The Coastal Commission's ability to prevent development by designating environmentally sensitive habitat areas appears to depend on the existence of a certified local coastal program (LCP).

In a case from Sand City, the First District Court of Appeal ruled that the Coastal Commission could not overturn Sand City's approval of a 495-unit vacation housing project based on the Commission's conclusion that the site is an environmentally sensitive habitat area (ESHA). The court said that because Sand City's LCP did not designate the site as ESHA, the Commission effectively amended the LCP during an appeal of the housing project — an action that is not permissible.

However, in a case from Los Angeles County, the Second District Court of Appeal ruled that the Commission could reject a landowner's coastal development permit in part because the site is not covered by a certified LCP. When there is no LCP, the commission "is given wide latitude to examine conformity with all Coastal Act policies," the court ruled.

The Sand City case involves a controversy with more than 20 years of history. The Lonestar Company closed its sand mine, located between Highway 1 and the ocean in Sand City, in 1986. That same year, the Commission certified an LCP that designated the 39-acre sand mine site for visitor-serving commercial uses.

The Monterey Peninsula Regional Park District soon began advocating for LCP amendments to designate all of Sand City west of Highway 1 for parks and open space. The state Department of Parks and Recreation sought to acquire some of the land. But Sand City resisted the park agencies. Eventually, in 1996, Sand City, the state parks department and the regional park district signed an agreement setting aside most of Sand City's coastal areas for parks, but designating two sites — including the former sand mine — for development. Sand City amended its LCP to reflect the agreement, and the Commission approved the amendment. In 1997, the Commission approved an LCP amendment to permit mixed, rather than segregated, uses on the sand mine site.

The 1997 amendment came at the request of developer Security National Guaranty (SNG). It proposed building 495 residential units (including vacation rentals and time share condos), a hotel and a conference center at the former sand mine. Sand City approved a coastal development permit for the project in December 1998. The Sierra Club and two members of the Coastal Commission appealed, and, in December 2000, the Commission denied the development permit. The Commission based its decision on a staff report that declared the entire project site as ESHA. Under the Coastal Act, only uses dependent upon the habitat resources are permitted in an ESHA.

Seeking to overturn the Commission's decision, SNG sued. San Francisco Superior Court Judge Ronald Quidachay ruled for the Commission, but the First District overturned the lower court.

Although SNG made a number of arguments, the appellate court focused on the developer's contention that the Commission could not declare the project site ESHA during an administrative appeal of a coastal development permit. The Commission argued that the question was not ready for judicial review because SNG had not exhausted its administrative remedies and the Commission had not provided a final pronouncement regarding possible uses of SNG's site. The court concluded SNG's challenge was purely a legal question and ready for review.

The Commission cited LT-WR, LLC v. California Coastal Com., (2007) 152 Cal.App.4th 770 (see CP&DR Legal Digest, September 2007). In that case, the court ruled the Commission could designate a site as ESHA, even though the designation conflicted with an approved land use plan. But the First District said LT-WR was not applicable because the land use plan in that case specifically permitted designation of new ESHAs. Plus, LT-WR did not involve an administrative appeal.

Instead, the court determined that the Commission's action regarding SNG's site "clearly exceeded" its statutory authority, which limits the Commission's review to the project's compliance with a certified LCP.

"In denying SNG's permit at least in part based on its unlawful ESHA designation, the Commission imposed additional standards not found in Sand City's LCP," Justice Henry Needham Jr. wrote for the court. "SNG was entitled to have its development proposal judged by the standards of the certified LCP in effect at the time of its application."

"By declaring the site an ESHA, the Commission has impermissibly attempted to amend part of Sand City's LCP," Needham wrote.

The court ordered the Commission to rehear the appeal "based on the standards set forth in Sand City's certified LCP."

In the case from Los Angeles County, the court reached the opposite conclusion. In 2001, Milos and Trisha Douda filed an application for a coastal development permit to build a 5,800-square-foot house, a garage, a swimming pool and a septic system on a parcel in the Santa Monica Mountains. The Coastal Commission had certified a land use plan for the area in the 1980s. But because the Commission never certified follow-up implementation ordinances and zoning maps, the county lacks a certified local coastal program for the area. Hence, the Coastal Commission makes the permitting decisions. The Commission concluded that the coastal sage scrub and chaparral on the Doudas' property met the definition of ESHA, and the Commission denied the application.

The Doudas sued, lost at the trial court level and then appealed. They contended that the Commission's sole function was to determine whether a proposed development conformed with the certified land use plan or LCP. The county's land use plan did not designate the property as ESHA.

The court noted that a certified land use plan is not equivalent to a certified local coastal program. A land use plan is only one part of an LCP.

The court said that the Coastal Act does not address whether a permit issuing agency (the Coastal Commission in this case) can designate an ESHA if there is no LCP. The Doudas' interpretation would mean the Commission was "powerless to protect any such areas prior to their designation by a local government in a certified land use plan or a certified local coastal program," Justice Judith Ashmann-Gerst wrote for the court. "On the other hand, the Commission's interpretation will allow the issuing agency to protect natural resources for the benefit of the public … Undeniably, this interpretation more closely comports with the declared and salutary purposes of the Coastal Act."

"Notably," Ashmann-Gerst continued, "the oversight given to an issuing agency prior to the certification of a local coastal program is much broader than the oversight given to it after certification. In the latter case, the issuing agency must do no more than confirm compliance with the policies of the Coastal Act. In the former case, there is no such constraint."

The Doudas further argued that the Coastal Act gave the Commission only until September 1977 to designate "sensitive coastal resource areas," and leaves with local government the ability to determine the contents of land use plans and LCPs.

The court said sensitive coastal resource areas are not the same thing as environmentally sensitive habitat areas, and said local government cannot adopt plans and programs without the Commission's consent.

First Case:
Security National Guaranty, Inc. v. California Coastal Commission, No. A114647, 08 C.D.O.S. 1235, 2008 DJDAR 1408. Filed January 25, 2008.
The Lawyers:
For SNG: Thomas D. Roth, (415) 293-7684.
For the Commission: Peter Southworth, attorney general's office (916) 445-9555.
For the Sierra Club: Laurens Silver, (415) 383-7734.

Second Case:
Douda v. California Coastal Commission, No. B188210, 08 C.D.O.S. 1701, 2008 DJDAR 2053. Filed February 6, 2008. Modified March 4, 2008 at 2008 DJDAR 3223.
The Lawyers:
For Douda: Stanley Lamport, Cox, Castle & Nicholson, (310) 277-4222.
For the Commission: Gordon Overton, attorney general's office, (213) 897-2000.