Legal Battles Over California Water Supplies Set to Escalate With Final Bay-Delta Plan

March 13, 2013

Bloomberg BNA, Water Law & Policy Monitor

Downey Brand water law attorneys David Alajdem, Christian Marsh and Steve Saxton were interviewed and Christian Marsh and Steve Saxton commented on this article over conflicting rulings and the ELF v. State Water Resources Control Board.

Read the full article below.

By Carolyn Whetzel for Bloomberg BNA.

LOS ANGELES—California’s legal battles over water are likely to escalate in 2013, once the Bay Delta Conservation Plan and a water quality plan for the Sacramento-San Joaquin Delta are finalized later this year, several attorneys told BNA.

This new wave of lawsuits would add to the already long list of water-related disputes now wending through federal and state courts, many of which could have far-reaching implications for government agencies that manage water resources, water users, and the environment.

Being developed through a joint federal and state process, the Bay Delta Conservation Plan is a complex, long-term strategy for better managing the delta and protecting, restoring, and enhancing its fragile ecosystem. The draft plan calls for a twin-tunnel conveyance system to be built around the delta, a proposal that has drawn opposition from the environmental advocates, Delta residents, and others.

“One thing is certain, the Bay Delta Conservation Plan is going to generate litigation,” Richard M. Frank, a professor at the University of California, Davis law school and director of the school’s California Environmental Law and Policy Center, told BNA.

With the large number of state and federal agencies involved in crafting the plan, attorneys said it is difficult to predict what types of lawsuits would be filed.

The plan “will face a number of legal challenges,” Phil Isenberg, chairman of the state’s Delta Stewardship Council, said at a recent UC Davis event. ‘‘Those challenges will come from all sides of the water battle and continue for years.’’

Litigation Impacts.

The California State Water Resources Board plans to adopt updated flow standards and water quality objectives in late summer as part of its strategy for the San Francisco/Sacramento-San Joaquin Delta Estuary, which also may also trigger legal action, Andy Sawyer, assistant chief counsel at the water board, told BNA.

Legal challenges to these plans have the potential to stall programs and measures designed to implement legislation enacted in 2009 to reform the state’s management of the delta, which provides irrigation for 7 million acres and drinking water for 25 million Californians.

Among the cases moving through the courts now are several whose outcomes could impose new obligations on federal and state agencies overseeing water projects, impact the state’s administration of water rights, and sideline or void existing agreements.

For agricultural and urban water users, the decisions could mean less water flowing their way. The stakes are equally high for threatened and endangered fish, which need sufficient water flows.

Delta Is Ground Zero.

As the hub of the state’s water system, the California Delta is ground zero for the state’s water wars, where the underlying issue in the disputes is who gets water and how much of it, especially when flows must be diverted to comply with the Endangered Species Act and when dry winters mean reduced supplies for competing water interests.

Many of the current cases target the joint operation of the U.S. Bureau of Reclamation’s Central Valley Project (CVP) and California’s State Water Project (SWP). The projects move water from rivers and dams in the north through the Delta to reservoirs and water districts in the Central Valley, the San Francisco Bay Area, and Southern California.

Delta Smelt, Salmon Consolidated Cases.

Take, for instance, the lawsuits irrigation districts, farmers, and other water agencies throughout the state have filed challenging scientific documents, called biological opinions, the bureau relied on to curtail flows through the Central Valley Project/State Water Project facilities to protect the threatened Delta smelt and endangered salmon (Delta Smelt Consolidated Cases, E.D. Cal., No. 09-cv-407 & Consolidated Salmonid Cases, E.D. Cal., No. 09-cv-1053).

In separate decisions in 2010 and 2011, the U.S. District Court for the Eastern District of California agreed with water users’ claims that the biological opinions were scientifically flawed, for various reasons, and ordered the government to rewrite the documents.

The court also found that in implementing the water curtailment plans, the bureau violated the National Environmental Policy Act. The government failed to take a hard look at the impacts the cuts in deliveries would have on the plaintiffs, the court said.

