In issuing its second California Environmental Quality Act ruling in seven months, the conservative-leaning California Supreme Court is emerging as one of CEQA's staunchest defenders. The latest decision — the rejection of an environmental impact report's water analysis for a large Sacramento-area housing project — is the court's first foray into such water studies, and the court appears to have set a high standard.

There are no overt liberals among the seven state Supreme Court justices these days. Justice Carlos Moreno is the only high court jurist appointed by a Democratic governor, and he began his career on the bench as a Deukmejian appointee to the Los Angeles Municipal Court. Yet, said CEQA attorney James Moose, even among conservative judges, "the environmental values are just so accepted in this society."

In a ruling that Moose and many others say is the state Supreme Court's most important CEQA decision in almost 20 years, the court stopped short of saying that a development project must have a guaranteed water source. However, the court made clear that anything less than a guarantee must be fully disclosed, and the alternatives scrutinized.

"If the uncertainties inherent in long-term land use and water planning make it impossible to confidently identify the future water sources, an EIR may satisfy CEQA if it acknowledges the degree of uncertainty involved, discusses the reasonably foreseeable alternatives — including alternative water sources and the option of curtailing the development if sufficient water is not available for later phases — and discloses the significant foreseeable environmental effects of each alternative, as well as mitigation measures to minimize each adverse impact," Justice Kathryn Werdegar wrote for the court's six-judge majority. (For more details on the ruling in Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova, please see CP&DR Legal Digest story).

Michael Zischke, an attorney who filed an amicus brief supporting the city on behalf of the California State Association of Counties, said that the court is insisting on the "reasonable likelihood of water." That is a workable standard for developers and local governments, he said.

Whether this standard is new is open to interpretation. Moose, who represented developer Angelo Tsakopoulos in the litigation, said the court handed down a "stringent new set of rules."

"I don't think there are too many EIRs out there that would pass this test," Moose said.

Attorney Stephan Volker, who represented project opponents, agreed with Moose that the decision is "far-reaching." But Volker said the state Supreme Court mostly combined appellate court case law with recent statutory changes. "This is the first time a court has put it all together in a comprehensive way," Volker said.

Terry Rivasplata, a senior environmental planner for Jones & Stokes in Sacramento, portrayed the decision as new policy. "It raises the bar. It makes sure people are looking forward to the long-term impact," he said.

Randy Kanouse, a lobbyist for the East Bay Municipal Utility District (MUD) and chief proponent of water planning legislation on which the court based part of its ruling, said the court correctly interpreted the statutes. The court is requiring the rigorous analysis required by the legislation, which merely sought to better connect land planning and water planning, he said.

"They didn't stop the project. To those who claim you've got to have all of your water rights and all of the water in a constructed reservoir, that's wrong," Kanouse said. Both the law and the court require only that project proponents make progress toward getting real water to serve new development, he said. "My critics in the building community used to try to demonize the legislation as more than what it is."

In fact, California Building Industry Association (CBIA) General Counsel Nick Cammarota characterized the ruling as "a fairly decent decision." The court upheld the analysis of the project's short-term water supply, and the court made clear that written verification of water agreements, public works project approvals and financing — and not necessarily readily available water — are adequate at the time of project approval, he said.

The court's decision "does clarify what the rules are for the discussion of water supply in an EIR," Cammarota said. "They said you didn't absolutely have to have certainty with respect to your water supply."

20,000 Units

The project that started the litigation decided by the court is the Sunrise-Douglas community plan, plus the Sunridge specific plan for about half of the community plan area. The community plan calls for roughly 20,000 housing units and 500 acres of retail and office development on 6,000 acres south of Highway 50, just east of the former Mather Air Force Base. Sacramento County approved the plans in 2002. Since then, Rancho Cordova incorporated as a city and has taken over plan implementation — as well as the legal defense. Opponents have many gripes about the project but centered their objection on water supplies and the potential impacts of heavy groundwater pumping. Despite the litigation, about 1,800 houses have been built.

