Banning Ranch Conservancy v. City of Newport Beach

Filed 3/30/17

IN THE SUPREME COURT OF CALIFORNIA

BANNING RANCH CONSERVANCY, )

)

Plaintiff and Appellant, )

) S227473

v. )

) Ct.App. 4/3 G049691

CITY OF NEWPORT BEACH et al., )

) Orange County

Defendants and Appellants; ) Super. Ct. No. 30-2012-00593557

)

NEWPORT BANNING RANCH LLC et al.,)

)

Real Parties in Interest and )

Appellants. )

____________________________________)

The City of Newport Beach (the City) approved a project for the

development of a parcel known as Banning Ranch. Banning Ranch Conservancy

(BRC) opposed the project and sought a writ of mandate to set aside the approval.

It alleged two grounds for relief: (1) the environmental impact report (EIR) was

inadequate, and (2) the City violated a general plan provision by failing to work

with the California Coastal Commission (Coastal Commission) to identify

wetlands and habitats. The trial court found the EIR sufficient, but granted BRC

relief on the ground that the general plan required the City to cooperate with the

Coastal Commission before approving the project.

1

The Court of Appeal agreed that the EIR complied with the requirements of

the California Environmental Quality Act (CEQA).1 However, it reversed on the

general plan issue, accepting the City‟s argument that the plan would be satisfied

if the City worked with the commission after project approval, during the process

for obtaining a coastal development permit.

In this court, the parties have briefed and argued both the general plan and

CEQA questions. The CEQA dispute centers on whether an EIR must identify

areas that might qualify as environmentally sensitive habitat areas (ESHA) under

the California Coastal Act of 1976 (Coastal Act; § 30000 et seq.), and account for

those areas in its analysis of project alternatives and mitigation measures. We

hold that CEQA so requires. The City‟s EIR is inadequate because it omitted any

consideration of potential ESHA on the project site, as well as ESHA that were

already identified. Because BRC is entitled to relief on its CEQA claims, we need

not address the general plan issues.

I. BACKGROUND

A. Banning Ranch, the General Plan, the Coastal Land Use Plan, and ESHA

Banning Ranch is a privately owned 400-acre tract of largely undeveloped

property, containing both oilfield facilities and wildlife habitat. Significantly, it

lies in the coastal zone that the Legislature has designated for special protection

under the Coastal Act. (§ 30001.5.) Most development in the coastal zone

requires a coastal development permit. (§ 30600.)

Although most of Banning Ranch is in unincorporated Orange County, all

of it falls within the City‟s “sphere of influence” for zoning and planning

purposes. (See Gov. Code, § 56425 et seq.) The City‟s general plan sets out two

1 Public Resources Code, section 21000 et seq. Unless otherwise noted,

further statutory references are to the Public Resources Code.

2

alternative goals for the area. The preferred option is community open space, with

development limited to nature education facilities and a park. The second

alternative would allow construction of up to 1,375 residential units, 75,000 square

feet of retail facilities, and 75 hotel rooms. As to both alternatives, the plan calls

for consolidating the oil operations and restoring wetlands and wildlife habitats. A

general plan “strategy” titled “Coordination with State and Federal Agencies”

requires the City to “[w]ork 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.” (City of Newport Beach, General Plan (July

2006) ch. 3, Land Use Element, p. 3-76.)

In addition to having a general plan, every local government in 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 CLUP may be completed first, with regulations developed later. (Yost v.

Thomas (1984) 36 Cal.3d 561, 566; § 30500.) The City had yet to enact its

regulatory component, or to adopt procedures for issuing coastal development

permits, and thus did not have a certified local coastal program. (See § 30600,

subd. (b)(1).) Accordingly, the Coastal Commission exercised permitting

authority over development on Banning Ranch. (See § 30600, subd. (c).)

The City did have a certified CLUP, but chose to exclude Banning Ranch

from its scope. The general plan explains that “Banning Ranch is a Deferred

Certification Area . . . due to unresolved issues related to land use, public access,

and the protection of coastal resources.” (City of Newport Beach, General Plan,

supra, ch. 13, Implementation Program, p. 13-8.) The CLUP defines ESHA in the

same terms as section 30107.5 of the Coastal Act: “any area in which plant or

animal life or their habitats are either rare or especially valuable because of their

special nature or role in an ecosystem . . . which could be easily disturbed or

3

degraded by human activities and developments” is an environmentally sensitive

habitat area. (City of Newport Beach, Local Coastal Program (Dec. 13, 2005)

Coastal Land Use Plan, 4.1.1, p. 4-1.) The CLUP sets out criteria for identifying

ESHA and establishes a presumption, rebuttable by “site-specific evidence,” that

areas meeting those criteria are ESHA.

The Coastal Act specifies that “[e]nvironmentally sensitive habitat areas

shall be protected against any significant disruption of habitat values, and only

uses dependent on those resources shall be allowed within those areas.” (§ 30240,

subd. (a).) “Development in areas adjacent to environmentally sensitive habitat

areas . . . shall be sited and designed to prevent impacts which would significantly

degrade those areas, and shall be compatible with the continuance of those habitat

. . . areas.” (§ 30240, subd. (b).)

B. The Proposed Development and the Early Identification of ESHA

The City was unable to raise the funds to buy Banning Ranch for open

space. In August 2008 Newport Banning Ranch LLC (NBR) submitted a proposal

for a residential and commercial village reaching the maximum levels of

development permitted by the general plan. At the City‟s request, the proposal

included a report on “the extensive field survey work” by NBR‟s biological

consultant “on potential special status habitats (potential ESHA).” The proposal

explained that the project was designed to avoid all areas of ESHA as defined by

the CLUP, with one exception. A major access road would have unavoidable

impacts on 0.06 acre of potential scrub ESHA and 0.02 acre of potential riparian

ESHA. These impacts would be fully mitigated. A map included in the biological

report showed numerous potential ESHA throughout Banning Ranch.

