In a published opinion filed January 14, 2026, the Third District Court of Appeal affirmed the Sacramento County Superior Court’s judgment denying the City of Vallejo’s (“Vallejo”) writ petition challenging the City of American Canyon’s (“American Canyon”) EIR certification for and approval of the Giovannioni Logistics Project, a 2.4 million square foot warehouse complex on a 208-acre tract of undeveloped, industrially zoned land in American Canyon (the “Project”). City of Vallejo v. City of American Canyon (Buzz Oates LLC, et al., Real Parties in Interest) (2026) _____ Cal.App.5th _____. The Court rejected appellant Vallejo’s arguments that the Project EIR violated the water supply disclosure requirements of CEQA and its Guidelines, and also the provisions of Water Code sections 10910 and 10911.
Background
American Canyon currently has no groundwater access; it receives most of its water from the State Water Project (“SWP”) and the rest (about 23% in a normal year) from Vallejo pursuant to purchases made under a contract (the “1996 Agreement”) between the two cities. The 1996 Agreement authorizes American Canyon to make three types of purchases: (1) as much as 3,206 acre feet per year (“AFY”) of potable treated water (“Vallejo treated water”); (2) as much as 500 AFY of raw water diverted from the Sacramento-Bay Delta by Vallejo pursuant to its appropriative water right under License 7848 (“Vallejo permit water”); and (3) as much as 500 AFY of emergency raw water in dry years only (“Vallejo emergency water”). (The Court noted that while the 1996 Agreement is currently the subject of other breach of contract/declaratory relief litigation between the parties, the details of which are not part of the CEQA action’s record, it is clear that neither party seeks to invalidate the 1996 Agreement.) Historically, Vallejo has satisfied most of its obligations to American Canyon with License 7848 water.
Once the Project is operational, it will require a relatively modest 23.9 AFY of potable water. The Project’s Final EIR (“FEIR”) was issued in two volumes, in late 2022 and early 2023, and included a final water supply assessment (“WSA”) as an appendix. One-and-one half hours before the scheduled February 21, 2023 public hearing on the Project, Vallejo sent American Canyon an email attaching two comment letters: (1) a February 21, 2023 letter (“February 2023 letter”) with comments on the draft EIR (“DEIR”); and (2) an April 6, 2022 letter (“April 2022 letter”) commenting on American Canyon’s draft urban water management plan for 2020 (“2020 plan”). The February 2023 letter argued the EIR’s WSA was deficient because it (1) failed to recognize License 7848 place of use restrictions that, inter alia, prevented delivery of License 7848 water to the Project site, (2) failed to consider the contract litigation’s impact, and (3) failed to consider the April 2022 letter’s comments. The April 2022 letter had urged American Canyon to revise its 2020 draft plan to (1) clarify that only License 7848 water could legally be supplied, (2) recognize that place of use restrictions prevented delivery of License 7848 water to certain parts of American Canyon, (3) clarify that the quantities of American Canyon’s purchases and rights were less than represented, and (4) clarify past and expected future curtailments of License 7848 water deliveries. (American Canyon adopted the 2020 plan in January 2023 without making the requested revisions and apparently Vallejo never challenged it.)
American Canyon conducted the February 21, 2023 public hearing on the Project, but continued its deliberations for a month to review Vallejo’s comment letters and consult with outside counsel, who prepared a written response asserting the WSA was factually accurate and legally sufficient. After resuming deliberations on March 21, 2023, American Canyon certified the FEIR and approved the Project the following day.
Vallejo filed its writ petition in Napa County Superior Court on April 21, 2023, after which it was consolidated with similar actions (which later settled) and transferred to Sacramento County Superior Court, where Vallejo ultimately remained the sole petitioner. The petition’s four CEQA causes of action and one cause of action for violations of Water Code sections 10910 and 10911 were all based on alleged deficiencies in the FEIR’s WSA. After the trial court entered judgment denying the petition, Vallejo appealed and the Court of Appeal affirmed.
The Court of Appeal’s Opinion
Echoing Vallejo’s administrative comments, its four CEQA causes of action alleged the EIR violated CEQA because it (1) failed to disclose the volumes of water American Canyon actually purchased, (2) failed to disclose place of use restrictions on License 7848 water, (3) failed to disclose the impact of emergency curtailment orders on water supply availability, and (4) failed to disclose the contract litigation.
