Court Invalidates EIR For Failing To Disclose Legal Uncertainty Affecting Availability Of Water To Serve Development Project

Where the United States questions whether a federal water supply contract may be used to serve a proposed urban development project, that project’s environmental impact report (“EIR”) must disclose the government’s position and address the resulting uncertainty in the project’s water supply. 

The Fifth District Court of Appeal reached that holding in a September 13, 2011, opinion in Madera Oversight Coalition v. County of Madera (App.Case No. F059153).  The opinion affirms a Superior Court judgment setting aside the EIR for a 5,200-unit mixed-use development project located in unincorporated Madera County.

The Court of Appeal addressed several recurring CEQA issues, including: (1) preparation of CEQA administrative records and challenges to trial court rulings on record augmentation motions; (2) compliance with CEQA’s requirements for analyzing and mitigating effects to cultural, historical, and archaeological resources; (3) use of the existing environmental conditions versus projected future conditions as the baseline for assessing the significance of project impacts; (4) cumulative impact analysis; and (5) analysis of water supply availability.

Of particular interest is the appellate holding that the water supply adequacy determination in Madera County’s EIR violated CEQA’s mandate for full disclosure and informed decisionmaking by failing to disclose key factors affecting the availability of a federal “holding contract” water supply that the project’s SB 610 Water Supply Assessment (“WSA”) and EIR identified to serve the proposed project.  Although the WSA and EIR determinations were based on a legal opinion concluding that the holding contract water may be used to serve the proposed project, neither that opinion, the WSA nor the EIR disclosed and addressed evidence indicating that the holding contract supply might not be available to serve the project absent a contract amendment.

The EIR process failed to disclose and address a letter by the U.S. Bureau of Reclamation questioning whether the water available under the holding contract could be used to serve commercial, industrial and other urban uses approved as part of the new development project.  The EIR process also failed to disclose and address a recent superior court ruling, arising from separate litigation, that questioned the availability of water supplies to serve a different development project under a different, but similar, federal holding contract.

The Court of Appeal rejected arguments that the WSA and EIR determination of water supply adequacy should be upheld as supported by substantial evidence.  Focusing on the failure to disclose and address the Bureau of Reclamation letter and separate court ruling, the Court of Appeal held that the question of full EIR disclosure presents “a question of law.”  The appellate court explained:

Ultimately, this case comes down to whether the discussion in the EIR regarding the project’s water supply is adequate despite the nondisclosure of information concerning uncertainties surrounding the proposed use of Holding Contract No. 7 as the project’s source of water.

From there, the appellate court reasoned that those omissions:

[R]esulted in the public and decisionmakers being deprived of a full disclosure of the uncertainties related to the project’s water supply.  The basis for this conclusion is relatively simple.  Would two objectively reasonable persons – one presented with only the water supply assessment and the other presented with both the water supply assessment and the [Bureau of Reclamation’s] letter – come to the same conclusion as to the level of uncertainty of the project’s water supply?  We conclude they would not and, thus, the water supply assessment did not provide a full disclosure of relevant information.

The case serves as a reminder that a comprehensive and detailed water supply availability analysis is critical to preparing legally defensible CEQA documents for proposed development projects.

KMTG will publish a Legal Alert with a more detailed analysis of the opinion's broad CEQA holdings.  In the meantime, a copy of the court's opinion may be found here.

For more information regarding this matter, please contact Hanspeter Walter, Andrew Tauriainen, Eric Robinson, or the KMTG attorney with whom you normally consult.