The Hawai'i Supreme Court has upheld a 2003 Circuit Court decision that required Castle & Cooke to submit an environmental assessment for its Koa Ridge residential project in Central O'ahu.

The decision means the company will have to resubmit its application to the state Land Use Commission to reclassify 761 acres of agriculture land to urban use and include an environmental assessment. Castle & Cooke had argued that the environmental review should be done at a later stage in the planning process.

The Sierra Club, which filed the lawsuit against the state Office of Planning, the Land Use Commission, Castle & Cooke and others, called the decision a major victory in the campaign against urban sprawl.

But Castle & Cooke said the decision will add to the rising cost of housing and delay construction of affordable homes.

"Obviously, we're disappointed, and there's a lot of future homeowners who are going to be very disappointed, said Harry Saunders, Castle & Cooke president of Hawai'i operations.

In 2002, the state Land Use Commission granted a reclassification of 761 acres of agricultural land for Castle & Cooke's Koa Ridge Makai and Waiawa developments without requiring an environmental assessment. Castle & Cooke had proposed building 3,600 homes and a medical arts center on the property.

The Sierra Club sued the commission, saying an environmental assessment was required, and the circuit court agreed.

The high court's decision reaffirms that developers must go through the environmental review process, which will give decision makers more information to base decisions, said Jeff Mikulina, director of the Sierra Club, Hawai'i Chapter.

"Our argument is all about getting an honest lay of the land so the decision makers can make the most informed decision," Mikulina said.

The Sierra Club and others had concerns about traffic, groundwater availability, loss of agricultural land and open space, and poor planning, he said.

"Farm land is more important than ever so we'd really like to see them protecting those lands, which are the last open space between Pearl City and Mililani, and as an island, focus development in areas that are already urbanized, particularly Wahiawa, Waipi'o and Waipahu, that have stable or losing population," Mikulina said.

Castle & Cooke's Saunders said the company is near completion of an environmental impact statement, and resubmitting an application to the Land Use Commission will add another year to the process because the company had to wait a year for this decision. He said the homes will most likely be available by 2010. Saunders said he is confident that Castle & Cooke will win approval for the project.

Reach Eloise Aguiar at eaguiar@honoluluadvertiser.com.