Exhaustion Defense Waived
After reviewing CEQA’s well-established requirements and standards of review for EIRs, the Court next considered and rejected American Canyon’s argument that some or all of Vallejo’s claims were barred by failure to exhaust administrative remedies, which “is a jurisdictional prerequisite to maintaining a CEQA action[.]”(Citing Save the Hill Group v. City of Livermore (2022) 76 Cal.App.5th 1092, 1104-1105, my April 4, 2022 post on which can be found here.)
While the Court wryly noted “Vallejo’s comments left something to be desired in terms of timing and precision[,]” it also observed “that [in order to exhaust] public comments need only “fairly apprise” the agency of an EIR’s alleged deficiency.” However, it determined it didn’t need to “decide whether Vallejo’s comments were sufficiently specific” to exhaust because it “conclude[d] American Canyon waived the [exhaustion] requirement by failing to raise it in the trial court.” While exhaustion is a “jurisdictional” prerequisite, it is such only in the sense of being a “procedural prerequisite” followed under stare decisis; indeed, “failure to exhaust does not deprive a court of subject matter jurisdiction” (citing and quoting Azusa Land Reclamation Co. v. Main San Gabriel Basin Watermaster (1997) 52 Cal.App.4th 1165, 1216), and it “is generally considered an affirmative defense that can be waived at trial” which is what the Court found happened in this case. Because “American Canyon said nothing about exhaustion of administrative remedies in the trial court and so failed to preserve the issue” the Court proceeded to analyze the merits of Vallejo’s claims on appeal.
CEQA’s Applicable Principles Governing an EIR’s Water Supply Analysis
To preface its discussion of the CEQA claims, the Court of Appeal reviewed the Supreme Court Vineyard case’s principles for evaluating an EIR’s analytical adequacy in the context of water supply analysis; there, the central issue in dispute was “how firmly future water supplies for a proposed project must be identified or, to put the question in reverse, what level of uncertainty regarding the availability of water supplies can be tolerated in an EIR for a land use plan.” (Quoting Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal.4th 412, 428.) The Supreme Court in Vineyard distilled four relevant principles from the appellate precedents: (1) an EIR can’t simply ignore or assume a solution to the problem of supplying water to the project, and must present decision makers with sufficient facts to evaluate the pros and cons of supplying the necessary water; (2) an EIR can’t defer analysis of future water sources for a large land use project, and the impacts of exploiting them, must assume all project phases will be built and require water, and must analyze to the extent reasonably possible the impacts of providing water to the entire project; (3) the EIR must address the impacts of tapping future water supplies that bear a likelihood of actually proving available – as opposed to speculative sources and unrealistic allocations (“paper water”) – and must include a reasoned analysis of the circumstances affecting the likelihood of availability; and (4) “where, despite a full discussion, it is impossible to confidently determine that anticipated future water sources will be available, CEQA requires [the EIR to contain] some discussion of possible replacement sources or alternatives to use of the anticipated water, and of the environmental consequences of those contingencies.” (Quoting Vineyard, at 432.)
Importantly, while announcing these principles, the Supreme Court also made clear that an EIR was not required demonstrate the project “is definitely assured water through signed, enforceable agreements with a provider and already built or approved treatment and delivery facilities.” (Ibid.) Requiring such certainty at the time a long-term, large-scale land use project is approved, it reasoned, would likely be unworkable, and “[t]hus, an EIR need only show that water is reasonably likely to be available from an identified source.” (Citing id. at 446.)
In addition to reiterating, clarifying, and elaborating on the Vineyard principles, CEQA Guidelines § 15155, as adopted in the wake of Vineyard and revised 11 years later, provides inter alia, in its subdivision (f): “The degree of certainty regarding the availability of water supplies will vary depending on the stage of project approval. A lead agency should have greater confidence in the availability of water supplies for a specific project than might be required for a conceptual plan (i.e., general plan, specific plan). An analysis of water supply in an environmental document may incorporate by reference information in a water supply assessment, urban water management plan, or other publicly available sources. . . . .”
