BEST BEST & KRIEGER ATTORNEYS AT LAW

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1 INDIAN WELLS (760) IRVINE (949) LOS ANGELES (213) ONTARIO (909) Paeter E. Garcia BEST BEST & KRIEGER 3750 University Avenue Post Office Box 1028 Riverside, California (951) (951) Fax BBKlaw.com League of California Cities Annual Fall Conference Long Beach, California September 24-27, 2008 LLP SACRAMENTO (916) SAN DIEGO (619) WALNUT CREEK (925) I. INTRODUCTION EVOLVING ISSUES FOR WATER SUPPLY ASSESSMENTS IN A WATER SCARCE CALIFORNIA California water law continues to be complicated and cities throughout the state are feeling the pressure now more than ever before. Indeed, significant challenges to statewide water supplies in the face of growing population, increased water demands, and new legal requirements have combined to test the limits of city planning and land use functions. One particular issue caught in the crossfire is the preparation and use of water supply assessments (WSA) pursuant to Water Code section et seq. and related provisions of the California Environmental Quality Act (CEQA). Collectively, the WSA requirements are often referred to by their implementing legislation, Senate Bill 610 (SB 610). As further detailed below, when it comes to the intersection of water supply and the land development process, the days of a simple will-serve letter are all but over. Today, cities acting as lead agencies for certain projects subject to CEQA are responsible for not only determining whether adequate water supplies exist to serve the project, but must support that determination through rigorous detail and documentation. 1 WSAs are the backbone of that process. This overview provides cities with a practical, step-by-step introduction to the WSA procedure. It also briefly addresses the related but distinct requirements of the Urban Water Management Planning Act and laws governing the preparation of written verifications (WV), and how those processes relate to a WSA. Moreover, these issues are discussed in the context of recent court decisions and ongoing litigation that continue to shape this important area of water law and policy and land use planning. 1 SB 610 imposes WSA-related requirements upon public water systems and cities and counties acting as lead agencies under CEQA for certain projects. For convenience, this overview often refers only to cities in connection with obligations applicable to both cities and counties.

2 A. California s Evolving Links Between Water Supply and Land Use Planning In 2001, SB 610 and SB 221 were enacted into law. These measures were intended to strengthen SB 901 by more closely linking land use decision-making and water supply availability, and increasing communication and coordination among water suppliers and local land use agencies (cities and counties) in connection with the approval of sizable development projects. As set forth in greater detail below, SB 610 requires water service providers to prepare WSAs for certain projects defined by Water Code section and otherwise subject to CEQA review. Ultimately, the goal of the WSA is to evaluate whether the water agency s total projected water supplies available during normal, single-dry and multiple-dry water years during a 20-year projection are sufficient to meet the projected water demand associated with the proposed project, in addition to the water agency s existing and planned future uses, including agricultural and manufacturing uses. (See Wat. Code 10910(c)(3).) Upon approval by the water agency, the WSA is submitted to the lead agency for inclusion in the CEQA document being prepared for the proposed project, wherein the lead agency must determine based on the entire record whether the projected water supplies will be sufficient for the project in addition to existing and planned future uses. (Wat. Code 10911(b)-(c).) While this overview focuses on WSAs, SB 221 sets forth similar yet separate requirements for the preparation of WVs, which are generally triggered by the approval of a development agreement or tentative map that includes a subdivision. (Govt. Code ; ) SB 221 defines a subdivision as a proposed residential development of more than 500 units, except that for a water agency with fewer than 5,000 service connections, a subdivision includes a residential development project that would account for an increase of 10 percent or more in the number of the agency s existing service connections. (Govt. Code (a)(1).) Such approvals must be conditioned on the requirement that a sufficient water supply shall be available to serve the project, where proof of the availability of that supply must be based on a WV prepared by the agency providing water service to the project. (Govt. Code ; ) As with SB 610, a sufficient water supply under SB 221 means that total water supplies available during normal, single-dry and multiple-dry years within a 20-year projection will meet the projected demand associated with the proposed subdivision, in addition to existing and planned future uses, including agricultural and industrial uses. (Govt. Code (a)(2).) B. California s Evolving Water Supply Landscape Due in large part to geography and historic development patterns, California s major population centers are far removed from its primary water sources. California has thus long engaged in large-scale movement of surface water supplies from significant hydrologic areas to populated and irrigated areas where supplies are more scarce. Two main components of that effort are the federal Central Valley Project (CVP) and California s State Water Project (SWP), which produce water from major sources that are tributary to and then exported from the Sacramento-San Joaquin River Delta (Delta). Of course, the Colorado River is another key component of California s surface water supplies. In addition to these sources, numerous other projects divert and deliver water from the state s major river systems to serve regional and local demands. Combined these projects encompass an enormous system of pumping and power plants, reservoirs, lakes, storage tanks, canals, tunnels, and pipelines, all of which depend on a -2-

