In a published opinion filed May 20, 2015, the Fourth District Court of Appeal reversed the trial court’s judgment granting mandate relief based on a general plan violation, affirmed its denial of relief under CEQA, and thereby upheld the City of Newport Beach’s approval of a mixed-use development within the coastal zone on the 400-acre Banning Ranch property. Banning Ranch Conservancy v. City of Newport Beach (Newport Banning Ranch LLC, et al., Real Parties in Interest) (4th Dist., Div. 3, 2015) ___ Cal.App.4th ___, 2015 WL 2399347.

The project approved by the City seeks to develop one-fourth of Banning Ranch for residential/commercial uses, while preserving the remainder as open space and parks in conjunction with removal and remediation of much of the site’s oil production facilities. Plaintiff Conservancy advanced two primary claims in opposition to the approval, alleging that the City (1) violated its own general plan by failing to adequately “coordinate” with the California Coastal Commission prior to approval, and (2) violated CEQA by failing to designate “environmentally sensitive habitat areas” (ESHAs) in the Project EIR. The trial court granted the Conservancy’s writ petition in part, agreeing with the first claim and rejecting the second. The Court of Appeal agreed with the trial court’s finding of no CEQA violation, but disagreed with its general plan inconsistency determination, reversing on the latter point with directions to enter a new judgment denying all mandate relief.

General Plan Consistency Issue

The crux of the general plan consistency issue was determining “[w]hat actions were required of the City [by its own general plan] vis-à-vis the Coastal Commission, prior to project approval[.]” The general plan, of course, holds the legal status of “a “”constitution” for future development’ [citations] located at the top of ‘the hierarchy of local government law regulating land use’ [citation].” (Quoting from DeVita v. County of Napa (1995) 9 Cal.4th 763, 773.) Here, City’s operative 2006 general plan recognized Banning Ranch as a distinct district within its sphere of influence. The plan noted resident support for alternate visions of the Ranch’s complete preservation as open space or its limited development to help fund preservation of the majority of the property in open space. The general plan contained alternative subsidiary goals, policies, strategies and implementation actions stemming from these basic open space/limited development land use alternatives for the property. Ultimately, the City concluded the all-open space alternative for Banning Ranch was infeasible due to the prohibitively high cost of acquiring the property.

The issue in controversy centered on the effect of LU 6.5.6, an applicable “strategy” (a term not defined in the general plan) which, in its entirety, stated: “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.” Facts providing necessary context are Banning Ranch’s (1) location in the “coastal zone” (placing it within the Coastal Commission’s regulatory jurisdiction under the Coastal Act), and (2) express exclusion (as a “deferred certification area”) from the City’s approved coastal land use plan. This state of affairs means not only that the Commission retains permit jurisdiction for Banning Ranch (requiring its issuance of a Coastal Development Permit (“CDP”) for any approved development there to proceed) but also that (as to Banning Ranch) the City is not subject to the legal obligation ordinarily imposed by its coastal land use plan to define ESHAs in reviewing development proposals. Thus, while the City’s draft EIR contained detailed descriptions of vegetation types and special status species known to occur on the entire Banning Ranch property – breaking down precise vegetation types to the hundredth of an acre and proposed land uses down to the tenth of an acre – it did “not actually label sectors of Banning Ranch as ESHA or potential ESHA.” Rather, the DEIR noted the project lies within the coastal zone, considered it to be consistent with the Coastal Act’s applicable land use policies, identified mitigation measures to prevent substantial degradation of or disruption of habitat values in the mapped vegetation/special status species areas, and stated: “The determination of what areas would be regulated as ESHA would be made by the Coastal Commission as part of the [CDP] process for the project.”

Both the conservancy and the Coastal Commission staff submitted highly critical comments on the DEIR’s failure to designate ESHAs. The Coastal Commission’s letter, for example, recommended the City review the project under its Local Coastal Program review process and that the EIR determine probable ESHA areas and required buffers, inter alia. The City responded that it had complied with CEQA in analyzing the project’s biological resources impacts; that it was unnecessary under the Coastal Act, CEQA, or its own coastal land use plan for it to identify ESHAs in its EIR; and that ESHA designation involved a unique Coastal Act finding “within the discretion and authority of the Coastal Commission when the Project comes before them.”

