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In Friends v. Cal. Coastal Commission (Nov. 15, 2021, H048088, H04809) __ Cal.App.5th __ [2021 Cal.App. LEXIS 1038], the Sixth District Court of Appeal found that the California Coastal Commission (Coastal Commission) violated CEQA by approving a coastal development permit without making specific findings about project alternatives and mitigation measures pursuant to the Coastal Commission’s certified regulatory program. The Court concluded that the agency’s subsequent proceedings and analysis could not cure the defect.

In 2008, Monterey County (County) approved a permit and certified an EIR for a mixed-use development that proposed building 80 residential units on a site that consisted of part oak woodland habitat and part agrarian strawberry fields (Project). An appeal was taken to the Coastal Commission. Coastal Commission staff recommended denial of the Project based on inconsistencies with the County’s local coastal program (LCP) regarding lack of water supply and potential adverse impacts to protected oak woodlands. The Coastal Commission held a de novo hearing in 2017 (2017 hearing), and environmental groups (Petitioners) spoke at the hearing opposing the project. Despite the staff report (2017 report) recommendation to deny the Project as inconsistent with the LCP, the Coastal Commission voted to approve the permit application.

Coastal Commission staff issued a subsequent, revised report (2018 report) that contained additional environmental analysis and found the Project would not have adverse effects on water supply or otherwise violate LCP policies. The Coastal Commission then held a second hearing (2018 hearing) and issued the permit, indicating it had been approved at the initial hearing in 2017.

Meanwhile, after the first hearing, Petitioners filed suit alleging violations of CEQA. The trial court granted the County’s demurrer, finding that the Coastal Commission’s de novo review superseded the certification of the EIR, and denied the petition’s remaining causes of action against the Coastal Commission. Petitioners appealed, arguing that the Coastal Commission had erroneously approved the project before completing environmental review.

Certified Regulatory Program

Although Petitioners acknowledged that the Coastal Commission was entitled to adopt the functional equivalent of an EIR under its certified regulatory program, they argued that the Coastal Commission had not done so until after it approved the Project. While the 2017 report was prepared before the 2017 hearing approving the Project, Petitioners argued that it failed to evaluate alternatives or mitigation measures despite identifying significant impacts. The 2018 report addressed some of these concerns but was not prepared until after the approval at the 2017 hearing. Petitioners argued that the 2018 report represented “an extreme example of post hoc rationalization” that could not cure the Project approval deficiencies. In response, the Coastal Commission argued that it was within its power to properly reject the staff’s recommendation in the 2017 report, that the entire de novo review process, consisting of the multiple reports and hearings throughout 2017 and 2018, was itself the functional equivalent of an EIR, and that its final decision at the end of that process memorialized the Coastal Commission’s decision with the benefit of full environmental review.

While the Court acknowledged that a certified regulatory program may exempt an agency from preparing an EIR, the agency is still required to comply with CEQA’s other requirements, and certification of such a program entails regulations that a project be preceded by the preparation of a written report functionally equivalent to an EIR.  Citing Mountain Lion Foundation v. Fish & Game Com. (1997) 16 Cal.4th 105, the Court observed that, for the Coastal Commission to claim an exemption from CEQA’s EIR requirements, it was required to demonstrate strict compliance with its certified regulatory program. Thus, under both substantive mandates of CEQA and the agency’s own regulations, a written report containing specific alternatives and mitigation measures was required before the Project was approved. Because the 2017 report identified significant environmental impacts, yet failed to undertake these analyses, the Court held that the agency had not complied with the certified regulatory program’s requirements.

Further, while the Court generally agreed that the Coastal Commission had the right to reject staff recommendations in the 2017 report, it found that the agency failed to follow its own regulations in doing so. Specifically, the Coastal Commission failed to state the basis for their disagreement with staff in sufficient detail at the 2017 hearing to allow staff to revise the report, and then hold a public hearing on the revised report before approving the Project. Despite the Coastal Commission’s contention that the 2018 report and subsequent 2018 hearing represented an ongoing environmental review process, the Coastal Commission’s failure to complete the proper environmental review before the 2017 hearing rendered the approval noncompliant with CEQA. Moreover, the Court found that the new environmental analysis in the 2018 report and the commissioners’ statements at the 2018 hearing, attempting to bolster the 2018 report findings after Petitioners had already had filed their petition with the trial court, further underscored the Coastal Commission’s failure to follow required procedures.

Exhaustion of Administrative Remedies

The Project’s proponent contended that Petitioners had failed to exhaust their administrative remedies and were therefore barred from raising claims that the Coastal Commission did not analyze certain Project impacts. Here, the Coastal Commission’s environmental review was incomplete at the time of approval. Petitioners objected to the 2018 report in letters to the Coastal Commission before the 2018 hearing, expressing concerns about the adequacy of the 2017 hearing approval as well as the post hoc environmental review in the 2018 report. On this record, the Court found that the dispositive issue, of whether the Coastal Commission had conducted the required environmental review before the Project’s approval, was properly preserved for judicial review.

Though the parties raised issues about Monterey County’s EIR, the Court found it unnecessary to reach these and reversed the trial court decision.

Key Points:

  • An agency with a certified regulatory program must strictly comply with CEQA’s requirements, including the evaluation of feasible alternatives and mitigation measures.
  • Environmental review must be completed prior to project approval in order to utilize a functionally equivalent document.
  • Agency decisionmakers must be detailed and specific when making verbal findings at a hearing, particularly if the findings are different from what is in the staff report.