In Consolidated Appeals, Third District Upholds Multiple Trial Court Decisions in Decades-Long Litigation Over CEQA Review of State Water Project Contracts

December 13th, 2021

By: Dustin Peterson



In Central Delta Water Agency v. Department of Water Resources (2021) 69 Cal.App.5th 170, the Third District Court of Appeal considered three consolidated appeals arising out of long-term water contracts that have been the subject of repeated rounds of environmental review and litigation lasting decades. In each of the consolidated cases, the Court of Appeal set forth the respective trial courts’ reasoning and rulings at length, and affirmed them in full.

Background

In 1995 the Department of Water Resources (DWR), along with a number of water contractors, drafted and signed a comprehensive amendment to the State Water Project (SWP), called the Monterey Amendment. In Planning & Conservation League v. Department of Water Resources (2000) 83 Cal.App.4th 892 (the PCL litigation), the Third District found the Monterey Amendment EIR to be deficient and required preparation and certification of a new EIR. Subsequently, the petitioner in that litigation, Planning and Conservation League (PCL), entered into a settlement agreement with DWR. As part of the settlement agreement, DWR agreed to prepare a new EIR for the Monterey Agreement. The settlement agreement also provided that the Kern Water Bank Authority, a public entity created to operate the 20,000-acre groundwater reserve known as the Kern Water Bank (KWB), would retain title to the KWB and DWR would study its impacts in the EIR. The terms of the new settlement agreement, combined with the original terms of the Monterey Agreement, became known as the Monterey Plus project (the Monterey Agreement “plus” the settlement agreement), and a Monterey Plus EIR—the subject of the present litigation—was prepared.

Four appeals from the trial court decisions concerning the Monterey Plus EIR were considered together in a single opinion:

First, Central Delta Water Agency and associated parties (collectively, Central Delta) challenged the certification of the Monterey Plus EIR on a number of grounds, but prevailed on only a single CEQA claim at trial. On appeal, Central Delta challenged the trial court’s rulings on the issues where DWR had prevailed. They also challenged the trial court’s authority to issue a limited writ in response to the single, identified CEQA violation.

Second, the Kern Water Bank Authority and associated parties (KWB parties) cross-appealed in the Central Delta case, arguing that Central Delta was precluded from raising its claims under res judicata or collateral estoppel.

Third, the Center for Biological Diversity (CBD) challenged the Monterey Plus EIR in a separate case. They prevailed on a CEQA claim, but the trial court found their request for attorney fees to be untimely. CBD appealed this ruling on attorney fees.

Finally, the Center for Food Safety and other petitioners (collectively, Food Safety) challenged the revised EIR (Revised EIR) prepared after the events of the Central Delta litigation.  The trial court denied the petition, and Food Safety appealed, arguing that the Revised EIR failed to sufficiently evaluate impacts related to crop conversion.

Other issues raised in the cases involved the propriety of a stay in the trial court, which was mooted by the time of the appeal, and a reverse validation claim. These are not discussed further in this summary.

Central Delta Litigation

Baseline and Project Description

Central Delta’s first claim centered on the Monterey Plus EIR’s adopted baseline and resulting project description. The Monterey Plus EIR characterized the project considered as, in part, a continuation of operations under the Monterey Amendment. Central Delta argued that the baseline for analysis should not have included the Monterey Amendment, and that the proposed Project should have been characterized to include re-approving the Monterey Amendment. Central Delta further asserted that this approach had blurred the lines between the proposed project and the status quo. They maintained these errors had compromised the informational value of the EIR. The trial court disagreed, as did the Court of Appeal.

While Central Delta argued that the PCL litigation voided the original Monterey Amendment contracts, this had not been the case. Instead, the amended contracts had been validated by the settlement agreement. Further, both PCL and DWR agreed in the settlement agreement that the SWP would continue to operate under the Monterey Amendment while the Monterey Plus EIR was being prepared.  As such, the Court found that the Monterey Plus EIR accurately described the project as “continuing” to operate under those contracts. It also found that the EIR’s no project alternatives were properly characterized as returning to a pre-Monterey Amendment state.

