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California Supreme Court deals blow to Banning Ranch development

This Aug. 18, 2016, photo shows Banning Ranch, including what remains of an oil-extraction operation, on what is believed to be the biggest piece of privately-owned vacant land on Southern California's coast in Newport Beach, Calif.
This Aug. 18, 2016, photo shows Banning Ranch, including what remains of an oil-extraction operation, on what is believed to be the biggest piece of privately-owned vacant land on Southern California's coast in Newport Beach, Calif.
Nick Ut/AP

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The California Supreme Court put up another obstacle to the controversial Newport Banning Ranch development project on Thursday, ruling that the environmental impact report for the project was inadequate. 

The developers behind Newport Banning Ranch hope to build nearly 900 homes and a resort on 400-acres north of Newport Beach in Orange County.

But the project, on one of the largest remaining, unprotected open space areas along the Southern California coast, has been plagued by permitting setbacks and mired in opposition.

The Supreme Court’s decision means the developers must go back to the city of Newport Beach for approval of a new environmental impact report. Sam Singer, a spokesman for the developers, said they would not be deterred. 

"The ruling today will probably delay our project by another year or two but we’re not disheartened,” he said. "We’re committed to making this project happen.”

Their plan calls for developing about 20 percent of the land while preserving the other 80 percent as open space. 

Steve Ray, executive director of the Banning Ranch Conservancy, which filed the lawsuit over the environmental review, celebrated the decision. “It’s a real, real relief that the court has seen it the way we always felt it was,” he said.

The court’s decision comes on top of the California Coastal Commission’s rejection of the project in September. Commission staff recommended the project be reduced to less than one-third of its proposed size, which the developers say would make it economically unviable. 

The Newport Banning Ranch consortium, which includes real estate firm Brooks Street, investment firm Cherokee Investment Partners, and oil and gas producer Aera Energy, filed suit against the California Coastal Commission late last year, alleging that the commission’s rejection of the project amounted to an unconstitutional taking of their property. 

The Banning Ranch Conservancy hopes the Supreme Court’s decision this week will kill the project. The conservation group hopes to eventually purchase the property, restore it and turn it entirely into public open space and wildlife habitat.

To do that, the developers have to be willing to sell. They have long contended that developing part of the land would  provide the means for them to clean up and preserve the rest. Abandoned oil rigs and associated debris dot the land. 

In early March, the state’s oil and gas regulator issued dozens of citations to oil operators on the land, ordering them to clean up their sites.

Don Drysdale, a spokesman for the Division of Oil, Gas and Geothermal Resources, said in an email that the operators, Armstrong Petroleum and West Newport Oil, "appear to be working in good faith to achieve compliance." 

He said they reported to the agency that many of the cited violations have been remedied or would be by March 31. The operators asked for deadline extensions for fixing some violations. 

"The Division considers the options of issuing formal orders and civil penalties premature, but will continue to make both announced and unannounced inspections at the oil lease to confirm that progress toward compliance is being made," Drysdale wrote.