HALACO ENGINEERING COMPANY v. SOUTH CENTRAL COAST REGIONAL COMMISSION (1984)

I. PROCEDURAL AND FACTUAL HISTORY

In 1965, Halaco Engineering Company constructed a recycling smelter plant in Oxnard, California, to engage in the business of recycling nonferrous metal scrap.   The site occupies about 40 acres, of which approximately 28 acres comprise a distinct eastern parcel used as a settling pond and waste disposal site.

The operation and use of the eastern parcel involves pumping fluids containing suspended solids into the settling pond and then removing the settled solids from the bottom of the pond and placing them on the berms, or sides, of the settling pond.   Expansion of the eastern, southern, and western berms of the pond is limited by property boundaries and a flood control channel.   The expansion of the northern berm is not so limited, and is the focus of this controversy.

In 1969, Halaco sought a determination from the City Engineer of Oxnard as to whether a permit was required for the construction and use of the settling pond.   The city engineer requested drawings depicting the project.   Halaco responded with a blueprint sketch which showed three settling ponds on the eastern parcel.   It was clear in the project description that dredgings from the pond would be placed on the berms, and that the berms would gradually expand in width and height.   The city engineer determined that no permits were required for the construction and use of the settling pond.

In 1970, Halaco constructed a single settling pond with dimensions roughly half of what was shown on the blueprint sketch.   The pond was dredged once a year and the height and width of the berms were slowly increased.

In 1972, California voters approved the California Coastal Zone Conservation Act.   In 1976, that law was repealed and replaced by the California Coastal Act of 1976 (hereinafter, the Act).   These enactments seek to safeguard the coastal zone as a distinct and valuable natural resource, but allow exemption from regulation to those developments which have obtained a vested right prior to the law's effective date.  (Pub. Resources Code § 30608.)   Halaco's smelting plant is within the geographical area regulated.

In 1972, the Oxnard City Council discussed Halaco's settling pond operation in connection with issuing a special use permit for another aspect of the business.

Towards the end of 1975, the pond had reached the dimensions shown in the 1969 blueprint sketch.   Virtually all the waste material being dredged from the pond was then being placed on the northern berm.

By May of 1978 it was clearly evident that the expansion of the northern berm was beyond that shown on the 1969 blueprint sketch.

In July 1978, Halaco applied to the appropriate commission for a determination that its operation was exempt from the Act.

After administrative hearings, the commission determined that Halaco's operations on the west parcel were exempt from the permit requirements of the Act.   With respect to the eastern parcel containing the settling pond and waste disposal site, however, the commission voted to approve an exemption only as shown on the blueprint sketch of 1969.

From that determination of the regional commission, Halaco pursued an administrative appeal to the state commission.   The state commission found no substantial issue in the appeal.

Halaco then filed its petition for writ of mandate in the superior court, pursuant to Code of Civil Procedure section 1094.5.   The commission filed a cross-complaint and sought a preliminary injunction restraining Halaco from further depositing waste material on the northern berm of the settling pond.   In July 1980, the commission obtained a preliminary injunction.

In March 1981, the case was tried on the basis of the administrative record, and the pleadings and arguments of counsel.   The trial court made findings of fact and conclusions of law, granted a writ of mandate and entered its judgment directing the commission to modify and revise its determination as to Halaco's vested rights without reference to the 1969 sketch.   The preliminary injunction was dissolved.¹  Further, the judgment affirmed the commission's determination that an 18,000-gallon propane tank was a development subject to the Act.   The trial court did not make an award of attorney fees, as allowed by statute.

The commission appeals from the judgment of the trial court directing a revised determination as to Halaco's vested rights.   Halaco appeals from the determination that its propane tank is a development within the coastal zone, and also from the denial of attorney fees.

II. SCOPE OF REVIEW

A. The trial court properly utilized its independent judgment.

This action was filed in the trial court pursuant to Code of Civil Procedure section 1094.5.   That section provides a two-tier rule for the trial court to apply;  after administrative proceedings which are adjudicatory, “ ‘․ if the agency decision substantially affects a fundamental vested right, the trial court must exercise its independent judgment on the evidence and find an abuse of discretion if the findings are not supported by the weight of the evidence (§ 1094.5, subd. (c));  otherwise the trial court's inquiry is limited to a determination of whether the findings are supported by substantial evidence in light of the whole record.  (§ 1094.5, subd. (b).)’ ”  (Patterson v. Central Coast Regional Com. (1976) 58 Cal.App.3d 833, 840, 130 Cal.Rptr. 169;  McCarthy v. California Tahoe Regional Planning Agency (1982) 129 Cal.App.3d 222, 228, 180 Cal.Rptr. 866.)

