Third District Declines to Exercise Original Jurisdiction over CEQA Claims and Upholds Lower Court’s Decision Denying Motion to Dismiss Claims Due to Failure to Join Necessary Party

Quantification Settlement Agreement Cases
(2011) 201 Cal.App.4th 758

In a lengthy opinion focusing on the legality of agreements concerning the allocation of Colorado River water, the Third District Court of Appeal ruled (1) it was appropriate to remand the petitioners’ CEQA claims to the trial court, rather than for the Court of Appeal to exercise its original jurisdiction over those claims, and (2) the trial court did not abuse its discretion in denying a motion to dismiss the CEQA claims by virtue of the petitioners’ failure to name as real parties in interest all of the parties to one of the challenged agreements.

In 2003, the Imperial Irrigation District (“IID”), the Coachella Valley Water District (“Coachella”), and the Metropolitan Water District of Southern California (Metropolitan) entered a “Quantification Settlement Agreement” and (along with numerous other parties) various related agreements.  The agreements served to apportion California’s share of Colorado River water, and to provide a framework for conservation measures and water transfers among the parties.  IID filed a validation action.  Various entities filed answers in opposition to the validation action, as well as separate lawsuits challenging the agreements on various grounds.  The cases were consolidated and coordinated.  In January 2010, the trial court found that a key agreement implementing the Quantification Settlement Agreement was unconstitutional.  In light of this finding, the trial court dismissed CEQA challenges as moot, since the agreements had to be rescinded for reasons other than CEQA.  Various appeals and cross-appeals followed.

In the validation action, the Court of Appeal reversed the trial court’s conclusion that the agreement was unconstitutional.  The Court of Appeal rejected other challenges to the validity of the agreement as well.  The Court affirmed the trial court’s grant of summary adjudication of an allegation that the parties had failed to comply with the “wheeling statutes.”  (Wat. Code, §§ 1810-1814.)

CEQA challenges remained.  As noted above, the trial court had dismissed those claims as moot based on its (erroneous) conclusion that the agreements were invalid on constitutional grounds.  With the agreements revived, two of the petitioners – Imperial County and an environmental group – urged the Court of Appeal to reach the merits of their CEQA claims, rather than remanding them to the trial court.  The Court of Appeal declined.  Although the Courts of Appeal do have original jurisdiction to hear CEQA claims, the Court concluded the circumstances did not justify a departure from the normal practice of having the trial court consider CEQA claims in the first instance.

Coachella, Metropolitan, and the San Diego County Water Authority argued the trial court abused its discretion when it denied a pretrial motion to dismiss Imperial County’s CEQA lawsuit because the County had failed to name the United States and certain Native American Tribes as real parties in interest.  The trial court ruled the United States and tribes, as parties to certain agreements, were “recipients of approval” for purposes of subdivision (a) of Public Resources Code section 21167.6.5, and therefore “necessary parties.”  The trial court also ruled, however, that they were not “indispensable parties.”

The threshold issue was whether the United States and Tribes were “recipients of approval” under section 21167.6.5.  They were parties to an “allocation agreement” – one of 12 agreements implementing the overall QSA.  The EIR challenged by the County was intended to cover not merely the QSA, but also its implementing agreements, including the allocation agreement to which the United States and Tribes were a party.  The Court of Appeal therefore agreed with the trial court that the United States and Tribes were “recipients of an approval.”

Next, the Court of Appeal considered whether the trial court had abused its discretion in determining that the United States and Tribes were not “indispensable parties” under the factors set forth in Code of Civil Procedure section 389, subdivision (b).  The Court concluded the trial court had weighed those factors reasonably in denying the motion to dismiss.