3 number of variables such as rainfall, snowpack, runoff, storage and pumping capacities, and a host of legal constraints arising out of environmental, water right and other issues. Among these myriad factors, however, precipitation is perhaps the most critical element in determining how much water is available throughout the state. Hydrologic cycles dictate whether a given year is a normal or dry year which, along with other factors, determines the percentage allocation of contractual and water right allotments that are made available from the SWP, CVP, Colorado River and other water supply projects. Groundwater supplies, which are said to serve up to onethird or more of the state s water demands are also directly affected by hydrologic cycles. 2 Both 2007 and 2008 have been deemed below normal water years. According to Executive Order S issued on June 4, 2008, pursuant to which Governor Arnold Schwarzenegger proclaimed the existence of a statewide drought, prevailing water supply conditions in California are being influenced by the following factors, among others: many Southern California communities received only 20 percent of normal rainfall in 2007 and Northern California in 2008 experienced the driest spring on record, with most communities receiving less than 20 percent of normal rainfall from March through May; the Sacramento and San Joaquin River basins are experiencing critically dry conditions and the statewide runoff forecast for 2008 is estimated to be 41 percent below average; water storage in many of the state s reservoirs is far below normal, including Lake Oroville which supplies water to the SWP at 50 percent of capacity, and Lake Shasta which supplies water to the CVP at 61 percent of capacity; the Colorado River Basin has just experienced a record eight-year drought resulting in current reservoir storage throughout the River system reduced to just over 50 percent of its total capacity; and, moreover, the effects of global climate change are expected to increasingly impact California s hydrology in ways that may reduce snowpack, alter the timing of runoff, and increase the intensity and frequency of droughts in the western United States. Beyond these conditions, the Governor s Executive Order also identified that SWP and CVP exports from the Delta have been substantially restricted pursuant to recent and ongoing federal litigation concerning fisheries protection and other environmental concerns in the Delta. In Natural Resources Defense Council v. Kempthorne, et al. (USDC Case No. 05-CV OWW), environmental groups filed suit against the U.S. Fish & Wildlife Service (FWS) and the Secretary of the Interior alleging the biological opinion (B.O.) and no jeopardy findings prepared by FWS regarding impacts to delta smelt caused by SWP and CVP operations violated the federal Endangered Species Act (ESA). In May 2007, federal district court Judge Oliver Wanger issued a ruling declaring the B.O. invalid under the ESA. Plaintiffs requested the Court to impose an interim remedy to restrict project operations pending the completion of the new B.O. The Court conducted an evidentiary hearing in August 2007 and, on December 14, 2007, issued a Final Interim Remedial Order setting forth temporary restrictions on Delta exports from the SWP and CVP. Importantly, the Court invalidated but did not vacate the B.O., meaning the CVP and SWP are legally permitted to operate pending release of the new B.O., which the Court ordered to be completed no later than September 15, Under the Kempthorne decision, the 2 For additional information regarding California s water supply history and planning, including a discussion of the state s major water supply resources, see CALIFORNIA WATER II, Arthur L. Littleworth and Eric L. Garner (2 nd Ed. 2007). -3-

4 Court-ordered restrictions are based on flow rates in certain significant rivers near the CVP and SWP export facilities and real-time data concerning the migratory and spawning status of delta smelt. The restrictions have been estimated as having the potential to result in reduced project deliveries of 9 to 29 percent if is a normal water year and 3 to 19 percent if is a dry water year. In a similar case, Pacific Coast Federation of Fishermen's Association / Institute for Fisheries Resources, et al. v. Gutierrez, et al. (USDC Case No. 1:06-CV OWW), environmental plaintiff groups filed suit in federal court against the National Marine Fisheries Service (NMFS) and the Secretary of Commerce challenging the validity of the B.O. and no jeopardy findings prepared by NMFS regarding impacts to winter and spring-run salmon and steelhead trout caused by SWP and CVP operations. On April 16, 2008, Judge Wanger issued a decision