Issued in early February, the decision in Vineyard Area Citizens is the state Supreme Court's second recent California Environmental Quality Act ruling. In July 2006, the court ruled that California State University must mitigate off-site traffic and fire safety impacts from expansion of the CSU Monterey Bay campus (see CP&DR Legal Digest, September 2006). Several participants and commentators, though, see Vineyard Area Citizens as the high court's most important CEQA ruling since Laurel Heights Improvement Ass'n v. Regents of Univ. of Cal., (1988) 47 Cal.3d 376, and Citizens of Goleta Valley v. Board of Supervisors, (1990) 52 Cal.3d 553. In Laurel Heights, the court held that an EIR must address reasonably foreseeable activities that result from a project, that a project may not be segmented into smaller parts during environmental review, and that an EIR must discuss project alternatives. In Goleta Valley, the court held that the number of alternatives discussed is subject to the "real of reason," but that alternative sites may have to be considered even for private developments.

Since those landmark decisions, the state Supreme Court has heard few CEQA cases and has dealt primarily with finer points and process. Prior to last year's decision in City of Marina v. Board of Trustees, 39 Cal.4th 341, the state's high court had issued only two CEQA rulings in a decade. In Friends of Sierra Madre v. City of Sierra Madre, (2001) 25 Cal.4th 165, the court ruled that a city-sponsored ballot measure is subject to environmental review. And in Mountain Lion Foundation v. Fish & Game Comm'n, (1997) 16 Cal.4th 105, the court ruled that removing a species from the state's endangered species list is not exempt from environmental review.

The Vineyard Area Citizens case, however, deals with substantive issues for an environmental study. And the issues involved have proven to be tricky, as trial and appellate courts have disapproved a number of EIRs because of inadequate analysis of water.

"This court," said attorney Moose, "is pretty firm on CEQA compliance. I contrast it with the rulings coming off the court back in the early '90s, when it was a Deukmejian court." Two other CEQA cases are pending before the state Supreme Court. In Muzzy Ranch v. Solano County Airport Land Use Commission, No. S131484, the issue is whether an environmental review should have been completed before the commission adopted a compatibility plan that froze land use designations surrounding Travis Air Force Base. The second case, In re Bay-Delta Programmatic Environmental Impact Report Coordinated Proceedings, No. S138975, concerns the EIR for the Cal-Fed Bay Delta project, which an appellate court found inadequate, partly because the EIR did not contain a "no growth" alternative.

How To Pass The Test

The EIR produced for the Sunrise-Douglas community plan and Sunridge specific plan was detailed and rigorous, Moose said. "There was nothing more we could have done when we wrote the EIR seven years ago," he protested. "How could anyone have known?"

Environmentalists, though, said the state Supreme Court decision is mostly a clarification of the rules. "It confirms that the appellate court cases have been correct," said attorney Susan Brandt-Hawley, who submitted an amicus brief in support of the project opponents. "Courts understand water supply and the dangers of planning without it."

What the court said, according to winning attorney Volker, is that an EIR must apprise decision-makers and the public of possible water shortfalls and the potential environmental impacts of those shortfalls before a long-term development project is approved. Volker said the court is insisting on five things:

• An inventory of existing approved and planned demands on water during buildout of a land use plan, such as a general plan.

• An inventory of groundwater and surface water supplies expected to become available during the same timeframe.

• An evaluation of whether the supplies will be sufficient.

• If there is a discrepancy, an assessment of impacts resulting from not having water for all anticipated demands.

• If there is adequate water, an evaluation of impacts of supplying the water.

All of this likely falls under the heading of cumulative impacts, which have long vexed planners. In a dissenting opinion, Justice Marvin Baxter said that the court is demanding that a new analysis of long-term water supplies and impacts accompany every major development proposal.

But the majority opinion said that an EIR for a project could tier off of studies of long-term water plans, such as an urban water management plan. The court's decision appears to raise the profile of urban water management plans, which most municipal water providers must prepare for 20-year periods and update every five years.

"I think where the rubber meets the road is in the urban water management plan," said Volker, an Oakland-based environmental attorney. The urban water management plan is where supply and demand estimates need to correlate. If the plan shows that there is not enough water to supply expected growth, then building should be halted until new supplies are identified, he said.

East Bay MUD's Kanouse said the decision bolsters the need for good urban water management plans. If a thorough water plan is in place, there is no reason to prepare an analysis from scratch when a large subdivision is proposed, he said.

