Court of Appeal Upholds Water Supply Assessment Against Challenge to Groundwater Supply Sufficiency

The Court of Appeal for the First District has issued a long-awaited decision upholding a SB 610 Water Supply Assessment (“WSA”) that relied upon groundwater as a significant source of supply without performing a basinwide study of existing and future groundwater pumping.

The new decision provides important guidance to cities, counties, public water supply agencies and development project proponents who must navigate an increasingly complex maze of state laws that seek to tighten the linkage between land-use planning and water supply planning.

The decision in O.W.L. Foundation v. City of Rohnert Park, First District Court of Appeal Case No. A114809 (filed November 19, 2008), reverses an earlier trial court ruling that had invalidated the WSA for failure to adequately assess the long-term sufficiency of a regional groundwater source to serve proposed land development projects, because the WSA did not properly estimate cumulative future groundwater pumping throughout the regional source basin. The trial court had held that SB 610’s requirement to analyze the “sufficiency” of a groundwater source of supply pursuant to Water Code § 10910(f)(5) mandated a detailed “basinwide” analysis that compared all existing and projected future groundwater pumping against the safe yield of that basin.

In reversing the trial court, the Court of Appeal held:

We agree with appellants that a WSA need not analyze groundwater pumping by all users in an entire basin. We also agree that the relevant statute does not specify a particular methodology for a sufficiency analysis and in that respect affords the water supplier substantial discretion in determining how to measure groundwater sufficiency. While that discretion is not boundless, we are satisfied the City acted well within its discretion in adopting the WSA. Accordingly, we reverse.

The Court of Appeal explained that SB 610’s requirement to assess the “sufficiency” of a groundwater source of supply “requires some consideration of conditions in the relevant groundwater basin in connection with determination whether there is sufficient water to supply the project.” However, the Court of Appeal held that “there is nothing in the statute to suggest that the only way groundwater conditions may be analyzed is by measuring pumping by all users throughout a groundwater basin.” “[T]he local water supplier must have the discretion to make technical and practical determinations about the appropriate geographical area to support a WSA,” the Court of Appeal held.

Key principles arising from the Court of Appeal’s decision include: (1) SB 610 does not specify a particular analytical method for assessing the sufficiency of a groundwater source of supply to serve new development; and (2) courts should defer to any reasonable analytical approach selected by the public water supplier that prepared the WSA, so long as the approach is not “arbitrary, capricious, or entirely lacking in evidentiary support . . . .”

The Court of Appeal explained that the abuse-of-discretion standard for reviewing the substantive adequacy of WSAs is very deferential to the expertise of the cities, counties and public water agencies that prepare WSAs. The Court of Appeal further explained that the abuse-of-discretion standard for WSAs is more lenient, or deferential, than the substantial-evidence standard that courts apply when reviewing the substantive adequacy of environmental impact reports (“EIR”) and negative declarations prepared under the California Environmental Quality Act (“CEQA”).

The Court of Appeal’s guidance on how to assess the sufficiency of groundwater sources for new urban development, and the degree to which courts should defer to agency expertise in assessing water source sufficiency, is important and timely. Complying with the SB 610 WSA law, the separate SB 221 Water Sufficiency Verification law for residential subdivisions, and CEQA has become increasingly difficult. That is the result of continuing population growth, a series of dry winters, fears about the long-term water supply impact of climate change, and dramatic regulatory and litigation restrictions on the State Water Project (“SWP”) and the federal Central Valley Project (“CVP”), which serve water to two-thirds of California households, from the Bay Area to as far south as San Diego.

The combination of reduced surface water supplies and continuing population growth is increasing reliance on groundwater as a major source of supply to serve existing and future urban development, as well as ongoing and expanded agricultural production. For that reason, the Court of Appeal’s decision on how to perform SB 610 WSA review for urban development that relies upon groundwater has been long anticipated by local land-use agencies and water managers across the state.

The case arose after the City of Rohnert Park (“City”) approved a single WSA for six development projects located in a large area that had been proposed for annexation under the last general plan update. The City prepared the WSA because it was identified as the public water supplier that would serve the proposed projects. The City’s two principle sources of supply were groundwater from its own well system and surface water received pursuant to a contract with the Sonoma County Water Agency.

