Coon: Initially, I was mildly surprised at the opinion's outcome, its author and that the decision was unanimous. That was based on the Court of Appeals' framing of the issue of ESHA more in terms of “legal labeling” than substantive environmental analysis. But after reading the Supreme Court's opinion, including the salient facts it emphasized showing the City's inconsistent treatment of ESHA for CEQA purposes, its own vested interest in a particular road configuration that would unavoidably impact ESHA and its extreme resistance to cooperating with Coastal Commission staff to analyze and mitigate ESHA impacts, I'm actually not surprised at all.

GlobeSt.com: How will this decision impact commercial development moving forward?

Coon: It will impact the necessary CEQA analysis for proposed commercial development in the coastal zone where it would be in or adjacent to potential ESHA. Early biological studies and analyses of the site are obviously critical to project due diligence. An EIR can't simply “punt” ESHA designation and analyses to a subsequent Coastal Development Permit process under the auspices of the Coastal Commission. Whether or not it has a certified Local Coastal Program and direct local permitting authority, a lead agency city or county in the coastal zone will have to make a good-faith effort to analyze a project's impacts on potential ESHA—and discuss feasible mitigation measures and alternatives that would address those impacts—during the CEQA process. I'm not sure this is a bad thing at all, though. Most people (including prudent developers) would presumably say: “If there's bad news in the form of environmental constraints, give it to me up front.”

GlobeSt.com: What potential conflicts do you foresee with the decision, if any, and how might they be resolved?

Coon: In one sense, the decision is straightforward and states a simple rule: no matter who prepares it, an EIR for a project in the coastal zone must analyze any potential ESHA and discuss mitigation measures and alternatives to address project impacts on these. This ensures that 1) the lead agency can't just stick its head in the sand and ignore practical reality; 2) Coastal Act protections can be actually be implemented and serve to shape the project during the CEQA process; and (3) the EIR will be a user-friendly tool for the Coastal Commission when acting as a responsible agency. The bigger question to me is whether and how this case might be extended to apply in currently unforeseeable ways in other contexts where different responsible agencies (e.g., a regional water board, air district, CDFW, BCDC, State Lands Commission, etc.) play some role in the overall project approval process. That remains to be seen.

GlobeSt.com: What else should our readers take away from this decision?

Coon: Lead agencies, developers and their consultants should not play the role of ostrich when the staff of a responsible agency is critically commenting that the project EIR's analysis is inadequate and omits material information that is necessary to mitigate significant impacts or to allow the responsible agency to adequately do its job. That's a big red flag that says “trouble ahead,” particularly when you're dealing with a state agency with as much power as the Coastal Commission, and you face strong opposition that is willing to sue on your EIR. Generally speaking, in the CEQA world, fuller disclosure and robust, good-faith responses to comments raising serious environmental issues are never a bad thing.

NEWPORT BEACH, CA— The California Supreme Court recently issued its opinion in a case that pits the City of Newport Beach against the Banning Ranch Conservancy regarding the approval by the city for a mixed-use development within the coastal zone on the 400-acre Banning Ranch property. The case focuses on the development of land that is home to sensitive habitat.

According to Arthur Coon, shareholder and co-chair of the land use practice at Miller Starr Regalia, the ruling specified the following:

• Lead agencies and developers in the coastal zone may not omit or defer analysis of a project's impacts on potential environmentally sensitive habitat areas (ESHA)—rare or especially valuable and sensitive habitat areas given special protection by the Coastal Act—simply because the Coastal Commission has ultimate permitting jurisdiction or the final say as to whether specific areas actually constitute ESHA.
• CEQA requires EIRs to take a comprehensive view and coordinate their analysis with the planning and environmental review processes of other responsible agencies, and even though prepared by a local lead agency (here, the City of Newport Beach) they must take into account regionally significant impacts (which by definition Coastal Zone impacts are) and serve as a useful document for other responsible agencies (here, the Coastal Commission), as well.
• The facts in the record here showed the City didn't make a good faith attempt in the EIR to identify and discuss potential ESHA areas on the project site—even though it knew the developer's consultant had identified potential ESHA there, the Commission had through consent orders identified specific ESHA there and the City had in the past identified potential ESHA in connection with other projects (including an adjacent park project of the City), and its own local certified Coastal Land Use Plan even contained criteria for doing so.
• The practical consequences of the existence of ESHA are great, and will impact proposed mitigation measures and alternatives—which the Court noted are the “core” of an EIR—and greatly influence and shape the project footprint. The Coastal Act says ESHA must be avoided (and entirely, per the Commission's staff) by development, and development adjacent to ESHA must buffer and mitigate its impacts; while the Court stopped short of saying development can never legally occur in ESHA, a major theme of its analysis is that the Coastal Act's protection of ESHA is so strong that omission of analysis of potential ESHA in a coastal-zone project EIR renders the document inadequate. Significantly, this omission rendered inadequate the Banning Ranch project EIR's discussion of alternatives and mitigation measures to address potentially significant environmental impacts.
• The bottom line on ESHA is that coastal zone project EIRs are inadequate as informative documents under CEQA if they ignore and don't discuss evidence of impacts on potential ESHA; it is not just a legal label that doesn't matter or can be avoided and analysis of which can be deferred until a later Coastal Commission coastal development permit (CDP) process.

