U.S. Weather Research Program (USWRP) prospectus development teams (PDTs) are small groups of scientists that are convened by the USWRP lead scientist on a one-time basis to discuss critical issues and to provide advice related to future directions of the program. PDTs are a principal source of information for the Science Advisory Committee, which is a standing committee charged with the duty of making recommendations to the Program Office based upon overall program objectives. PDT-1 focused on theoretical issues, and PDT-2 on observational issues; PDT-3 is the first of several to focus on more specialized topics. PDT-3 was convened to identify forecasting problems related to U.S. coastal weather and oceanic conditions, and to suggest likely solution strategies. There were several overriding themes that emerged from the discussion. First, the lack of data in and over critical regions of the ocean, particularly in the atmospheric boundary layer, and the upper-ocean mixed layer were identified as major impediments to coastal weather prediction. Strategies for data collection and dissemination, as well as new instrument implementation, were discussed. Second, fundamental knowledge of air-sea fluxes and boundary layer structure in situations where there is significant mesoscale variability in the atmosphere and ocean is needed. Companion field studies and numerical prediction experiments were discussed. Third, research prognostic models suggest that future operational forecast models pertaining to coastal weather will be high resolution and site specific, and will properly treat effects of local coastal geography, orography, and ocean state. The view was expressed that the exploration of coupled air-sea models of the coastal zone would be a particularly fruitful area of research. PDT-3 felt that forecasts of land-impacting tropical cyclones, Great Lakes-affected weather, and coastal cyclogenesis, in particular, would benefit from such coordinated modeling and field efforts. Fourth, forecasting for Arctic coastal zones is limited by our understanding of how sea ice forms. The importance of understanding air-sea fluxes and boundary layers in the presence of ice formation was discussed. Finally, coastal flash flood forecasting via hydrologic models is limited by the present accuracy of measured and predicted precipitation and storm surge events. Strategies for better ways to improve the latter were discussed.