The City was not satisfied with NBR‟s proposed road network. Banning

Ranch is bordered by the Santa Ana River and other wetland areas to the west, and

by 19th Street to the north. (For a map of the area, with the roadway plan

4

ultimately approved by the City, see appen. A.) West Coast Highway, which runs

along the coastline, forms the southern boundary. The eastern boundary is

intersected or approached by 15th, 16th, 17th, and 18th Streets. The southeastern

corner of the site is bordered by Sunset Ridge Park, a separate City project that

was in progress at the time of NBR‟s proposal. NBR‟s plans called for a new

“Bluff Road,” running north from the highway and curving east to meet 15th

Street, with another segment extending northward. The Orange County master

plan of arterial highways (MPAH) envisioned Bluff Road as a six-lane divided

road running north and south through the eastern portion of Banning Ranch,

connecting 19th Street with the highway. However, NBR proposed to omit the

segment between 19th and 17th streets in order to limit ESHA impacts. It

contemplated amending the MPAH to reflect this change.

The mayor and city council wanted Bluff Road to run all the way to 19th

Street. NBR submitted a revised plan, saying it would accommodate the “road

circulation network requested by the City of Newport Beach as a public benefit.”

NBR‟s biological consultant pointed out that the changes “would significantly

impact scrub, wetlands, and riparian habitat that would be considered [ESHA]

pursuant to the City‟s [CLUP] as well as the California Coastal Act . . . . It is

important to note that impacts to ESHA are prohibited [by the] California Coastal

Act except for certain allowable uses, and the proposed connectors would be

problematic to the California Coastal Commission.”

Under CEQA, the “lead agency” is “the public agency which has the

principal responsibility for carrying out or approving a project.” (§ 21067.) As

lead agency for the NBR project, the City was responsible for preparing an EIR.

(See § 21100, subd. (a).) The process entails circulation of a notice of preparation,

followed by draft and final EIRs. The public may submit comments on the notice

5

of preparation and the draft EIR. (Cal. Code Regs., tit. 14, §§ 15082, 15087,

15089.)2

The City retained its own environmental consultant. In March 2009, it gave

notice that it would prepare a draft EIR for the Banning Ranch project. The notice

stated that the project “includes areas that may be defined and regulated under the

California Coastal Act . . . as either wetlands or environmentally sensitive habitat

areas (ESHAs).” The notice also explained that because the City did not have a

certified local coastal program, it could not issue coastal development permits for

the project. If the City approved the project plans, NBR would apply for a coastal

development permit from the Coastal Commission.

A number of public comments on the notice mentioned the need to identify

ESHA in the EIR. The City of Costa Mesa suggested that “[g]iven the

significance of the project site, the EIR should consider the Coastal Commission

thresholds for impacts to wild life and endangered species.” A consultant and a

board member for BRC, the group that eventually brought this lawsuit, also urged

the City to use Coastal Commission standards to assess ESHA on the site.

Another BRC member commented that the proposed Bluff Road extension crossed

ESHA, and would not be approved by the commission.

In April 2009, Coastal Commission staff learned that vegetation had been

cleared from three areas on Banning Ranch without a coastal development permit.

Investigation disclosed that NBR had leased portions of its property to a contractor

doing utility work. The contractor cleared the areas and used them for parking and

storage. In September and December 2010, the City and NBR representatives

visited the sites with a Coastal Commission ecologist to determine the extent of

2 Subsequent references to “Guidelines” are to the CEQA guidelines found in

title 14 of the California Code of Regulations, section 15000 et seq.

6

the unpermitted activity and its impacts. The ecologist decided that two cleared

areas, one on Banning Ranch and one straddling the boundary between the ranch

and City property, met the definition of ESHA.3 The City and NBR disputed that

determination and submitted documents supporting their view. Ultimately,

however, they chose not to contest the ESHA findings.

The parties formalized a stipulation that commission staff‟s ESHA findings

would be determinative only as to the two areas at issue, and that the commission

would undertake a separate analysis of other areas in any future proceedings. The

City and NBR noted their disagreement with the findings and retained the right to

present evidence on whether other areas were ESHA. The commission adopted

the staff findings, which included a determination that the unpermitted activity

was inconsistent with policies in the City‟s CLUP.4 It issued consent orders

requiring the City and NBR to restore the damaged sites.

3 The ecologist prepared a memorandum describing the December 2010 site

visit. She noted that the parties had discussed “our approach to making an ESHA

determination.” The memorandum refers to the map of potential ESHA on

Banning Ranch that was part of the biological report accompanying NBR‟s

original project proposal. It observes that the biological report “was posted on the

City of Newport Beach website and downloaded in August 2009; it has since been

removed. . . . Given that the vegetation . . . and ESHA . . . exhibits portray the

expert opinion of [NBR‟s consultant] at the time they were developed, we believe

it is appropriate to consider this information, along with other sources, in our

ESHA determination. We note that these data support our ESHA

conclusions . . . .”

4 Staff noted that until the City obtained certification of its local coastal

program, Coastal Act standards governed permitting and enforcement. However,

“because the City‟s CLUP has been certified and Banning Ranch is within the

City‟s sphere of influence, it serves as a valuable guidance document in such

matters.” The report quotes at length from the CLUP‟s provisions regarding

ESHA.

7

In March 2011, shortly before the consent orders were finalized, City and

NBR representatives met with Coastal Commission staff to talk about Banning

Ranch. Topics included attempts by commission staff to visit the project site, and

the fact that there had been “no recent contacts with [commission] staff.” Several

months later the City‟s planning manager e-mailed the NBR project manager,

asking what revisions would be made as a result of the commission‟s designation

of ESHA on the site. The NBR manager responded, “No revisions. We will have

to fight for our project — just as the City will for its park — but it can be built as

proposed after re-vegetating the two [areas] (which are in areas already designated

for open space) and providing the mitigation (again which is areas already

designated for open space — most of which is in the open space at the north of the

property). [¶] In short — the [Coastal Commission] agreement will not affect the

[draft] EIR.”

The reference to the City‟s park was to Sunset Ridge Park, the separate

project bordering Banning Ranch to the southeast. The final EIR for the park

project had been certified a year earlier. (See Banning Ranch Conservancy v. City

of Newport Beach (2012) 211 Cal.App.4th 1209, 1219 (Banning Ranch I).) The

Sunset Ridge Park EIR designated no area of the park as ESHA under the City‟s

CLUP, but acknowledged that two areas might be considered ESHA by the

Coastal Commission. (Id. at pp. 1233-1234.) The proposed public access to the

park was a road over Banning Ranch, the size and location of which became a

significant issue.

