Posts Tagged ‘water’


The Second District Court of Appeal in Conway v. State Water Resources Control Board rejected claims that the Regional Water Quality Control Board improperly established “total maximum daily loads” or TMDLs. The court also rejected challenges to the Board’s compliance with CEQA in establishing TMDLs.

The Clean Water Act requires all states to identify polluted water bodies within their jurisdictions. For all such water bodies the state must set TMDLs, which is the maximum amount of pollutants (or load) that a water body can receive from point and nonpoint sources. The Regional Water Quality Control Board has established the TMDLs for pollutants in McGrath Lake. McGrath Lake is surrounded primarily by agricultural fields, as well as petroleum facilities, public roads, and a former landfill. The lake including its lake bed sediment is polluted with pesticides and polychlorinated byphenyls (PCBs).

Owners of private property on the lake will likely be held responsible for remediation of the pollution. They challenged the TMDL established for the lake, arguing that it may only be stated in terms of pollutants in the water. They contend the TMDL is impermissibly stated in terms of concentration of pollutants in lake bed sediment. On this basis, the petitioners argued that the TMDLs violate the Clean Water Act and the state Water Code. They also argued that the TMDL was adopted in violation of the CEQA. The trial court denied their petition for a writ of mandate. The Court of Appeal Sixth Appellate District affirmed, holding that for the purposes of establishing TMDL the lake is both its water and its sediment.

Petitioners’ unsuccessful theory was that  TMDL can only regulate the movement of pollutants into the water column, pointing out that the Code of Federal Regulations definition of a “Load” as the “amount of matter [contaminants] introduced into a receiving water.”

The court was not convinced. The court noted that in this case the sediment is wet, it is intermixed with the lake waters, and thus it is part of the lake. The Regional Board could reasonably determine that the lake bed sediment is not a distinct physical environment. Instead, the lake waters and the lake bed sediment form a single physical environment. Notably, pollutants in the sediment leach into the water. The court also noted that the federal regulations give the Board expansive authority for defining how TMDLs are measured, as appropriate to the circumstances: “TMDLs can be expressed in terms of either mass per time, toxicity, or other appropriate measure.”

Petitioners further argued that “other appropriate measure” for measuring TMDL could not include measurement by concentration in the sediment. Petitioners argued that this would present a “slippery slope” towards expansive regulation of activities on land, such as regulation of pesticide use on agricultural land.

The court seemed unwilling to follow petitioners down this rabbithole, reasoning: “But slipping down the slope stops where application of a law or regulation becomes unreasonable.”  If it would be unreasonable or absurd to interpret the Clean Water Act and its implementing regulations as applying to land miles from the lake, the law and regulations will not be so interpreted, it held. But this case was not concerned with land miles from the lake, but with the lake bed itself.

The court also rejected, in fairly summary terms, Petitioners’ CEQA challenge. Essentially, Petitioners argued that the Board, which complies with CEQA through a certified regulatory program, had to consider the impacts of whatever remediation activities would be needed to reach the established TMDLs. Petitioners further argued that “dredging” was the only feasible remediation technique, and so the Board had to evaluate the impacts of dredging. The court disagreed. It noted that the adoption of TMDLs was only the first step in the process. The environmental review for that was appropriately tiered, according to the court. The Board had neither planned nor proposed to adopt any particular method for cleanup at this time. Without discussing whether cleanup ought to be at least disclosed as a reasonably future phase of the Project, the court summarily dismissed the CEQA claims. It held cleanup was a decision for the future, and would be subject to further environmental review in the future.

 

The US EPA recently released the final draft of its report on the Connectivity of Streams and Wetlands to Downstream Waters. The purpose of the report is to summarize current scientific understanding about the connectivity and mechanisms by which streams and wetlands affect the physical, chemical, and biological integrity of downstream waters. The focus of the review is on surface and shallow subsurface connections of small or temporary streams, nontidal wetlands, and certain open waters. The report stresses that it neither considers nor sets forth legal standards for Clean Water Act (CWA) jurisdiction, nor does it establish EPA policy.