invalidating the NMFS B.O. for failing to comply with the ESA. As with Kempthorne, the Court did not vacate the B.O., meaning that project operations are authorized to continue pending the preparation of a new B.O. and any interim requirements the Court may impose. Soon after the Court invalidated the NMFS B.O., proceedings were conducted to determine whether interim restrictions such as those ordered in the Kempthorne case would be required pending the new B.O., which is not expected to be completed until some time in On July 18, 2008, the Court issued Findings of Fact and Conclusions of Law for the initial proceedings which concluded, among other things, that additional water supply restrictions beyond those required in Kempthorne are not required at this time to protect species migration and habitat. To say the least, these court decisions and recent dry conditions have placed water supplies directly in the spotlight. From the United States Congress, to the State Capitol, in the press, and for cities, counties, and water agencies statewide, the questions are heard with increasing frequency: How much water is available? Is it enough? How does this affect us? Particularly for cities and other land use agencies, a common question is whether and to what degree these circumstances factor into land use planning and related environmental review and approval processes. A more specific matter is how WSAs and other water supply analyses fit into the mix. II. WATER SUPPLY ASSESSMENTS: NUTS AND BOLTS A. What Triggers the Preparation of a WSA? While often overlooked, SB 610 provides a detailed roadmap for the process and contents of preparing a WSA. Under SB 610, any city or county that determines a project as defined by Water Code section is subject to CEQA must, at the time it determines whether an environmental impact report, a negative declaration, or a mitigated negative declaration is required for the project pursuant to Section , identify the public water system that may provide water service to the project and request the water provider to prepare a WSA. (Wat. Code 10910(a)-(c).) This standard illustrates the importance of understanding two threshold issues: (1) whether the proposed development constitutes a project under Water Code section 10912; and (2) what entity constitutes the public water system that will provide water service to the proposed project. -4-

5 B. What Projects are Subject to WSA Requirements? Under Water Code section 10912, projects subject to the WSA requirements include: (1) a proposed residential development of more than 500 dwelling units; (2) a proposed shopping center or business establishment employing more than 1,000 persons or having more than 500,000 square feet of floor space; (3) a proposed commercial office building employing more than 1,000 persons or having more than 250,000 square feet of floor space; (4) a proposed hotel or motel, or both, having more than 500 rooms; (5) a proposed industrial, manufacturing, or processing plant, or industrial park planned to house more than 1,000 persons, occupying more than 40 acres of land, or having more than 650,000 square feet of floor area; (6) a mixed-use project that includes one or more of the projects specified above; (7) a project that would demand an amount of water equivalent to, or greater than, the amount of water required by a 500 dwelling unit project. (Wat. Code 10912(a).) In addition to the projects enumerated above, if the public water system (as defined below) that will serve the proposed development has fewer than 5,000 service connections, then a project also means any proposed residential, business, commercial, hotel or motel, or industrial development that would account for an increase of 10 percent or more in the number of the public water system s existing service connections, or a mixed-use project that would demand an amount of water equivalent to, or greater than, the amount of water required by residential development that would represent an increase of 10 percent or more in the number of the public water system s existing service connections. (Wat. Code 10912(b).) C. Who Prepares a WSA? As indicated above, SB 610 requires a city, acting as lead agency, at the time it determines a project as defined by Water Code section is subject to CEQA review, to identify the public water system that will provide water service to the project and request the water provider to prepare a WSA for the project. (Wat. Code 10910(a)-(c).) If the city or county is not able to identify any public water system that may supply water for the project (or if -5-

6 the city or county itself is the public water system), the city or county must prepare the WSA after consulting with any entity serving domestic water supplies whose service area includes the project site, the local agency formation commission, and any public water system adjacent to the project site. (Wat. Code 10910(b).) Under Section 10912, a public water system is defined as a system for the provision of piped water to the public for human consumption that has 3,000 or more service connections, including a water provider that may become a public water system as a result of serving water to the project. (Wat. Code 10910(b); 10912(c).) A public water system includes all of the following: (1) any collection, treatment, storage, and distribution facility under control of the operator of the system which is used primarily in connection