C. The Park Road Dispute

Commission staff issued a report in October 2011 recommending that a

coastal development permit be denied for Sunset Ridge Park. The report

explained that the City sought access to its park through Banning Ranch under an

agreement with NBR. The proposed access road crossed ESHA that were

8

occupied by the endangered California gnatcatcher. After working with the City

and considering several alternatives, staff had identified a route that would avoid

direct impacts on gnatcatcher habitat. Staff was prepared to recommend approval

of this alignment if the road was restricted to two lanes with limited daily usage

and gnatcatcher habitat was created on each side, with some other habitat

improvements.

The City and NBR would not agree to these conditions. The draft EIR for

the Banning Ranch project, which had just circulated, proposed widening the road

to four lanes. It would serve both the park and the NBR development, becoming a

major arterial road used by thousands of vehicles a day. Commission staff

observed that such a road would directly affect the ESHA already identified, and

others that were likely to be determined. The staff report concluded:

“To summarize, staff has been working earnestly with the City to identify a

[park] project that could be approved pursuant to modifications and special

conditions to bring it into compliance with the Coastal Act. However, after further

review, and after further communication with the City and with [NBR], it has

become clear that they cannot address the threshold issue of foreclosing future

expansion of the park access road, so that ESHA, buffers, and the California

gnatcatcher that relies on them, are permanently protected . . . . Compromises on

the widths and kinds of uses within buffers would also be required, that could only

be offset by revegetating the buffers with [plants] suitable for use by gnatcatchers,

and permanently preserving those areas. Certain issues remain unresolved related

to vernal pools and the legality of mowing habitat that would otherwise be ESHA.

Therefore, in our final analysis based on the information now before us, staff

determined that the proposed [park] project is not consistent with the Coastal Act,

and the proposed project must be denied. If the City and [NBR] anticipate a larger

road . . . to serve future development on the Banning Ranch property, all impacts

9

associated with a road in this location should be reviewed in the context of the

larger development it will ultimately serve. Approval of a smaller road and its

associated impacts is premature at this time.” (Cal. Coastal Com., Staff Rep. on

application No. 5-10-168 (Oct. 20, 2011) pp. 6-7.)

In a responding letter, the City claimed it had no legal authority to

revegetate the roadside areas, which would “create a new resource” instead of

providing a buffer. The letter said “it continues to be the position of the City that

its proposed park access road is not a precursor for future [NBR development].”

However, the City acknowledged that the proposed arterial road for the Banning

Ranch project was “double the size of the park road,” and that the park road was

“located with aforethought in the approximate location” of the arterial road. The

City protested the restrictions on the park access road as a “preemptive strike on

future development” that was beyond the scope of the Coastal Commission‟s

permitting authority. It noted that foreclosing the construction of an arterial road

on Banning Ranch would conflict with the circulation element of the City‟s

general plan, the County‟s master plan, and countywide transportation funding

requirements.

D. The Draft EIR and Public Comments

The City circulated a draft EIR for the Banning Ranch project in September

2011. The document explained that while the City could not issue coastal

development permits, it did “review[] pending development projects for

consistency with the General Plan, Zoning regulations, and the CLUP” before

applicants sought coastal development permits from the Coastal Commission. The

draft EIR did not identify potential ESHA or discuss the subject in any substantive

detail. It noted in various places that the project would require a permit from the

commission, which would determine whether Banning Ranch contained ESHA.

10

The City acknowledged that in doing so, the commission would take guidance

from the CLUP.

Many comments on the Banning Ranch draft EIR complained about the

omission of an ESHA analysis. One comment asserted that the avoidance of any

ESHA determination was “egregious” because both NBR and the City knew there

were ESHA on Banning Ranch because of the Coastal Commission consent

orders. A consultant retained by BRC claimed that while the draft EIR did not

include a map of probable ESHA, a computer search would reveal “numerous

wetland polygons . . . indicating the EIR preparer‟s opinion regarding the limits of

wetland ESHA on the project site; many of these areas are proposed for permanent

impacts, which is inconsistent with the Coastal Act.” Another comment referred

to a hearing on the park access road, from which “it appears that the Coastal

Commission has identified ESHA at Banning Ranch where the City had not.

Habitat mapping [in the EIR] must be revised to reflect [the] observations and the

standards of the Coastal Commission.”

The Coastal Commission submitted 15 pages of staff comments, noting

they “should not be construed as representing the opinion of the Coastal

Commission itself.” Staff said the City‟s CLUP provided “strong guidance” even

though no local coastal program was in place. They suggested the EIR address

whether the proposed development was consistent with policies in both the CLUP

and the Coastal Act. Several comments pertained to ESHA.

Commission staff pointed out that under the Coastal Act, development must

avoid impacts to ESHA. They said section 30240 does not permit “non-resource

dependent impacts to an ESHA area,” even if there is mitigation in other areas.

“Rather, Section 30240 requires that proposed new development be located

outside of ESHA areas. Additionally, Section 30240 requires siting, design, and

appropriate buffers to ensure that development adjacent to ESHA does not result

11

in” ESHA impacts. Staff recommended that the EIR use the CLUP to evaluate

sensitive habitat areas and appropriate buffer zones. “[I]t is important that the EIR

process incorporate a determination of probable ESHA areas and their required

buffers before land use areas and development footprints are established.” Staff

proposed that ESHA, wetland, and buffer zone delineations be reviewed by

commission biologists before the EIR was finalized.

Based on a “preliminary analysis,” commission staff found that the

proposed Banning Ranch development was inconsistent with the ESHA

requirements of the Coastal Act, particularly the four-lane portion of Bluff Road

connecting with West Coast Highway. They urged that the EIR “more fully

consider alternative intensities of development on the site and alternative means to

access the property,” because any access road from West Coast Highway would

likely be found inconsistent with the Coastal Act. The comment added that some

grading and placement of structures appeared to infringe on sensitive areas

mapped in the draft EIR, and “[o]nce more fully mapped as recommended herein,

the quantity of sensitive habitat areas may be even more extensive. In any event,

it‟s clear that the proposed development would result in the elimination of habitat

supporting sensitive species.” Staff suggested the City evaluate alternatives to

avoid these impacts.