In 2006, the US Supreme Court decided Rapanos v. United States, where it held that a geographically isolated body of water can be regulated under the CWA only if it has a “significant nexus” to “navigable waters” of the United States. The meaning of “significant nexus” was never clarified. The report on connectivity is meant, in part, to provide insight on this question.

According to the report, scientific evidence “unequivocally” demonstrates that streams, individually or cumulatively, exert a strong influence on the integrity of downstream waters. EPA found that wetlands and open waters in riparian areas and floodplains are physically, chemically, and biologically integrated with rivers via functions that improve downstream water quality. These functions include: the temporary storage and deposition of channel-forming sediment and woody debris; recharge of groundwater sustaining river baseflows; storage of floodwater; retention and transformation of nutrients, metals, and pesticides; and export of organisms or reproductive propogating materials to downstream waters. In addition to providing effective buffers to protect downstream waters from point source and nonpoint source pollution, wetlands and open waters form integral components of river food webs, providing nursery habitat for breeding fish and amphibians, colonization opportunities for stream invertebrates, and maturation habitat for stream insects.

The report recognizes that watersheds are integrated at multiple spatial and temporal scales by flows of surface water and groundwater, transport, transformation of physical and chemical materials, and movements of organisms. Connectivity of streams and wetlands to downstream waters occurs along a continuum that can be described in terms of frequency, duration, magnitude, timing, and rate of change of biotic fluxes to downstream waters. Variations in the degree of connectivity influence the range of functions that streams and wetlands provide. Thus, the incremental effects of individual streams and wetlands are cumulative across entire watersheds and must be evaluated in the context of other streams and wetlands.

Continuing the theme of water-related issues in California, the Sacramento County Superior Court, Judge Timothy Frawley presiding, recently addressed litigation concerning the operation of the State Water Project. On March 5, 2014, the court released its rulings in the cases Central Delta Water Agency, et al. v. California Department of Water Resources, et al. (Case No. 34-2010-80000561) and Rosedale-Rio Bravo Water Storage District, et al. v. California Department of Water Resources. (Case No. 34-2010-80000703.) The litigation in these cases involved CEQA challenges brought against an EIR prepared by the Department of Water Resources (“DWR”) for the project known as the “Monterey Amendments to the State Water Project Contracts (Including Kern Water Bank Transfer) and Associated Actions as Part of a Settlement Agreement.”

Background and History

The history of the challenged EIR stretches back to the 1960’s and the inception of the State Water Project (“SWP”). The SWP was structured so that its costs for operation are borne primarily by various public water agencies (“SWP contractors”) that contract with the state to receive SWP water. The obligations for sale, delivery, and use of SWP water were set forth in long-term contracts with these SWP contractors. As many may know, the original long-term contracts were overly optimistic when estimating the water supply which would be available at full build-out of the SWP. The original contracts anticipated that 4.2 million acre-feet of water would be available per year, but actual, reliable water supply from the SWP is now in the vicinity of 2 to 2.5 million acre-feet annually. So by the early 1990’s, the SWP was increasingly unable to fulfill demand for water deliveries.

In response to shortages in the SWP supply exacerbated by drought, DWR and the SWP contractors engaged in extensive negotiations in the city of Monterey, California. The negotiations resulted in substantial revisions to the SWP long-term water supply contracts. These revisions became known as the “Monterey Amendment.”

The Monterey Amendments established six primary objectives: (1) resolve conflicts and disputes among SWP contractors regarding water allocations and financial responsibilities for SWP operations; (2) restructure and clarify SWP water allocation procedures and delivery during times of shortage and surplus; (3) reduce financial pressures on agricultural contractors in times of drought and supply reductions; (4) adjust the SWP’s financial rate structure to more closely match revenue needs; (5) facilitate water management practices and water transfers that improve reliability and flexibility of SWP water supplies in conjunction with local supplies; and (6) resolve legal and institutional issues related to storage of SWP water in Kern County groundwater basins, and in other areas.