with the system; (2) any collection or pretreatment storage facility not under the control of the operator that is used primarily in connection with the system; and (3) any person who treats water on behalf of one or more public water systems for the purpose of rendering it safe for human consumption. (Wat. Code 10912(c)(1)-(3).) Again, many cities provide retail water service through separate municipal water departments and, therefore, the city itself may qualify as the public water system responsible for preparing the WSA for a particular project. The foregoing illustrates an important point: while SB 610 is often associated with large projects, such as housing developments exceeding 500 units, cities should carefully scrutinize proposed development applications and the proposed water service provider to determine whether the WSA requirements apply. As noted above, many types of shopping and commercial centers, business and industrial parks, hotels and varieties of mixed use projects may trigger the need for a WSA. Moreover, if the water service provider is small (i.e., fewer than 3,000 connections or between 3,000 and 5,000 connections), it must be determined, respectively, whether the provider would become a public water system as a result of serving the project or if serving the project would increase the water service connections by 10 percent or more, thus requiring the preparation of a WSA. (Wat. Code 10912(b)-(c).) D. What Must Be Included in a WSA? As indicated above, SB 610 provides a general roadmap for the process and requirements of preparing a WSA. Moreover, existing data and documentation such as UWMPs, contracts, agreements, judgments, studies and reports typically provide the starting point and framework for the WSA analysis. (See Wat. Code 10910(c)-(f).) (1) Documenting Supply In documenting water supplies, Water Code section 10910(d) requires a WSA to identify any existing water supply entitlements, water rights, or water service contracts relevant to the identified water supply for the proposed project and a description of the quantities of water received in prior years by the public water system under the existing water supply entitlements, water rights, or water service contracts. (Wat. Code 10910(d)(1).) Any such supplies must be demonstrated by providing information related to all of the following: -6-

7 written contracts or other proof of entitlement to an identified water supply; copies of a capital outlay program for financing delivery of a water supply that has been adopted by the water supplier; federal, state, and local permits for construction of necessary water supply infrastructure associated with delivering the water supply; any regulatory approvals required to convey or deliver the water supply. (Wat. Code 10910(d)(2)(A)-(D).) If the WSA identifies a source or sources of water supply that have not been received in prior years by the water provider, the WSA must identify other public water systems or water service contract holders that receive such water or have existing water supply entitlements, water rights, or water service contracts to the source, and should discuss the extent to which that supply is available to the water provider. (Wat. Code 10910(e).) If the water supply for the proposed project will include groundwater supplies, the WSA must also include the following information and analysis: (a) A review of any information in the UWMP relevant to the identified water supply for the proposed project; (b) A description of any groundwater basin(s) from which the proposed project will be supplied. If the basin has been adjudicated, a copy of the order or decree adopted by the court or board must be included and a description provided of the amount of groundwater the water supplier has a legal right to pump under the order or decree. For basins that have not been adjudicated, information must be included from DWR s most current Bulletin regarding whether the basin(s) is overdrafted or is projected to become overdrafted if present management conditions continue. In the case of an overdrafted basin(s), the water supplier must provide a detailed description of the efforts being undertaken in the basin(s) to eliminate long-term overdraft conditions; (c) A detailed description and analysis of the amount and location of groundwater pumped by the water supplier for the past 5 years from any groundwater basin from which the proposed project will be supplied, which description must be based on information that is reasonably available, including, but not limited to, historic records; (d) A detailed description and analysis of the amount and location of groundwater that is projected to be pumped by the water supplier from any basin from which the proposed project will be supplied, which description must be based on information that is reasonably available, including, but not limited to, historic records; and (e) An analysis of the sufficiency of the groundwater from the basin(s) from which the proposed project will be supplied to meet projected water demand associated with the proposed project. This final portion of the analysis, however, is not required if the water supplier determines the sufficiency of groundwater needed to meet the initial and projected water demand -7-

