[REN #473] Public Beach Access vs. Private Property Rights: The Supreme Court Decides

Picture of a surfer on a beach for Real Estate News for Investors Podcast Episode #473

The tug-of-war over access to a popular San Mateo County beach could wind up in the nation’s highest court. Silicon Valley billionaire, Vinod Khosla, has filed a petition with the U.S. Supreme Court in his defense against a lawsuit by the Surfrider Foundation. Legal experts say if he wins, his case could turn the California Coastal Act upside-down, and put beach access for millions of people at risk. (1)

The Sun Microsystems co-founder paid $32 million for an 89-acre property that surrounds the beach in 2008. It’s been a popular surf spot for decades with a dirt access road that runs through what is now Khosla’s property.

Khosla was warned before he bought the property that he must continue to provide beach access as mandated by the state constitution and the Coastal Act of 1976. He allowed access to continue at first, but two years later, he locked the gate to the road and the legal battle began.

At first, the Surfrider Foundation sent a letter to Khosla asking him to restore public access. Other members of the public echoed that request, and Khosla’s attorneys responded with a detailed letter about the poor condition of the road and beach facilities, the cost of repairs and maintenance, and the need to operate the beach as a business, which was not Khosla’s intent when he bought the property.

The public was not sympathetic. Khosla’s letter was met by more pleas to open the access road, protest rallies, and a highly-publicized act of trespassing by five surfers.

The Surfrider Foundation filed a lawsuit in 2013 claiming Khosla was not legally allowed to block the road because he hadn’t filed for a coastal development permit to change the amount of access allowed to the public.

The family that owned the property before Khosla had allowed access for almost a hundred years. They were also at least partially compensated by charging fees for parking, and operating a store.

Khosla attempted to do the same for the first two years, but shut it down saying he was losing money. In his legal filings he said he was “willing to give the business a go and continued to allow members of the public to access the property upon payment of a fee.”

However, he says he soon faced the same money-losing situation as the previous owners. He claims in his legal documents, “The business was operating at a considerable loss, as the costs of keeping the beach, the parking lot and other facilities in operating and safe condition significantly exceeded the fees the business generated.”

As the stand-off continued, the case wound its way through court and last summer, Khosla lost his case on appeal. Khosla submitted his case to the State Supreme Court which declined to hear it. Now Khosla is hoping for a more sympathetic ruling from the U.S. Supreme Court.

He claims that the California Coastal Commission requirement for a permit to simply padlock his gate is a violation of his property rights. He says in his petition that the case is a “textbook physical invasion of private property” and describes the Coastal Act as “Orwellian.” (2)

There’s no word yet on whether the Supreme Court will hear the case. That decision could come by this summer, but legal experts say Khosla is prepared to argue his case with a powerful legal team.

Attorney Paul Clement is the Counsel of Record on the petition. He’s the former U.S. solicitor general under President George W. Bush and has reportedly argued at least 50 cases before the Supreme Court.

He’s also a hard-hitter for the conservative agenda with several high-profile cases. He provided defense in a case involving the Defense of Marriage Act and represented the National Rifle Association in another. An attorney for the Surfrider Foundation has also called him the “nation’s premier conservative private property rights attorney.”

The Supreme Court receives thousands of petitions a year but only accept about 100 of them. Legal experts say Clement’s conservative track record and the significance of the issue could be enough to capture the attention of the court’s right-leaning justices, and convince them to accept the case.

In the meantime, the California Coast Commission has begun enforcing the order to open that gate, which could result in fines of about $11,000 a day. The Commission has informed Khosla of several other violations as well.

The Mercury News says that the penalties could add up to more than $20 million with additional penalties if the violations continue. Khosla is also at risk of having a lien placed on his property if he refuses to pay.

Khosla attorney’s attempted to resolve the issue about a year ago by offering to sell a 6-acre easement but state officials say his price was too high. He wanted $30 million which is almost as much as he paid for the entire property. The State Lands Commission estimated the value of that smaller plot of land at $360,000.

Khosla doesn’t live on the property. His attorneys say he’s arguing the case as a matter of principle, as a constitutional right to his private property. Legal experts on the other side of the argument says it’s also a matter of beach access rights for every American.

Massara says of the Supreme Court petition, “This represents a threat not just to the California Coastal Act, but to coastal protection laws in other states.” He disputes Khosla’s argument that “any private property owner can eliminate public access to any shoreline with no permits whatsoever.” He says if that is allowed to happen, “the net result would be that virtually anyone with sufficient financial resources could buy up coastal property in the United States and eliminate beach access.”

Surfrider attorney Joe Cotchette also warned about a dangerous precedent saying the case “strikes at the core of our society.” He told the Los Angeles Times, “This is so much bigger than a little beach in San Mateo County. It’s a stepping stone to every coastline in the United States.” (3)

For now, the San Mateo County Sheriff’s Department has said it won’t arrest anyone for trespassing if they climb over that gate, unless the court reverses its decision. Khosla’s gatekeepers also occasionally unlock the gate.

Links:

(1) Khosla’s Petition

(2) Mercury News

(3) LA Times

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