On June 12, 2018, in County of Ventura v. City of Moorpark and Broad Beach Geologic Hazard Abatement District, __ Cal.App.5th __ (2018) (Case No. B282466), the Second District Court of Appeal published a decision addressing whether the California Environmental Quality Act’s broad definition of “project also applies to statutory exemptions, questions of state law preemption, the limits of a city’s contractual authority, and the abdication of a government entity’s police power.  My partner, Art Coon, wrote about the CEQA issues here.

The project was a response to decades of erosion at Broad Beach in Malibu that left beachfront properties—protected only by a temporary emergency rock revetment—at risk from storm damage and high tides.  To address the problem, the City of Malibu formed a Geologic Hazard Abatement District (“GHAD“) “to implement a long-term shoreline protection plan to return Broad Beach to its historical proportions and splendor.”  In particular, the project would create an extended new approximately 30-40 foot deep restored dune system that would bury and cover the revetment rocks now on the beach and create an approximately 50’ wide dry sandy beach.

To achieve that result, the project would import approximately 300,000 cubic yards of sand initially for dune restoration, related preservation work, and future sand backpassing and renourishment activities.  The project would include four additional deposits of equal size at five year intervals, along with periodic supplemental deposits of up to 75,000 cubic yards each as needed.  Each of the five major deposits would generate approximately 44,000 one-way truck trips over a three to five month period.

The City of Moorpark expressed concern that extensive sand hauling through the City would negatively affect residents.  The City and Broad Beach GHAD eventually negotiated and entered into a settlement agreement that prohibits trucks used in the sand hauling project from driving through the City, except in an emergency.  The settlement agreement also states that it could only be amended or modified by mutual written agreement of the parties.

The County of Ventura and City of Fillmore challenged the project alleging that it is not exempt from CEQA review, is preempted by state law, constitutes an illegal attempt by Moorpark to regulate traffic outside city limits, and represents an abdication of the Broad Beach GHAD’s police power.  The trial court found the project statutorily exempt from environmental review under the GHAD statute and CEQA.  The trial court also determined that the settlement agreement is neither preempted by the Vehicle Code nor an improper attempt by Moorpark to regulate traffic outside city limits.  The court found, however, that the Broad Beach GHAD improperly contracted away to Moorpark its police power in portions of the settlement agreement.

Ventura and Fillmore argued that the settlement agreement is void because Vehicle Code section 21, which preempts local traffic control ordinances and resolutions, preempts Moorpark’s ability to control project traffic.  A city may enact and enforce, within its limits, only those ordinances and regulations that do not conflict with state law.  Cal. Const. art. XI, § 7.  Thus, if a local ordinance or resolution conflicts with state law, it is void.  A conflict exists if an ordinance or resolution “‘duplicates, contradicts, or enters an area fully occupied by general law, either expressly or by legislative implication.”  Sherwin-Williams Co. v. City of Los Angeles, 4 Cal.4th 893, 897 (1993).

The Court of Appeal held that Vehicle Code section 21 is inapplicable here because the settlement agreement is a contract, not an ordinance or resolution, and Vehicle Code section 21 does not apply to contracts.  The Court reasoned that the settlement agreement does not have the effect of an ordinance or resolution that conflicts with the purpose of the Vehicle Code.  Rather, the agreement merely dictates the routes Broad Beach GHAD’s contractors and subcontractors must use when working on the project.

Ventura and Fillmore also argued that the settlement agreement is an unlawful attempt by Moorpark to exercise its regulatory powers outside city limits under the guise of its contractual authority.  Subject to limited exceptions, a city has no extraterritorial powers of regulation and may not exercise governmental functions beyond its corporate boundaries.  But the prohibition against extraterritorial regulation applies only where the local authority exercises its regulatory or police power as opposed to its contracting power.  A city has authority to enter into contracts that enable it to carry out its necessary functions, including those implied by necessity.  The Court held that there was no extraterritorial regulation problem, reasoning that Moorpark has attempted to abate that nuisance within city limits by signing a settlement agreement that designates permissible sand hauling routes for Broad Beach GHAD’s contractors.  If the Broad Beach GHAD found the agreement’s route provisions overly burdensome, it could have refused to sign the settlement agreement.

Finally, in the most interesting part of the case, Ventura and Fillmore argued that the Broad Beach GHAD abdicated its police power when it granted Moorpark the power to dictate the sand hauling routes the GHAD’s contractors must use during the life of the project.  Before a GHAD could be said to abdicate its alleged police power, however, a determination must first be made that such a district has the police power.

GHAD’s are special district’s formed in specific geographic areas to prevent, mitigate, abate, or control defined geologic hazards through maintenance, improvements, or other means.  GHADs are primarily financed through an assessment of landowners within the designated district boundaries.  As political subdivisions of the state, GHADs are subject to state law and derive their power from a statute authorizing the creation of the district.  They do not have the police power unless it is specifically granted to the district by the state legislature.

The Court largely appeared to concede that GHADs have the police power but without analyzing whether the legislature actually provided any such grant of authority.  Instead, the Court essentially pointed to particular provisions within the GHAD statute providing certain powers to the district, such as the power to enter into contracts, and concluded that, “as a creature of state law, BBGHAD may exercise a portion of the state’s police power.”  In particular, according to the Court, the determination of hauling routes is a police power because hauling sand constitutes an “improvement” within the meaning of the GHAD law.  The Court thus held that sections of the settlement agreement are void because they surrender the Broad Beach GHAD’s discretion to alter haul routes in the future.

The Court ultimately held that the settlement agreement is not void in its entirety, however, because the illegal portions of the agreement were severable from its main purpose.  Under Civil Code section 1599, where an agreement has several objects, some of which are lawful and others of which are unlawful, it is “void as to the latter and valid as to the rest.”


Questions? Please contact Bryan W. Wenter, AICP of Miller Starr Regalia.

For more than 50 years, Miller Starr Regalia has served as one of California’s leading real estate law firms. Miller Starr Regalia has expertise in all types of real property matters, including full-service litigation and dispute resolution, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, exactions, title insurance, environmental law, and land use. Miller Starr Regalia attorneys also write Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. For more information, visit www.msrlegal.com.