The Monterey Amendments included numerous  elements to achieve these objectives. For example, the so-called “urban preference” was eliminated in favor of reductions in water deliveries borne proportionately by urban and agricultural users, water rates were restructured, and various other changes were made to the way the SWP is administered. Relevant to the litigation here, the Monterey Amendment also required DWR to transfer the “Kern Water Bank” property to the Kern County Water Agency.

In 1995 the Central Coast Water Authority, as lead agency, completed and certified a final EIR (“Monterey Agreement EIR”) studying the environmental impacts of the extensive amendments to the SWP water supply contracts.  Soon after, the Planning and Conservation League and others challenged the sufficiency of this EIR (the “PCL litigation”). Among other allegations the plaintiffs argued that DWR should have been the lead agency for the purposes of preparing the EIR, and that the EIR inadequately defined the “project”. The PCL litigation reached the appellate court, where the court determined that DWR should have functioned as lead agency, and that the EIR was defective in at least one respect. The court ordered that DWR prepare a new EIR.

Following remand, the parties to the PCL litigation entered into a settlement agreement (the “Settlement Agreement”) governing how the new EIR would be prepared. The parties agreed that the proposed project to be analyzed in the new EIR would be defined during the scoping process, but at a minimum, would analyze the Monterey Amendment and certain additional terms agreed to in the Settlement Agreement. With this agreed scope the project became known as the “Monterey Plus” project, and the new EIR for the project was referred to as the “Monterey Plus EIR.”

DWR issued a draft EIR in October 2007 and certified a final EIR for the Monterey Plus project on February 1, 2010. The project studied in the EIR included all of the objectives and elements of the Monterey Amendment, along with the objectives and elements of the Settlement Agreement. The baseline used in the EIR was the continued operation of the SWP in accordance with the pre-Monterey Amendment water supply contracts. This means the EIR used 1995 as the baseline year to measure existing conditions. The EIR also provided analyses using baselines adjusted for 2003 and 2020 to account for changes in water supply and transfers resulting from decisions unrelated to the project. Since the proposed project was continued operation of the SWP under the Monterey Agreement, the EIR identified the no project alternative as a return of operation to the pre-Monterey Amendment water supply contracts. To account for uncertainty in determining what, exactly, these pre-amendment conditions would look like, the EIR analyzed four different “no project” scenarios.

The EIR determined that the project did not have any significant impacts from 1996 to 2003, but might cause some potentially significant impacts during the period from 2003 to 2020. These impacts could include impacts to biological, cultural, and paleontological resources resulting from groundwater recharge activities. The EIR also identified potentially significant growth-inducing impacts resulting from the delivery of additional SWP water to urban contractors. Even though DWR incorporated mitigation measures for these impacts, they could remain potentially significant. The EIR also determined that the project may result in potentially significant impacts due to additional pumping from the Delta and from the construction of additional ponds on the Kern Water Bank lands. But DWR incorporated mitigation measures which it determined would reduce these impacts to less-than-significant levels.

DWR recorded a notice of determination regarding its decision to adopt findings and determinations, a statement of overriding considerations, and a mitigation, monitoring, and reporting program for the project. On June 3, 2010, DWR then filed a return on peremptory writ of mandate, requesting that the trial court discharge the 2003 writ of mandate that had required the new EIR. The very same day, Petitioners Central Delta Water Agency, South Delta Water Agency, and various environmental organizations led by the Center for Biological Diversity, filed a petition for writ of mandate challenging the sufficiency of DWR’s new Monterey Plus EIR under CEQA. The Petitioners also challenged the validity of the agreement to transfer the Kern Water Bank property from DWR to the Kern County Water Agency.  At the same time, the Rosedale-Rio Bravo Water Storage District and the Buena Vista Water Storage District, each of which operates a water bank system in the vicinity of the Kern Water Bank, filed a separate CEQA action, focusing narrowly on issues of operation of the Kern Water Bank.

