In the second of two published opinions filed May 10, 2016, the Fourth District Court of Appeal affirmed the trial court’s judgment upholding the lead agency designation and EIR for a controversial project proposing to pump 50,000 acre-feet annually for a 50-year period from an aquifer underlying Cadiz, Inc.’s Mojave Desert property in San Bernardino County.  Center For Biological Diversity, et al. v. County of San Bernardino, et al., (4th Dist., Div. 3, 2016) 247 Cal.App.4th 326, Case No. G051058.  (For my post covering the Court’s related published opinion, see “Fourth District Rejects CEQA Challenges To Large Mojave Desert Groundwater Pumping Project In Separate Published Opinions,” by Arthur F. Coon, posted May 11, 2016.)

The Project And Background

As described by the Court:  “The Project is a public/private partnership, the purposes of which are to prevent waste of the water in the aquifer, and to ultimately transport the water to customers in Los Angeles, Orange, Riverside, San Bernardino, and Ventura Counties.”  Approximately 34 new wells would be constructed on Cadiz, Inc.’s San Bernardino County property overlying the Cadiz Valley and Fenner Valley aquifer system; which is estimated to hold 17 to 34 million acre-feet of fresh water.  The wells would pump an average of 50,000 acre-feet of groundwater annually (with a maximum amount of 75,000 acre-feet in any single year) for a 50-year period.  The pumped water would travel 43 miles through an underground conveyance to the Colorado River Aqueduct, which would transport it to the Project participants, including lead agency/Project proponent Santa Margarita Water District (SMWD).

Currently, the groundwater in the aquifer from which the Project would draw “flows downward to dry lakes, where it mixes with highly salinated groundwater before evaporating.  Once the groundwater reaches the dry lakes, it becomes unusable as fresh water.  The stated “fundamental” purpose of the Project is to save “substantial quantities of groundwater” that are being lost to evaporation and excess salinity.”

The Center for Biological Diversity, San Bernardino Valley Audubon Society, Sierra Club, and National Parks Conservation Association (Appellants) filed a writ petition under CEQA challenging the Project approval and associated EIR.  The trial court denied the petition, and the Court of Appeal affirmed.

Lead Agency Issue

CEQA defines the “lead agency” as “the public agency which has the principal responsibility for carrying out or approving a project which may have a significant effect upon the environment.”  (Pub. Resources Code, § 21067.)  Appellants argued that SMWD was improperly designated in a 2011 Memorandum between it and the County as the lead agency for the Project, and that this error so tainted the process that a new EIR was required.  The trial court agreed the designation of SMWD as lead agency violated CEQA and that County should have served as the lead agency, but found the error was not prejudicial.

The Court of Appeal held SMWD’s lead agency designation was correct and in compliance with CEQA under the criteria set forth in CEQA Guidelines § 15051 (a), (b), or (d).  That section provides in pertinent part:

Where two or more public agencies will be involved with a project, the determination of which agency will be the lead agency shall be governed by the following criteria:

(a)  If the project will be carried out by a public agency, that agency shall be the lead agency even if the project would be located within the jurisdiction of another public agency.

(b)  If the project is to be carried out by a nongovernmental person or entity, the lead agency shall be the public agency with the greatest responsibility for supervising or approving the project as a whole.  (1) The lead agency will normally be the agency with general governmental powers, such as a city or county, rather than an agency with a single or limited purpose such as an air pollution control district or a district which will provide a public service or public utility to the project.

(c)  Where more than one public agency equally meet the criteria in subdivision (b), the agency which will act first on the project in question shall be the lead agency.

(d)  Where the provisions of subdivisions (a), (b), and (c) leave two or more public agencies with a substantial claim to be the lead agency, the public agencies may by agreement designate an agency as the lead agency.  An agreement may also provide for cooperative efforts by two or more agencies by contract, joint exercise of powers, or similar devices.

(14 Cal. Code Regs., § 15051 (a), (b)(1), (c), (d).)

The Court of Appeal stated:  “We publish this opinion to address the issue of how a public/private partnership should be analyzed under Guidelines section 15051.”  It held that “if a project will be carried out jointly in a partnership between a public agency and a nongovernmental person or entity, the agency that will serve as the lead agency for purposes of the environmental review for the project may be (1) the public agency that is part of the public/private partnership, or (2) the public agency with the greatest responsibility for supervising or approving the project as a whole.  We further hold that [SMWD] was correctly designated as the lead agency for the Project under either prong of this test.”