E. The Final EIR

In the final EIR, the City responded to comments but did not change its

position on ESHA determinations. Regarding the Coastal Commission consent

orders, the City said the agreed-upon restoration plan was being implemented. It

acknowledged that the commission had identified two ESHA on the project site.

However, it said the commission “has not made an ESHA determination for the

remainder of the . . . site, and no conclusions of ESHA can and will be made by

the City at this time as part of the EIR process that would in any way bind the

12

Coastal Commission or elucidate on the Coastal Commission‟s ultimate

conclusions [sic]. Rather, as appropriate under CEQA, the City has analyzed the

impacts of the project, and concluded that they can be reduced to a less-than-

significant level or avoided with appropriate measures. As stated in the Consent

Orders, a separate analysis will be undertaken by the Coastal Commission in

connection with any future Coastal Development Permit application or proceeding

before the Coastal Commission involving these properties.”

In a general discussion of ESHA, the City emphasized that Sunset Ridge

Park and the NBR development were separate projects, and that the park was

beyond the scope of the Banning Ranch EIR. Although the Coastal Commission

was responsible for ESHA determinations, the City had “taken into consideration

. . . the policies of the Coastal Act in the Draft EIR and provide[d] a consistency

analysis of the proposed Project and those policies.” The City referred to a table

in the draft EIR finding the project generally consistent with a list of Coastal Act

provisions, but without any mention of ESHA. It recognized that “the proposed

alignment of Bluff Road is within areas that were identified as ESHA by the

Coastal Commission in the Consent Orders. The Coastal Commission has not

reviewed the Newport Banning Ranch proposal and has not made any

recommendations regarding Bluff Road at this time. The Coastal Commission

has, however, reviewed the City‟s Sunset Ridge Park application which included a

park access road in this same area and made recommendations on reconfiguring

the entry road to minimize impacts to sensitive coastal resources in a manner that

could be found consistent with the Coastal Act and Section 30240 in particular.”

The City did not mention that it had rejected those recommendations, saying only

that it had later “revised its application for Sunset Ridge Park.”

The City disavowed any obligation to further consider ESHA. It claimed it

had “fulfilled its obligation under CEQA to analyze the significant impacts of a

13

project on the physical environment.” It maintained that ESHA findings were

“within the discretion of the Coastal Commission, or a local agency as part of its

[local coastal plan] certification process. While the Draft EIR must identify a

project‟s impact on the environment, including biological resources such as

sensitive species and sensitive native vegetation, it is not required to make a

finding pursuant to the Coastal Act. That would be within the discretion and

authority of the Coastal Commission when this Project comes before them.” The

City noted that NBR would “apply for a Coastal Development Permit to

implement its proposed Project. The Coastal Commission‟s comments regarding

the level of detail required for a Coastal Development Permit will be forwarded to

[NBR] for its consideration in preparing its application to the Coastal

Commission.”5

With regard to using the CLUP to analyze environmental impacts, the City

noted Banning Ranch‟s status as a deferred certification area, and argued that “the

policies in the City‟s CLUP are not applicable to the Banning Ranch property. . . .

Because the City does not have a certified [local coastal plan], and the City‟s

CLUP does not include the Banning Ranch property, the City acknowledges that

any consideration of a Coastal Development Permit for the Project site would

require a finding of consistency with the . . . policies of the Coastal Act.”

5 An e-mail from the City‟s planning manager to its environmental

consultant, shortly before the final EIR was released, also indicates the City‟s

expectation that NBR would shoulder the responsibility for meeting Coastal

Commission requirements. When asked how much time and effort the consultant

should spend preparing a response to anticipated commission staff comments on

archaeological resources, the planning manager wrote: “Very little. After the

EIR‟s certified, the work is done. It will be [NBR‟s] responsibility to get it

through [the Coastal Commission].”

14

In response to commission staff‟s ESHA comments, the City stated: “The

purpose of the Draft EIR is to analyze a proposed project‟s impact on the physical

environment. It is not, in and of itself, a policy consistency analysis, except to the

extent that such inconsistencies reveal environmental impacts that otherwise are

not discussed. . . . [T]he Draft EIR analyzes the proposed Project‟s impact on

biological resources, including federal and State listed endangered and threatened

species, sensitive plant and animal species, and specific habitats such as wetlands

and vernal pools. All impacts to these resources would be mitigated or avoided

with the Mitigation Program . . . . The Draft EIR acknowledges that the Coastal

Commission makes the determination as to whether any or all of these constitute

ESHA under the Coastal Act, and application of the policies of the Coastal Act to

the existing conditions on the Project site would be undertaken as part of the

Coastal Commission‟s Coastal Development Permit process.” The City did not

directly respond to staff‟s concern about the identification of potential ESHA

“before land use areas and development footprints are established.” It did not

respond at all to the suggestion that ESHA and buffer zone delineations be

reviewed by commission staff before the EIR was finalized.

The City extensively addressed commission staff‟s comments on the Bluff

Road access from West Coast Highway. It acknowledged that the staff

recommendations prepared for the Sunset Ridge Park permit application included

a finding that the proposed arterial road would be inconsistent with the Coastal

Act. However, the City noted that no action had yet been taken on the Sunset

Ridge Park application. It repeated that staff had indicated they would approve an

access road from West Coast Highway under some circumstances. A new

connection from 19th Street to the highway was a “fundamental goal” of the

project, and the City had accepted funding from the county (“Measure M” funds)

premised on the condition that it would complete that link. It found that

15

elimination of access from the highway would be “infeasible” in light of these

constraints.

The City‟s response concluded: “Bluff Road through the property is

reflected in the City‟s General Plan Circulation Element Master Plan of Streets

and Highways and the Orange County MPAH. The City cannot eliminate this

planned circulation improvement without amending its Circulation Element, and

cannot unilaterally amend the County‟s MPAH. Further, eliminating Bluff Road

would place the City in conflict with its obligations assumed in connection with its

acceptance of Measure M funds. Finally, eliminating Bluff Road access from

West Coast Highway would not substantially lessen impacts to biological

resources and would eliminate an alternative means of coastal access.”

