A county has the authority to regulate the development of a private water storage reservoir, and that authority is not pre-empted by state water law, the Third District Court of Appeal has ruled.

The court determined that San Joaquin County could require the developers of a proposed reservoir on two Sacramento-San Joaquin Delta islands to obtain a conditional use permit from the county. The court also ruled that the county’s adoption of the use permit requirement — which occurred after the reservoir developers obtained a water appropriation permit from the state — was not unfairly discriminatory.

The controversy arose when a company called Delta Wetlands Properties started buying agricultural islands in the delta with the intent of creating shallow water-storage projects in San Joaquin and Contra Costa counties (see CP&DR Environment Watch, April 2001). The company planned to sell the stored water on the open market. In February 2001, the state Water Resources Control Board approved a permit allowing Delta Wetlands to appropriate water for the project. In November of that year, the San Joaquin County Board of Supervisors adopted an urgency ordinance allowing water storage facilities only in agricultural zones and subject to a conditional use permit. The Delta Wetlands project site was zoned for agriculture. The ordinance specifically exempted projects within the state’s jurisdiction and water projects in the Delta above a certain height that would also be regulated by the state. By the middle of 2002, the county had adopted a permanent ordinance and completed an environmental review of the ordinance.

Delta Wetlands never filed an application with the county. Instead, the company — an Illinois general partnership with a local office in Lafayette — sued the county. Delta Wetlands argued that the ordinance on its face conflicted with or was preempted by state law, discriminated against the company’s project, failed to consider regional interests and that the county’s environmental review was inadequate. San Joaquin County Superior Court Judge Bob McNatt ruled for the county. Delta Wetlands appealed, and a three-judge panel of the Third District upheld Judge McNatt.

The appellate court published only two parts of its lengthy opinion — those dealing with the issues of preemption and discrimination. Delta Wetlands argued that the county ordinance conflicted with Government Code § 53091, which says that local zoning ordinances “shall not apply to the location or construction of facilities for the production, generation, storage, or transmission of water.” The statute applies to projects of local agencies and certain public utilities. Delta Wetlands argued that its project fell into the latter category, but the court disagreed.

“Contrary to [Delta Wetlands’] claims, courts have narrowly interpreted the exemptions from Government Code § 53091 to refer to local agencies,” Justice Coleman Blease wrote for the Third District. “Private parties are not the subject of this statutory scheme and it would have been at odds with it to include them.”

Delta Wetlands tried an “implied preemption” argument, meaning that state law had occupied the entire subject to the exclusion of local regulation. The company also contended that the state water board’s permit preempted local action. Again, the court disagreed.

Neither the water board’s statutory authority nor its permitting procedure prohibited the county from adopting the ordinance, the court ruled. Water Code § 6026 permits a city or county to regulate dams or reservoirs that are not within the state’s jurisdiction and are not subject to regulation by another public agency, the court noted. Moreover, the provisions of the Delta Protection Act of 1992 “manifestly do not preempt the county’s land use authority. If anything, they impose a duty to regulate land uses within the purview of the legislation,” the court ruled.

The water board’s permit “specifically recognizes the jurisdiction and responsibility of San Joaquin and Contra Costa counties,” Blease continued. Because the project could impact fire and police protection, water supplies, sewage and waste disposal, and roads, the water board recommended that the counties adopt mitigation measures. “The county cannot require mitigation measures unless it has permitting authority to do so,” Blease wrote.

The court then turned to the question of discrimination. Delta Wetlands argued that it had ascertained 10 years earlier that its project was consistent with the San Joaquin County general plan and did not require a use permit. Only after the company received its state water appropriation permit did the county amend its zoning ordinance — a move that Delta Wetlands said was specifically and illegally intended to frustrate the private water storage project. But the court said there was no evidence of discrimination.

“The mere fact the water storage project was the impetus for the ordinance does not mean it unfairly discriminates against the project,” Blease wrote. “The evil sought to be remedied will often not come to the attention of authorities until a use is proposed or a permit application is made. This is particularly true here, where no private party (as opposed to government entity) had ever proposed to build a large-scale storage project of this nature in this area.”

Additionally, the Delta Wetlands’ argument was difficult to prove because the company never applied for a county permit nor stated whether its project would be high enough to fall within the exception to the county ordinance, the court ruled.

In the unpublished portion of the Third District’s opinion, the court said that Delta Wetlands failed to prove that the county ordinance impermissibly affected regional and state interests. Regarding the California Environmental Quality Act claims, the court upheld the county’s negative declaration because Delta Wetlands had not presented substantial evidence to support a fair argument that the ordinance would significantly impact the environment.

The Case:
Delta Wetlands Properties v. County of San Joaquin, No. C043811, 04 C.D.O.S. 6894, 2004 DJDAR 9343. Filed July 29, 2004.
The Lawyers:
For Delta Wetlands: Anne Schneider, Ellison, Schneider & Harris, (916) 447-2166.
For the county: Thomas Shephard, Neumiller & Beardslee, (209) 948-8200.