Numerous factors led the Court to this conclusion, including:  SMWD was a public agency that would, in part, carry out the Project; nongovernmental entity Cadiz would also, in part, carry out the Project, and SMWD has greatest responsibility for supervising the Project as a whole; the Project involves more than just groundwater well installation, and also involves construction of pipelines and monitoring facilities and oversight of water transfers to many Project participants for distribution to areas in five Southern California Counties.  Because SMWD “has at least a substantial claim to be the lead agency,” it and the County properly entered into the agreement so designating it.  The EIR provided evidentiary support for SMWD’s designation as lead agency, and the Court’s opinion set forth a detailed recitation of over a dozen of SMWD’s responsibilities for “implementing, carrying out, supervising, and approving the Project as a whole” in its “cooperative partnership with Cadiz[.]”  While the Court acknowledged the County has general governmental powers which would make it an appropriate lead agency candidate were only a private project proponent involved, here the County’s role (i.e., approval or exemption from its local groundwater management ordinance) extended only to the pumping portion of the Project, while SMWD had far more authority over the Project as a whole.

In rejecting CBD’s argument “that the lead agency should be the agency that is in the best position to objectively balance the benefits and risks of the Project,” the Court noted that CEQA and its Guidelines set forth the relevant criteria for determining the lead agency, which “need not be free from receiving any benefit from the project, as long as that agency is able to fully and fairly provide the necessary environmental information required by CEQA’s procedures.  [SMWD]’s interest in the Project did not automatically make it an improper lead agency.”  Further, to support a designating agreement under Guidelines § 15051(d), it is not required (as CBD argued) that two or more public agencies have an “equal” responsibility over the project or claim to lead agency status, only that two agencies have a “substantial claim to be the lead agency.”

EIR Project Description Issues

The Court also rejected three arguments by Appellants that the EIR’s project description was “misleading, … inaccurate, unstable, and not finite” and violated CEQA in various respects.

First, the Court rejected Appellant’s argument that the Project will not fulfill the stated fundamental purpose of conserving water that would otherwise be lost to brine and evaporation unless there will be an exact “one-to-one” ratio between the amount of groundwater pumped and that which would otherwise have evaporated.  Per the Court:  “[T]he Project was not intended solely to conserve water that would be lost to evaporation, but to “save substantial quantities of groundwater,” including fresh groundwater in the basin, which is not reachable and not yet drained to the dry lakes and becomes impotable.”  The EIR’s calculations of water savings (through pumping creating a “cone of depression” which, once established, will ultimately prevent groundwater from flowing into the dry lakes) and the evaporation rates it used were supported by substantial evidence.

Second, the Court rejected CBD’s argument that the EIR’s description of the Project’s total duration was misleading.  Phase 2 of the Project, which involved importing water back into the aquifer for storage, was distinct and would not commence until after Phase 1 pumping had occurred for 50 years and established the cone of depression.  The possibility of brief extensions of pumping at the end of the 50-year term to complete contracted water deliveries would not affect the “cap” on the total amount – 2.5 million acre feet – that could be pumped over the Project’s entire operational term.  If any additional term were agreed to, a new environmental analysis and groundwater management, monitoring and mitigation plan would be required at that time, and the court found the “the possibility of an extension of the term of the Project [50 years in the future] to be far too speculative to require environmental analysis at this point.”  Per the Court: “[T]he Project has a defined time period, and the EIR explains what will happen after pumping stops, in terms of well field closure, decommissioning, and post pumping monitoring.”

Finally, the Court rejected CBD’s contention that the rate and total quantity of groundwater withdrawal were inaccurately and misleadingly described in the EIR.  In arguing that agreed reservations of groundwater to the County would cause amounts pumped to exceed an average of 50,000 acre feet per year, CBD overlooked provisions in the purchase and sale agreement that would require Project participants to reduce their shares pro rata as needed, and the fact that the Plan placed maximum limits on extraction as stated in the Project description.  CBD’s argument that excess pipeline capacity showed that excess withdrawals were likely was also misplaced, as the Project’s Phase 1 pipeline’s capacity was 75,000 acre-feet annually, consistent with the maximum withdrawal permitted in a given year; the 30,000 acre-feet per year Phase 2 pipeline that could be implemented in the future was to send water back to the Project site for storage, not to carry additional extracted water.

Conclusion and Implications

The most significant portion of the opinion is its analysis of the “lead agency” issue – the reason the opinion was published, as stated by the Court, was to provide proper guidance on “how a public/private partnership should be analyzed under Guidelines section 15051.”  The opinion also contains an interesting prefatory discussion of California water law which serves to place the subsequent CEQA analysis in context.  While not otherwise particularly noteworthy, the decision addresses an interesting and controversial groundwater extraction and export project of a type that may become more common in the future, particularly should California’s drought and its adverse effects continue.



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