Federal and state agencies and environmental advocates have challenged many of the district court’s findings, which were briefed and argued in 2012, and are now awaiting decisions from the U.S. Court of Appeals for the Ninth Circuit.

If allowed to stand, the district court rulings requiring a NEPA environmental review whenever the bureau implements an operating decision to comply with the ESA would represent a major change, Reed D. Benson, a law professor at the University of New Mexico who focuses on water law in the western United States, told BNA. Historically, the courts have not required environmental reviews for federal agencies carrying out their ESA duties, he said.

“Requiring the bureau to complete a full environmental impact statement before it cuts water deliveries to comply with the Endangered Species Act could greatly delay implementation of protections for species on the brink of extinction,” Benson said.

Here, “the water contractors are suing under NEPA, using the Magna Carta of U.S. environmental laws, for harm caused by the Endangered Species Act,” he said. “This is an obstruction of the ESA.”

Water Delivery Disputes.

In another Delta case, the Natural Resources Defense Council and other groups continue a battle to overturn a 2009 district court ruling that blocked their effort to force the rewriting of longterm water contracts, upon their renewal, to protect the smelt under the Endangered Species Act.

Last year, a Ninth Circuit panel voted 2-1 to affirm the ruling that the bureau’s renewal of 41 contracts with Sacramento River Settlement Contractors, a group of irrigation districts and mutual water companies with historic rights to the river water, is not subject to the ESA and that the environmental group lacked standing to sue (NRDC v. Salazar, 9th Cir., No. 09-17661, 7/17/12).

On March 5, the Ninth Circuit issued an order granting NRDC’s petition for an en banc rehearing (2013 WLPM 7, 3/6/13).

“The majority in the 2-1 panel decision failed to follow Supreme Court and Ninth Circuit precedent, and en banc rehearing gives the full court a chance to correct those errors,” NRDC attorney Kate Poole told BNA in an email.

Tehama-Colusa Canal Authority v. DOI.

Central Valley Project contractors in Sacramento Valley are awaiting a decision from the Ninth Circuit in a legal battle asserting that the state’s “area of origin” statute (Calif. Water Code Sec. 11460) entitles them to their full contracted water allocations over exports to users outside of the watershed (Tehama-Colusa Canal Authority v. Department of the Interior, 9th Cir., No. 11-17119).

At issue is whether state law enacted to ensure water users in areas where water originates have reasonably adequate supplies applies to the Tehama-Colusa Canal Authority contractors and if the Bureau of Reclamation can reduce their contracted water allocations in dry years.

The final ruling in this case has implications for how the Central Valley Project and the State Water Project export water.

In 2011, the federal district court rejected the Tehama-Colusa Canal Authority’s argument that the Bureau of Reclamation violated the area of origin when curbing its allocations during dry years.

The district court held that the Tehama-Colusa contractors did not have priority rights for Central Valley Project deliveries in dry years over exports out of the area for multiple reasons, including: the shortage provision in the contracts allow the bureau to reduce allocations; water in the irrigation canal is from stored Central Valley Project facilities, not natural flows protected by the area of origin law; and the water users never applied to the state board for area of origin permits.

A key question on appeal is if the district court correctly interpreted prior case law and state decisions involving the area of origin statute and Central Valley Project operations.

Conflicting Rulings.

In court documents, the Tehama-Colusa Canal Authority contends the district court ruling conflicts with a 2006 California appellate court opinion and a state water board ruling on the area of origin law.

Tehama-Colusa Canal Authority water contractors received only 40 percent of the water under their contracts in 2008 and 2009, while the bureau is exporting supplies to users to the south, according to information on the authority’s website. Reduced allocations forced farmers to leave land fallow, slowed the area economy, and required the purchase of additional water supplies, the authority said.

At issue, “is a huge amount of their water supply,” Steve P. Saxon, an attorney at Downey Brand LLP in Sacramento who is representing the authority, told BNA. “It’s significant.”

