coastal Act. The letter pointed out that the development must avoid impacts to ESHA and recommended that the EIR use the CLUP, which includes criteria for the determination of ESHA, to evaluate sensitive habitat areas and appropriate buffer zones. The letter concluded that based on its preliminary analysis, Coastal Commission staff had found the project to be inconsistent with the Coastal Act’s ESHA requirements. Commission staff requested that the EIR more fully consider alternatives that would avoid ESHA impacts.

After the city certified the EIR and approved the project, petitioner Banning Ranch Conservancy (BRC) filed a petition for writ of mandate, contending that the EIR did not adequately analyze environmental impacts and mitigation measures with respect to ESHA and improperly deferred the analysis to the Coastal Commission. BRC also alleged that the city violated the requirement under the city’s general plan to coordinate with and work with the Coastal Commission to identify habitats for preservation, restoration, and development.

The trial court rejected the CEQA claims, but ruled in BRC’s favor on the General Plan claim. The Court of Appeal reversed on the General Plan claim, holding that the city complied with its General Plan.

The California Supreme Court’s Decision

Having established the applicable standard of review, the Court rejected the city’s argument that it was not required to reach conclusions as to whether the project site included ESHA. Although the final determination regarding ESHA would ultimately be made by the Coastal Commission under its permitting process, the Court held that it was inappropriate to defer the analysis entirely. The Court noted that Public Resources Code § 21003 requires local agencies to integrate the requirements of CEQA with other planning and environmental review procedures so that all those procedures, to the maximum feasible extent, run concurrently, rather than consecutively. The court also noted that the CEQA Guidelines encourage agencies to consult with responsible agencies in preparing EIRs so that the document will meet the needs of all the agencies that will use it to grant approvals. The court then concluded that the city ignored its duty to integrate CEQA review with the requirements of the Coastal Act, and gave little consideration to the Coastal Commission’s needs.

Further, reasoned the Court, the CEQA Guidelines specifically require an agency to consider related regulatory regimes, such as the Coastal Act, when considering the feasibility of project alternatives. Thus, according the Court, the regulatory limitations imposed by the Coastal Act’s ESHA provisions should have been central to the Banning Ranch EIR’s analysis of feasible alternatives.

Defending its actions, the city argued that lead agencies under CEQA are not required to make legal determinations that are within the sole jurisdiction of another agency. One concern raised was that the accuracy of an agency’s ESHA determination might be subject to de novo judicial review. The Court rejected these arguments, reasoning that a lead agency is not required to make a “legal” ESHA determination in an EIR. Rather, it must discuss potential ESHA and their ramifications for mitigation measure and alternatives when there is credible evidence that ESHA might be present on a project site. Such discussions would only be reviewed by the courts for “sufficiency.”

The city next argued that the identification of potential ESHA was not required under CEQA because it would be speculative. The Court rejected this argument because, on the record before it, there had been positive identifications of ESHA on the project site by Coastal Commission, and the applicant’s own consultant had identified areas of potential ESHA. The Coastal Commission staff had also offered the city assistance in identifying ESHA. Thus, the court determined that the city had “ample bases” for an informed ESHA analysis. Further, the city had routinely identified ESHA in EIRs for projects within the city’s CLUP. The fact that Banning Ranch is not in the CLUP did not excuse the City from identifying ESHA in the Banning Ranch EIR.

The Court also rejected the city’s argument that ESHA would be fully considered during the coastal development permitting phase of the project. The Court explained that such a delay was inconsistent with CEQA’s policy of integrated review and that the city’s position was inconsistent with CEQA’s requirement that lead agencies consider related regulations and matters of regional significance when weighing the feasibility of project alternatives. In reaching this determination, the Court emphasized that lead agencies must take a “comprehensive view” in an EIR.

Finally, the Court rejected the city’s supposition that if the city were required to identify ESHA in the EIR, it would have to accept the Coastal Commission staff’s opinions about what constitutes ESHA and what mitigation measures are required. The Court noted that CEQA does not require a lead agency to agree with the opinions of other agencies. But to serve the public and decision-makers, the EIR must lay out competing views. The Court explained that, although the Coastal Commission makes the final ESHA determination, the public and the members of the Coastal Commission were entitled to understand the disagreement between commission staff and the City on the subject of ESHA.

Because the Court determined the Banning Ranch EIR violated CEQA for failing to identify ESHA and account for ESHA in its discussion of alternatives and mitigation measures, the Court declined to address the general plan issues.

 Conclusion and Implications

The Supreme Court’s decision in this case emphasizes the importance of multi-agency coordination and provides insight into how CEQA’s mandates should be carried out in relationship to other, overlapping, regulatory regimes. Under the circumstances, the Court ruled that city’s EIR could not omit analysis of potential ESHA. The court recognized, however, that other regulations may be complex or their application may be uncertain, and that practical difficulties with interagency coordination may arise at the EIR stage. Thus, the Court stated that the level of agency coordination required in a particular case should be governed by the rule of reason.

The opinion is available at:

(Chris Stiles, Laura Harris)