In Center for Biological Diversity v. County of San Bernardino (2010) 184 Cal.App.4th 1342, the Court of Appeal, Fourth Appellate District, held that the County of San Bernardino violated the California Environmental Quality Act when it certified a final environmental impact report for an open-air waste composting facility unconnected to any external piped water supply system. The court noted deficiencies in the alternatives analysis and in the water supply analysis.

Infeasibility of environmentally superior alternative. Despite significant and unavoidable air quality impacts of the proposed open-air facility that could be substantially mitigated by an enclosure, the FEIR rejected the alternative of an enclosed facility as infeasible, relying on a memorandum prepared by an environmental consultant, who opined that the alternative was economically and technically infeasible. This case is the latest in a series of exacting opinions, mandating detailed and extensive analysis by experts that an alternative’s costs would render it economically infeasible. (See, e.g., Uphold Our Heritage v. Town of Woodside (2007) 147 Cal.App.4th 587 and Preservation Action Council v. City of San Jose (2006) 141 Cal.App.4th 1336.)

In this case, the court concluded that the “infeasibility” memorandum prepared by the consultant lacked substantiality for at least three reasons. First, the court was critical of the qualifications of expert, suggesting that the expert lacked the necessary expertise on compost facility financing to render an opinion. After noting that the memorandum contained no facts indicating such expertise, the court stated that the expert’s opinion “is at best an irrelevant generalization, too vague and nonspecific to amount to substantial evidence of anything.”

Second, the expert estimated the cost of an enclosed facility based solely on one other particularly high-priced enclosed facility in Rancho Cucamonga, when there was evidence in the record that similar facilities were proliferating in southern California and across the country. The court found that because the expert ignored all of these other facilities in calculating the costs of the alternative, “there is no meaningful comparative data pertaining to a range of economic issues.”

Third, the court found insufficient the report’s conclusions that the alternative would be financially infeasible because it would be 30 times more expensive than the proposed project. The court cited the increasingly familiar refrain, taken from CEQA case law going back to 1988: “The fact that an alternative may be more expensive or less profitable is not sufficient to show that the alternative is financially infeasible. What is required is evidence that the additional costs or lost profitability are sufficiently severe as to render it impractical to proceed with the project.” The expert’s memorandum did cite to other open air facilities operated by competitors in Kern County and Arizona and stated that the costs of this project must be roughly equivalent to those projects in order to compete, but the record apparently did not contain evidence of the costs of these facilities or the prices they charge. Moreover, the court was troubled by the fact that the record did not include evidence of transportation costs that could render a closer, but more expensive facility more competitive than a distant, less costly facility.

The court also rejected the FEIR’s conclusion that the facility was technically infeasible because the proposed site lacked utility connections and was more than one mile from the nearest electric lines. The court reasoned that there was no evidence in the record demonstrating that the costs of establishing such connections would render the alternative financially infeasible.

Deficiencies in the water supply analysis. The court also found the FEIR defective because it did not include Water Supply Assessment (WSA), which is required to be included in EIRs for certain kinds of projects. The project proponent argued that the proposed facility was not such a project because the facility would not use water in amounts roughly equivalent to 500 residential units, one of the triggers for a WSA. (Water Code, § 10912.) The court rejected this reasoning, even though the modest water demand for the project would be satisfied either by an on-site well or water imported by trucks. Water Code section 10912, subdivision (a), defines seven types of “projects” that trigger the need for a WSA. One of those, defined in subdivision (a)(5), includes a “processing plant … occupying more than 40 acres of land, or having more than 650,000 square feet of floor area.” Pointing to this language, the court rejected the project proponent’s argument that section 10912 applied only to large buildings, which were not present on the proposed site, or large water users equivalent to 500 residential units. The court noted that the dictionary defines a “plant” to include land as well as buildings, and that, within subdivision (a)(5), the Legislature included acreage as a factor separate from square floor area. The court therefore concluded that an open-air composting facility was a “project” under section 10912 if it met the acreage threshold of subdivision (a)(5).

The court also disagreed with Gray v. County of Madera (2008) 167 Cal.App.4th 1099, which had held that a WSA is only required if a project impacts a “public water system,” which is defined by statute as a “system for the provision of piped water” involving the “collection, treatment, storage, and distribution” of water for human consumption. The court in this case reasoned that Gray contained no analysis to support its holding and that an analysis of Water Code section 10910 indicates that, even in the absence of a public water system, a WSA is required. The court noted that section 10910, subdivisions (b) and (c)(4), require a city or county to “prepare the water assessment required by this part” if the city or county cannot identify a public water system supplying the relevant project, and subdivision (g)(1) requires a public water system, “or the city or county if either is required to comply with this act pursuant to subdivision (b),” to approve a WSA. Citing these elements of the statute, the court disagreed with Gray and found that, where a city or county cannot identify a third party public water system to serve a proposed facility meeting the definition of a “project” as that term is used in Water Code section 10912, the city or county must prepare a WSA even if the groundwater source involved is not connected to any larger physical “public water system.” By departing from the rule expressed in Gray, the court arguably expanded the range of circumstances in which a WSA will be required. This could lead to closer scrutiny of groundwater use in some cases.