California’s Department of Water Resources and State Water Resources Control Board have filed a brief on behalf of the federal government, asking the Ninth Circuit to affirm the ruling. ‘‘It was correct, and, if reversed, could impact DWR’s operation of the SWP and ongoing litigation in another water district over breach of contract claims,’’ the state said in its brief. Solano County Water Agency, Napa County Water Conservation District, Butte County, and Yuba City have ‘‘areaof-origin’’ claims pending in state court against the Department of Water Resources (Solano County Water Agency v. DWR, Cal. Super. Ct., No. 34-2008- 00016338).

Water users in the San Joaquin Valley to the south who intervened in the case also want the district court ruling upheld.

2003 Colorado River Agreement.

A series of longstanding disputes over the 2003 Quantification Settlement Agreement (QSA) involving water transfers from agricultural Imperial County to San Diego could be headed toward resolution (Quantification Settlement Agreement Cases, Cal. Super. Ct., No. JC 4353).

On March 6, a California Superior Court judge in Sacramento overseeing consolidated cases, most over the environmental impacts of the agreement, stayed a judgment in the litigation for 90 days at the request of the Imperial Irrigation District to give the parties time to negotiate a global agreement (see related story).

Litigation in state court challenging the constitutionality of the QSA and related agreements ended last year with the California Supreme Court declining to review an appellate panel decision validating the agreements, which transfer as much as 12.9 million acre-feet from agricultural Imperial County to urban San Diego for 75 years.

A key source of this dispute involves the potential environmental impacts of the reduced agricultural flows to the Salton Sea that would result from the decrease in Colorado River water for the state and loss of agricultural water to San Diego County.

Imperial County, South Coast Air Quality Management District, Metropolitan Water District of Southern California, and coalitions of local farmers and landowners are among the entities involved in the lawsuits.

A global settlement would resolve California Environmental Quality Act claims that grew out of the QSA alleging failure to consider the higher salinity levels in the Salton Sea that would result from reduce flows, increased air pollution related to dust from shrinking shores, and wildlife impacts. Other pending claims involved an alleged violation of the state’s open meeting law and a disagreement over which water providers should be involved in the agreements.

ELF v. State Water Resources Control Board.

A change-of-venue petition in an already potentially groundbreaking water law case asks a state appeals court to declare the water in the Scott River ‘‘real property’’ (County of Siskiyou v. Superior Court of Sacramento, Cal. Ct. App., No. C067252, 2/1/11).

Declaring river water real property “would redefine property law and water law,” James Wheaton, president and legal director of the Oakland-based Environmental Law Foundation said. “If that happens potentially any regulation on the use of the water would be a taking and the government would have to pay.”

Wheaton filed the underlying lawsuit that seeks to extend California’s public trust doctrine, which protects the natural environment, to the groundwater hydrologically connected to the Scott River in Northern California (Environmental Law Foundation v. SWRCB, Cal. Super. Ct., No. 34-2010-80000583).

“This is an incredibly important case, a huge case,” Downey Brand LLP attorney Christian Marsh said. “Do we want to apply the public trust doctrine to groundwater?”

While the merits of the underlying case have yet to be briefed, the appeals court decision on venue is due any day, attorneys involved the case told BNA. The California Courts of Appeal, Third Appellate District, notified parties in January that it is on the verge of issuing a decision, according to Roderick E. Walston with Best Best & Krieger LLP, who is representing Siskiyou County. At issue is a Sacramento County court’s refusal to transfer the case to Siskiyou County, Walston said. Siskiyou County believes the case should be heard in its court.

Walston disagreed with comments by Wheaton and others that the declaration of the river water as “real property” would upend state property and water laws and trigger takings claims.

The argument that the river is real property applies just to the change-of-venue petition, Walston said. California venue statutes require cases involving real rights and interests be litigated where those interests are, Walston said. Civil code defines a “water course” as property, he said.

Yuba County Water Agency v. SWRCB.

In December 2012, Yuba County Water Agency challenged a California Superior Court ruling that upheld the state water board’s authority to require increased cold water, instream flows in the Lower Yuba River (YCWA v. SWRCB, Cal. Ct. App., No. C072870).

