Water Supply Suit Must Wait For EIR, Court Rules: Development Opponents Not Allowed to Challenge Water Agency's Study

June 30, 2008
California Planning & Development Report (CP&DR), June 2008, Vol. 23, No. 6

A water supply assessment provided by a water agency for a proposed development project is not subject to legal scrutiny until it becomes part of an environmental impact report, the Second District Court of Appeal has ruled.

The unanimous three-judge appellate panel upheld a Los Angeles County Superior Court judge who had ruled that a water supply assessment may be challenged in court as part of a California Environmental Quality Act (CEQA) review, but not independently.

A water supply assessment (WSA) “is a technical, informational document and not a ‘final’ act or determination” subject to court review, the Second District ruled.

“It teaches us something that’s very helpful, but not unexpected,” said Eric Robinson, an attorney for the Association of California Water Agencies (ACWA) who filed an amicus brief in the case. “It teaches us that opponents of a land development project may not try to stop the project by challenging the water supply assessment for the project.”

Attorney Anne E. Mudge, who represented the developer in the case, said the case is important because it is the first published opinion that centers squarely on a water supply assessment law approved in 2001. Although the decision did not address the contents of a water study, the decision answered a key procedural question, namely, whether a water agency’s supply assessment is subject to legal challenge. The answer was no.

As with many water supply cases, this latest one comes from the Santa Clarita Valley, along Interstate 5 just north of Los Angeles. In 2003, the City of Santa Clarita approved GateKing Properties’ proposed business park – 4.2 million square feet of industrial and commercial space on 161 acres, with another 200-plus acres dedicated as open space.

Local environmental groups sued over the GateKing EIR and won an important decision three years ago in California Oak Foundation v. City of Santa Clarita, (2005) 133 Cal.App.4th 1219. In that case, the Second District, Division Eight, ruled the EIR was inadequate because the water supply assessment prepared by the Newhall County Water District failed to fully explain the uncertainty over future water deliveries (see CP&DR Legal Digest, December 2005). Specifically, the court found that the water supply assessment erroneously assumed that a contested transfer of 41,000 acre-feet of State Water Project water from Kern County to the Newhall district was a certainty.

After losing in court, the city asked the water district to prepare a new water supply assessment. It did so and in May 2006, the city certified a revised EIR containing the new water study. Under a state law amended in 2001 (SB 610, Costa), a water supply assessment is required for residential projects with more than 500 units and large commercial projects, including industrial parks with more than 650,000 square feet (see CP&DR, October, 2001).

Before the city certified the revised EIR with the new water supply assessment, an organization called the California Water Impact Network (C-WIN) sued the water district, alleging the assessment was legally deficient and misleading. The district, the city and the developer argued the document was not subject to legal review, and Los Angeles County Superior Court Judge Dzintra Janavs agreed. “WSA’s are not immune from judicial review, but must be challenged and reviewed as part of CEQA review,” Judge Janavs ruled. After C-WIN appealed, the Second District, Division Seven, ruled that Janavs got it right.

On appeal, C-WIN argued it should be able to challenge the water supply assessment either as an adjudicative act taken after a public agency accepts evidence, or as an arbitrary decision. But the appellate panel ruled otherwise. It found that under state law, the city – not the water provider – makes the final decision on water supply issues.

“[T}he WSA’s role in the EIR process is akin to that of other informational opinions provided by other entities concerning potential environmental impacts – such as traffic, population density or air quality,” Justice Norvell Woods Jr. wrote for the court. The water supply assessment “is not a final agency decision, determination or action” subject to court review, he wrote.

“While the lead agency must include the WSA in the EIR, the lead agency is not required to accept the WSA’s conclusions,” Woods continued. “The lead agency may in evaluating the WSA accept or disagree with the water provider’s analysis or may request additional information from the water provider. In any event, the lead agency is required by statute to make the ultimate determination, based on the entire record, whether water supplies are sufficient.”

The court noted that, in fact, the same parties to the original lawsuit over the project EIR are back in court over the revised EIR. That lawsuit, which is pending at the appellate level, contains “nearly identical” complaints about the water supply assessment, including the contention that the 41,000 acre-foot transfer remains in doubt.

Robinson, the ACWA attorney with Kronick, Moskovitz, Tiedemann & Girard, agreed with the court. He said the decision simply “eliminates one piece of unnecessary litigation” without preventing development opponents from having their day in court.

The decision, said GateKing attorney Mudge, “establishes that you only get one bite of the apple. I think you’re still going to see water supply litigation, but it will be in the CEQA context.”

The Case: California Water Impact Network v. Newhall County Water District, No. B197570, 08 C.D.O.S. 4413,2008 DJDAR 5483. Filed April 16, 2008.

The Lawyers: For C-WIN - Babak Naficy, (805) 593-0926; For Newhall - Thomas Bunn III, Lagerlof, Sebecal, Gosney & Kruse, (626) 793-9400; For GateKing Properties - Anne E. Mudge, Cox, Castle & Nicholson, (415) 392-4200