8 associated with the proposed project has been addressed in the description and analysis provided in the most recently adopted and applicable UWMP. (Wat. Code 10910(f).) While Section 10910(d)(5) above indicates certain groundwater-related analysis may not be required in a WSA, cities should carefully consider this issue. To the extent a proposed project may be served with groundwater, and the most recently adopted UWMP includes a groundwater discussion, that UWMP analysis should be closely examined to determine whether it provides sufficient information to justify omitting discussion from the WSA. Various factors can influence the sufficiency of groundwater supplies (for instance, existing or emerging groundwater quality issues, water right disputes, increasing demands, and the availability and reliability of replenishment water, to name a few) and any one or more of these factors might not have been addressed in the UWMP or may have changed since the UWMP was prepared. For most if not all circumstances, it may be advisable to include relevant groundwater information and analysis from the UWMP and to supplement that discussion by addressing other factors that support a sufficiency determination. With regard to identifying water supplies, the specific wording of SB 610 raises a practical consideration that should not be overlooked. On the one hand, the general WSA standard urges water agencies to evaluate the total projected water supplies available to them over the 20-year period; in other words, the statute encourages an analysis of an agency s entire water supply portfolio. On the other hand, Water Code section 10910(c) and (d) can be read to suggest that a WSA need only discuss and analyze sources of supply relevant to the supply that will be used to serve the proposed project. Water agencies commonly have rights and access to water supplies within their portfolio that are not necessarily planned to serve a particular project. In that instance, while SB 610 could be read as not requiring the WSA to discuss those resources, a broader discussion of each component of the agency s water supply portfolio is probably useful in buttressing the overall analysis that the total projected water supplies available to the agency over the 20-year projection during normal, single-dry and multiple-dry years are sufficient to serve the project in addition to the agency s existing and planned future uses. (Wat. Code 10910(c).) Along these lines, one recommended practice is to use tables illustrating the water supplier s entire range of existing and planned water supplies in five-year increments over the 20-year projection, including tables to reflect water supply availability in normal, single-dry and multiple-dry years. (See, DWR Guidebook for Implementation of SB 610 and SB 221 (October 8, 2003) (DWR Guidebook), pp. 15, 29.) (2) Documenting Demand Water supply is only half the equation in the WSA. In addition to identifying, discussing and quantifying supply, a WSA must also document the following demands: (a) the projected demand associated with the proposed project; (b) the water provider s existing demands; and (c) demands associated with the water provider s planned future uses. (Wat. Code 10910(c); 10911(c).) Projected demand associated with the proposed project is typically based on water use factors for the particular land use(s) included in the proposal. Notably, significant flexibility may exist in developing water use factors for a particular project based on geographic regions, -8-

9 local practices, conservation and water saving techniques/requirements, and project design features. Moreover, projected water demand for many projects is now separately calculated based on the project s potable and non-potable water needs. Again, while these factors may provide unique opportunities for reducing project demand, cities must ensure that water use factors and total projected demand for a project are supported by reasoned and substantial evidence. By way of example, for a 1,500-unit residential development project, using a water use factor of 0.3 afy per unit versus 0.6 afy per unit amounts to a sizeable difference in total projected water demand of 450 afy. However, if the 1,500-unit project is comprised of singlefamily homes with 6,000 to 10,000 square foot, fully landscaped lots, using a water use factor of 0.3 afy may result in a questionable analysis. Moreover, while SB 610 indicates water demand data can be derived from the most recently adopted UWMP, that data should be carefully reviewed and appropriately tailored to reflect a project s current configuration and other current conditions, trends and legal requirements affecting the projected demand associated with a proposed project. Existing demand within a water provider s service territory should be reasonably ascertainable. According to the DWR Guidebook, existing demand should include the water provider s current customers and any system uses and losses during a normal water year. Existing demand might also account for changes in demand characteristics, such as changes in per capita use, percentage of use by customer type, demographic variability, etc. (DWR Guidebook, p. 23.) Existing demands can also be projected through the ensuing 20-year period. In doing so, water providers may account for changes in water use patterns that often occur in single-dry and multiple-dry years due to established water conservation programs, shortage contingency plans, voluntary use reductions, changes in water pricing, or other factors. These water use responses may be documented