The trial court acknowledged that analyzing impacts only after a decision has been made generally compromises an EIR’s effectiveness as an informational document. Nonetheless, it determined that this case presented “a highly unusual situation in which the parties agreed, and the court approved, a ‘remedial’ EIR to analyze the impacts of the pre-existing contractual agreement.” The Court of Appeal agreed. The Court further agreed with the trial court’s rejection of Central Delta’s argument that the court in the PCL litigation should have invalidated the Monterey Amendment approvals, as this argument should have been raised in that court at that time.

Given the unique procedural and factual circumstances surrounding the litigation, the Court affirmed the trial court’s judgment that DWR “correctly determined that it could carry out the project simply by deciding to continue operating under the Monterey Amendment.”

No Project Alternatives

Central Delta argued that the EIR’s no project alternatives failed to analyze the impacts of language removed from a portion of the agreement. Part of the Monterey Agreement original contract was changed to allow both urban and agricultural SWP contractors equal access to unscheduled surplus water.  This change eliminated language stating that surplus water could not be used for “permanent economies.” Central Delta argued that this language had the potential to affect how an unexpected surplus of water would be distributed in the event of an ongoing, permanent shortage. The trial court agreed with Central Delta that the removed language could plausibly affect water deliveries in times of drought, and therefore had the potential to cause impacts that should have been addressed in the no project alternatives.  However, DWR provided the requested analysis in responses to comments. The trial court found that the EIR with additional analysis, while imperfect, did not preclude informed decisionmaking, and therefore the error was not prejudicial. The Court of Appeal agreed.

Remedy

The trial court had found the Monterey Plus EIR to be deficient in regard to its evaluation of impacts to groundwater from the future use and operation of the KWB. The trial court’s writ severed the KWB from the rest of the project, requiring revision of the EIR only to further address those impacts. The Court allowed continued operation of both the SWP pursuant to the contracts and the KWB while the EIR was revised.

Citing Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116 (Save Tara), Central Delta argued that the trial court abused its discretion because a writ must void any approvals that commit an agency to a definite course of action that has not been subject to proper environmental review.  The Court disagreed, and reaffirmed the discretion of a trial court to leave project approvals in place when crafting a remedy under CEQA. It found Save Tara to be inapposite, as that case involved initial approval of a project, not the extent of discretion afforded to a trial court under CEQA’s remedies statute.

Kern Water Bank Parties’ Cross-Appeal

The KWB parties filed a cross-appeal in the Central Delta litigation, arguing that Central Delta’s entire challenge to the Monterey Plus EIR was barred by res judicata and collateral estoppel because the underlying cause of action was the same as the one discharged in the PCL litigation. The trial court rejected the argument and the parties appealed.

Res Judicata

Res judicata, also known as claim preclusion, bars a claim from being raised if it was or could have been raised in prior litigation. The KWB parties argued that Central Delta’s claims were essentially the same as those raised in the present case – that DWR had violated CEQA in its management of the SWP. Central Delta responded that the Monterey Agreement EIR and the Monterey Plus EIR were distinct attempts to satisfy CEQA’s requirements, and that challenges to them were not the same cause of action.

In evaluating whether two claims are the same cause of action, courts ask whether they are based on the same primary right. In CEQA cases, a plaintiff’s right to ensure compliance with CEQA with respect to a particular environmental impact is a primary right. Here, the PCL litigation had involved a separate EIR. The Court here observed that the prior petition could not have addressed the Monterey Plus EIR, and that the PCL petitioners did not challenge the return to the writ. As such, the Court agreed with the trial court that the cases involved different causes of action and that res judicata did not apply.

Collateral Estoppel

The trial court had also considered whether Central Delta was collaterally estopped from pursuing its appeal. Collateral estoppel, also known as issue preclusion, prevents litigation over issues actually litigated in a prior proceeding when, among other things, the party against whom issue preclusion is asserted is the same, or in privity with, the party in the prior proceeding.  The trial court found that the issues raised by Central Delta were not identical to those raised in the PCL litigation, and that Central Delta was not in privity with the PCL petitioners.

