A water supply analysis for a proposed development in the Santa Clarita Valley appeared at first glance to have passed a California Environmental Quality Act test laid out earlier this year by the state Supreme Court.

However, the Second District Court of Appeal in mid-October vacated its decision of the previous month regarding the environmental impact report for the West Creek project to make way for a rehearing. The court initially ruled that the EIR adequately addresses the likely availability of long-term water sources.

For a short time, the ruling was the first published decision issued since the state Supreme Court handed down four principles for analyzing water supplies under CEQA in Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova, (2007) 40 Cal.4th 412 (see CP&DR, March 2007, CP&DR Legal Digest, March 2007). Two of those principles covered arguments presented by Santa Clarita Organization for Planning the Environment (SCOPE) over the West Creek EIR, but the document — which was certified prior to the Vineyard decision — appeared to survive nonetheless.

Arguing that the court relied on a portion of the Vineyard decision that was revised and that the court got other aspects of the Santa Clarita Valley case wrong, slow-growth advocates and environmentalists requested a rehearing. Usually, a rehearing request is merely a procedural step before a petition to the state Supreme Court is submitted. But the Second District, Division Six, took the unusual step of granting the rehearing, which automatically vacated the September 25 opinion. The rehearing could be scheduled before the end of the year.

Antonio Rossmann, an attorney in the case for the Planning & Conservation League, contended that the court's decision to re-hear the case opens the door for a completely different outcome. But Robert McMurry, an attorney for developer Newhall Land and Farming Company, expressed little concern.

"I think this is a language issue, and sharpening of the language," McMurry said of the rehearing decision.

The case provides an interesting portrait of water supply policy and environmental analysis. Naturally, the case comes from the Santa Clarita Valley, which is ground zero in disputes over water availability for urban growth. At least three times during recent years in the valley, courts have rejected water supply analyses, and those earlier rulings figure to varying extents into the case at hand.

Newhall Land and Farming Company's West Creek project is proposed to contain 2,500 housing units, 180,000 square feet of retail space, and 46 acres of community facilities. In 2003, the Second District rejected Los Angeles County's water analysis for West Creek, concluding that it relied on "paper water" the State Water Project may not be able to deliver. (Santa Clarita Organization for Planning the Environment v. County of Los Angeles, 106 Cal.App.4th 715 (SCOPE I); see CP&DR Legal Digest, April 2003). After the county and Newhall revised the EIR, a Santa Barbara County Superior Court judge upheld the new analysis.

In its now-withdrawn opinion, the court upheld the lower court. The court explained the four principles from the Vineyard decision:

• First, an EIR must provide sufficient facts for decision-makers to be able to "evaluate the pros and cons of supplying the amount of water that the project will need."

• Second, an EIR must analyze supplies for an entire project, not merely the early phases of development.

• Third, an EIR "must address the impacts of likely future water sources, and the EIR's discussion must include a reasoned analysis of the circumstances affecting the likelihood of the water's availability."

• Fourth, there must be some discussion of alternatives if anticipated water is not available.

The third and fourth principles were at issue in the case at hand. SCOPE argued that the availability of future water sources is in doubt because the primary source is a transfer of unreliable State Water Project (SWP) water from the Kern County Water Agency to the Castaic Lake Water Agency.

That transfer of 41,000 acre-feet of water annually has been controversial since the agencies agreed to the water sale during the 1990s. The sale was based on the Monterey Agreement, a 1995 document that outlines how the Department of Water Resources (DWR) allocates SWP water. Among other things, the Monterey Agreement permits the transfer of up to 130,000 acre-feet of water from the agricultural Kern County Water Agency to urban entities. In 2000, however, a court invalidated the EIR for the Monterey Agreement in Planning & Conservation League v. Department of Water Resources, 83 Cal.App.4th 892. Less than two years later, a court rejected the EIR for the Kern-Castaic water transfer because it tiered off the invalidated Monterey Agreement EIR. (Friends of the Santa Clara River v. Castaic Lake Water Agency, 95 Cal.App.4th 1373; see CP&DR Legal Digest, March 2002). Nevertheless, Castaic began receiving the transferred water in 1998 and has continued to get the water ever since.

In SCOPE I, the court rejected the West Creek EIR because the analysis assumed the entire 41,000 acre-foot transfer would be available every year, even though the SWP often fails to deliver full allocations because of droughts. In the latest round of litigation, SCOPE argued the revised EIR fails because it does not disclose that the Kern-Castaic transfer is not final and permanent. Under this argument, the EIR would violate Vineyard's third principle.

In its withdrawn opinion, the court disagreed. The EIR concludes "that as a practical matter an adverse outcome in the Monterey Agreement litigation is unlikely to ‘unwind' the transfer agreement," Justice Arthur Gilbert wrote for the court. "Contrary to SCOPE's argument, this conclusion is supported by reasoned analysis."

In the request for a re-hearing, Rossmann contended the court was assuming too much because the Monterey Agreement (now called the Monterey Amendment) remains in doubt. In fact, DWR released a new EIR for the project on October 22 and scheduled hearings around the state on the document for November and December. Considering recent federal court orders slowing pumping from the Bay Delta, it is possible DWR could drop the Monterey Amendment, which would eliminate the basis for the Kern-Castaic water transfer, Rossmann argued.

The court had noted that the transfer may be made permanent even without the Monterey Agreement and "the legislative policy of this state is to facilitate water transfers." Agreeing with this conclusion, Newhall attorney McMurry contended there is virtually no chance of ending the transfer because Castaic has paid $47 million, the farmers who formerly used the water entitlement have stopped farming, and water has been flowing to Castaic for nine years.

As for alternatives in the absence of the water transfer — a subject of the fourth Vineyard principle — the court cited the original Vineyard opinion, which was later amended. Rossmann argued that under the correct version of Vineyard, Newhall must identify replacement water sources and their environmental consequences. McMurry, however, said the Vineyard revision merely makes clear that the "substantial evidence test" applies to water reliability, and the West Creek EIR passes the test.

The Case:
Santa Clarita Organization for Planning the Environment v. County of Los Angeles, No. B189116, Opinion filed September 25, 2007. Opinion vacated and re-hearing granted October 15, 2007.
The Lawyers:
For SCOPE: Alyse Lazar, (805) 496-5390.
For the Planning and Conservation League: Antonio Rossmann, Rossmann & Moore, (415) 861-1401.
For the county: Elizabeth Cortez, county counsel's office, (213) 974-0684.
For Newhall Land and Farming: Robert McMurry, Paul, Hastings, Janofsky & Walker, (213) 683-6000.