Court of Appeal Finds Water Supply Assessments Not Actionable Until Completion of Environmental Review Process

Water Law  

April 16, 2008

On April 16, 2008, the Second Appellate District issued an opinion in California Water Impact Network v. Newhall County Water District (2008) __ Cal.App.4th __ ( C-WIN v. Newhall CWD ), rejecting a challenge to a water district’s approval of a water supply assessment (WSA) for a commercial/industrial development in Santa Clarita. The Court addressed the purpose and function of water supply assessments in the environmental review process for new developments under the California Environmental Quality Act (CEQA), and found that a WSA is a “technical, informational document and therefore not a ‘final’ determination . . .” subject to direct judicial review. As a result of the decision, the content of a WSA can only be challenged upon completion of the CEQA review process by the local land use authority. The C-WIN v. Newhall CWD decision takes away the risk of direct challenges to the conclusions of water suppliers, and requires that judicial review of water supply determinations take place after project approval.

Since 1995 California law has required that before approving a major development, a local land use authority must request a water supply assessment from the most likely potential water supplier for the project. In 2001, this law was strengthened by Senate Bill 610 (SB 610). See Water Code § 10910 et seq. The issue of whether a water supply analysis is legally adequate under CEQA has been increasingly subject to litigation, and was addressed by the California Supreme Court in February, 2007. Vineyard Area Citizens for Responsible Growth v. City of Rancho Cordova , 40 Cal.4th 412. The purpose of SB 610 is to insure that a land use agency thoroughly considers the availability of water supplies before approving major new developments. A WSA must evaluate whether local water supplies over a 20-year period will meet the water demand of the proposed development plus other water needs. The WSA is prepared by the water supplier, which may also be the “lead agency” required to prepare an environmental analysis for the project, but often may be a special district separate from the CEQA lead agency. In the WSA, the water supplier must identify sources of supply, describe groundwater basin conditions if applicable and, if supplies are determined to be insufficient, discuss what measures will be taken to acquire and develop additional supplies. A WSA does not create any entitlement to water, but the local land use agency must include the WSA in any CEQA environmental document and must consider the WSA when making its own findings about the sufficiency of water supplies.

The Decision
After the initial water supply analysis for the development project was successfully challenged, California Oak Foundation v. City of Santa Clarita (2005) 133 Cal.App.4th 1219, the water supplier, Newhall County Water District, prepared and adopted a new WSA. The California Water Impact Network (C-WIN) filed suit against the Water District, claiming the right to challenge the legal adequacy of the WSA immediately upon adoption by the Water District, and before the WSA was considered by the CEQA lead agency, the City of Santa Clarita, during the CEQA review process.

The Court held that the Water District’s approval of the WSA could not be challenged directly, but that C-WIN had to wait until completion of the environmental impact report (EIR) process to file suit. The Court reasoned that a WSA is not a “final” determination by a public agency, as that term is traditionally used, and thus the claim was not ripe for judicial review. A WSA does not impose a duty on a water supplier to provide water service to the project, so it represents nothing more than a “technical, informational, advisory opinion” issued by the water supplier. In other words, “the WSA’s role in the EIR process is akin to that of other information opinions provided by other entities concerning potential environmental impacts––such as traffic, population density or air quality.” And since the local land use authority makes the final determination about whether water supplies are adequate, the Court found that it is inappropriate to challenge the water supplier who prepares the WSA. The land use authority is not required to accept the WSA’s conclusions, and the “final” decision occurs only after the agency acts upon the WSA. Further, the Court found, it does no harm to those who wish to challenge the conclusions in a WSA to await the completion of the CEQA process.

The Court also found that C-WIN did not “exhaust administrative remedies,” because the group failed to address its complaints about the WSA to the City during the environmental review process.

There are pros and cons in this decision for water suppliers that are not also the CEQA lead agencies. The decision protects water suppliers from direct legal challenges to SB 610 water supply assessments. While water supply decisions will continue to receive judicial scrutiny, local land use authorities (usually reimbursed by the real party in interest) will bear the legal costs of these challenges under the framework of CEQA. However, if land use authorities must explain and defend the details of a WSA rather than local water suppliers, those suppliers may nonetheless be drawn into lawsuits, or else risk the potential for a court to reach conclusions about the adequacy of their supplies, rights and entitlements in their absence.

California Water Impact Network Decision.