F. Project Approval and the Litigation Below

The City certified the final EIR in July 2012. It also approved NBR‟s

master development plan, a development agreement, and zoning changes for

Banning Ranch. BRC challenged the project approval by seeking a writ of

mandate. It contended the EIR did not adequately disclose or analyze

environmental impacts and mitigation measures with respect to ESHA, instead

deferring these critical functions. BRC also alleged that the City had violated its

obligation under the general plan to work with the Coastal Commission to identify

areas on Banning Ranch to be protected from development.

The City responded that CEQA does not require an EIR to include ESHA

determinations. It defended its exercise of discretion under the general plan. The

trial court rejected the CEQA claims, relying on Banning Ranch I, supra, 211

Cal.App.4th 1209. In that case, the Court of Appeal held it was sufficient for the

City‟s Sunset Ridge Park EIR to note potential ESHA and acknowledge that the

Coastal Commission‟s designation of ESHA might lead it to reject proposed

16

mitigation measures. However, the trial court granted BRC‟s petition, finding that

the City had failed to meet its obligations under the general plan.

The Court of Appeal reversed the grant of relief, concluding that the

general plan did not require the City to work with the Coastal Commission before

project approval. On the CEQA issue, the court agreed with the City that ESHA

designations were a legal determination to be made by the Coastal Commission,

and not a subject for consideration in the EIR. Like the trial court, the Court of

Appeal found support in Banning Ranch I, supra, 211 Cal.App.4th at pages 1233-

1234. It acknowledged that in Banning Ranch I the park was subject to the City‟s

CLUP, and the City did identify potential ESHA in the EIR. However, it deemed

these differences unimportant, finding it sufficient for the Banning Ranch EIR to

note that the project was outside the scope of the CLUP and the Coastal

Commission would determine whether ESHA would be affected. The court

concluded, “CEQA does not require the City to prognosticate as to the likelihood

of ESHA determinations and coastal development permit approval.”

II. DISCUSSION

A. Sufficiency of the EIR

“[A]n agency may abuse its discretion under CEQA either by failing to

proceed in the manner CEQA provides or by reaching factual conclusions

unsupported by substantial evidence. (§ 21168.5.) Judicial review of these two

types of error differs significantly: While we determine de novo whether the

agency has employed the correct procedures, „scrupulously enforc[ing] all

legislatively mandated CEQA requirements‟ (Citizens of Goleta Valley v. Board of

Supervisors (1990) 52 Cal.3d 553, 564), we accord greater deference to the

agency‟s substantive factual conclusions. In reviewing for substantial evidence,

the reviewing court „may not set aside an agency‟s approval of an EIR on the

ground that an opposite conclusion would have been equally or more reasonable,‟

17

for, on factual questions, our task „is not to weigh conflicting evidence and

determine who has the better argument.‟ (Laurel Heights [Improvement Assn. v.

Regents of University of California (1988)] 47 Cal.3d [376,] 393.” (Vineyard

Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40

Cal.4th 412, 435 (Vineyard).)

Whether an EIR has omitted essential information is a procedural question

subject to de novo review. (Vineyard, supra, 40 Cal.4th at p. 435; Sierra Club v.

State Bd. of Forestry (1994) 7 Cal.4th 1215, 1236 (Sierra Club).) Here the

principal issue is whether the Banning Ranch EIR was required to identify

potential ESHA and analyze the impacts of the project on those areas. CEQA

requires every EIR to identify “[a]ll significant effects on the environment of the

proposed project,” which would generally include effects on sensitive habitat

areas. (§ 21100, subd. (b)(1); see Guidelines, § 15126.2.) ESHA, however, are

“rare or especially valuable” habitat areas in the coastal zone, given enhanced

protection by the Coastal Act. (§ 30107.5) They must be “protected against any

significant disruption of habitat values, and only uses dependent on those

resources shall be allowed within those areas.” (§ 30240, subd. (a).)

Development adjacent to ESHA “shall be sited and designed to prevent impacts

which would significantly degrade those areas, and shall be compatible with the

continuance of those habitat . . . areas.” (§ 30240, subd. (b).)

The City argues that CEQA imposes no duty to consider the Coastal Act‟s

ESHA requirements. It claims it was sufficient for the Banning Ranch EIR to

analyze the impacts of the NBR project, including those on sensitive habitat areas,

without accounting for potential ESHA. Essentially, the City claims it was

entitled to ignore the fact that Banning Ranch is in the coastal zone. The City‟s

position is untenable. CEQA sets out a fundamental policy requiring local

agencies to “integrate the requirements of this division with planning and

18

environmental review procedures otherwise required by law or by local practice so

that all those procedures, to the maximum feasible extent, run concurrently, rather

than consecutively.” (§ 21003, subd. (a).) The CEQA guidelines similarly specify

that “[t]o the extent possible, the EIR process should be combined with the

existing planning, review, and project approval process used by each public

agency.” (Guidelines, § 15080.)

An EIR project description must include “[a] list of related environmental

review and consultation requirements [found in] federal, state, or local laws,

regulations, or policies. To the fullest extent possible, the lead agency should

integrate CEQA review with these related environmental review and consultation

requirements.” (Guidelines, § 15124, subd. (d)(1)(C), italics added; see also

Guidelines, § 15006, subd. (i).) Toward that end, agencies are encouraged to

“[c]onsult[] with state and local responsible agencies before and during

preparation of an environmental impact report so that the document will meet the

needs of all the agencies which will use it.” (Guidelines, § 15006, subd. (g).)

Here, the City ignored its obligation to integrate CEQA review with the

requirements of the Coastal Act, and gave little consideration to the Coastal

Commission‟s needs.

The Guidelines specifically call for consideration of related regulatory

regimes, like the Coastal Act, when discussing project alternatives. An EIR must

“describe a range of reasonable alternatives to the project,” or to its location, that

would “feasibly attain” most of its basic objectives but “avoid or substantially

lessen” its significant effects. (Guidelines, § 15126.6, subd. (a).) Among the

factors relevant to the feasibility analysis are “other plans or regulatory limitations,

[and] jurisdictional boundaries (projects with a regionally significant impact

should consider the regional context).” (Id., subd. (f)(1).) By definition, projects

with substantial impacts in the coastal zone are regionally significant.