The Central Delta Water Agency Litigation

For the most part, the trial court rejected the claims brought by the petitioners. Notable for CEQA practitioners, the trial court declined to consider two of Petitioner’s arguments at the outset for failure to adequately summarize the record. Specifically, Petitioners cited to only a single page of the Monterey Plus EIR’s lengthy discussion regarding the issue of “paper water” (a term used to describe contractual water that may not actually exist as “wet water,” e.g., contractual water that may be beyond the contracting supplier’s ability to actually supply it) and failed to adequately summarize the evidence in the record addressing the Project’s climate change impacts.

Petitioners’ first primary challenge involved the project description element of the Monterey Plus EIR. Petitioners alleged the project description did not comply with CEQA’s requirements that it be accurate and stable. As noted above, the EIR described the Project as continued operation of the SWP under the Monterey Amendment, for which no permits or approvals are required. Petitioners argued this description of the project was confusing because it was unclear whether operation under the Monterey Amendment was the proposed project, or actually, the status quo. Petitioners submitted that this description concealed the true scope of the project. The court rejected this argument, but not without noting the unique factual circumstances of the case, a recurring theme throughout the trial court’s opinion.

The trial court stated that the litigation presented an unusual circumstance for a CEQA case because the proposed project was actually a standardized contract amendment, previously approved and executed. The court pointed out that DWR was operating the SWP pursuant to the Monterey Amendment while the new EIR was being prepared. Therefore, the Monterey Plus EIR accurately described the result of carrying out the proposed project being studied: continued operation of the SWP pursuant to the Monterey Amendment. Petitioners pointed out that this approach essentially resulted in an EIR analyzing the impacts of a decision that had already been made.

The court agreed, generally, with the assertion made by Petitioners. Under CEQA, the approach taken by DWR to prepare the Monterey Plus EIR should usually not be allowed. But in this case, the parties to the Settlement Agreement, certified by the court, approved preparation of a remedial EIR to analyze the impacts of the Monterey Amendments. Any argument that the court should have invalidated the Monterey Amendment approvals, rather than allowing DWR to continue operating under them, was time-barred. The time for petitioners to make this objection was when the Settlement Agreement was approved and the writ issued. Considering these unique circumstances, the trial court could not find that DWR abused its discretion by describing the project as continued operation of the SWP under the Monterey Amendment and Settlement Agreement.

Petitioners next argued the baseline selected in the EIR was flawed because the baseline omitted provisions of water supply contracts eliminated by the Monterey Amendment. The trial court quickly dispensed with this and other arguments attacking the baseline in the EIR. The EIR studied both existing baselines for years 1995 and 2003, and a future baseline at year 2020 to provide a complete assessment of the Monterey Amendment’s impacts. This choice of baseline was therefore supported by substantial evidence and entirely reasonable under the circumstances. Additionally, DWR’s approach was consistent with the Court of Appeal’s opinion in the PCL litigation. So again, considering the unique circumstances, DWR did not abuse its discretion by preparing an EIR in accordance with the prior Settlement Agreement and court order.

Similarly, the trial court found the range of alternatives analyzed in the EIR reasonable under the circumstances, despite Petitioners’ assertion that the EIR did not evaluate a true no-project alternative. As noted above, DWR analyzed four different no-project scenarios in the EIR. DWR adopted this approach because it identified a good faith disagreement as to what exactly conditions prior to the Monterey Amendments would look like. DWR had continued to operate the SWP with the Monterey Amendments in place even after litigation was initiated following approval of the amendments in 1995 (and it is 2014 at the time of this entry—not an insignificant passage of time). The trial court found this approach to analyzing a no-project alternative to be reasonable. The EIR provided sufficient information to the public and decision makers regarding the impacts of various potential scenarios under pre-Monterey Amendment conditions.

