Court Invalidates Urban Development Project EIR For Failing To Disclose And Address Water Supply Uncertainties


In Madera Oversight Coalition, Inc. et al. v. County of Madera, (— Cal.App.4th —, Fifth Dist., September 13, 2011) (Madera), the Fifth District Court of Appeals (Court) provided guidance on completing California Environmental Quality Act (CEQA) review for a major urban development project. The opinion addresses: disclosure of uncertainties regarding water supply; limits on agency discretion in establishing an environmental baseline for analyzing impacts; standards for creating, augmenting and challenging the administrative record; and findings for mitigation of impacts to archeological resources.

In Madera, petitioners challenged the Madera County’s 2008 approval of the mixed-use Tesoro Viejo development project (Project), claiming that its Environmental Impact Report (EIR) was inadequate. The trial court ruled for the petitioners based on deficiencies in the EIR’s discussion of uncertainties regarding the Project’s water supply. Both sides cross-appealed.

EIR Must Disclose and Provide Reasoned Analysis of Uncertainty Regarding Water Supply

The Court held that the EIR was defective for failure to disclose that the Project’s entitlement to water under a Bureau of Reclamation (“Reclamation”) water right contract was disputed by Reclamation and because the administrative record omitted documents revealing that dispute. The EIR had identified the Project’s primary source of water supply as surface water delivered by Reclamation pursuant to a settlement contract, “Holding Contract No. 7”. However, it did not indicate any uncertainty relating to the water supply, and likewise failed to identify alternative sources and environmental impacts of using such alternative sources if water under the Holding Contract supply were to prove unavailable.

Two documents clouding the certainty of the Project’s water supply had not been addressed in the EIR or included in the record. The first was a 2007 letter from a Reclamation official stating that the Project’s use of water for other-than-agricultural purposes would require an amendment to Holding Contract No. 7. The second was a 2006 Superior Court decision, Madera County Farm Bureau et al. v. Madera County Board of Supervisors (Super. Ct. Stanislaus County, No. 350927), holding that Reclamation holding contracts do not provide the contractor with independent water diversion rights.

The Madera Court upheld the trial court’s finding that the EIR’s discussion of water supply was legally inadequate, holding that it failed to include a required “reasoned analysis of the circumstances affecting the likelihood of the availability of water under Holding Contract No. 7.” Citing the California Supreme Court’s decision in Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal.4th 412, the Court stated that “reasoned analysis” is synonymous with “a full discussion, a good faith effort at full disclosure, or an analytically complete and coherent explanation.”

While acknowledging that an opinion letter that had been included in the EIR reached different conclusions than the omitted documents, the Court stated that “omitting or ignoring contrary information is not the way to produce an adequate informational document.” It concluded that the omission of the Reclamation letter and the superior court decision from the water supply assessment and EIR “resulted in the public and decisionmakers being deprived of a full disclosure of the uncertainties related to the project‘s water supply.”

Projects facing water supply issues are well-served to view the Madera decision as a reminder that water supply uncertainty does not render an EIR inadequate, but failing to describe and analyze known uncertainties may well do so.

No Deference to Agency in Court Review of Administrative Record

Complicating the issues surrounding the water supply discussion was the fact that the two documents mentioned above were neither identified in the EIR nor included in the Administrative Record (“Record”). Their admission by the trial court was appealed by the Agency, but upheld by the Court of Appeal. The Court dedicated much of its decision to articulating the rules governing the creation, augmentation and legal review of a CEQA administrative record. Parties involved in CEQA administrative record disputes, whether at trial or on appeal, should examine the Madera decision carefully, particularly the discussion of the appellant’s burden.

As a starting point, Public Resources Code § 21167.6 sets forth eleven categories of documents for inclusion in the Record. While declining to identify the standard of review for Agency inclusion of documents beyond the eleven mandatory categories, the Court took an expansive view, finding that “the administrative record will include pretty much everything that ever came near a proposed development or to the agency’s compliance with CEQA in responding to that development.” (Slip Op. at 9.) The Court held that if a document is not included in the Record, it is the trial court that has the duty to determine whether it should be admitted as extra-Record evidence. Moreover, the Court held that no deference is to be accorded to the respondent agency’s decision as to what to include in the Record; the trial court addresses the issue de novo.

