In Delaware Tetra Technologies, Inc. v. County of San Bernardino (2016) 247 Cal.App.4th 352, the Fourth District upheld the County of San Bernardino’s approval of a Memorandum of Understanding between the county, the Santa Margarita Water District, and the Fenner Valley Mutual Water Company, that laid the groundwork for developing a plan for a groundwater pumping project. The court held that environmental review was not required under CEQA prior to the county’s approval of the MOU.

The project involved a public/private partnership to construct 34 wells on property owned by Cadiz, Inc., to pump an average of 50,000 acre-feet of groundwater per year for 50 years, transport that water via pipeline to the Colorado River Aqueduct, and deliver that water to project participants, including the Santa Margarita Water District. The county entered into the MOU with Santa Margarita and the Fenner Valley Mutual Water Company (the project operator) to establish a process for completing a plan for the project. Specifically, under the MOU, the parties agreed that a groundwater management, monitoring, and mitigation plan would be developed in connection with the finalization of the EIR for the project that would govern the operation and management of the project by Fenner Valley during the operational phase of the project. Once completed, the plan would need to be reviewed by the county for final approval.

Relying primarily on Save Tara v. City of West Hollywood, the project opponents argued that the MOU was one of several necessary steps in approving the project, and the county was therefore required to perform environmental review prior to approval of the MOU. The Court of Appeal disagreed.

The question was whether the approval of the MOU by the county would commit it to an activity with direct or indirect impacts on the environment. The court determined that the county retained full discretion to approve or disapprove the project despite executing the MOU and therefore had not committed itself as the City of West Hollywood had in Save Tara. Further, the court found that the act of approving the MOU did not exclude the consideration of alternatives or mitigation measures, which would typically be part of the environmental review, citing Cedar Fair L.P. v. City of Santa Clara.

The appellate court emphasized that its opinion did not foreclose environmental review under CEQA; in fact, the MOU required that an EIR be prepared prior to final approval of the project. The approval of the MOU was not a sufficient commitment toward the project to require an EIR on its own. The opponents also argued that approval of the MOU violated a county ordinance on groundwater management, but that issue was decided in an accompanying unpublished opinion, which the court referenced in holding that the MOU did not violate the ordinance.