In the PCL litigation, the trial court found that the Monterey Plus EIR corrected the identified deficiencies. However, the Court of Appeal agreed with the trial court’s finding that it was unclear whether it had determined that the EIR fully complied with CEQA in all other respects. Thus, the KWB parties failed to establish that the issues raised by Central Delta were actually litigated and decided in the PCL litigation.

Further, the Court found that privity had not been established. CEQA litigation on behalf of the public is generally sufficient to support a finding of common interest to establish privity, and here, both the PCL plaintiffs and Central Delta pursued CEQA challenges on behalf of the public. However, when a plaintiff abdicates the public interest role and abandons such representation, a court will not infer such privity. Here, the trial court had found that the PCL plaintiffs expressly disavowed and abandoned their role as public agents with respect to the Monterey Plus EIR when they consented to discharge the writ in the settlement agreement. The Court of Appeal agreed, and upheld the trial court’s determination that Central Delta was not collaterally estopped from raising its claims.

Center for Biological Diversity Appeal of Attorney Fees Ruling

In separate litigation, CBD raised claims related to the Monterey Plus EIR under CEQA and the validation statutes, prevailing on the former. However, the trial court denied their motion requesting $1,768,513 in attorney fees for 2,324.3 hours of work as untimely, and CBD appealed this ruling.

A motion for attorney fees must be filed within the same time for filing a notice of appeal.  This is ordinarily 60 days after service of notice of entry of judgment, but in a validation action, the deadline is 30 days after notice of entry. Here, CBD filed a timely notice of appeal within 30 days, but did not file its motion for fees until 60 days had passed.  CBD argued that, because they only sought attorney fees on the successful CEQA cause of action, the standard 60-day limit to file a notice of appeal on a CEQA cause of action should apply.  The Court of Appeal disagreed, and upheld the trial court’s reasoning that the deadline is tied to the final judgment, not each cause of action.  As such, the validation cause of action triggered the shorter deadline for filing both the notice of appeal and the motion for attorney fees.

Food Safety Appeal

Following DWR’s certification of the Revised EIR in response to the holding in the Central Delta litigation, Food Safety filed suit challenging the propriety of the Revised EIR.

Food Safety argued that the Revised EIR failed to adequately analyze the conversion of croplands from annual crops such as alfalfa to permanent crops such as nuts and citrus. Food Safety alleged that increased water availability from the KWB would lead farmers to switch from annual crops, which can be fallowed in times of drought, to permanent crops that must be watered consistently.  DWR argued that crop conversion was not an impact of the KWB transfer, but had been increasing statewide since the 1980s, driven by higher profitability and state water policies requiring more investment from farmers to increase irrigation efficiency. The Court found that substantial evidence supported DWR’s conclusion.

Food Safety further disputed the EIR’s conclusion that alternate sources of water would be available within the KWB service area even without development of the water bank. However, an appendix to the Revised EIR showed that such water could be available from other water banks in the region. Again, the Court found DWR’s position to be supported by substantial evidence.

Finally, Food Safety argued that, even if crop conversion would occur without the proposed project, the project would further facilitate it. The Court found that this possibility had been analyzed and discussed in the Revised EIR, which had found that such conversions were not in and of themselves an environmental impact under CEQA, nor would it cause any significant impacts. The Court agreed that crop conversion was not itself a significant impact, and disagreed with Food Safety that the resultant “hardening of demand” was an impact.

While Food Safety disputed the EIR’s factual conclusions in a number of respects, the Court concluded that there was substantial evidence on the record to support DWR’s findings and affirmed the judgment of the trial court.

Key Points:  

  • A trial court has the discretionary authority to leave earlier project approvals in place while the agency complies with CEQA.
  • Imperfect analysis of no project alternatives will not invalidate an EIR if the lead agency provides relevant information that allows for informed decisionmaking and informed public participation.
  • Different underlying causes of action cannot be barred by res judicata, and parties that expressly disavow and abandon their role as representatives of the public in a CEQA case will not be in privity with subsequent parties for the purposes of claim preclusion.
  • A case involving a validation claim may be subject to a shortened 30-day deadline for requesting attorney fees, even if the claim is unsuccessful and the only fees sought relate to other causes of action.
  • A shift from one type of crop to another does not by itself represent a substantial change in the environment, and conflicts in evidence are resolved in favor of the agency.



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