At issue is a water board decision amending the agency’s water rights permits to improve conditions in the river to support salmon and steelhead.

Plaintiffs alleged CEQA violations, violations of water rights permits, and constitutional takings, among other claims.

In its opinion, the trial court denied the CEQA allegations, held that plaintiffs lacked standing for the takings claims as the suit involved administrative proceedings, and found that the water board has authority to revise the permits. Also, the court dismissed without prejudice claims disputing requirements for updated fish screens, finding they were premature.

Groundwater Pumping Plan.

A plan to pump billions of gallons of groundwater from the Mojave Desert and sell it to Southern California Water Agencies triggered several lawsuits in 2012 (Broines v. Cadiz Inc., Cal. Super. Ct., No. 30-2012-00620636-CU-WM-CXC).

Cadiz Inc. has spent years trying to advance the project to capture and sell the groundwater beneath the 34,000 acres it owns in eastern San Bernardino County, near Mojave National Preserve and Joshua Tree National Park. Based in Los Angeles, the company grows citrus and other agricultural crops on about 9,600 acres in Cadiz Valley.

The Center for Biological Diversity and other groups have sued alleging CEQA violations. The environmental impact report concluded the project would result in no significant impact on critical desert resources.

A labor group and Tetra Technologies, a salt-mining operation near the Cadiz property, also filed complaints over the project.

Other allegations target San Bernardino County officials’ decision to cede status for preparation of the environmental analysis to Orange County-based Santa Margarita Water District, which has contracted to buy much of the water.

Defendants in the cases include San Bernardino County, Santa Margarita Water District, and Los Angeles-based Cadiz. Initially filed in San Bernardino County, the cases have been transferred to California Superior Court in Orange County.

Antelope Valley Groundwater Cases.

A dispute over water rights in the Antelope Valley groundwater basin continues to move forward as the California State Court judge overseeing the coordinated proceeding works to determine which parties have the right to extract a “safe yield,” the amount of water that can be pumped without depleting the aquifer beyond its ability to replenish in wet years (Antelope Valley Groundwater Cases, Cal. Super. Ct., JCCP No. 4409).

Judge Jack Komer previously determined that the groundwater basin has been in overdraft for 50 years.

At stake in the 14-year battle are the rights of almost every landowner—including large farming operations, on both sides of the Los Angeles-Kern county line that pump groundwater or may sometime in the future extract the water—and the federal government’s right to pump water for Edwards Air Force Base.

Bakersfield, Calif.-based agricultural firms Bolthouse Farms Inc. and Diamond Farming Co. filed the initial complaints against several public water suppliers, including Palmdale Water District, Rosamond Community Services District, and Los Angeles County Water Service Company.

The proceeding includes cross complaints and two certified classes of plaintiffs, one of non-pumping landowners—the Willis class—and another class of small landowner pumpers called the Wood class.

Scarce Water Supplies.

Resolution of these lawsuits will clarify important legal questions surrounding management of California’s scarce water supplies—such as how to balance the operation of the federal and state water systems with protection for ecosystems or groundwater management—but battles among the competing water interests will likely continue in the courts and in the Legislature.

Why? California’s water supply is scarce and the state lacks a clear and integrated approach to managing its resources, according to a 2012 National Research Council report, Sustainable Water Management in the California Bay-Delta.

Isenberg, the chairman of the Delta Stewardship Council and a veteran of the state’s water wars, cited the key findings of the report at the California Water Law & Policy Conference last year. “Smart policies, hard work and lots of money can improve the Delta ecosystem, and even California’s water supply more reliable,” he said, according to a copy of his presentation. “However, achieving good results requires tradeoffs, and there will be positive and negative impacts. The most difficult thing to do is to make clear policy choices and enforce them. This is the job of policy-makers, not scientists.”

Reproduced with permission from Water Law & Policy Monitor (Mar. 13, 2013). Copyright 2013 by The Bureau of National Affairs, Inc.