The trial court also rejected an argument CEQA practitioners frequently encounter: deferral of mitigation. The petitioners argued DWR improperly deferred mitigation by finding that impacts on Delta aquatic life would be reduced to a less-than-significant level after compliance with existing and future regulatory permits and processes. However, the court declared this was not a situation where an agency relied on references to compliance with existing laws to avoid compliance with CEQA. The Monterey Plus EIR conducted the appropriate impact analysis and determined that the project could have significant impacts on the delta. But DWR operations would be subordinate to existing laws and regulatory requirements including applicable SWRCB Orders, Army Corps of Engineers permits, Biological Opinions, endangered species take permits, habitat protection plants, etc. The court determined it was appropriate for DWR to rely on commitment to this existing regulatory scheme to mitigate the Project’s impacts. In fact, the court suggested it may not have even been feasible for DWR to propose additional mitigation measures separate from the existing regulatory scheme.

Finally, the court upheld the DWR’s analysis of the project’s growth-inducing impacts in the Monterey Plus EIR. The EIR concluded that the Project could potentially induce growth. DWR identified contractors that could receive additional water, calculated the amount of additional water that could be made available, and estimated the number of additional residents this new water could support. The EIR also discussed potential economic development resulting from this potential increase in population. Petitioners argued the EIR should have conducted additional, site-specific analyses of the Project’s potential growth inducing impacts, but the court found the generalized level of detail in DWR’s analysis sufficient under the circumstances and compliant with CEQA.

The Kern Water Bank Issue

The Central Delta Water Agency petitioners also challenged the portion of the Monterey Plus EIR dealing with the transfer of the Kern Water Bank property. As part of the Monterey Amendment, the Kern Water Bank property would be transferred from DWR to the Kern County Water Agency for the express purpose of developing and operating a groundwater bank.

The Central Delta Water Agency petitioners argued that the EIR failed to sufficiently describe or analyze the Water Bank’s future operations. Instead, the petitioners argued the analysis was limited to the historical operation of the water bank during the unusually wet period from 1995 to 2004. The trial court agreed the EIR insufficiently analyzed operation of the water bank, as the court explained in further detail in its Rosedale opinion.

The Rosedale-Rio Bravo Litigation

The Rosedale-Rio Bravo Water Storage District petitioners argued that the Monterey Plus EIR failed to analyze the use and operation (as opposed to merely the transfer) of the Kern Water Bank as a component of the project. Specifically, the Rosedale petitioners argued the EIR failed to adequately discuss, analyze, and mitigate potential hydrology and water quality impacts associated with the use and operation of the water bank. The trial court agreed, noting the defects in the EIR could be traced to its incomplete description of the project. The trial court pointed out that the EIR described this portion of the project as including only the transfer of the property. But the record unequivocally demonstrated that the project included not just the transfer, but also the “construction, operation and maintenance of the Kern Water Bank.”

The trial court concluded that the omission of relevant information regarding the use and operations of the Kern Water Bank was prejudicial. This omission precluded informed decision-making and informed public participation, as analysis of potential impacts associated with operation of the water bank was not included in the EIR. On this narrow ground, the Court granted the petitions in both the Rosedale and Central Delta Water Agency cases.

Conclusion

The court has ordered an additional hearing to be noticed by the parties, to discuss “an appropriate remedy for the CEQA violation,” presumably pursuant to Public Resources Code Section 21168.9(b).  This CEQA statute encourages courts to fashion remedies no broader than necessary to cure violations, i.e., any remedy “shall include only those mandates which are necessary to achieve compliance with [CEQA] and only those specific project activities in noncompliance with [CEQA].”

Here, the court identified violations in only a narrow area of the Monterey Plus EIR dealing with the Kern Water Bank. It seems reasonable that DWR could argue for, and the court would accept, a narrow remedy upholding the majority of the Monterey Plus EIR while requiring additional, focused analysis on the operation of the Kern Water Bank.