 In reviewing the decision of an administrative agency, therefore, a trial court must first determine whether a fundamental vested right is substantially affected by the administrative decision.   The California Supreme Court has recognized the nature of a “fundamental vested right” in several different contexts:  Bixby v. Pierno (1971) 4 Cal.3d 130, 93 Cal.Rptr. 234, 481 P.2d 242 (corporate recapitalization plan is not a fundamental vested interest);  Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 112 Cal.Rptr. 805, 520 P.2d 29 (widows' right to receive a death allowance is a fundamental vested right);  Harlow v. Carleson (1976) 16 Cal.3d 731, 129 Cal.Rptr. 298, 548 P.2d 698 (right to continued welfare benefits is fundamental and vested).   In the area of land use, however, our research discloses no case which has recognized a fundamental vested right to exist.  (Cf. San Diego Coast Regional Com. v. See the Sea, Limited (1973) 9 Cal.3d 888, 109 Cal.Rptr. 377, 513 P.2d 129.)   In Patterson v. Central Coast Regional Com., supra, 58 Cal.App.3d 833, 130 Cal.Rptr. 169, the Court of Appeal held that a developer had a vested right to subdivide property but that he had no fundamental vested right to construct houses on lots where construction had not been actually instituted.   In McCarthy v. California Tahoe Regional Planning Agency, supra, 129 Cal.App.3d 222, 180 Cal.Rptr. 866, the court found no fundamental vested right to construct a highway access driveway.   In that case, the property owner had been issued a foundation building and demolition permit, but was cautioned that the permit did not assure issuance of further building permits or approval of the project.

 In McCarthy, supra, the court delineated in a land use context the preexisting right which gives rise to independent judicial review of an administrative decision:  “The term ‘vested,’ when used in the ‘fundamental vested rights' doctrine to determine the scope of judicial review is not synonymous with its use in the ‘vested rights' doctrine relating to land use and development.   As used in the scope of judicial review, ‘[t]he term “vested” has been used in a nontechnical sense to denote generally a right “already possessed” (Bixby v. Pierno, supra, 4 Cal.3d 130, at p. 146 [93 Cal.Rptr. 234, 481 P.2d 242] ) or “legitimately acquired.”  (Strumsky v. San Diego County Employees Retirement Assn., supra, [11 Cal.3d] at p. 34 [112 Cal.Rptr. 805, 520 P.2d 29].)  On this basis, this court has distinguished generally between applicants and recipients in determining whether a right is “vested” for the limited purpose of determining the applicable scope of review.’  (Harlow v. Carleson (1976) 16 Cal.3d 731, 735 [129 Cal.Rptr. 298, 548 P.2d 698].)  On the other hand, as used in the vested right doctrine, ‘vested’ means the irrevocable right to complete construction notwithstanding an intervening change in the law that would otherwise preclude it.  (Aries Dev. Co. v. California Coastal Zone Conservation Com. [1975] supra, 48 Cal.App.3d [534] at p. 543 [122 Cal.Rptr. 315].)  In short, a vested right for review purposes means a preexisting right while a vested right for construction means a right the government is estopped to deny.  (Patterson v. Central Coast Regional Com., supra, 58 Cal.App.3d at p. 844 [130 Cal.Rptr. 169].)”  (McCarthy v. California Tahoe Regional Planning Agency, supra, 129 Cal.App.3d at pp. 229–230, 180 Cal.Rptr. 866.)

From the undisputed facts in the record before us, it is clear that Halaco's smelting operation, including the dredging of the settling pond and deposit of material on the waste disposal site preexisted the enactment of either the 1972 or 1976 Coastal Act.   The dredging of the settling pond had been a continuous operation since 1970.   The City of Oxnard, its building department, city engineer and city council, recognized this to be a dynamic and changing process.   The deposition of waste material on the berms of the pond was known to be an integral part of the operation.   Expansion of the northern berm onto the waste disposal site involves no new construction, nor any change in the use of the eastern parcel.

 Further, this utilization of the eastern parcel is clearly “fundamental.”   From the standpoint of its economic aspect, the dredging of material from the settling pond is an essential, integral part of the commercial smelting operation.   It is the character and quality of this economic aspect that renders it fundamental.  (McCarthy, supra, at p. 230, 180 Cal.Rptr. 866.)   Halaco does not seek to use its settling pond to obtain a commercially advantageous position.   Instead, that use is essential to the economic character of the smelting operation which has been sanctioned by government agencies since its inception.

 Since a fundamental vested right is involved, the trial court correctly employed its independent judgment in reviewing the administrative proceedings.   Of course, the essence of independent judgment is that the trial court may disregard the administrative agency findings of fact and reweigh the evidence to reach its own factual determinations.

B. The appellate court must affirm findings of the trial court if there is substantial evidence to support those findings.

 Where the trial court has properly employed its independent judgment and arrived at factual findings, this court need only review the record to determine whether those findings are supported by substantial evidence.   If there is any substantial evidence, even though contradicted, we must affirm the trial court findings.  (Bixby v. Pierno, supra, 4 Cal.3d 130, 143, n. 10, 93 Cal.Rptr. 234, 481 P.2d 242);  Moran v. Board of Medical Examiners (1948) 32 Cal.2d 301, 308, 196 P.2d 20;  McCarthy v. California Tahoe Regional Planning Agency, supra, 129 Cal.App.3d 222, 228–229, 180 Cal.Rptr. 866.)   This court can overturn those factual findings only if the evidence, including the record of the administrative proceedings, is insufficient as a matter of law to sustain the finding.  (Patterson v. Central Coast Regional Com., supra, 58 Cal.App.3d 833, 842, 130 Cal.Rptr. 169.)

