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Fourth Appellate District Rejects CEQA Challenge to Imperial Irrigation District’s Equitable Distribution Plan, Finds Substantial Evidence in Support of the District’s Decision Not to Conduct Additional Environmental Review
May 29, 2012

by Adam D. Link
alink@somachlaw.com

On April 26, 2012, the Fourth Appellate District of the California Court of Appeals rejected a challenge to Imperial Irrigation District’s (District) Equitable Distribution Plan (EDP) that the District failed to engage in supplemental environmental review after approving a negative declaration in support of a previous version of the EDP.  In Abatti v. Imperial Irrigation Dist. (2012) 205 Cal.App.4th 650, Plaintiffs contended that California Environmental Quality Act (CEQA) Guidelines section 15162 (Cal. Code Regs., tit. 14, § 15162) was invalid to the extent the regulation improperly purports to extend Public Resources Code section 21166 to negative declarations.  Plaintiffs also sought to overturn or distinguish a related ruling, Benton v. Board of Supervisors (1991) 226 Cal.App.3d 1467 (hereafter Benton), upholding section 15162 as valid.  Plaintiffs also argued in the alternative that the District’s decision to modify the EDP without conducting additional environmental review in the form of an Environmental Impact Report (EIR) was not supported by substantial evidence.  The Appellate Court rejected both of these contentions, holding that section 15162 was a valid regulation pursuant to the holding in Benton and that there was substantial evidence supporting the District’s decision not to draft an EIR in support of the modified EDP.  This decision reiterates relevant aspects of CEQA law and may help special districts developing water allocation plans, including other irrigation districts, defend against attacks on CEQA grounds in the future.

The District’s Approval of the EDP

The District’s EDP is a plan for the distribution of water in the event of an actual or potential shortage of water.  In November 2006, the District adopted a resolution which included a provision stating the District Board of Directors had reviewed the Initial Study relating to the EDP as well as the Negative Declaration prepared concurrently therewith and approved both, finding the EDP would not have a significant effect on the environment.  This initial determination was not challenged on CEQA grounds.  In December 2007, the District adopted regulations implementing the EDP as well as an “Environmental Compliance Report” that concluded the minor modifications to the EDP that were incorporated into the regulations did not result in environmental effects which would trigger the preparation of an additional environmental assessment pursuant to CEQA Guidelines section 15162.  In November 2008, the District adopted revised regulations implementing the EDP, and similarly adopted another “Environmental Compliance Report” that again concluded that no additional environmental review was warranted pursuant to section 15162.

Plaintiff’s Challenge to Section 15162 Was Without Merit

The Court rejected Plaintiffs’ claim that CEQA Guidelines section 15162 is invalid because it improperly extends Public Resources Code section 21166 to negative declarations.  Section 15162 specifically states that “[w]hen an EIR has been certified or a negative declaration adopted for a project, no subsequent EIR shall be prepared for that project unless the lead agency determines…” certain specified findings based on substantial evidence in the record.  (Cal. Code Regs., tit. 14, § 15162(a), emphasis added.)  However, Public Resources Code section 21166 states that “[w]hen an environmental impact report has been prepared for a project pursuant to this division, no subsequent or supplemental environmental impact report shall be required …” unless certain specified criteria are met.  (Pub. Resources Code, § 21166.)  Plaintiffs thus argued that the absence of a reference to negative declarations in the statute underlying section 15162 invalidated the regulation’s attempt to include such decisions. 

California courts, however, have ruled on this precise issue in the past, and upheld section 15162 as valid, specifically as it relates to the incorporation of negative declarations.  In Benton, petitioners had similarly argued that the approving entity could not lawfully apply section 15162 and that the regulation was void to the extent it purported to extend the limitation on subsequent environmental review embodied in Public Resources Code section 21166 to cases in which an agency’s initial environmental determination resulted in the issuance of a negative declaration rather than an EIR, because the text of section 21166 refers only to EIR’s.  (Benton, supra, 226 Cal.App.3d at pp. 1477-1478.)

The Benton court rejected this contention, concluding that the regulation did not exceed its statutory authority and that the same principles that apply to supplemental review after an EIR apply with even greater force where the initial environmental review resulted in the issuance of a negative declaration.  Specifically, the court found that:

To interpret CEQA as requiring a greater level of review for a modification of a project on which a negative declaration has been adopted and a lesser degree of review of a modified project on which an EIR was initially required would be absurd.  (Benton, supra, 226 Cal.App.3d at pp. 1479‑1480.)

Relying on the logic articulated in Benton, the Fourth District Court found that the Benton court had correctly concluded section 15162 validly implements the principles contained in Public Resources Code section 21166, and thus rejected each of Plaintiffs’ arguments attempting to invalidate section 15162 and the court’s decision in Benton.

