Green tycoon Khosla accuses enviros of 'extortion' in beach access case

This story was updated at 7:36 a.m.

REDWOOD CITY, Calif. -- Billionaire venture capitalist Vinod Khosla is in court, trying to avoid being dragged before a state agency known for its aggressive defense of coastal access rights.

Khosla's attorney yesterday accused environmentalists of "blackmail and extortion" in the closing arguments of a lawsuit brought by the Surfrider Foundation over access to a popular beach south of Half Moon Bay, which Khosla bought in 2008 for $32.5 million. The case has attracted attention for its high-profile defendant as well as its subject matter -- beach access is a perennial hot topic in California, with its 1,100 miles of coastline.

"This case is about a private property owner protecting his private property rights," said Jeff Essner, an attorney with the Silicon Valley law firm Hopkins & Carley. "My client is entitled to close his gate and protect his private property rights without applying for a permit from the Coastal Commission."

Surfrider sued in March 2013 after Khosla closed a road leading from Highway 1 to Martins Beach, which had been open to the public for decades under the previous owners. The suit, in San Mateo County Superior Court, alleges that Khosla violated the state's 1976 Coastal Act by changing the intensity of the land use without seeking a permit from the state Coastal Commission, which oversees development on coastal lands.


Attorneys for Surfrider insisted that Khosla should ask the commission for the right to close the road to the picturesque beach, which has been popular with surfers. "Somehow, somewhere, justice has to rain down on this individual, Mr. Khosla, and force him to go to the Coastal Commission and unlock that gate," said Joe Cotchett, an attorney with Cotchett, Pitre & McCarthy representing Surfrider. "Take down that lock, Mr. Khosla."

Essner said that agency staff members had told Khosla's property manager in 2011 that they would use the bureaucratic process to deny a development permit and urged him to donate the right of way to a nonprofit. Such a suggestion -- or making a donation a term of the permit -- would violate the Takings Clause of the Fifth Amendment to the Constitution, he said, which requires the government to justly compensate landowners if it takes the land for public use.

Lawyers with experience in California land use issues said that if Khosla went to the agency, it might indeed deny a development permit or seek an easement across the land so the public could reach the beach.

"What the suit's trying to do is force the property owner to get inside the permitting process," said Paul Beard, a principal attorney with the Pacific Legal Foundation who handles land-use cases. "By getting them in the permitting process, there might be a way to exact a public access easement from them."

"They're the most aggressive agency that I practice in front of in terms of their asserting their jurisdiction and expanding their jurisdiction," said Wayne Whitlock, a lawyer with the Pillsbury law firm, based in the Bay Area. "They're always looking to protect these rights of public access or the necessity of obtaining a permit."

The agency's powers expanded last month when Gov. Jerry Brown (D) signed a bill granting it the right to impose fines administratively for public access violations, rather than going through a court. Surfrider is asking the court to issue a fine of up to $15,000 per day, dating back to October 2010, which would total more than $20 million. But if the new authority had been around earlier, it could have forestalled the suit, Surfrider co-counsel Eric Buescher said.

"It would have been something other than sending them a letter and saying, 'We think you should do this,'" he said. "It maybe could have avoided a year and a half of lawsuits and lawyers."

But the fact that the commission has not been involved in the case could suggest that state officials don't think highly of its chances. An agency official did testify last month in support of a state bill to take Khosla's land by eminent domain, saying it represented "basically the shortest distance between where we are now and where we want to get, which is opening coastal access to this beach" (Greenwire, June 17).

"They regularly get involved in cases where they're not parties," Beard said. "They haven't gotten involved in either case, which suggests to me that they don't see the merits."

A Coastal Commission official said that it's not customary for the agency to get involved in third-party lawsuits, but that it might. "We don't really take positions on outside litigation, typically," said agency legislative director Sarah Christie. "We have been monitoring the case however, and it is possible that we could file an amicus on appeal, depending on the ruling and assuming there is an appeal."

Judge Barbara Mallach has until mid-October to issue a decision, but should decide within the next two months, Cotchett said.

"I anticipate no matter what happens, somebody or both sides will be appealing," Buescher said.

Cotchett suggested the case could go all the way to the U.S. Supreme Court, but observers were skeptical, saying Khosla's legal argument -- that being forced to apply for a permit constitutes an illegal taking -- would be a long stretch.

"That's kind of a novel theory that would be difficult to litigate," Beard said, "that a judicial decision took his property without compensation. That would be kind of a difficult and strange argument to make."

Surfrider argued that the issue is premature. "Our position is that you can't have a Fifth Amendment taking of any kind until the Coastal Commission tells you you have to do something and actually takes your property," Buescher said. "Given the current political climate at the Supreme Court, arguing against private property rights is probably not a particularly productive thing to do, but we don't really see that as the dispute in this stage."

A representative for Khosla, former state Assemblyman and former Coastal Commission Chairman Rusty Areias, said after the hearing that he didn't want the case to stretch on.

"The Vinod Khosla I know, my client, would like to see this issue resolved," he said. For environmentalists, he said, "this is a horrible case. You could not pick a worse test case than this case." He hypothesized that Surfrider picked the Martins Beach case because of Khosla's prominence. "That well-traveled road of pin-the-tail-on-the-billionaire, I think it was just too enticing."

Turning the environmentalist-versus-billionaire narrative on its head, Cotchett and Areias greeted each other warmly after the hearing in downtown Redwood City, a small suburb halfway between San Francisco and San Jose.

"Friendship is based on affection, not agreement," Areias said.

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