19

(Guidelines, § 15206, subd. (b)(4)(C).)6 Thus, 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.

Evaluation of project alternatives and mitigation measures is “[t]he core of

an EIR.” (Citizens of Goleta Valley v. Board of Supervisors, supra, 52 Cal.3d at p.

564 (Goleta Valley).) “The purpose of an environmental impact report is to

provide public agencies and the public in general with detailed information about

the effect which a proposed project is likely to have on the environment; to list

ways in which the significant effects of such a project might be minimized; and to

indicate alternatives to such a project.” (§ 21061; see § 21002.1, subd. (a).)

CEQA procedures “are intended to assist public agencies in systematically

identifying both the significant effects of proposed projects and the feasible

alternatives or feasible mitigation measures which will avoid or substantially

lessen such significant effects.” (§ 21002; see Guidelines, §§ 15126.4, 15126.6.)

Decisions as to the feasibility of alternatives and mitigation measures are

subject to a rule of reason. (Goleta Valley, supra, 52 Cal.3d at p. 565; Laurel

Heights Improvement Assn. v. Regents of University of California, supra, 47

Cal.3d at p. 407 (Laurel Heights I); see Guidelines, § 15126.6, subd. (f)(1).) No

one factor establishes a categorical limit on the scope of reasonably feasible

alternatives to be discussed in an EIR. (Goleta Valley, at p. 566; Guidelines,

§ 15126.6, subd. (f).) Here, however, the City‟s EIR omitted any analysis of the

Coastal Act‟s ESHA requirements. It did not discuss which areas might qualify as

6 In general, an EIR must take “the regional setting” of a project into account,

placing “[s]pecial emphasis . . . on environmental resources that are rare or unique

to that region and would be affected . . . .” (Guidelines, § 15125, subd. (c).)

“[T]he significant effects of the project [must] be considered in the full

environmental context.” (Ibid.)

20

ESHA, or consider impacts on the two ESHA delineated in the Coastal

Commission‟s consent orders. As a result, the EIR did not meaningfully address

feasible alternatives or mitigation measures.7 Given the ample evidence that

ESHA are present on Banning Ranch, the decision to forego discussion of these

topics cannot be considered reasonable.

None of the City‟s justifications for deferring the ESHA analysis is

persuasive. It contends it has no authority to designate ESHA on Banning Ranch

because only the Coastal Commission can do that. Amicus curiae League of

California Cities makes a similar argument that lead agencies are not required to

make legal determinations within the province of another agency. The League

expresses concern that ESHA identifications in EIRs might be subject to de novo

judicial review. However, 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 measures and alternatives when there is credible

evidence that ESHA might be present on a project site. A reviewing court

considers only the sufficiency of the discussion.8

7 We express no view as to whether ESHA impacts must be avoided, as

opposed to mitigated. (See Bolsa Chica Land Trust v. Superior Court (1999) 71

Cal.App.4th 493, 507.) The issue never arose here because the EIR did not

discuss ESHA impacts. We use “mitigation” in a general sense, to include such

measures as buffer zones.

8 BRC contends the City did have legal authority to designate ESHA, relying

on Douda v. California Coastal Com. (2008) 159 Cal.App.4th 1181. Douda is

inapposite; there the court reviewed a challenge to the Coastal Commission’s

authority to designate ESHA. (Id. at p. 1191.) In passing, the court noted that a

local government may become an “issuing agency,” i.e., an agency empowered to

issue a coastal development permit, before it certifies a local coastal program. (Id.

at pp. 1188, 1191.) For that to happen, however, the local agency must “establish

procedures for the filing, processing, review, modification, approval, or denial of a

coastal development permit.” (§ 30600, subd. (b)(1).) The City had no such

procedures in place.

(footnote continued on next page)

21

The City claims that identification of potential ESHA would be merely

speculative. The argument fails for several reasons. First, no speculation was

involved with respect to the two ESHA covered by the consent orders.9 These

areas were in the path of the Bluff Road access from West Coast Highway, yet the

City approved the road without considering ESHA requirements. Further, the City

knew that NBR‟s own biological consultant had identified numerous potential

ESHA in other areas. The City‟s CLUP provided guidelines for identifying

ESHA. The City was offered the assistance of Coastal Commission staff. It had

ample bases for an informed discussion of the NBR project‟s potential ESHA

impacts. “The fact that precision may not be possible . . . does not mean that no

analysis is required. „Drafting an EIR . . . involves some degree of forecasting.

While foreseeing the unforeseeable is not possible, an agency must use its best

efforts to find out and disclose all that it reasonably can.‟ (Guidelines, § 15144.)”

(Laurel Heights I, supra, 47 Cal.3d at p. 399.) Here the City did not use its best

efforts to investigate and disclose what it discovered about ESHA on Banning

Ranch.

(footnote continued from previous page)

The Douda court, in the course of summarizing the terms of section 30600,

which are less than crystalline, suggested that a local agency might be authorized

to issue permits without either certifying a local coastal program or following

section 30600, subdivision (b)(1). (Douda v. California Coastal Com., supra, 159

Cal.App.4th at p. 1188.) The suggestion is incorrect. The statute leaves no room

for such a scenario. (§ 30600, subds. (c) & (d).)

9 BRC asserts the City had earlier determined that all of Banning Ranch was

ESHA. The claim is misleading. As the City explains, a study referenced in a

2003 planning document had generally identified Banning Ranch as “ESHA.”

After Coastal Commission staff cautioned the City about the consequences of

designating ESHA under the Coastal Act, the City changed its usage to refer to

Banning Ranch as an “environmental study area.”

22

It also appears that the City has evaluated ESHA impacts as a matter of

course for other projects. The EIR explained that even though it did not have a

certified local coastal program and therefore could not issue coastal development

permits, the City did review project applications for consistency with its general

plan, zoning regulations, and CLUP. Applicants would then seek a coastal

development permit from the Coastal Commission. Accordingly, it seems the City

routinely applied its CLUP requirements, which include specific ESHA

guidelines, even though ultimate ESHA determinations would be made by the

commission. The City‟s excuse for not doing so in this case is that Banning Ranch

is not covered by the CLUP. However, the EIR acknowledged that the

commission would consider the CLUP‟s provisions when it assessed ESHA on

Banning Ranch. Nothing prevented the City from doing the same, just as it does

for projects within the CLUP.