CEQA Challenges to WSA Rejected
Having laid out the relevant principles, the Court of Appeal next analyzed Vallejo’s claims that American Canyon’s warehouse project EIR violated them. With respect to Vallejo’s Petition’s First Cause of Action, the Court held that the EIR’s omission of amounts of water actually purchased by American Canyon under the 1996 Agreement – as opposed to amounts available for purchase under the contract – did not render its “discussion of future water supplies speculative and unrealistic in violation of the third Vineyard principle, that future water supplies must bear a likelihood of actually proving available.” The fact that American Canyon in past years purchased only 2,074 AFY of Vallejo treated water, as opposed to the 3,206 AFY available for purchase under the 1996 Agreement, did not render American Canyon’s reliance on the availability of the contract amounts speculative because Vallejo (1) did “not seriously dispute” the availability of the full amount of water under the contract, and (2) cited to nothing in the record supporting its assertion that American Canyon’s contractual option to purchase the full amount had been in any way impaired or diminished by its past purchases of less than that amount. Vallejo gave the Court “no reason to believe the EIR relies on “’paper water’”” – as was the situation in the case giving rise to Vineyard’s third principle. And even though Vallejo “presumably has ready access to information that would allow [a comparison between] American Canyon’s demands … and available supplies [under the 1996 Agreement], no such information appear[ed] in the record.” Contrary to Vallejo’s unsupported and unverifiable contentions, the record indicated that American Canyon received 100% of the water it contracted for and sought to purchase in all but one year since 1999; that all types of Vallejo water were more reliable than SWP water; and that American Canyon typically purchases less than the full contracted amounts of Vallejo water it is entitled to buy “for reasons other than lack of supply.”
The EIR also properly relied on the 2015 plan, which explained that while Vallejo treated water is a reliable source, American Canyon “typically” purchases less than its full allotment under the 1996 Agreement due to its higher costs of purchase compared to other sources. Thus, per the Court, the record doesn’t show American Canyon’s “entitlement” to Vallejo treated water is speculative, rather, “it may just be expensive.” Regardless, Vallejo failed to carry its burden to “show[ ] future water supplies were uncertain or unlikely to be available” and thus didn’t show the EIR was inadequate for failing to disclose differences between contracted and delivered amounts of water.
The Court next rejected the Vallejo Petition’s Second Cause of Action based on the EIR’s failure to discuss place of use restrictions associated with License 7848 water. First, even though it was undisputed that the place of use restrictions prevented use of License 7848 water in the project area, the Court was inclined to believe that such restrictions were not “circumstances affecting the likelihood of the water’s availability” warranting analysis in the EIR’s WSA within the meaning of Guideline § 15155(f)(3), which contemplates analysis of “drought, salt-water intrusion, regulatory or contractual curtailments, and other reasonably foreseeable demands on the water supply” affecting and reducing its availability to the public water system. Rather, the Court saw a distinction between “use” and “availability” and observed that the place of use restrictions don’t reduce the volume of available water, they only limit areas within American Canyon that can receive it. However, it found that it needn’t resolve the issue because even assuming a discussion of place of use restrictions was required in the EIR, Vallejo showed no prejudice from its absence.
While noncompliance with CEQA’s information disclosure requirements may be prejudicial regardless of whether compliance would have resulted in a different outcome, there is no presumption that error is prejudicial. Rather, prejudice must be shown, under the applicable “abuse of discretion” standard, under which “[a] prejudicial abuse of discretion occurs if the failure to include relevant information precludes informed decisionmaking and informed public participation, thereby thwarting the statutory goals of the EIR process.(Quoting Neighbors for Smart Rail v. Exposition Metro Line Construction Authority (2013) 57 Cal.4th 439, 463 (extra quotation marks omitted), my August 9, 2013 post on which can be found here.)
Applying this standard, the Court of Appeal held that since “License 7848 water will not be used for the Project[,] [i]t follows that the failure to discuss [the place of use restrictions] could not have thwarted the statutory goals of the EIR process.” The EIR was sufficiently detailed in its evaluation and analysis of future water supplies on a citywide basis, comparing the Project’s anticipated demand with the 2015 plan’s demand assumptions for the project area (which actually assumed industrial uses requiring more water than the Project), and it concluded based on substantial evidence that total projected supplies would meet total projected demand in all years and scenarios. Additional information regarding the place of use restrictions, even if helpful or desirable, was not necessary for the EIR’s legal sufficiency because they did not affect the availability of License 7848 water to American Canyon as a whole.
The Court next rejected Vallejo’s arguments, under its Third Cause of Action, that the EIR failed to adequately analyze various alleged impacts of potential scenarios involving curtailment of License 7848 water, in violation of CEQA Guidelines § 15155(f). While the EIR mentioned a five-month dry-year curtailment in 2015, it did not need to make monthly curtailment projections under that regulation, as Vallejo contended; moreover, courts cannot impose procedural or substantive requirements beyond those explicitly stated by CEQA or the Guidelines. (Citing Pub. Resources Code, § 21083.1.) Again, even assuming such projections would have been helpful, they were not required and the EIR was not inadequate for omitting them.
