A proposed development in Los Osos can move forward after the California State Supreme Court sided with the owner’s contention that the Coastal Commission does not have jurisdiction over the project.
In what some are calling a landmark case limiting the appeal powers of the Coastal Commission, the Supreme Court unanimously overturned the initial decision by a County Superior Court judge and subsequent decision by the Court of Appeals that both went in favor of the Commission.
The case of Shear Development Co., LLC v. California Coastal Commission, had its roots in 2004 when Shear Development Co., of Los Osos purchased eight undeveloped lots in town, which at the time was under a moratorium on new septic systems put in place by the Regional Water Quality Control Board.
The company “built infrastructure for all,” said the Pacific Legal Foundation (PLF) the law firm that represented Shear Development before the Supreme Court, “with County approval to build homes in two phases. San Luis Obispo County approved the phase-two permits in 2017 under the Local Coastal Program.”
The Coastal Commission appealed to itself the County’s decision to grant the Coastal Development Permit, a common move the Commission makes when it decides it wants to review a local CDP decision.
Such power is written into the original 1970s law that created the Coastal Commission with the intention of protecting California’s 1,100-mile coastline from private development and ensuring access to the ocean remains open for the public.
The Commission’s appeal in the Shear case “claimed jurisdiction based on an illustration buried in a County area plan — not the official designated maps the Local Coastal Program requires,” according to PLF’s news release from April 23. The Commission eventually overturned the County’s issuance of the CDP and denied the project in 2020.
“Shear sued to hold the agency to its legal limits,” the PLF said, but lost its bid for a Writ of Mandate in Superior Court (the trial court).
According to the Supreme Court’s written decision, “The Commission concluded that it had appellate jurisdiction because the proposed development was in a ‘sensitive coastal resource area’ (SCRA) under the County’s local coastal program (LCP) and because there was more than one principal permitted use of the proposed development site under the County’s LCP.”
Shear argued “that the Commission had no appellate jurisdiction on either basis. The trial court denied the petition, finding for the Commission on the SCRA issue. Shear appealed, and the County, as amicus curiae (friend of the court), agreed with Shear’s positions. The Court of Appeal affirmed the trial court’s judgment.”
The State Supreme Court decided to accept the further appeal and look at the Coastal Commission’s actions with regards to limits on its appeal authority.
According to the written decision, authored by Chief Justice Patricia Guerrero, “We granted review to decide the standard of review a court should apply when determining whether the Commission’s exercise of appellate jurisdiction over a coastal development permit was proper and, when the Commission and a local government offer conflicting interpretations of an LCP, whether deference is due to either entity’s interpretation.”
Chief Justice Guerrero continued, “Second, where two entities offer incompatible interpretations of a law that both administer, a court should apply the traditional Yamaha factors regarding agency deference to each entity’s interpretation.”
“Yamaha factors” refers to a 1998 case, Yamaha Corp. of America v. State Board of Equalization.
The Yamaha case involved musical instruments manufactured by Yamaha (a Japanese company) that were brought into the U.S. and stored in a California warehouse. The company then gave away the instruments to musicians, stores and others as promotional gifts and the tax board decided they should pay some $700,000 in use taxes (sales taxes) because they were used in California. The company paid the taxes under protest and then filed suit for a partial refund.
According to the decision, “Although it did not contest the tax assessed on property given to California residents, Yamaha contended no tax was due on the gifts to out-of-state recipients.” Yamaha won at trial and the Superior Court judge ordered a refund.
The State Attorney General representing the tax board appealed and the case was overturned on appeal.
“Casting the issue as whether Yamaha’s promotional gifts had occurred in California or in the state of the donee [recipient],” the decision said, “the Court of Appeal looked to an annotation in the Business Taxes Law Guide. According to the guide, gifts are subject to California’s use tax when the donor divests itself of control over the property in this state.”
The Supreme Court overturned the Appellate Court’s decision and returned it to them for further work. The key term is “annotations.”
“The question is what standard courts apply when reviewing an agency’s interpretation of a statute,” the decision stated. “In effect, the Court of Appeal held the annotations were entitled to the same ‘weight’ or ‘deference’ as ‘quasi-legislative’ rules.”
Simply put. the court said that the actual language of the law should be followed not some interpretation of the law.
In the Shear case, it seems the Coastal Commission’s use of an illustration was different than the actual approved map included in the County’s LCP for Los Osos.