In response to the unprecedented drought the State is facing in 2014, the California Legislature recently enacted emergency drought legislation. The two measures, SB 103 and SB 104, received bipartisan support in both the Senate and Assembly before being signed into law by Governor Jerry Brown on Saturday, March 1, 2014.

The bills allocate substantial funds, approximately $687.4 million, to support drought relief in drought-afflicted communities throughout the State. The dispersion of more than $500 million in existing water bond funding will be expedited for local projects already planned or under way. Examples of these projects include improvement of storm water capture, expanded use of recycled water, enhanced groundwater management and recharge, and expanded water conservation. Other funds, including revenue from the AB 32 cap-and-trade auctions, will also be made available for drought-relief efforts through provisions in SB 103 and SB 104.

The bills include various other provisions beyond simple monetary relief. For example, sanctions have been enhanced for certain conduct, like illegal diversion of water, during drought years. The bills also direct the California Department of Public Health to adopt new groundwater replenishment regulations by July 1, 2014. This leaves only four months for the department to draft and adopt new regulations—a tall order for any agency engaging in rulemaking bound to impact many interests. And in California under current conditions, no topic is likely to be much more controversial than water supply.  After all, in the West, water is what we fight over.

Governor Brown Declares a Drought State of Emergency

January 17th, 2014 by Gwynne Hunter

California Governor Jerry Brown has declared a drought state of emergency and called for statewide water conservation. Brown directed the state to manage water for drought conditions and asked that asked that all Californians conserve water wherever possible.

This has been the driest year in California’s recorded history. The state’s snowpack is at only 20 percent of water content typical for this time of year. Rivers and reservoirs are below record lows.

These water shortfalls can be disastrous for farms, communities, and fire-prone areas. Brown directed state officials to assist economically impacted farmers and ensure adequate drinking water supply. The governor also directed state agencies to use less water and hire more firefighters.

In May 2013, Brown issued an executive order directing state water officials to expedite review and processing of voluntary transfers of water and water rights. In December 2013, Brown formed a Drought Task Force.

Details on Brown’s public awareness campaign can be found at saveourh2o.org.

In 2003, the California Legislature shifted funding sources for certain State Water Resources Control Board activities, and mandated the board assess fees at a level sufficient to collect for the appropriate board work. The Legislature only authorized fees on water rights permit and license holders, rather than all water users, so the board assessed fees only on those groups. The California Farm Bureau Federation and the Northern California Water Association sued, claiming the board was imposing an unconstitutional tax because permit holders bore a disproportionate amount of the fee relative to benefits received. In 2011, the California Supreme Court upheld the fee statutes as facially constitutional, but remanded the matter to determine their constitutionality “as applied” by the board.

In California Farm Bureau Federation v. State Water Resources Control Board, Sacramento County Superior Court Case No. 03CS01776, the court found that the allocation of fees among actual and potential payors was invalid given the insufficient connection between the amount charged and benefits received.

The court found that the fees were reasonably related to the total costs of the Division of Water Rights’ regulatory program, and that the petitioners had not carried their burden to prove otherwise. But following 10 days of testimony taken in late 2012, the court analyzed whether the fees were properly allocated among actual payors (those holding licenses and permits) and potential payors (those not paying the fee but receiving benefits from the division’s activities).

The petitioners argued that the fee scheme was not fair or reasonable because no fees were assessed against the holders of approximately 38% of the total acre-feet of California water rights under the board’s jurisdiction, including those holding riparian, pueblo, and pre-1914 rights, none of which are subject to the permit and license process. Although these holders received benefits from the board’s Water Rights Division, the board had no statutory authority to impose fees on them. The court held that it was improper for the board to shift those fees to other permit holders to make up the deficiency. To do so would force permit and license holders to pay more than a de minimis amount for regulatory activities benefitting non-paying water rights holders and the general public.