Parties should not make motions to the appellate court to augment the record. The role of the Court of Appeal is not to review the agency’s underlying decision concerning inclusion or omission of documents from the Record, but only to review the trial court’s ruling, in the same manner as other evidentiary rulings by a trial court. The Court of Appeal will “presume the trial court’s order is correct,” and will “indulge all intendments and presumptions that support the order” even “implied findings” where the trial court made no express findings. (Slip Op. at 18.)

As with all appeals, it is the appellant who bears the burden of showing that the trial court erred. Where the specific claim of legal error concerns an omission of information from the EIR, the plaintiff must demonstrate that: (1) the EIR did not contain information required by law; and (2) the omission precluded informed decisionmaking by the lead agency or informed participation by the public. These were the standards by which the trial court correctly determined that the documents clouding the Project’s water supply entitlements should have been included in the Record.

Mitigation Measures Cannot Undo EIR’s Determinations

The Madera Court rejected a mitigation measure contained in the EIR that would have allowed for “verification” of previously identified “historical resources” after the lead agency certified the EIR. The EIR identified particular sites within the Project area as historical resources and contained a mitigation measure subjecting the sites to later “verification” by a qualified archaeologist as part of the process for determining necessary mitigation for particular resources within each site (e.g., on-site preservation or data documentation). The Court concluded that this mitigation measure violated CEQA by allowing the EIR’s determinations of historicity for particular sites to be undone “outside the arena where public officials are accountable.” The determination of significance must be made before certification of the EIR, and cannot be subject to being “undone.” (Slip Op. at 32.)

In addition, waiting to formulate mitigation measures until some future time, after receiving the recommendation of a professional archaeologist, for example, was criticized by the Court. This practice was characterized as improper because it does not allow public review of the measure, and because such a future undefined measure cannot support the required finding of substantial evidence that significant impacts have been mitigated. (Slip Op. at 41.) Some agencies might defer the formulation of precise measures until confronted with their necessity, for example, upon finding that an endangered raptor is nesting near a project site. The Madera Court’s criticism of such an approach indicates that any such deferred formulation must incorporate essential performance standards that will allow the agency to make the required findings and assure the public that environmental resources are being protected.

Selection of Mitigation Measures Must be Supported by Substantial Evidence and Reasons for Selecting Among Potential Mitigation Measures Must be Explained

The identification within CEQA of a “preferred” mitigation for historical resource impacts gave rise to further admonition by the Court. The agency had adopted non-preferred mitigation without explanation or evidence. The Court found this to have been impermissible. An EIR must discuss all mitigation measures proposed, and the reason for selecting the measure chosen. (Slip Op. at 37.) If a “preferred” measure is infeasible, the EIR must provide evidence and reasoning for its determination of infeasibility. Likewise, the selection of any mitigation measure in preference to another should be explained and supported with substantial evidence. In the case of the “preferred” mitigation (i.e., preservation in place) of historical resources, the agency must adopt it unless it is shown to be infeasible or another measure is shown to be better at serving the purpose of the mitigation, the Court held. (Slip Op. at 39.)

Selection of a Future Baseline is Impermissible

In analyzing traffic impacts of the Project, the agency compared future scenarios of “with Project” and “without Project.” The Court of Appeal acknowledged the rule that although “normally” a baseline should reflect existing physical conditions existing at the time of the preparation of the Notice of Preparation of the EIR, lead agencies do have latitude to choose a different baseline. This discretion is not unlimited, however, and was transgressed in the Project EIR. The Court held that “lead agencies do not have the discretion to adopt a baseline that uses conditions predicted to occur on a date subsequent to certification of the EIR” but, instead, must choose a baseline predating that certification. Furthermore, because the EIR serves as an informational document, the baseline must be clearly stated, and the reason for its selection must be clearly articulated in the EIR. The Project EIR was found deficient with respect to baseline issues.


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Janet K. Goldsmith or Eric N. Robinson