On June 11, 2014, President Obama signed the Water Resources Reform and Development Act (WRRDA). Historically, water resources legislation has been enacted every two years to provide policy direction to the Army Corps of Engineers (Corps) and the Administration. The WRRDA is the first water resources bill that has been signed since 2007, however.

The WRRDA authorizes 34 federal, state, and local projects aimed at maintaining the nation’s ports, levees, dams, and harbors. For example, the WRRDA authorizes projects to deepen the Boston Harbor and the Port of Savannah, to restore the Everglades, and to strengthen levees in the Sacramento region. The Congressional Budget Office estimates the total cost to implement these projects will be $12.3 billion between 2014 and 2025. This cost will be offset by $18 billion in project deauthorizations contained in the WRRDA.

Some key components of the WRRDA:

• Authorizes approximately $45 million for flood risk management measures for the Orestimba Creek in the San Joaquin River Basin to protect the City of Newman.
• Authorizes approximately $689 million for flood risk management measures in the Sutter River Basin.
• Allows local communities, which may have state or local funding sources, to carry out work in advance of the Corps and receive a credit for this work.
• Requires the Corps to set firm deadlines for preparing its studies.
• Expedites project permitting and approvals by reducing the number of studies to be performed by the Corps.
• Requires the Corps to allow for regional variances regarding vegetation patterns and characteristics on levees, among other variances, with feedback from state, regional, and local entities.
• Authorizes financial assistance through the Water Infrastructure Finance and Innovation Act of 2014 to carry out pilot projects by public or private entities for flood damage reduction, hurricane and storm damage reduction, environmental restoration, coastal or inland harbor navigation improvement, or inland and intracoastal waterways navigation improvement.
• Deauthorizes $12 billion for old, inactive port projects.
• Reforms and preserves the Inland Waterways Trust Fund, which is used to fund the construction and rehabilitation of the nation’s inland waterways system.

In addition to the aforementioned projects, the WRRDA authorizes construction activities to strengthen 24 miles of levees protecting over 100,000 residents and $7 billion in property in the Natomas area, north of downtown Sacramento. Federal maps show that a levee breach could put homes and businesses in the area under 20 feet of water. In 2012, the Sacramento Area Flood Control Agency finished upgrading 18 miles of Natomas levees. The WRRDA authorizes the Corps to complete upgrades to the remaining 24 miles of levees, which had been stalled because of the lack of federal authorization.

Read the full text of the WRRDA here.

The Clean Water Act (CWA) was passed in 1972 to protect and remediate America’s waters. While the country has made great strides toward these goals in the years since the CWA’s enactment, one-third of America’s lakes, rivers, and coastal waters still remain unsafe for fishing and swimming. The federal government intends to increase the effectiveness of the CWA by clarifying its scope and expanding its application.

On April 21, 2014, the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers jointly issued a proposed rule, “Definition of ‘Waters of the United States’ Under the Clean Water Act.” The rule, which will define the scope of waters protected under the CWA, is meant to clarify the agencies’ regulatory jurisdiction for streams and wetlands under the CWA. The rule could expand EPA’s and the Corps’s jurisdiction, subjecting more projects and activities to the CWA’s permitting requirements for discharges, pollutants, and fill materials. In more clearly defining “waters of the United States,” the agencies hope to alleviate some of the confusion over the CWA’s reach created by the Supreme Court’s decisions in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers (2001) 531 U.S. 159 and Rapanos v. United States (2006) 547 U.S. 715.

The proposed rule clarifies that the CWA protects most seasonal and rain-dependent streams, and wetlands near rivers and streams. Specifically, the proposed rule defines “waters of the United States” as “traditional navigable waters; interstate waters, including interstate wetlands; the territorial seas; impoundments of traditional navigable waters, interstate waters, including interstate wetlands, the territorial seas, and tributaries, as defined, of such waters; tributaries, as defined, of traditional navigable waters, interstate waters, or the territorial seas; and adjacent waters, including adjacent wetlands.” In addition, the agencies propose that “other waters” (those which do not fit within the proposed categories of waters jurisdictional by rule) would only be jurisdictional upon a case-specific determination that that, either alone or in combination with similarly situated ‘‘other waters’’ in the region, they have a ‘‘significant nexus’’ to a traditional navigable water, interstate water, or the territorial seas. The rule would also offer a definition of significant nexus and explain how similarly situated ‘‘other waters’’ in the region should be identified.