Nor did the EIR need to specifically discuss the risk of “simultaneous curtailment” of SWP water to both cities through the North Bay Aqueduct; the EIR adequately discussed the fact that American Canyon receives imported water from both the SWP and Vallejo, that both sources come from the Delta watershed through that Aqueduct, and that water from either or both sources could be curtailed, resulting in supply reductions in Vallejo and proportionate reductions in American Canyon. The EIR further incorporated the 2015 plan and its relevant analyses, clearly disclosed the role of the North Bay Aqueduct, and alerted decisionmakers that possible conditions affecting imported SWP water could similarly impact the Vallejo water supply. Per the Court, that was a sufficient analysis of the “simultaneous curtailment” issue.
The Court next noted Vallejo’s final argument under its Third Cause of Action – that the EIR violated Guidelines § 15155(f)(4) by failing to analyze “alternative sources” – appeared to be forfeited due to Vallejo’s failure to raise it in the trial court, but held that it lacked merit in any event because the requirement only applies when the lead agency cannot determine that a particular water supply will be available. Here, American Canyon concluded that particular water supplies would be available to meet the Project’s needs, and effectively unchallenged substantial evidence supported that conclusion. Hence, even if the issue were preserved, which the Court concluded it wasn’t, it lacked merit.
Turning to Vallejo’s Fourth Cause of Action, the Court held that the EIR’s failure to discuss the contract litigation was not shown to be error (prejudicial or otherwise) because the record lacked any information about that dispute “other than counsel’s representations that [it] has something to do with differing interpretations of the 1996 Agreement.” The trial court concluded that without further information, it wasn’t possible to tell whether that lawsuit could undermine the EIR’s conclusion of an available and sufficient water supply, and Vallejo did “nothing to augment the record on appeal.” The Court of Appeal thus concluded it, too, was “unable to evaluate the significance of the contract litigation” and that Vallejo’s failure to provide an adequate record required the issue to be resolved against it.
Derivative Water Code Claims Rejected
Vallejo’s Fifth (and final) Cause of Action, alleged under Water Code §§ 10910 and 10911, fared no better than its CEQA claims. While rejecting American Canyon’s argument that the cause of action was nonjusticiable under California Water Impact Network v. Newhall County Water Dist. (2008) 161 Cal.App.4th 1464 – because the WSA challenged here was not merely an “interlocutory and preliminary step” but was actually reviewed and incorporated into the certified FEIR – the Court of Appeal nonetheless found the claim lacking in merit. It essentially realleged Vallejo’s four CEQA arguments under the Water Code statutes and failed for the same reasons: the WSA’s identification of the 1996 Agreement, and its description of quantities of water received in prior years (via the incorporated 2015 plan’s multiple charts) were sufficient to comply with the statutory requirements, and there was no need to include plans for acquiring additional water supplies because American Canyon had not concluded its water supplies would be insufficient.
Conclusion and Implications
The “water wars” between Vallejo and American Canyon – with Vallejo, in this battle, unsuccessfully wielding CEQA as its weapon of choice – will probably continue unless and until those municipal neighbors’ respective rights and obligations under the 1996 Agreement are definitively clarified in American Canyon’s separate breach of contract/declaratory relief litigation. After all, per the quote famously attributed to Mark Twain, “Whiskey is for drinking, water is for fighting over.” Reading between the lines of the dispute, one senses that Vallejo is using every legal means of leverage at its disposal to either limit its neighbor’s growth or (quite literally) to extract a higher price for providing much of the water that supports that growth.
Apart from the overarching water battle drama, the case provides a good overview of CEQA’s requirements for an EIR’s water supply analysis, and a few other good “teaching moments” and helpful reminders for CEQA and writ practice generally. These include: a “failure to exhaust” defense, while “jurisdictional” in some sense, can nonetheless be waived by failing to raise it as an affirmative defense in the trial court; an EIR’s omission of relevant information is not per se reversible error, and prejudice is required to be shown, i.e., the omission must have precluded informed decision making and public participation; a WSA can viably be challenged in a legal action when incorporated into a certified EIR (as opposed to when it is merely an interim, stand-alone study); an EIR is presumed adequate, an EIR’s challenger bears the burden of showing it is legally inadequate or unsupported by substantial evidence, and the challenger’s failure to procure an adequate record to review its arguments on appeal can be fatal to its claims; and (perhaps my personal favorite) “[t]oo much should not be expected of an EIR.” .(Quoting Tiburon Open Space Committee v. County of Marin (2022) 78 Cal.App.5th 700, 726, my May 23, 2022 post on which can be found here.)
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