The Cost of Wetlands in Half Moon Bay

In 1976, the California Coastal Act was adopted by popular vote.  Pervasive in reach and colossal in scope, the Coastal Act contains hundreds of sections and an equal number of interpretive regulations.  The Coastal Act’s definition of “development” is so deliberately broad it would conceivably encompass the construction of a sand castle and the planting of a beach umbrella (the “placement or erection of any solid material or structure”).  The Coastal Act’s definition of “wetlands” is likewise so deliberately broad that a puddle created by tire tracks could trigger California Coastal Commission oversight (lands which “may be covered periodically or permanently with shallow water”).

These definitions serve two overarching objectives of the Coastal Act:  regulation of development and “permanent protection of the state’s natural and scenic resources.”  And “permanent” means permanent.  The California Court of Appeal in Bolsa Chica Land Trust v. Superior Court of San Diego County (1999) confirmed the prohibition against residential development on wetlands.

Seemingly unbeknownst to the drafters of the Coastal Act, however, there are state and federal constitutional provisions mandating the payment of just compensation for the taking or damaging of private property for public use.  Curiously, neither the Coastal Act nor its interpretive regulations acknowledge the cost of environmental preservation, as if implementation of this objective should be free for the taking.  Emboldened by decades of judicial deference to legislative environmental policies and secure in the inability of the average citizen to afford the cost of constitutional enforcement, local governments have acquired an aura of invincibility.  The Constitution is viewed as a pesky irritant in the battle against development.

In Half Moon Bay, however, Joyce Yamagiwa fought back in court – with a vengeance.  In a 167-page opinion filed on November 28, 2007, Chief Judge Vaughn Walker of the United States District Court for the Northern District of California reminded Half Moon Bay that the Constitution is not going anywhere.  Ms. Yamagiwa’s trust was awarded $36,795,000 for the taking of what was once 24 acres of developable land.  (Joyce Yamagiwa, Trustee v. City of Half Moon Bay, Case No. C05-4149.)  The case was tried by Edward Burg and Kathrin Wanner of Manatt, Phelps & Phillips on behalf of Ms. Yamagiwa.

Although the case has a factual and procedural history of herculean proportion, Chief Judge Walker made one crucial finding which closed the door on Half Moon Bay.  Chief Judge Walker concluded that Half Moon Bay had caused the formation of wetlands on the 24-acre parcel as a result of the installation of storm drains in the 1980s.  Prior to the installation of the storm drains, there were no documented wetlands on the parcel, known as Beachwood.  The storm drain project “completely changed the topography” on Beachwood, resulting in a parcel of land that now resembles an elongated bathtub.  Chief Judge Walker also found that Half Moon Bay’s the City’s maintenance plan for the storm drains was nonexistent.  Indeed, Half Moon Bay’s maintenance supervisor testified that he was “not aware of any maintenance the City has ever done to any storm drain system on Beachwood.”  In one instance when Beachwood’s owner attempted self-help maintenance, Half Moon Bay called the police and other state and federal agencies to put a stop to it.  In another instance, Half Moon Bay denied the owner permission to regrade a portion of Beachwood to fill in low spots created by Half Moon Bay’s own storm drain project.

In light of the lack of maintenance and the alteration of Beachwood’s topography, one would expect Half Moon Bay to welcome evidence that wetlands had not formed on Beachwood, thus minimizing the potential for liability for damaging the parcel.  Half Moon Bay nevertheless shopped for a hydrologist – any hydrologist – who would conclude that there were wetlands on Beachwood.  In 1999, Half Moon Bay’s Planning Commission concluded that the Army Corps of Engineers would decide whether there were wetlands on Beachwood, pursuant to the Army Corps’ definition of “wetlands.”  Nine months later, the Army Corps completed its analysis and found no wetlands on Beachwood outside the southeast corner, an area which was already off limits to development under the vesting tentative map that had previously been issued.

Unhappy with this determination, Half Moon Bay found a different hydrologist to determine whether wetlands existed under its local coastal plan definition of “wetlands” – a much broader definition.  Under the Army Corps’ definition, wetlands required wetland hydrology (water-saturated soils for at least 18 consecutive days), hydric soils (special soils formed over a lengthy period of time due to saturated conditions) and hydrophytic vegetation (plants that tend to be found in wetlands).  In Half Moon Bay’s local coastal plan, however, not all of these parameters need be present for an area to qualify as a wetland.