"I've always thought the urban water management plan was very important," added the CBIA's Cammarota. "It's the foundational document" and is the proper place for a discussion of water supply.

The court's decision may force water districts to take such plans more seriously, said Rivasplata. Some urban water management plans are "smoke and mirrors," in that they mostly talk about searching for potential water sources and possible water delivery projects, he said. If developers rely on tenuous water plans, they may be inviting litigation, he said.

Still, Moose pointed to the opinion itself, which suggests that a developer may be required to provide water impact mitigation. How could the developer ensure mitigation occurs, he asked, if the water is coming from the State Water Project or the federal Central Valley Project?

Show Me The Water

The court also addressed recent legislation that ties together water planning and land use planning. Senate Bill 901 from 1995 and SB 610 (both Costa) from 2001 amended the Water Code to require cities and counties to obtain supply assessments from water suppliers prior to approving large-scale development plans. Senate Bill 221 (Kuehl) from 2001 amended the Government Code to require that a subdivision of more than 500 units have "written verification" of a 20-year water supply before a city or county may approve a subdivision map.

Citing a brief from the Association of California Water Agencies, the court said the legislation, taken together, demands "that ‘water supplies must be identified with more specificity at each step as land use planning and water supply planning move forward from general phases to specific phases.' The plans and estimates that Water Code § 10910 mandates for future water supplies at the time of any approval subject to CEQA must, under Government Code § 66473.7, be replaced by firm assurances at the subdivision map approval stage."

One issue not directly addressed by the state Supreme Court — but of great interest to anyone involved in CEQA litigation — concerns the court's "standard of review." The state high court invited briefing from interested parties on the issue but ended up making no specific pronouncement. However, in its decision, the court utilized the "substantial evidence" test, and determined that there was a lack of substantial evidence behind Sacramento County's conclusion that adequate surface water diversions are likely to supply the project's long-term needs.

Brandt-Hawley, whose amicus brief focused on the standard of review, praised the court's application of the substantial evidence test. She said a lead agency's findings and conclusions must be supported by substantial evidence, while courts may apply a more deferential standard to an agency's procedures and analysis.

What puzzled some people, including Moose, Zischke and Cammarota, is that the project EIR appeared to contain substantial evidence that there was a reasonable likelihood water would be available for the long-term. The court did determine there was substantial evidence behind the county's findings regarding short-term water supply. What practitioners need to do, said Zischke, is come up with an analysis that closely matches the approved short-term supply study.

As for the project itself, the sides will return to Sacramento County Superior Court to fight over the next steps. Since the project was approved, Rancho Cordova has completed a general plan and accompanying EIR, which provide a great deal of water analysis, Moose said. The long-term water supplies are essentially in hand, he said, in that the Sacramento River diversion project has been approved without legal challenge. The only thing left is actual construction, which is expected to take about three years. Plus, Moose said, additional planning documents regarding the Cosumnes River indicate that groundwater pumping will have no adverse impact on that river and protected fish. The question is whether the city will have to approve a new EIR for the housing project that combines all of these things, he said.

But Volker instead sees "a train wreck scenario."

"They have already violated the law by proceeding with development in the face of an unlawful approval," Volker said. "I think it [the state Supreme Court decision] means that the project approvals will be set aside and that the City of Rancho Cordova will have to prepare supplemental EIRs for the Sunrise-Douglas community plan and the Sunridge specific plan."

Moreover, Volker is not persuaded that the recent Cosumnes River studies are adequate. The river is already dry during the late summer and early fall — the most critical times for migrating salmon, he said. The matter is likely to land in the Superior Court's hands within the next several weeks.

Contacts: James Moose, Remy, Thomas, Moose & Manley, (916) 443-2745.

Stephan Volker, attorney for Vineyard Area Citizens for Responsible Growth, (530) 496-0600.

Susan Brandt-Hawley, attorney for Stanislaus Natural Heritage Project, (707) 938-3908.

Michael Zischke, Cox, Castle & Nicholson, (415) 262-5109.

Randy Kanouse, East Bay Municipal Utility District, (916) 443-6948.

Nick Cammarota, California Building Industry Association, (916) 443-7933.

Terry Rivasplata, Jones & Stokes, (916) 737-3000.