The California Coastal Commission had a most frustrating week.  After decades of lobbying the Legislature, the Commission finally gained new powers to impose administrative penalties on people who violate certain provisions of the Coastal Act.  But, just six days later, the Marin County Superior Court imposed significant restrictions on the Commission’s entire enforcement program.  The ruling in that case—brought by Phyllis Faber (one of the original Coastal Commissioners), the Alliance for Local Sustainable Agriculture (ALSA), and Drakes Bay Oyster Company—is the first time a court has invalidated a Coastal Commission enforcement order.  (Briscoe Ivester & Bazel LLP and Idell & Seitel LLP represent Drakes Bay Oyster Company; SSL Law represents Ms. Faber and ALSA.)

The California Coastal Act of 1976 generally prohibits new “development” near the coast without a coastal development permit (CDP).  The Commission advances an extreme interpretation of “development”, to include any activity that has even the potential to change the “intensity of use” of the coast.  Since essentially every activity near the coast has some potential to change the intensity of use, the Commission’s interpretation would bring them all within its jurisdiction, from changing prices at a business, to erecting a gate to protect private property from trespassers, to having children.

In the early 1990s, the Legislature gave the Commission the power to adopt enforcement orders requiring that unpermitted development be removed and the site restored administratively (that is, without going to court).  But if the Commission wanted civil penalties, it had to take people to court.  In the decades since, the Commission has lobbied the Legislature for the power to also issue civil penalties administratively.  The U.S. Supreme Court, in the landmark Nollan v. California Coastal Commission case, found that the Commission committed “extortion” in its permitting program.  But the Commission’s lobbyist argued that it could be trusted with new enforcement powers because it had never lost a challenge to any of its enforcement orders in court.

Never lost, that is, until the Commission faced Drakes Bay Oyster Company in court.  The oyster farm, in a coastal estuary called Drakes Estero, in Marin County, pre-dates the Coastal Act by more than four decades.  The farm has leased Drakes Estero from California, through its Fish and Game Commission, since 1934.

Even though the farm long pre-dates the Coastal Act, in recent years the Commission has insisted that it needs a CDP for its entire operation, largely on the theory that the farm’s production varies from year to year and that this variation is a change in intensity of use.  In January 2006, the farm applied for a permit and, in 2007, the farm and the Commission agreed to operating conditions pending issuance of a CDP.

It should have been easy for the Commission to issue the CDP.  The Coastal Act requires the Commission to “protect”, “provide for”, and give “priority” to aquaculture proposals like Drakes Bay’s.  And the oyster farm has proven to be a good steward of Drakes Estero:  harbor seals are thriving, eelgrass coverage has doubled, water quality is excellent, and there is no evidence that the farm harms the environment.

Instead, the Commission became hostile.  The Commission refused to act on the farm’s permit application.  The Commission required the farm to move shellfish bags out of a location the Commission had approved, and then demanded that the farm pay five-figure penalties for moving the bags.  The Commission insisted, in the name of protecting harbor seals 700 yards away, that the farm’s workers trudge long distances across fragile sandbars—even though there was strong evidence that the farm had never disturbed even a single harbor seal.  The Commission’s executive director, the late Peter Douglas, lived nearby and seemed to take the matter personally, bullying the farm’s supporters (calling them “pathetic”, “despicable”, and, more creatively, “fellow travelers” and “pecksniffians”), in emails and online.

In November 2012, more than six years after the farm had applied for a permit, the Commission’s enforcement staff issued a short notice of the Commission’s intent to issue new enforcement orders against the farm for not having a permit.  The allegations were vague, did not include any specific charges of environmental harm, and did not include the proposed orders.  The notice directed the farm to complete a short ‘statement of defense’ form, which it did, denying the allegations.

Then, ten days before the hearing, staff unloaded on the farm:  they released a fifty-page, single-spaced report, with hundreds of pages of attachments, accusing the farm of harm to harbor seals, eelgrass, and water quality.  The report ignored the significant data on Drakes Estero collected by the National Park Service and the National Academy of Sciences showing that the farm causes no environmental harm.  Instead, the Commission thought it best to cite studies conducted under completely different circumstances in far-away locations.  That report enclosed proposed orders that would require the farm to rip out oyster racks, rake the bed of Drakes Estero, and douse Drakes Estero in bleach and vinegar.  A week later, the farm submitted hundreds of pages of expert declarations establishing, on the basis of the actual data on Drakes Estero, that the farm long pre-dates the Coastal Act (and thus does not need a CDP), that it causes no environmental harm, and that the proposed orders would cause environmental harm.

The Commission didn’t want to hear it.  At the February 2013 hearing, staff recommended that the Commission exclude all of Drake’s Bay’s expert declarations from the record, and the Commission agreed.  After a presentation by three staff lawyers (who, per Commission regulations, were not sworn or subject to cross-examination), the Commission adopted staff’s proposed enforcement orders.