The rule will not be finalized until completion of a scientific assessment. The proposed rule contains a draft assessment, comprised of a review and synthesis of more than one thousand pieces of peer-reviewed scientific literature.

EPA and the Corps seek input on how the CWA should apply to “other waters” — those not fitting the definition of waters of the United States — and whether waters spanning multiple ecological regions should be evaluated individually or collectively. Comments on the proposed rule are due to EPA by July 21, 2014.

The proposed rule can be found at http://www2.epa.gov/sites/production/files/2014-04/documents/fr-2014-07142.pdf.

The proposed rule also preserves the CWA’s exemptions for agriculture. In collaboration with the U.S. Department of Agriculture, the agencies developed an interpretive rule to ensure that certain specific water conservation practices will not be subject to dredge or fill permitting requirements. This interpretive rule will go into effect immediately. The agencies recognize, however, the value of receiving public comment on the interpretive rule and are publishing it by separate notice in the Federal Register.

The public is encouraged to provide their comments on the interpretive rule to the docket on the interpretive rule, Docket Id. No. EPA–HQ–OW–2013–0820, and not the docket for the proposed CWA jurisdiction rule.

The interpretive rule and the request for comments can be found at http://water.epa.gov/lawsregs/guidance/wetlands/agriculture.cfm.

On January 27, 2014, Governor Jerry Brown issued the California Water Action Plan, which highlights the challenges for managing the State’s water resources and outlines strategic goals and actions to provide more reliable water supplies, restore important species and habitat, and establish a more resilient and sustainably managed water resource system for farms, ecosystems and communities. The plan specifically identified a number of actions to implement sustainable groundwater management practices. One of those actions called for legislation to provide local and regional agencies with comprehensive authority to manage groundwater. If those agencies fail to achieve sustainable management, the Plan proposes allowing the state to temporarily assume responsibility for groundwater management. The Governor’s Office of Planning and Research (OPR) is now seeking input on actions that can be taken to improve groundwater management in California.

Groundwater control has generally been left to local efforts and courts; California has no comprehensive authority for monitoring or regulating groundwater. One primary objective of the Plan is to establish a legal framework through which to improve groundwater management and expand groundwater storage capacity.

OPR planned two sustainable groundwater management workshops, on March 24 and April 16, facilitated by the California Environmental Protection Agency, the California Department of Food and Agriculture, and the California Natural Resources Agency. The purpose of the workshops is to solicit ideas and approaches to groundwater management.

OPR now seeks input on the following questions:

• What new or modified statutory authorities do local and regional agencies need to manage groundwater more effectively?
• What would help local agencies overcome barriers to funding for conservation, projects, and programs?
• What types of governance structures are most effective for managing groundwater locally, and should these models be encouraged?
• What specific data and information do local managers need to succeed? What should be done to help them obtain the data?
• What can be done to help local and regional agencies manage a basin or sub-basin that spans multiple jurisdictions?
• Are there improvements to the groundwater adjudication process that would make it more useful and cost-effective for local authorities?
• What role should groundwater management plans play, and does their content need to change?
• What incentives could local and regional agencies be given to improve groundwater management?
• Should local groundwater management planning be connected, through formal processes, to land use decisions, county general plans, or integrated regional water management plans? If so, what kind of formal processes?

More information can be found at:

http://www.opr.ca.gov/docs/Sustainable_Groundwater_Management_3-7-2014.pdf

http://www.opr.ca.gov/docs/joint_workshop_notice.pdf

Written comments are due to OPR by April 25, 2014.

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 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.