In reviewing the trial court’s finding that the City violated its general plan’s land use policy LU 6.5.6 by “fail[ing] to coordinate and work with the Coastal Commission in identifying which wetlands and habitats present in Banning Ranch would be preserved, restored or developed, prior to its approval of the Project[,]” the Court of Appeal applied a well-established and highly deferential standard of review. It stated: “We review decisions regarding consistency with a general plan under the arbitrary and capricious standard. These are quasi-legislative acts reviewed by ordinary mandamus, and the inquiry is whether the decision is arbitrary, capricious, entirely lacking in evidentiary support, unlawful, or procedurally unfair. [Citations.] Under this standard, we defer to an agency’s factual finding of consistency unless no reasonable person could have reached the same conclusion on the evidence before it.” (Quoting Endangered Habitats League, Inc. v. County of Orange (2005) 131 Cal.App.4th 777, 782.) “It is, emphatically, not the role of the courts to micromanage these development decisions.’ [citation.] Thus, as long as the City reasonably could have made a determination of consistency, the City’s decision must be upheld, regardless of whether we would have made that determination in the first instance.” (Quoting California Native Plant Society v. City of Rancho Cordova (2009) 172 Cal.App.4th 603, 638, emph. in orig.)

Applying this standard, the Court reviewed the record and concluded “it cannot fairly be said that the City worked with the Commission prior to project approval to identity habitats for preservation, restoration, or development.” But it didn’t have to under the terms of LU 6.5.6’s “vague strategy to “work with” all pertinent state and federal agencies” since that strategy did not require compliance prior to Project approval. Per the Court: “There is no temporal cutoff for the completion of this vague strategy.” Thus, “the City … was free under L U 6.5.6 to reject the preferred procedure suggested by the Coastal Commission’s comment letter.” Given the vagueness of the strategy “and the lack of measurable standards as to the extent or timing of the coordination required,” the City’s interpretation of the process contemplated by LU 6.5.6 and its related consistency finding were reasonable. According to the Court: “[I]t was up to the City to decide precisely how this strategy of working with concerned agencies would be implemented. The City’s decision to forego additional engagement with the Coastal Commission prior to Project approval did not make the Project inconsistent with the general plan.”

Further, the Court “agree[d] with the City that an ESHA designation is a legal conclusion, not the sort of cooperation mandated by Public Resources Code section 30336 [of the Coastal Act]. There is no authority for the proposition that the City violated its statutory duty to cooperate with the Coastal Commission by not including ESHA designations in its EIR.” (The Court also distinguished and criticized the reasoning of California Native Plant Societysupra, 172 Cal.App.4th at 640-643, which reached a seemingly contrary conclusion in reviewing the consistency of another city’s action with its general plan’s “cooperation” provision. The Court ultimately concluded that, in this regard, California Native Plant Society failed to accord appropriate deference to the city’s consistency determination and improperly sought to impose specific requirements not found in the general plan that “would … by necessity be designed out of whole cloth.”)

In summing up its analysis of the general plan consistency issue, the Court of Appeal noted “the lack of specific guidance in the general plan indicates to us that it is unreasonable to find the City’s view of LU 6.5.6 to be arbitrary. It is improper for courts to micromanage these sorts of finely tuned questions of policy and strategy that are left unanswered by the general plan. Cities are free to include clear, substantive requirements in their general plans, which will be enforced by the courts. But courts should not invent obligations out of thin air.”

EIR Adequacy Issue

The Court likewise rejected the Conservancy’s CEQA arguments based on the City’s refusal to identify ESHAs in its EIR, adopting the City’s following position as supported by its own prior precedent: “[A]n ESHA determination is a legal determination, ultimately made by the Coastal Commission in a project … not covered by the City’s coastal land use plan[.] [Citation.] All of the necessary data pertaining to biological resources and habitat at Banning Ranch is included in the EIR. The EIR describes the environmental impacts of the Project and mitigation measures designed to address those impacts. The Conservancy’s complaint concerns the City’s reluctance to draw a legal conclusion based on a review of the data, not the failure to include data or scientific analysis that would enable a decision maker to classify a habitat as ESHA.” Accordingly, the Court approved the City’s approach of not speculating about potential ESHA determinations, and simply deferring those determinations to the Coastal Commission, while “flagg[ing] potential inconsistencies with the Coastal Act by emphasizing (1) that the Project was outside the scope of its coastal land use plan, and (2) that the Coastal Commission would determine whether ESHAs were affected by the Project.”

Conclusion and Takeaways

The Court of Appeal’s decision does not break new legal ground in applying the well-established and highly deferential “arbitrary and capricious” standard of review to a local legislative body’s interpretation of and consistency determination regarding its local general plan. Nor does the decision do so by reviewing an EIR under CEQA in terms of its adequacy as an informational document, rather than with regard to the ultimate conclusions it may reach or the legal labels it may place on various biological resources it analyzes. However, the opinion does serve as a helpful primer illustrating the application of what should be settled land use law and CEQA principles. It also makes a helpful contribution to the legal literature by confirming that coastal jurisdictions which lack permitting authority over project property subject to the Coastal Act need not designate ESHAs when approving projects otherwise within their jurisdiction. Rather, such a local agency and may properly defer to the Coastal Commission as the agency with authority to decide this legal “labeling” issue – notwithstanding a vague “coordination” requirement in the local agency’s general plan.