In April 2013, Ms. Faber, ALSA, and Drakes Bay petitioned the Marin County Superior Court for a writ of mandate to invalidate the Commission’s enforcement orders.  They made four main claims:  (1) the Commission’s decision to exclude Drakes Bay’s expert evidence and not allow cross-examination violated the Constitutional right to due process, (2) the Commission’s orders finding environmental harm were not supported by the evidence that the farm causes no environmental harm, (3) the Commission’s orders impermissibly conflicted with the Fish and Game Commission’s jurisdiction, and (4) the Commission violated the California Environmental Quality Act (CEQA) by not preparing an environmental impact report (EIR) before adopting the orders.

On June 26, 2014, the Honorable Judge Roy O. Chernus issued a decision invalidating the enforcement orders in every important respect.  Judge Chernus did not rule on the first two claims for violation of due process and lack of evidence, focusing instead on the third on fourth claims.

On the third claim, Judge Chernus found for the Commission.  The petitioners argued that the orders infringed on the Fish and Game Commission’s regulation of Drakes Bay, in violation of section 30411(a) of the Coastal Act, which prohibits the Coastal Commission from regulating in ways that “duplicate or exceed” the “wildlife and fishery management programs” of the Fish and Game Commission.  The Judge found that section 30411(a) did not apply:  the farm’s oysters are not “wildlife”, because they are cultivated, or a “fishery”, because the Fish and Game code defines “fish” as being “wild”.  Even if the section did apply, it was not violated because there was no conflict.  The Judge noted that Drakes Bay’s leases require the farm to comply with the regulations of other agencies, including the Coastal Commission.  The Judge concluded that the Fish and Game Code and Coastal Act were “complimentary, and not in competition,” because each serves the “mutual public policy of maintaining and preserving a healthy aquatic and animal ecosystem.”

Judge Chernus then turned to the fourth claim, failure to prepare an EIR in violation of CEQA.  CEQA generally requires that, before approving a “project” with significant environmental effects, state and local agencies prepare an EIR that studies those effects and evaluates alternatives.  The Commission did not dispute that its enforcement orders, which would require significant demolition of historic structures and changes to the farm’s everyday operations, constituted a “project” with significant environmental effects.  Instead, the Commission argued that CEQA does not apply to the Commission’s enforcement program for two reasons.  Judge Chernus disagreed with both.

First, the Commission argued that the report issued by enforcement staff against Drakes Bay was the “functional equivalent” of an EIR, and so no separate EIR was necessary.  If the Natural Resources Agency certifies that an agency’s regulatory program evaluates environmental consequences of projects in a way that is the functional equivalent of an EIR, then no separate EIR is necessary.  Judge Chernus observed that the Natural Resources Agency has certified the Commission’s “permit” program, but not the Commission’s enforcement program.  Because the enforcement program was not certified, he concluded that enforcement staff’s report did not qualify as the functional equivalent of an EIR.

Second, the Commission argued that enforcement actions are categorically exempt from CEQA.  CEQA generally exempts “[a]ctions by regulatory agencies to enforce … a law … administered or adopted by the regulatory agency.”  Judge Chernus agreed that this exemption applied to the Commission’s enforcement orders, but held that an exception to this exemption applied here.

CEQA exemptions do not apply where “there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances”.  At oral argument, the Commission argued that the entire California coast is special.  Judge Chernus agreed that the “environmentally-sensitive activities over which Coastal Commission generally exercises its regulatory authority” present unusual circumstances.  He went on to conclude that there was a reasonable possibility that most of what the enforcement orders required would have a significant effect on the environment.  Petitioners presented evidence that the orders “will adversely impact the physical environment by degrading water quality, damaging eel grass, causing air and noise pollution, and disturbing native wildlife and persons who use the Estero for recreation.”  (The Commission’s decision to exclude that evidence, Judge Chernus reasoned, was an “abuse of discretion”.)  Judge Chernus noted that the Commission “itself recognizes the reasonable possibility its removal and restoration orders may have a significant negative impact on the physical environment of the Estero and the species that live there.”  Because of the possibility that the orders will cause significant adverse effects to sensitive coastal resources, the usual CEQA exemption for enforcement orders did not apply.

Judge Chernus ordered that a writ of mandate issue directing the Commission to “set aside” those parts of the enforcement orders that “may have a significant impact on the environment due to unusual circumstances.”  He left intact certain minor portions of the orders that would not significantly impact the environment, such as the requirement to apply for a CDP.  But the ruling strikes down all of the orders’ significant provisions, such as the requirements to remove unused oyster racks, clams, an endemic tunicate, and onshore equipment.

Just six days earlier, on June 20, Governor Brown signed into law a bill giving the Commission limited new enforcement powers to adopt civil penalties administratively against people who undertake new development that inhibits public access to the coast.  (The bill is much narrower than what the Commission had asked for, which was administrative penalty power over every kind of unpermitted development, not just unpermitted development that inhibits public access.)  But those new enforcement powers come with additional environmental responsibilities, since Judge Chernus has now held that the Commission must complete an EIR whenever it exercises its enforcement powers in a way that might cause significant environmental effects.

 

Peter Prows
Briscoe Ivester & Bazel LLP
155 Sansome Street, 7th Floor
San Francisco, CA 94104
Telephone: (415) 402-2700
Fax: (415) 398-5630

Disclaimer: In our Newsletters and Bulletins, Briscoe Ivester & Bazel LLP intends to present general information to the public and does not intend to provide legal advice pertaining to a particular situation.

 

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