in the most recently adopted UWMP and the DWR Guidebook suggests accounting for this information according to each water use sector. (DWR Guidebook, p. 31.) As indicated above, with expanding availability and uses of recycled water and other non-potable water resources, many water providers account for system-wide demands according to different types of water utilized by different customers. Documenting demands associated with a water provider s planned future uses is commonly understood as being equivalent to documenting demands associated with projected population growth within a water provider s service area. To that end, WSAs frequently (if not universally) utilize forecasted demand figures provided in the most recently adopted UWMP. While this may represent the most convenient and/or conservative approach to calculating this component of demand in preparing a WSA, several sources of authority indicate the possibility that a different approach was intended and authorized by SB 610. Those authorities are discussed in greater detail below in Section V. Similar to documenting supplies, the DWR Guidebook recommends summarizing the WSA s demand analyses and calculations in tables, which may be organized in 5-year increments over a 20-year projection and account for changes in demand during single-dry and/or multiple-dry periods. (DWR Guidebook, p. 31.) In turn, the supply and demand tables may be compared to address the general water supply sufficiency standard of SB 610: whether the total projected water supplies available to the water provider during normal, single-dry, and multiple-dry years over the next 20-year period are sufficient to meet the projected water demand associated with the proposed project, in addition to existing -9-

10 and planned future uses, including agricultural and manufacturing uses. (Wat. Code 10910(c).) E. What is the Timing of a WSA? A WSA must be adopted by the governing body of the water supply agency at a regular or special meeting and submitted to the city or county within 90 days from the date on which the request was received. (Wat. Code 10910(g)(1).) The water supplier may request an extension of time not to exceed 30 days to prepare and adopt the WSA. (Wat. Code 10910(g)(2).) In the event the water supplier fails to timely prepare, adopt and submit a WSA, the city or county may seek a writ of mandamus to compel compliance with the requirement to submit the WSA. (Wat. Code 10910(g)(3).) SB 610 indicates a city s request for a WSA should issue at the same time the city issues a notice of preparation for the proposed project. Water Code section provides that at the time a city determines under Public Resources Code section whether an EIR, negative declaration, or mitigated negative declaration is required for a project subject to CEQA, the city must identify the water supplier that may serve the project and request the supplier to determine whether the projected water demand associated with the project was included as part of the most recently adopted UWMP. (Wat. Code 10910(b)-(c).) Notably, the express language of Section does not appear to require the city to request the preparation of a WSA at that time. To the extent such a requirement does exist, however, Public Resources Code section would appear to require cities to identify the water supplier and request that it prepare a WSA within 30 days of determining the project application complete. 3 F. How is a WSA Used? After a WSA is prepared and adopted it must be submitted to the city or county and included in the EIR being prepared for the proposed project. (Wat. Code 10911(b).) If a WSA concludes that water supplies are not or will not be sufficient to serve the projected demand associated with the project in addition to existing and planned future uses, the water provider must also submit to the city or county its plans for acquiring additional water supplies needed to serve the project, setting forth measures being undertaken to acquire and develop those supplies. (Wat. Code 10911(a).) According to SB 610, those plans may include, without limitation: the estimated total costs and the proposed method of financing the costs associated with acquiring the additional water supplies; all federal, state, and local permits, approvals or entitlements anticipated to be required to procure additional supplies; and the estimated timeframes within which the water provider expects to be able to acquire such additional supplies. (Wat. Code 10911(a)(1)-(3).) As discussed in greater detail below, the California Court of Appeal recently held that WSAs are only an intermediate step in CEQA s environmental review process. (California Water Impact Network v. Newhall County Water District ( CWIN ), 161 Cal.App.4th 1464.) 3 Pursuant to Government Code section 65943, a determination of completeness generally must be made within 30 days of receiving the project application. -10-