III. THERE WAS SUBSTANTIAL EVIDENCE TO SUPPORT THE FINDINGS OF THE TRIAL COURT

 In the administrative hearing, the regional commission found a vested right to the use of the eastern parcel as depicted on the 1969 blueprint sketch.   The trial court found a vested right to exist without reference to the 1969 sketch.   The extent of Halaco's vested right “is a mixed question of law and fact, involving conflicting inferences that may be drawn from the basic facts.”  (Transcentury Properties, Inc. v. State of California (1974) 41 Cal.App.3d 835, 844, 116 Cal.Rptr. 487.)   Explaining its independent judgment, the trial court found that Halaco intended to use its settling pond and waste disposal site in a way that was fully explained to, understood, and considered by Oxnard.   After reviewing the evidence, the trial court found that the 1969 sketch was not critical to the scope of the operation.   In support of that finding, we note that the settling pond was not constructed according to the sketch.   Its dynamic, changing character was clearly recognized by Oxnard officials, and described by Halaco in its various letters and communications describing its smelting operation.   This constitutes substantial evidence in support of the findings of the trial court.

 With respect to the cross-appeal, Halaco urges that its 18,000-gallon propane tank is personal property, not a “development” within the ambit of the Act.   Further, since the tank is used to store fuel used in the smelting operation, Halaco argues that the tank is merely incidental equipment, an integral part of the exempted smelting operation.   The tank was brought onto the premises in July 1973.   The trial court found the tank constituted placement of solid material in the coastal zone and therefore was subject to the permit requirement of the Act.

Again, we find substantial evidence in support of the trial court finding.

Public Resources Code section 30106 defines the word “development” to mean “․ the placement or erection of any solid material or structure; ․”  Although the Act provides for a waiver of de minimis developments (§ 30624.7), there is no exclusion provided for movable structures or personal property.   The evidence is clear that the tank was placed on Halaco's property by a crane, and could be similarly removed;  it nevertheless remains within the definition of a development.   Such a structure simply does not present the same concerns as an automobile or office furniture brought to the site, as Halaco argues.   Finally, if Halaco's argument that incidental equipment brought to the site is embraced by the exemption of the smelting operation, then any new equipment or technology which might advance the business pursuit of the smelting operation would be similarly exempted.   Clearly the opposite intent is evident in the legislation.  (See San Diego Coast Regional Com. v. See the Sea, Limited, supra, 9 Cal.3d 888, 109 Cal.Rptr. 377, 513 P.2d 129.)

 Finally, Halaco appeals from the denial of attorney fees authorized by Government Code section 800.   Halaco argues that the commission's determination of a limited vested right was arbitrary and capricious as a matter of law, and that the commission's failure to follow its own rules or statutory duty to properly adopt factual findings requires the award of attorney fees.   The trial court refused to make such an award.   The actions of the commission, and any failure to follow duties imposed by statute or its own rules, are matters of factual determination appropriately resolved in the trial court.   The record before us does not compel the conclusion that as a matter of law the commission's actions were arbitrary or capricious.   Under Government Code section 800, any award is discretionary with the trial court.   We cannot say that the court abused its discretion in denying an award of fees.

The judgment is affirmed;  costs on the appeal and cross-appeal shall be borne respectively by appellants and cross-appellant.

I concur in the holding and reasoning of the majority opinion.   It is necessary, however, to express the caution not to overly read either.   My concurrence does not indicate a striking from proper commission jurisdiction the authority to restrict activities far in excess of that reasonably foreseeable at the time Halaco obtained its “vested right” to pile the waste product on its property.   This case was not tried, however, on the theory of a new and different effect upon ecology and scenic destruction.   In my view, where these factors are in issue, then “vested rights” may be less rigidly entrenched or the whole theory of restricting the rights of individual owners where there is demonstrable evidence of injury to the populous as a whole would fail.   The rights of each, the owners and the general populous, must meet in a fair and reasonable balance based on not only historical fact (vested interests) but the need for future preservation of irreplaceable natural assets.

FOOTNOTES

FOOTNOTE.  

1.   We note that after the trial court dissolved its injunction, the Environmental Protection Agency obtained an injunction issued by a federal district judge incorporating the state injunction and revitalizing that order under federal authority.   Of course, this appeal is unaffected by that injunction.   Similarly, we cannot know what effect, if any, the federal court may give to the resolution of this appeal.

WISOT, Justice *. FN* Assigned by the Chairperson of the Judicial Council.

STEPHENS, Acting P.J.*, and ASHBY, J., concur.