Because the Supreme Court reversed the Court of Appeal's decision on the basis that the project EIR was inadequate, it “punted” on and did not reach the argument that the City also violated a rather vague general plan policy requiring it to “work with appropriate state and federal agencies to identify wetlands and habitats to be preserved and/or restored and those on which development will be permitted.”

We spoke with Coon about his reaction to the decision and how the decision will impact commercial development moving forward.

GlobeSt.com: What is your reaction to the decision on Newport v. Banning Ranch Conservancy?

Coon: Initially, I was mildly surprised at the opinion's outcome, its author and that the decision was unanimous. That was based on the Court of Appeals' framing of the issue of ESHA more in terms of “legal labeling” than substantive environmental analysis. But after reading the Supreme Court's opinion, including the salient facts it emphasized showing the City's inconsistent treatment of ESHA for CEQA purposes, its own vested interest in a particular road configuration that would unavoidably impact ESHA and its extreme resistance to cooperating with Coastal Commission staff to analyze and mitigate ESHA impacts, I'm actually not surprised at all.

GlobeSt.com: How will this decision impact commercial development moving forward?

Coon: It will impact the necessary CEQA analysis for proposed commercial development in the coastal zone where it would be in or adjacent to potential ESHA. Early biological studies and analyses of the site are obviously critical to project due diligence. An EIR can't simply “punt” ESHA designation and analyses to a subsequent Coastal Development Permit process under the auspices of the Coastal Commission. Whether or not it has a certified Local Coastal Program and direct local permitting authority, a lead agency city or county in the coastal zone will have to make a good-faith effort to analyze a project's impacts on potential ESHA—and discuss feasible mitigation measures and alternatives that would address those impacts—during the CEQA process. I'm not sure this is a bad thing at all, though. Most people (including prudent developers) would presumably say: “If there's bad news in the form of environmental constraints, give it to me up front.”

GlobeSt.com: What potential conflicts do you foresee with the decision, if any, and how might they be resolved?

Coon: In one sense, the decision is straightforward and states a simple rule: no matter who prepares it, an EIR for a project in the coastal zone must analyze any potential ESHA and discuss mitigation measures and alternatives to address project impacts on these. This ensures that 1) the lead agency can't just stick its head in the sand and ignore practical reality; 2) Coastal Act protections can be actually be implemented and serve to shape the project during the CEQA process; and (3) the EIR will be a user-friendly tool for the Coastal Commission when acting as a responsible agency. The bigger question to me is whether and how this case might be extended to apply in currently unforeseeable ways in other contexts where different responsible agencies (e.g., a regional water board, air district, CDFW, BCDC, State Lands Commission, etc.) play some role in the overall project approval process. That remains to be seen.

GlobeSt.com: What else should our readers take away from this decision?

Coon: Lead agencies, developers and their consultants should not play the role of ostrich when the staff of a responsible agency is critically commenting that the project EIR's analysis is inadequate and omits material information that is necessary to mitigate significant impacts or to allow the responsible agency to adequately do its job. That's a big red flag that says “trouble ahead,” particularly when you're dealing with a state agency with as much power as the Coastal Commission, and you face strong opposition that is willing to sue on your EIR. Generally speaking, in the CEQA world, fuller disclosure and robust, good-faith responses to comments raising serious environmental issues are never a bad thing.