The court also found that requiring Central Valley Project contractors to cover payments for all of the Bureau of Reclamation’s permits and licenses was invalid because it did not reflect the true beneficial interests of the contractors. The Bureau, which holds 22% of the total permitted or licensed water rights in California, claimed exemption from the board’s fees under the doctrine of sovereign immunity. To compensate, the board imposed fees on the recipient contractors (various irrigation and water storage agencies) based on a prorated portion of the total volume of water represented by the Bureau’s permits and licenses. The court stated that this method would be valid only if it represented a fair assessment of the recipient contractors’ actual beneficial interests in the Bureau’s water rights. The court found that while some of the Bureau’s water could be fairly attributed to the value of its project  delivery contracts, it did not follow that all of the water benefitted the contractors. (For example, Bureau project water is also released for environmental and water quality purposes.) Because the board had conducted no analysis of the contractors’ beneficial or possessory interest in the permits for the Bureau’s largest operation, the Central Valley Project, the court held the allocation unconstitutional.

The petitioners also established that for at least some payors, the fee regulations operated in an arbitrary manner, charging some permit holders multiple times for the same water.

The board was afforded one small victory: The court allowed the $100 minimum annual fee per permit  to stand. But as the court observed, the petitioners had never really presented any evidence concerning the minimum annual fee; the Court of Appeal had okayed it, and the Supreme Court had not addressed it.

The trial court stayed the board’s enforcement of its 2003-2004 regulations. Because the regulations have been modified over the years, the regulations for the period 2005-2013 may need further review. Under the stay agreement, subsequent proceedings will address the issue of whether permit and license holders that have been paying the fees under protest since 2003 should receive refunds for overpayment.

 

On July 17, 2012, the Ninth Circuit Court of Appeals released its decision in Natural Resources Defense Council v. Salazar, 2012 U.S. App. Lexis 14614 (Case No. 09-17661) affirming Judge Oliver Wanger’s decision in the Eastern District of California, finding that the United States Bureau of Reclamation did not violate section 7(a)(2) of the federal Endangered Species Act by renewing 41 water supply contracts. In this case, plaintiffs argued the Bureau unlawfully renewed the water service contracts without conducting adequate consultation under Section 7(a)(2) of the ESA, and that the contract renewals jeopardized the existence of the Delta smelt.

Background and Procedure

The Bureau operates the Central Valley Project, which is a network of dams, reservoirs, and pumping facilities for regulating and distributing water from the Sacramento and San Joaquin River watersheds. California’s State Water Project operates within the same watershed, and is an analogue to the CVP.

The Bureau and the SWP have coordinated management of the CVP since the 1930’s when the Bureau assumed control of the CVP because California could not finance the project. To operate the CVP, the Bureau was required to obtain water rights under state law, but a dispute arose regarding the priority of pre-project water rights. The California Water Rights Board held hearings on the matter and issued a decision allowing the Bureau to manage CVP water if it first addressed the issue of senior water rights holders. In response to that decision, the Bureau entered into 142 settlement contracts, each for 40-year terms with some parties asserting senior water rights from 1964. The contracts guaranteed so-called “Settlement Contractors” a certain amount of base water, which could only be reduced by 25% in very dry years. The Bureau also entered into long-term contracts with a coalition of water service contractors who obtained water from the Delta-Mendota Canal (DMC Contractors).

In 2003, the Bureau prepared a biological assessment under the ESA regarding effects on the Delta smelt from the renewal of the contracts, and requested consultation with the Fish and Wildlife Service. In 2004, the Service issued concurrence letters, which concluded the contract renewals were not likely to adversely affect any listed species or their critical habitat. Following the decision in Gifford Pinchot Task Force v. U.S. Fish and Wildlife Service, 378 F.3d 1059 (9th Cir. 2004) (invalidating the regulatory definition of “destruction or adverse modification”), the Bureau reinitiated consultation with the Service.  In 2005, FWS reissued concurrence letters reaching the same conclusion.  The concurrence letters incorporated by reference sections of the biological opinion for the Long-Term CVP and State Water Project Operations Criteria and Plan (known as “OCAP”).  Following completion of the Service’s ESA consultation, the Bureau renewed contracts with both the Settlement Contractors and the DMC Contractors.

