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March 11, 2014  |  Written by Aaron A. Ferguson

Sacramento Superior Court Finds Limited and Narrow Violation of CEQA In Challenge to State Water Project Contract Amendments and Related Kern Water Bank Operations

Last week, the Sacramento Superior Court ruled for the Department of Water Resources (DWR) and Real Party State Water Project contractors on all but one count in a suit challenging DWR’s environmental review for a set of amendments to State Water Project contracts, including transfer of the Kern Water Bank.  Central Delta Water Agency, et al. v. California Department of Water Resources, et al., No. 34-2010-80000561 (Super. Ct. Sacto. Co. 2014) (Central Delta).  The one violation that the Court found was DWR’s failure to sufficiently describe, analyze and mitigate the potential environmental impacts associated with future Kern Water Bank operations.  The Court ruled for Petitioners based solely on the inadequate Kern Water Bank analysis, and otherwise rejected Petitioners’ arguments on all other counts.  Somach Simmons & Dunn represents Real Party in Interest City of Yuba City in this litigation.


Numerous agricultural and urban water purveyors throughout the State of California hold standardized long-term contracts with DWR for delivery of water from the State Water Project (SWP).  In the early 1990s, disputes arose among agricultural and urban SWP contractors about how DWR should distribute the SWP’s limited supply among contractors during shortages.  To resolve these disputes, the DWR and SWP contractors subsequently negotiated the “Monterey Agreement,” and then incorporated the Monterey Agreement principles into a standardized amendment to the SWP contracts.  This amendment is now known as the Monterey Amendment.  The Monterey Amendment, including transfer of the Kern Water Bank from state to local control, constitutes the Project that DWR analyzed in the Monterey Plus Environmental Impact Report (EIR), and that Petitioners challenged in Central Delta.

Court’s Analysis of Kern Water Bank Operations

The Project includes transfer, development and operation of the Kern Water Bank, a 20,000-acre alluvial groundwater reservoir in southern Kern County.  As part of the Project, DWR sold the Kern Fan Element of the Kern Water Bank to SWP agricultural contractors.  Petitioners asserted that the EIR failed to adequately analyze the potential environmental impacts of this sale and the future operations of the Kern Water Bank. The Court ruled that the “EIR’s discussion of the Kern Water Bank’s future impacts is insufficient to comply with CEQA because it is limited to a brief, generalized discussion of past impacts, and an unstated and unsupported assumption that the Project will continue to have the same impacts in the future.”  The Court found that “[t]here is essentially no analysis of potential future operational requirements.”  The Court ruled for Petitioners on this issue.

Remedies and Next Steps

The Court has asked for a hearing to discuss potential remedies for the CEQA violation associated with the scope of the Kern Water Bank analysis.   CEQA provides for a court to narrowly tailor a remedial order to address those specific activities found to be in noncompliance. In light of the fact that the Court found for DWR and Real Parties on every one of Petitioners’ arguments except that directed at the Kern Water Bank operations, the Court could certainly issue a narrow ruling directed at resolving the EIR’s inadequate Kern Water Bank analysis.  Parties will present their arguments at the requested hearing, which is expected to occur in the near future.

For additional information please contact Aaron Ferguson at 916-446-7979 or by email

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