Eminent Domain Report

The California Coastal Act establishes another layer of regulation governing development in the Coastal Zone. Development under the Coastal Act is defined to encompass essentially everything and anything.  For example, under the Coastal Act development includes such things as a lot line adjustment, releasing fireworks on the 4^th of July, or putting up a No Trespassing sign.  While there are certain limited exemptions, in most cases individuals undertaking any development in the Coastal Zone must obtain a Coastal Development Permit.  In certain instances, the local agency’s decision to approve or deny a Coastal Development Permit is reviewed by the California Coastal Commission.  On this review, the Coastal Commission may consider whether the decision to approve, deny, or impose mitigation measures would potentially run into takings issues.  This practice by the Coastal Commission was challenged by a Marin County resident, who filed a petition seeking to enjoin the Coastal Commission and any local jurisdiction implementing the Coastal Act from considering takings issues in permitting decisions.

The resident, Richard Kohn, asserted that by considering takings issues the Coastal Commission was violating the judicial powers and separation of powers clauses in the California Constitution, was violating the Coastal Act, and was instituting an unlawful underground regulation in violation of the Administrative Procedure Act. The Superior Court denied the petition, and Mr. Kohn appealed.  In an unpublished decision, the California Court of Appeal affirmed the Superior Court’s decision.

Rejecting a standing argument apparently raised by the Coastal Commission, the Court of Appeal first found that Mr. Kohn had both public interest standing and taxpayer standing. However, the Court of Appeal then found that because Mr. Kohn was challenging the practice in the abstract, as opposed to challenging a decision on a specific permit, the challenge was not ripe.  The Court of Appeal explained: Because Kohn’s petition would require this court to resolve a hypothetical inquiry, and because no party will suffer any demonstrated hardship if we decline to decide it, we conclude the petition is unripe.  The question Kohn present must await decision on an adequate record in an appropriate case.  (Internal quotation marks omitted.)

After stating why the controversy was not ripe and why the Court of Appeal would not address it, the Court of Appeal than addressed the controversy head on, finding that [e]ven if this appeal presented a ripe dispute, we would find no error. The Court of Appeal, citing Public Resources Code section 30010, concluded that the California Legislature clearly defined the Commission’s role in evaluating permits and included takings issues within that sphere.  Section 30010 states:

The Legislature hereby finds and declares that this division is not intended, and shall not be construed as authorizing the commission . . . or local government acting pursuant to this division to exercise their powers to grant or deny a permit in a manner which will take or damage private property for public use, without the payment of just compensation therefor.

The Court of Appeal also concluded that the consideration of takings issues did not run afoul of the judicial powers clause or separation of powers clause because it is both reasonably necessary and incidental to one of the Commission’s primary and legitimate purposes, and after the Commission’s made a final decision the Commission’s takings considerations could ultimately be reviewed by the courts.

Finally, the Court of Appeal found that the Commission’s taking-avoidance policy is not an improper underground regulation because its application depends upon a case-specific exercise of discretion and therefore was not a rule or standard of general applicability subject to the Administrative Procedure Act.

The Court of Appeal’s ultimate resolution of the abstract takings issue was not surprising given prior precedent and the general deference with which courts have historically viewed the Coastal Act and the Coastal Commission’s jurisdiction under the Act. However, as demonstrated by the Supreme Court’s 1987 decision in Nollan v. California Coastal Commission, 483 U.S. 825, that does not mean the Coastal Commission’s decisions are immune from takings challenges.  Permit applicants should therefore be mindful of the takings overlay during the Coastal Development Permit process, as it provides another potential argument for moving a project forward.