The City insists that ESHA would be fully considered during the permitting

phase of the project. Such a delay is inconsistent with CEQA‟s policy of

integrated review. (§ 21003, subd. (a).) As noted, a lead agency must consider

related regulations and matters of regional significance when weighing project

alternatives. (Guidelines, § 15126.6.) The City‟s argument is also undermined by

Citizens for Quality Growth v. City of Mt. Shasta (1988) 198 Cal.App.3d 433.

There, the EIR did not discuss a mitigation measure proposed by the United States

Army Corps of Engineers. The city justified the omission by claiming the corps

would act to protect wetlands during the permit process. The court was not

persuaded. “Each public agency is required to comply with CEQA and meet its

responsibilities, including evaluating mitigation measures and project alternatives.

(See Guidelines, § 15020.)” (Citizens for Quality Growth, at p. 442, fn. 8.) Lead

agencies in particular must take a comprehensive view in an EIR. (§ 21002.1,

23

subd. (d); Habitat & Watershed Caretakers v. City of Santa Cruz (2013) 213

Cal.App.4th 1277, 1298-1299.)

The City‟s position finds no support in Banning Ranch I, supra, 211

Cal.App.4th 1209. In that case the City identified potential ESHA in Sunset Ridge

Park and discussed mitigation measures. BRC argued that the Coastal

Commission was likely to disagree but did not claim, as it does here, that the City

had entirely failed to designate potential ESHA. The Banning Ranch I court

concluded that the Sunset Ridge Park EIR “adequately flagged potential

inconsistencies and addressed them in advance through proposed mitigation.” (Id.

at p. 1234.) Here, the Court of Appeal reasoned that the Banning Ranch EIR also

“adequately flagged potential inconsistencies with the Coastal Act by emphasizing

(1) that the Project was outside the scope of [the CLUP], and (2) that the Coastal

Commission would determine whether ESHAs were affected by the Project.” We

disagree. Instead of flagging and addressing potential conflicts with Coastal Act

provisions, the City avoided any mention of them.

Hanging over the City‟s briefing, and much of the Court of Appeal opinion,

is the supposition that if the City were required to identify potential ESHA in the

EIR, it would have to accept the ESHA designations and related measures

proposed by commission staff. That is not the case. An EIR is an informational

document, not a settlement agreement or a memorandum of understanding. The

lead agency may disagree with the opinions of other agencies. (See North Coast

Rivers Alliance v. Marin Municipal Water Dist. Bd. of Directors (2013) 216

Cal.App.4th 614, 642-643; California Native Plant Society v. City of Rancho

Cordova (2009) 172 Cal.App.4th 603, 625-626 (California Native Plant).) In

order to serve the important purpose of providing other agencies and the public

with an informed discussion of impacts, mitigation measures, and alternatives, an

EIR must lay out any competing views put forward by the lead agency and other

24

interested agencies. (See § 21061; Laurel Heights I, supra, 47 Cal.3d at p. 391.)

The Guidelines state that an EIR should identify “[a]reas of controversy known to

the lead agency including issues raised by [other] agencies.” (Guidelines,

§ 15123, subd. (b)(2).) “Disagreement among experts does not make an EIR

inadequate, but the EIR should summarize the main points of disagreement among

the experts.” (Guidelines, § 15151.) “[M]ajor environmental issues raised when

the lead agency‟s position is at variance with recommendations and objections

raised in the comments must be addressed in detail.” (Guidelines, § 15088, subd.

(c).)

The City correctly points out that the ultimate findings regarding ESHA on

Banning Ranch will be made by the California Coastal Commissioners

themselves, not commission staff. But both the commissioners and interested

members of the public are entitled to understand the disagreements between

commission staff and the City on the subject of ESHA. The requirement that the

City spell out its differences with commission staff “ „helps [e]nsure the integrity

of the process of decision by precluding stubborn problems or serious criticism

from being swept under the rug. . . . [W]here comments from responsible experts

or sister agencies disclose new or conflicting data or opinions that cause concern

that the agency may not have fully evaluated the project and its alternatives, these

comments may not simply be ignored. There must be good faith, reasoned

analysis in response.‟ ” (People v. County of Kern (1974) 39 Cal.App.3d 830,

841-842; accord, Concerned Citizens of Costa Mesa, Inc. v. 32nd Dist.

Agricultural Assn. (1986) 42 Cal.3d 929, 935 (Concerned Citizens).) Rather than

sweep disagreements under the rug, the City must fairly present them in its EIR. It

is then free to explain why it declined to accept commission staff suggestions.

Some information on ESHA and the disputes between the City and

commission staff can be gleaned from a diligent search of the EIR appendices and

25

other elements of the administrative record. However, such a fragmented

presentation is inadequate. Readers of an EIR should not be required to “ferret out

an unreferenced discussion in [related material] . . . . The data in an EIR must not

only be sufficient in quantity, it must be presented in a manner calculated to

adequately inform the public and decision makers, who may not be previously

familiar with the details of the project. „[I]nformation “scattered here and there in

EIR appendices,” or a report “buried in an appendix,” is not a substitute for “a

good faith reasoned analysis . . . .” ‟ ” (Vineyard, supra, 40 Cal.4th at p. 442.)

Here the City did not make a good faith attempt to analyze project alternatives and

mitigation measures in light of applicable Coastal Act requirements. It openly

declared that it was omitting any consideration of potential ESHA from the EIR,

and deferring that analysis to a subsequent permitting process. The City‟s

approach, if generally adopted, would permit lead agencies to perform truncated

and siloed environmental review, leaving it to other responsible agencies to

address related concerns seriatim.

For all the reasons stated above, the Banning Ranch EIR is insufficient.

The City did provide a detailed biological analysis of project impacts, which may

have been adequate were Banning Ranch not in the coastal zone. But, however

technically accurate the City‟s analysis might otherwise be, it fell short by failing

to account for the Coastal Act‟s ESHA protections. “The preparation and

circulation of an EIR is more than a set of technical hurdles for agencies and

developers to overcome. The EIR‟s function is to ensure that government officials

who decide to build or approve a project do so with a full understanding of the

environmental consequences and, equally important, that the public is assured

those consequences have been taken into account. (Laurel Heights I, supra, 47

Cal.3d at pp. 391-392.)” (Vineyard, supra, 40 Cal.4th at p. 449; see Concerned

Citizens, supra, 42 Cal.3d at pp. 935-936.) The subject of ESHA on Banning

26

Ranch was raised early and often by City residents and Coastal Commission staff.

