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August 11, 2022  |  Written by Michelle E. Chester

Appellate Court Rules Los Angeles Did Not Violate CEQA When It Reduced Water Allocations to Agricultural Lessees without Environmental Review

In an opinion published on July 27, 2022, the First District Court of Appeal considered the application of the California Environmental Quality Act (CEQA) to a public agency’s administration of annual water allocations pursuant to an established authority. The appellate court reviewed the grant of a writ petition filed by the County of Mono and the Sierra Club (collectively, “County”), who sought to require the City of Los Angeles (City) to comply with CEQA before reducing deliveries of irrigation water to certain lands leased by agricultural operators in Mono County. Reversing the trial court’s decision, the appellate court held that the City did not violate CEQA when curtailing deliveries of irrigation water to the Mono County lessees. County of Mono v. City of Los Angeles (June 30, 2022, No. A162590) ___ Cal.App.5th ___ 2022 Cal.App. Lexis 659] (Mono County).  The decision is the first to address whether a water agency’s ongoing administration of water allocations constitutes a “project” under CEQA.

As irrigation and water districts throughout the State grapple with the need to manage increasingly scarce water resources, the decision fills a void in published CEQA case law in an area of heightened and growing public interest and litigation.

The 2010 Leases

The City owns approximately 6,100 acres of land in Mono County and, in 2010, executed agricultural leases for farming and related purposes on the land. The leases – all substantially identical in language – include provisions for the delivery of irrigation water for the properties, but the City expressly retained water rights benefitting the properties. Importantly, the leases include language stating that the City may discontinue any water supply provided to the properties to distribute the water for use of the City and its inhabitants. At the time the leases were executed, the City concluded that the action was exempt under CEQA because the leases involved the use of existing structures or facilities with no or negligible expansion of use. (See Cal. Code Regs., tit. 14, § 15301.) The City’s CEQA determination was not challenged.

The Proposed Dry Leases and 2018 Water Allocation

In 2018, the City proposed new forms of leases, referred to as the Proposed Dry Leases, that would reduce or eliminate the City’s delivery of irrigation water to lessees. At the same time, the City informed lessees that the 2018 water allocation would be only 0.71 acre-feet per acre—significantly less than the 2-3 acre-feet per acre requested by Mono County. The County objected to the Proposed Dry Leases and filed a petition for writ of mandate alleging that the City’s decision to curtail water deliveries to lessees failed to comply with CEQA. Specifically, the County alleged that the City had failed to consider impacts to the environment prior to changing the historically provided irrigation water supply. The trial court granted Mono County’s writ petition, finding that the City committed to a project without CEQA review when it proposed and then implemented the change in water allocations.

The Appellate Court’s Review

On appeal brought by the City, the appellate court reversed the trial court’s decision. The appellate court focused on whether the City’s change to water allocations in 2018 was an action taken under the existing leases or a new, separate action as part of the Proposed Dry Leases. The appellate court found that the 2018 allocation was part of the 2010 leases, because the 2018 allocation was merely a continuation of years of discretionary water allocations that the City was allowed to make under the 2010 lease terms. The appellate court’s analysis centered on the 2010 lease language that permitted the City to discontinue the supply of water to leased lands, and also considered the history of low‑water allocations under the 2010 leases. The appellate court disagreed that the low 2018 allocation near the time of the City’s issuance of the Proposed Dry Leases was sufficient to establish the creation or implementation of a new “project.”

Finding that the 2018 allocation was part of the 2010 leases, the appellate court considered whether the County’s writ petition was barred by the statute of limitations. The applicable statute of limitations to challenge the 2010 leases was 180 days from the project approval or commencement of project construction. (See Cal. Code Regs., tit. 14, § 15112.) Having filed in August of 2018, the County’s writ petition was time barred.

The appellate court’s decision also addresses the admissibility of extra-record evidence and, specifically, the timeliness of any admissible extra-record evidence. The City submitted a declaration after the trial court issued a tentative order. While recognizing that the City’s submission of the declaration was untimely, the appellate court concluded that there was no prejudice in considering the declaration, particularly because the County was given a full and fair opportunity to respond to the declaration before the trial court issued its decision.

While the appellate court’s decision does not break new legal ground, it provides helpful clarification regarding the definition of a CEQA “project” in the context of a public agency’s administration of annual water allocations pursuant to established authority—whether a lease, policy, or agreement. The decision also provides guidance regarding the admissibility of untimely extra-record evidence in traditional mandamus actions.

For additional information on this issue please contact Michelle Chester at mchester@somachlaw.com.

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