In 2005, plaintiffs filed suit challenging the 2005 OCAP biological opinion.  The lawsuit also included claims that the Bureau violated its legal obligations under Section 7(a)(2) of the ESA by renewing the DMC and Settlement Contracts. After reviewing the 2005 biological opinion, a district court held it was  unlawful for failing to adequately consider impacts to the Delta smelt’s critical habitat, failing to rely on the best available scientific information, and for not including mandatory mitigation measures to protect the Delta smelt. The district court remanded the 2005 OCAP biological opinion without vacatur, ordered the Bureau and the Service to re-consult, and imposed interim measures that automatically expired on the issuance of a new biological opinion.

The Service filed a new biological opinion in 2008 that concluded the CVP and SWP operations were likely to threaten the Delta smelt and identified “reasonable and prudent alternatives” to avoid jeopardy.  Following the issuance of the 2008 biological opinion, plaintiffs filed another complaint alleging that the Bureau had violated Section 7(a)(2) of the ESA by renewing the DMC and Settlement Contracts. Each side moved for summary judgment, and the district court granted summary judgment for the defendants. The District court found that plaintiffs lacked standing to challenge the DMC contracts, and that the Settlement Contracts were not subject to Section 7(a)(2).

The Ninth Circuit’s Opinion

The Ninth Circuit first rejected defendants’ argument that the issuance of the 2008 biological opinion by the Service rendered plaintiffs’ claims moot.  The court explained the claims were not moot because, unlike its prior cases where a new biological opinion clearly replaced the old opinion, in this case there was ongoing litigation regarding the validity of the 2008 opinion and a district court decision in a separate matter holding that parts of that 2008 opinion violated the ESA.   The Ninth Circuit also held the claims were not moot because it was unclear if the contracts at issue were considered in the 2008 opinion.

The Ninth Circuit then addressed plaintiffs’ standing to challenge the DMC contracts. The court determined plaintiffs failed to establish a causal connection between the threatened injury and the Bureau’s action because the DMC contracts included a shortage provision which expressly allowed the Bureau to take action to meet its legal obligations. These actions could include not delivering water to DMC Contractors if necessary in order to comply with the ESA. Therefore, the threatened injury, jeopardy to Delta smelt, would not be traceable to the contract renewals because the contracts expressly allowed for compliance with Section 7(a)(2). Based on this reasoning, the Ninth Circuit concluded the lower court properly determined the plaintiffs lacked standing to challenge the DMC contracts.

After addressing the DMC Contracts, the Ninth Circuit considered the applicability of Section 7(a)(2) to the Settlement Contracts. With respect to the Settlement Contracts, the Ninth Circuit ruled there was no “discretionary action” triggering the duty to consult under section 7(a)(2) of the ESA.  Citing the Supreme Court’s decision in Nat’l Ass’n. of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 666 (2007), the Court explained that “Section 7(a)(2) of the ESA only applies to federal agency action ‘in which there is discretionary Federal involvement or control.’”  The Ninth Circuit, therefore, held the lower court properly determined that the Bureau’s renewal of the Settlement Contracts was not subject to Section 7(a)(2) because the action was not discretionary.

The court explained that under the Reclamation Act of 1902, the Bureau must operate the CVP in conformity with California water law, including full recognition of any vested right acquired under California law. Under the state law, senior appropriative water rights must be satisfied before junior water rights. Under the Settlement Contracts, the Bureau is required to deliver base supply water that may only be reduced in critically dry years. This duty to deliver is mandatory, and under the Central Valley Project Improvement Act, the Bureau is required to renew these contracts upon request. Due to this requirement, the Bureau’s discretion was limited with regard to the Settlement Contracts such that Section 7(a)(2) of the ESA was not triggered. Based on this reasoning and lack of standing, the Ninth Circuit upheld the district court’s grant of summary judgment in favor of the defendants. (By John Wheat)