NEWPORT BEACH, Calif. (AP) -- California's Supreme Court ruled Thursday that an upscale coastal city failed to adequately consider the environmental effects of a plan to build homes on a large swath of land overlooking the Pacific Ocean.
The court said the city of Newport Beach should have considered environmentally sensitive habitat when drafting a review of a hotly contested proposal to develop a 401-acre (162-hectare) piece of land known as Banning Ranch.
The ruling comes amid years of court battles between environmental groups who want the tract of oil land left as open space and developers who want to build hundreds of million-dollar homes, a hotel and shopping area.
Terry Welsh, president of Banning Ranch Conservancy, said the ruling sends a strong message to cities or counties that they can't simply ignore the habitat areas, which are protected under state law, and leave them for California coastal regulators to consider.
"The city just almost went out of their way to avoid this discussion," said Welsh, whose group sued Newport Beach and developers over the environmental review.
Sam Singer, a spokesman for the developers, said the court decision may delay the project by a year or two but won't derail it. He said requiring cities to identify these areas will complicate coastal development applications down the road.
The city of Newport Beach approved the environmental review in 2012 for a proposal to build more than 1,300 homes on the land, which is an aging oil field.
Last year, developer Newport Banning Ranch brought before the California Coastal Commission a scaled-down project to build nearly 900 homes. That proposal was denied over concerns about the effect on the sensitive habitat. The developer later sued.
Commission Executive Director Jack Ainsworth said the state Supreme Court made a strong decision that underscores requirements for local governments to thoroughly evaluate potential effects to increasingly rare sensitive habitat.
"The primary reason the commission voted to deny the project was because of the impacts to the burrowing owl and gnatcatcher habitat, and loss of wetlands and sensitive vegetation," he said in a statement.
The city of Newport Beach said in a statement that it is much clearer which portions of the property are considered protected habitat now that the state Coastal Commission has reviewed the project.