The Court also made clear that Plaintiffs were precluded from raising a CEQA challenge to the District’s adoption of the 2006 EDP Resolution or the 2007 EDP Regulations, and were limited to challenging only whether the District’s revisions in the 2008 EDP Regulations warranted additional environmental review.  This is because there were no legal challenges to either the 2006 EDP Resolution or to the 2007 EDP Regulations within the operative limitations periods.  Specifically, Public Resources Code section 21167 contains the relevant limitations periods for raising certain CEQA challenges, including 180 days for actions “alleging that a public agency is carrying out or has approved a project that may have a significant effect on the environment without having determined whether the project may have a significant effect on the environment” (Pub. Resources Code, § 21167(a)) and 30 days for actions “alleging that a public agency has improperly determined whether a project may have a significant effect on the environment.”  (Pub. Resources Code, § 21167(b).)  Because no challenge to the 2006 EDP Resolution or to the 2007 EDP Regulations was brought within the relevant periods of limitation, Plaintiffs could no longer challenge those decisions on CEQA grounds.

Substantial Evidence Supported the District’s Decision Not to Prepare an EIR

The Court also rejected Plaintiffs’ alternative claim that even if section 21166 applied and section 15162 was valid, the District was nonetheless required to prepare an EIR because of the allegedly significant changes to the 2008 EDP Regulations.  The Court found that there was substantial evidence in the record to support the District’s determination that adoption of the 2008 EDP Regulations did not require the preparation of an EIR. 

Plaintiffs asserted three different grounds for claiming no substantial evidence to support the District’s decision.  First, Plaintiffs contended that the 2008 EDP Regulations substantially changed the original EDP by increasing the priority preference that industrial users of water would receive over agricultural users in times of a water shortage.  The Court rejected this assertion, finding that there was substantial evidence in the substance of the 2008 EDP Regulations themselves to support the District’s determination that the adoption of the 2008 EDP Regulations did not constitute a substantial change to the EDP that may have required additional environmental review.  More specifically, the Court found that the minor change in the 2008 EDP Regulations, which allowed the apportionment of water to existing users to be based on “past use,” and the apportionment of water to new users to be based in part on “anticipated use,” did not substantially increase the priority preference that industrial users of water would receive over agricultural users in times of a water shortage.

Second, Plaintiffs asserted that the 2007 EDP Regulations were intended to be a voluntary pilot program, while the 2008 EDP Regulations constituted a permanent reallocation of water over the long term, and thus additional environmental review was required under the circumstances.  The Court rejected this contention as well, noting that there was nothing in the text of either the 2007 EDP Regulations or the 2008 EDP Regulations that suggests that the former were temporary and voluntary, and the latter mandatory and permanent.  The Court also found that references in the administrative record to the 2007 EDP Regulations constituting a “pilot program” were based on the notion that the regulations were simply subject to future revision, though there was no sunset provision or notable difference in the “permanency” of each set of EDP regulations.  Thus, the Court rejected Plaintiffs’ contention that additional environmental review of the Project was required prior to adoption of the 2008 EDP Regulations on the ground that the 2008 EDP Regulations were mandatory and permanent, while the 2007 EDP Regulations were voluntary and temporary.

Third, Plaintiffs argued that the District’s approval of a water supply contract for a new geothermal power plant constituted a substantial change in the circumstances under which the EDP was being undertaken and thus necessitated additional environmental review.  The Court rejected this contention as well, holding that the District’s approval of a water supply contract for the geothermal project did not require additional environmental review of the EDP.  Specifically, in October 2008, the District entered into a water supply contract with a company related to the development of a geothermal plant that authorized the provision of up to 6,800 acre feet of water per year, which was an amount that could be met without reducing water available to existing customers.  Plaintiffs highlighted the fact that the 6,800 acre feet of water per year to be supplied to the plant was about 30 times what farmers use for the same acreage.  However, the Court noted that Plaintiffs fail to explain how that fact:

…demonstrates that there is insufficient evidence to support the District’s implicit determination that entering into a water supply contract for the [power plant] did not constitute a substantial change in the circumstances under which the Equitable Distribution Plan’s establishment of a priority preference for industrial users of water would be undertaken, and we see no basis for such a conclusion. Neither fact demonstrates that the Project’s establishment of a priority preference for industrial users of water over agricultural users in a time of water shortage would have new environmental effects or a substantial increase in the severity of previously identified effects.  (Abatti v. Imperial Irrigation Dist., supra, 205 Cal.App.4th at p. 683.)

The Court noted that to the extent that Plaintiffs were contending that the volume of water at issue in the contract necessitated further environmental review, the contract actually involved less than one-quarter of one percent of the water supply to be distributed pursuant to the EDP.  Thus, the Court concluded that the District did not err in failing to conduct additional environmental review of the EDP in light of its approval of a water supply contract for the geothermal plant.

Conclusions and Implications

This decision represents a reaffirmation of the validity of CEQA Guidelines section 15126 as it relates to supplemental environmental review required after adoption of a negative declaration, and a reminder that CEQA challengers must demonstrate that an agency’s decision not to engage in supplemental environmental review was not supported by substantial evidence.  In addition, the Fourth District’s discussion regarding the appropriate time limitations for filing a CEQA action and the types of information before an agency that will be considered substantial evidence is a useful reference for CEQA practitioners.  Finally, irrigation districts and other entities adopting or modifying water distribution plans to address times of shortage may rely on this case for further guidance as to what, if any, CEQA compliance may be required for those actions.

For further information on Abatti v. Imperial Irrigation Dist., please contact Adam D. Link at alink@somachlaw.com.

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