11 Thus, while the WSA provides foundational information and analysis regarding water supply sufficiency, the city or county acting as lead agency under CEQA makes the final determination based on the entire record whether water supplies will be sufficient to serve the project in addition to existing and planned future uses, which determination may or may not be consistent with the conclusion reached by the WSA. (Wat. Code 10911(b)-(c).) If the city or county determines water supplies are not sufficient, that determination must be included in the findings for the project. (Wat. Code 10911(c).) III. RELATED STATUTES: SIMILAR BUT NOT THE SAME AS SB 610 A. Urban Water Management Plans (Wat. Code et seq.) The Urban Water Management Planning Act, Water Code section et seq. (UWMP Act), is intended to provide assistance to water agencies in carrying out their long-term resource planning responsibilities to ensure adequate water supplies to meet existing and future demands for water. (Wat. Code (b).) To that end, an UWMP addresses, among other things, projected water use, the reliability of water supply sources, the potential for using reclaimed water and desalinated water, water shortage contingency planning, comparisons of supply and demand, and water conservation efforts. (See Wat. Code ) Specifically, the Act requires urban water suppliers to document water supplies available during normal, single-dry, and multiple-dry water years in five-year increments over a 20-year period or more, and the existing and projected future water demands associated with forecasted population increases throughout the water provider s service territory over the same minimum 20-year period. (Wat. Code 10631(a)-(e).) An UWMP must describe the service area of the supplier, including current and projected population, climate, and other demographic factors affecting the supplier s water management planning. (Wat. Code 10631(a).) The UWMP must quantify past and current water use, over 5-year increments, and projected water use, identifying the uses among various water use sectors, including single-family residential, multifamily, commercial, industrial, institutional and governmental, landscape, sales to other agencies, seawater intrusion barriers, groundwater recharge, conjunctive use, or any combination thereof, and agricultural. (Wat. Code 10631(e)(1).) An UWMP must also describe the reliability of the water supply and its vulnerability to seasonal and climatic shortage, and provide data, to the extent practicable, for average, single-dry, and multiple-dry water years. (Wat. Code 10631(c)(1).) For any water source that may not be available at a consistent level of use, the UWMP must describe plans to supplement or replace that source with alternative sources or water demand management measures. (Wat. Code 10631(c)(2).) As noted above, an UWMP must also include a water shortage contingency plan. (Wat. Code ) Given the level of detail and information required in an UWMP, an up-to-date UWMP can significantly reduce the burden of preparing a WSA. (Wat. Code, 10910(c)(2).) At the same time, however, and particularly under recent circumstances affecting imported water supplies from the Delta, cities may encounter outdated information in UWMPs that cannot be taken at face value. (See also, discussion below regarding recent litigation.) Yet that is understandable as UWMPs are only required to be prepared once every five years. (Wat. Code -11-

12 10621.) Changed information does not mean the previous UWMP is invalid or cannot be used. 4 To the contrary, as explained above, UWMPs are intended as long-range planning documents, periodically updated to address and account for circumstances affecting water supplies, demand, and land use activities over the preceding five years since the last UWMP was adopted and in 5- year increments moving forward. (Wat. Code ) Thus, changes that may occur after the most recent UWMP is adopted can and should be addressed in the WSA and CEQA analyses. All too often WSAs are prepared by simple, wholesale incorporation of information from an UWMP. However, for the reasons set forth above and below, cities are encouraged not to use WSAs and UWMPs interchangeably. Rather, UWMPs should be used as source documents, where portions of the information and analyses therein can be tailored and utilized to support analyses and determinations required by SB 610 and CEQA. B. SB 221 and Water Verifications (Govt. Code ; ) By definition, a WSA prepared pursuant to SB 610 is not a WV prepared pursuant to SB 221. Although similar in some respects (and often mistakenly referred to as one statute or as being interchangeable), SB 610 and SB 221 are different in several important ways, including, but not limited to: (1) SB 610 applies to a broad category of projects, whereas SB 221 only applies to residential development projects with 500 or more dwelling units; (2) WSAs must be incorporated into the environmental document prepared for a project under CEQA, while WVs do not; (3) SB 610 and SB 221 are triggered by different events and have different timing requirements; (4) SB 610 and SB 221 have different substantive provisions; and (5) adoption of WSAs and WVs may have different legal implications. Unlike SB 610 that requires the preparation of a WSA for a broad range of projects subject to CEQA (Wat. Code 10912(a)), the preparation of a WV under SB 221 is only required in connection with a development agreement or tentative map that includes a subdivision. (Govt. Code ; ) 5 SB 221 defines a subdivision as a proposed residential development of more than 500 units, except that for a water agency with fewer than 5,000 service connections, a subdivision includes a residential development project that would account for an increase of 10 percent or more in the number of the agency s existing service connections. (Govt. Code (a)(1).) Such approvals must be conditioned on the requirement that a sufficient water supply shall be available to serve the project, where proof of the availability of that supply must be based on a WV prepared by the agency providing water service to the project. (Govt. Code ; ) As with SB 610, a sufficient water 4 An UWMP is subject to legal challenge, which can significantly impair reliance or reference to all or some portion of its information, analyses or conclusions. (See Friends of the Santa Clara River v. Castaic Lake Water Agency (2004) 123 Cal.App.4 th 1.) 