Dr. Michael Josselyn, a Certified Professional Wetland Scientist, was then retained by Ms. Yamagiwa to determine whether wetlands existed on Beachwood under both the Army Corps’ definition as well as Half Moon Bay’s broader definition.  Dr. Josselyn concluded that there were no wetlands under the Army Corps’ definition.  This conclusion was reviewed and approved by the Army Corps.  The only wetlands that did exist were water-filled depressions created in dry land incidental to Half Moon Bay’s storm drain project, and therefore fell under an exemption under the Army Corps’ definition.  Dr. Josselyn also concluded that there were no wetlands under Half Moon Bay’s local coastal plan definition because of the absence of hydric soils.  Dr. Josselyn understood the local coastal plan definition of “wetlands” to exclude vernally wet areas (areas that are temporarily wet in the spring and winter) where the soils are not hydric.  Because all of the wetlands lacked hydric soils, Dr. Josselyn concluded that there were no wetlands, even under Half Moon Bay’s broader definition.

In light of Dr. Josselyn’s conclusions, Half Moon Bay had a second opportunity to conclude that development could proceed in light of the absence of wetlands on the Beachwood parcel.  It was not to be.  In May 2000, Half Moon Bay adopted a resolution labeling Dr. Josselyn’s interpretation of the vernally wet exception “erroneous” and refused to allow development to proceed.

Ms. Yamagiwa then sought a writ of mandate in superior court to direct Half Moon Bay to issue the permits.  The central issue was whether the local coastal plan’s definition of “wetlands” required the existence of hydric soils.  The trial court granted the writ, yet it was reversed on appeal.  On appeal, Half Moon Bay (and the California Coastal Commission, as intervenor) argued, and the court of appeal in an unpublished decision agreed, that Dr. Josselyn had taken an unnecessarily strict reading of the local coastal plan definition of “wetlands,” and that vernally wet areas covered with hydrophytic vegetation should be considered wetlands, whether or not hydric soils are present.  (Yamagiwa v. City of Half Moon Bay, Case Nos. A105612 and A105613.)  Based on the court of appeal’s decision, Dr. Josselyn was forced to concede that Beachwood contained wetlands because all of the study areas contained hydrophytic vegetation.  (The litigation was subsequently removed to federal court on Half Moon Bay’s own motion.)

Curiously, yet another wetlands consultant retained by Half Moon Bay cited the presence of wetlands in only those locations where residential development was proposed by Ms. Yamagiwa, but not where Half Moon Bay wanted to construct a new street.  Thus, Half Moon Bay could proceed with its intended development, while denying Ms. Yamagiwa the right to build homes.  The poetic irony of this result was not lost on Chief Judge Walker, who understandably questioned the “trustworthiness” of Half Moon Bay’s experts on the key wetlands issues.

Even more curious, Half Moon Bay’s decision to deny development of Beachwood came shortly after it had lifted a seven year ban on sewer permits due to a shortage of sewer treatment capacity.  Ms. Yamagiwa was required to pay close to one million dollars to Half Moon Bay for her proportionate share of the cost of expanding the sewage treatment plant.  Although Half Moon Bay denied development of Beachwood, it kept the money.

Half Moon Bay thus got its wish:  An expert conclusion that wetlands existed on Beachwood sufficient to deny Ms. Yamagiwa the right to develop.  As the saying goes, however, be careful of what you wish for as it just might be granted.  Having pursued a wetlands designation for the Beachwood parcel with a zeal bordering on avarice, Half Moon Bay successfully halted development.  Yet still unanswered was the question of who pays for the loss of use of Beachwood, Half Moon Bay or Ms. Yamagiwa.  The answer to that question hinged on whether Half Moon Bay created the wetlands condition as a result of its storm drain project, or whether wetlands preexisted the storm drain project.

Chief Judge Walker concluded that Half Moon Bay caused the formation of wetlands due to its storm drain project and the dearth of follow-up maintenance.  Ms. Yamagiwa was not required to “bear all of the loss herself” and should not be called upon to contribute more than her proper share to the public storm drain project.  This is consistent with the United States Supreme Court’s oft repeated admonition that the takings clause is designed to prevent the government from “forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”  Surely the residents of Half Moon Bay cannot balk at paying $5,000 each to satisfy the judgment, preclude residential development of Beachwood, and maintain the wetlands in perpetuity.  Half Moon Bay wanted wetlands, and it got wetlands.  Would it be more equitable to demand that Ms. Yamagiwa alone pay the cost of Half Moon Bay’s environmental objectives?  The Constitution answers the question in the negative.

The reaction of the Half Moon Bay City Council to the $36,795,000 judgment was a mixture of shock, mystification and dismay – akin to a 16-year-old being given the keys to his first car and realizing for the first time the cost of gasoline, insurance and maintenance.  In addition to compensating Ms. Yamagiwa for the loss of private property, it is hoped that Chief Judge Walker’s opinion will remind all government decision makers at the state and local levels, when considering the implementation of environmental policies, to first ask the question:  “What about the Constitution?