The WSA explained that the City’s groundwater came from wells located in the Santa Rosa Plain Subbasin of the larger Santa Rosa Valley Groundwater Basin. To determine whether the Subbasin source of supply would be sufficient to serve existing development, the six proposed projects and planned future development, the WSA analyzed past, present and projected future groundwater conditions within a “Study Area.” The Study Area did not encompass the entire Subbasin and included an area located outside of the Subbasin (but within a watershed whose surface streams apparently flowed into the Subbasin). After considering groundwater elevation and production trends, and estimating the effect of future production along with the six new projects, the WSA concluded that the groundwater source of supply would be sufficient.

The trial court disagreed, finding that the WSA’s reliance on the Study Area to support its groundwater sufficiency conclusion failed to pass muster under SB 610. The trial court reasoned that the Study Area approach ignored the potential for groundwater production outside of the Study Area, but within the Subbasin, to combine with the Study Area pumping to drive the Subbasin into overdraft, which could render the groundwater source of supply insufficient.

The Court of Appeal rejected the trial court’s reasoning, holding that borders of groundwater basins and subbasins delineated by state agencies, like the California Department of Water Resources, “do not necessarily provide sensible boundaries for evaluating the sufficiency of groundwater supply.” The Court of Appeal reasoned that “a groundwater basin is a complex natural resource and cannot be equated to a ‘bathtub’ in which water drained from the bathtub affects all water levels in the bathtub equally.” Thus, the Court of Appeal found, “there is no reason to believe that pumping at one end of a groundwater basin will necessarily affect groundwater levels at the other end, particularly in a vast and complex groundwater basin.”

Reviewing SB 610’s overall statutory requirements for WSA review, the Court of Appeal observed that a “WSA serves the limited function of providing information about groundwater sufficiency for a specific, proposed development project,” holding that “[a] broad inquiry into basin-wide conditions and uses may be a proper subject for such water management mechanisms, but it is not appropriate to impose that obligation upon water suppliers seeking to comply with section 10910(f) and analyze groundwater sufficiency for a particular project.” That is, the intent of SB 610 “was to ensure that local agencies take water supplies into account when considering new development,” but:

It was not to impose upon water suppliers the burden of undertaking a basin-wide analysis of past and future groundwater conditions every time a local agency proposes a new development project.

For the Court of Appeal to reach the merits of the WSA’s substantive adequacy in this case may seem odd. The Second District Court of Appeal issued a decision in April 2008 holding that third-party project opponents may not challenge the adequacy of a WSA outside of a CEQA lawsuit, which can only be filed after a land-use agency’s completion of CEQA review and approval of the project triggering WSA review in the first place. See KMTG Legal Alert California Water Impact Network v. Newhall County Water District, 161 Cal.App.4th 1464 (2008) (“C-WIN”). The C-WIN decision cited a lack of finality and failure to exhaust remedies as reasons why WSAs may not be legally challenged prior to, and outside of, CEQA litigation.

The C-WIN decision would seem to preclude litigation of the WSA at issue in the lawsuit brought by O.W.L. and other opponents of the six development projects covered by the City’s WSA. After all, these project opponents challenged the legal adequacy of the City’s WSA prior to completion of CEQA review and approval of the development projects whose water supply was analyzed in the WSA.

The First District Court of Appeal in the O.W.L. case went to considerable lengths to distinguish the C-WIN decision by emphasizing “the unique facts of this case.” In that regard, the O.W.L. court noted that the parties had requested a decision on the merits, after and despite the C-WIN decision, and had stipulated that the judicial determination of the WSA’s adequacy in the O.W.L. case would control the entry of judgment in separate CEQA litigation challenging the EIR for one of the six development projects considered in the WSA. Under these peculiar facts, the First District Court of Appeal found that “the concerns about finality and exhaustion of remedies in C-WIN are not present here, and it would be enormously inefficient, both from the perspective of the parties and the courts, to delay resolution of this dispute until after it is litigated anew in the CEQA lawsuit.” The First District Court of Appeal concluded by admonishing that the O.W.L. case is “unusual,” which justified a “narrow exception to the holding in C-WIN . . . .”


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