The City owed them a reasoned response.

We note that the City‟s handling of the Banning Ranch EIR not only

conflicted with its CEQA obligations, but also ignored the practical reality that the

project must ultimately pass muster under the Coastal Act. As one court has

observed, coordination between a lead agency and a permitting agency “serves the

laudable purpose of minimizing the chance the City will approve the Project, only

to have later permits for the Project denied . . . .” (California Native Plant, supra,

172 Cal.App.4th at p. 642.) Agreement between the agencies is not necessary, as

we have discussed, but conflicts may be avoided or reduced by consultation in

early stages.

B. Reversal Is Required

By certifying an inadequate EIR, the City abused its discretion. “[F]ailure

to disclose information called for by CEQA may be prejudicial „regardless of

whether a different outcome would have resulted if the public agency had

complied‟ with the law (§ 21005, subd. (a)).” (Neighbors for Smart Rail v.

Exposition Metro Line Construction Authority (2013) 57 Cal.4th 439, 463.) On

the other hand, “there is no presumption that error is prejudicial.” (§ 21005, subd.

(b).) “Insubstantial or merely technical omissions are not grounds for relief.

[Citation.] „A prejudicial abuse of discretion occurs if the failure to include

relevant information precludes informed decisionmaking and informed public

participation, thereby thwarting the statutory goals of the EIR process.‟ ”

(Neighbors for Smart Rail, at p. 463; see Sierra Club, supra, 7 Cal.4th at pp. 1236-

1237.)

27

Accordingly, reversal is not called for whenever an agency may have failed

to integrate its CEQA review with other environmental review procedures “to the

maximum feasible extent.” (§ 21003, subd. (a).)10 To be prejudicial, a failure to

account for related regulations must substantially impair the EIR‟s informational

function. Here, the City‟s failure to discuss ESHA requirements and impacts was

neither insubstantial nor merely technical. The omission resulted in inadequate

evaluation of project alternatives and mitigation measures. 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.

BRC is entitled to relief on its CEQA claim. We express no view on the

general plan issues discussed by the courts below.

10 We note that whether such a criticism may fairly be leveled in the first

place is a question calling for application of a rule of reason, similar to the rule

governing review of an EIR‟s analysis of “feasible” project alternatives. (See

Goleta Valley, supra, 52 Cal.3d at p. 565; Guidelines, § 15126.6, subd. (f)(1).)

Other regulations may be complex. Their application may be uncertain. Practical

difficulties with interagency coordination may arise at the EIR stage. Courts must

be careful not to second-guess good faith efforts to coordinate environmental

review.

28

III. DISPOSITION

We reverse the Court of Appeal‟s judgment and remand for further

proceedings consistent with the views expressed herein.

CORRIGAN, J.

WE CONCUR:

CANTIL-SAKAUYE, C. J.

WERDEGAR, J.

CHIN, J.

LIU, J.

CUÉLLAR, J.

KRUGER, J.

29

Appendix

1

See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Banning Ranch Conservancy v. City of Newport Beach

__________________________________________________________________________________

Unpublished Opinion

Original Appeal

Original Proceeding

Review Granted XXX 236 Cal.App.4th 1341

Rehearing Granted

__________________________________________________________________________________

Opinion No. S227473

Date Filed: March 30, 2017

__________________________________________________________________________________

Court: Superior

County: Orange

Judge: Robert Louis Becking, Temporary Judge*, Nancy Weiben Stock and Kim Garlin Dunning

__________________________________________________________________________________

Counsel:

Leibold McClendon & Mann, John G. McClendon, Douglas M. Johnson and David H. Mann for Plaintiff

and Appellant.

The Law Office of Julie M. Hamilton, Julie M. Hamilton and Leslie Gaunt for Friends of the Canyon as

Amicus Curiae on behalf of Plaintiff and Appellant.

Law Offices of Stephan C. Volker, Stephan C. Volker, Alexis E. Krieg and Daniel P. Garrett-Steinman for

North Coast Rivers Alliance as Amicus Curiae on behalf of Plaintiff and Appellant.

Lisa T. Belenky; Coast Law Group and Marco Gonzalez for Center for Biological Diversity, California

Native Plant Society and Coastal Environmental Rights Foundation as Amici Curiae on behalf of Plaintiff

and Appellant.

Aaron Harp, City Attorney, Leonie Mulvihill, Assistant City Attorney; Remy Moose Manley, Whitman F.

Manley and Jennifer S. Holman for Defendants and Appellants.

Thomas Law Group and Tina Thomas for California Infill Builders Federation as Amicus Curiae on behalf

of Defendants and Appellants.

Joshua P. Thompson and Christopher M. Kieser for Pacific Legal Foundation as Amicus Curiae on behalf

of Defendants and Appellants.

The Sohagi Law Group, Margaret M. Sohagi, Nicole H. Gordon and R. Tyson Sohagi for League of

California Cities and California State Association of Counties as Amici Curiae on behalf of Defendants and

Appellants.

Manatt, Phelps & Phillips, Susan K. Hori and Benjamin G. Shatz for Real Parties in Interest and

Appellants.

Kamala D. Harris, Attorney General, John A. Saurenman, Assistant Attorney General, and Jamee Jordan

Patterson, Deputy Attorney General, for California Coastal Commission as Amicus Curiae.

*Pursuant to California Constitution, Article VI, section 21.

Counsel who argued in Supreme Court (not intended for publication with opinion):

John G. McClendon

Leibold McClendon & Mann

9841 Irvine Center Drive, Suite 230

Irvine, CA 92618

(949) 585-6300

Whitman F. Manley

Remy Moose Manley

555 Capitol Mall, Suite 800

Sacramento, CA 95814

(916) 443-2745

Benjamin G. Shatz

Manatt, Phelps & Phillips

695 Town Center Drive, 14th Floor

Costa Mesa, CA 92626

(714) 371-2500