“Third,” Chief Justice Guerrero wrote in the Shear case, “the proposed development is not in an SCRA because the LCP does not designate it so. The Commission relies primarily on a single figure in the LCP, captioned ‘Figure 6-3’ but this figure does not support the Commission’s reading, and the LCP as a whole supports the opposite reading.”
The final reasoning was that the Commission doesn’t have appellate jurisdiction simply because the LCP allows for more than one primary use for a property.
“The Commission does not have appellate jurisdiction solely because a site has multiple, principal permitted uses,” Chief Justice Guerrero said. “Rather, the Commission has appellate jurisdiction when the proposed development is not designated as the principal permitted use — or one of several principal permitted uses — of the site under the local government’s LCP. Since Shear’s proposed development is for one of several principal permitted uses, the Commission does not have appellate jurisdiction on this basis.”
The decision was a total victory for the plaintiff. “Thus, we conclude that the Commission does not have appellate jurisdiction over Shear’s permit application and therefore reverse the judgment of the Court of Appeal.”
The Shear decision has PLF celebrating. “Today’s decision,” said Jeremy Talcott, a PLF attorney, “is a win for every property owner along California’s Coast. The Coastal Commission cannot simply decide to reinterpret legislation based on its own whims. Its authority has limits, and today the court enforced them unanimously.
“For years, the Commission has usurped the power given by the State Legislature to local coastal communities to approve homebuilding permits. This decision corrects the Commission’s overreach.”
PLF represented Shear at no cost. The firm touted the win as the biggest it’s had in some 40 years.
“Today’s ruling is one of the most significant checks on the Commission’s power since PLF’s landmark U.S. Supreme Court victory in Nollan v. California Coastal Commission nearly four decades ago.”
The subject of the lawsuit were three of the original eight lots, located at 282 Mar Vista Dr., 294 Mar Vista Dr., and 284 Highland Dr., Los Osos.
According to the project description from the Coastal Commission’s 2020 report on the appeal, the project involved “Construction of three single-family residences on three vacant parcels: a 2,476-square-foot 2-story residence on a 21,579-s.f. parcel; a 2,766-s.f. 1-story residence on a 23,032-s.f. parcel; and a 3,008-s.f. 2-story residence on a 22,296-square-foot parcel.
Estero Bay News reached out to Shear Development, seeking comment and C.M. Florence of Oasis Associates, the company’s agent on this matter, responded:
“We are very pleased with the Court’s decision. At its core, this case was about getting the jurisdictional question right, and the Court made clear that those lines matter — particularly where local coastal programs are concerned.”
She said the case clears up some things about which agency has jurisdiction and when.
“In addition to the balance of state and local control,” Florence said, “the opinion also confirms that the courts have the primary role in interpreting land-use laws, such as Local Coastal Programs, and should use their independent judgment to reach the best interpretation of LCPs, using a holistic approach that harmonizes all the various provisions.”
She noted that the County supported the company’s efforts, filing a friend of the court brief. “It was also important,” Florence said, “that the County of San Luis Obispo supported this position throughout. That alignment reflects a shared understanding of how these decisions are intended to work under State Law, and it helped bring clarity to an issue that has been unresolved for some time.”
Indeed, the County has found itself being challenged repeatedly on its land use and development decisions in Los Osos for years now, as citizens and citizen groups have appealed project after project to the Coastal Commission — even the addition of a single bedroom to an existing home — mainly citing a lack of available drinking water, among other issues.
The company got a big boost when PLF stepped up to help. “We appreciate the role that the project’s legal counsels and the Pacific Legal Foundation played in advancing the case to the California Supreme Court,” Florence said, “and the Court’s thorough consideration of the issues.”
Shear is happy to finally have a final decision on the matter. “After a long process,” Florence said, “this decision brings needed certainty. The next step is to continue working with the County to move the project forward through the building permitting process — plan preparation, submittal, and ultimately, permit issuance for the four remaining lots.”
The case was just one of hundreds of lawsuits that have been brought against the Coastal Commission since its beginnings in the ‘70s and one of the rare times the agency has lost. Despite much criticism, the goals of the Coastal Act are very much supported today.
Proposition 20, entitled “The California Coastal Zone Conservation Act of 1972,” established the agency that would become the California Coastal Commission, which was codified under the Coastal Act by the State Legislature in 1976.
According to a history of the Coastal Commission on the Commission’s website, Californians “declared by voter initiative that ‘it is the policy of the State to preserve, protect, and where possible, restore the resources of the coastal zone for the enjoyment of the current and succeeding generations.’”