5 Certain infill and low-income housing subdivisions are expressly excepted from SB 221 s WV requirements: This section shall not apply to any residential project proposed for a site that is within an urbanized area and has been previously developed for urban uses, or where the immediate contiguous properties surrounding the residential project side are, or previously have been, developed for urban uses, or housing projects that are exclusively for very low and low-income households. (Govt. Code (i).) Specific provisions also apply to the County of San Diego. (See Govt. Code (k).) -12-

13 supply under SB 221 means the total water supplies available during normal, single-dry and multiple-dry years within a 20-year projection that will meet the projected demand associated with the proposed subdivision, in addition to existing and planned future uses, including agricultural and industrial uses. (Govt. Code (a)(2).) Unlike SB 610, however, SB 221 requires a WV to consider specific factors in analyzing whether sufficient water supply exists to serve a proposed subdivision. (See Govt. Code (a)(2)(A)-(D).) The procedural aspects of SB 221 also differ from SB 610. Under SB 221, within five days of the time a city or county determines a tentative map application for a proposed subdivision is complete, the CEQA lead agency must send a copy of the application to any public water system that may supply water to the subdivision, including any water supplier that may become a public water system as a result of supplying water to the subdivision. 6 This requirement does not state, however, that a request to prepare the WV must be submitted at that time. As indicated above, the approval of a development agreement or tentative map including a subdivision must only be conditioned on obtaining an approved WV at some point which, as a fail safe mechanism, must occur before construction begins on the project. (See DWR Guidebook, p. iii.) Unlike SB 610, the timing for preparing a WV is not specifically tied to the CEQA process undertaken for a proposed subdivision. Under SB 610, the WSA prepared for a project including 500 or more dwelling units must be adopted and incorporated into the EIR prepared for the project. (Wat. Code 10911(b).) This requirement does not apply to the WV, which may be completed and approved before, as part of, or after the CEQA process. Indeed, while the required contents of a WV differ in some respects from a WSA prepared under SB 610, 7 SB 221 provides that the substantial evidence used to support the findings of a WV may include the WSA already prepared for the project. (Govt. Code (c)(2).) In any respect, once a request is submitted to the water provider to prepare a WV, it must be prepared and adopted within 90 days of the request. (Govt. Code (b)(1).) Also notable, WVs appear to have different litigation exposure than WSAs. First, whereas SB 610 only enables the city or county to file a writ of mandate against the water provider for failing to timely prepare and adopt a WSA (Wat. Code 10910(g)(3)), SB 221 enables the local agency or any other interested party to seek a writ of mandamus to compel a water provider to prepare and adopt a WV. (Govt. Code (b)(2).) Equally important, SB 221 appears to allow challenges to be filed directly against the water provider regarding the sufficiency of a WV. (Govt. Code (o).) As discussed in greater detail below, the Court of Appeal recently held that any challenge against the sufficiency of a WSA must be brought against the lead agency as part of its approval of the CEQA document, yet that holding does not apply to WVs. (CWIN, supra, 161 Cal.App.4 th 1464, ) These differences may become particularly acute in the situation where the city or county may seek to have a joint WSA/WV prepared for a project. 6 SB 221 defines public water system in accordance with the definition set forth by Water Code section 10912(c), above. (Govt. Code (a)(3).) 7 See, e.g., Govt. Code (a)(2), (c), (d), (g), (h). -13-

14 C. California Environmental Quality Act (Pub. Res. Code et seq.) Cases interpreting CEQA have held that the environmental effects of a project cannot be fully appreciated absent consideration of water supply impacts. (See Sierra Club v. West Side Irrig. Dist. (2005) 128 Cal.App.4th 690; Napa Citizens for Honest Government v. Napa County Board of Supervisors (2001) 91 Cal.App.4th 342; Stanislaus Natural Heritage Project v. County of Stanislaus (1996) 48 Cal.App.4th 182; Santa Clarita Organization v. County of Los Angeles (2003) 106 Cal.App.4th 715.) As discussed herein, SB 610 and the WSA process are intended to supplement, not supplant, the CEQA process. WSAs merely assist lead agencies in carrying out CEQA s requirement to adequately consider potential water supply impacts resulting from a proposed project. IV. RELATED CASE LAW AND PRACTICAL ISSUES Without question, WSAs are technically and legally complex. And what better combination for the courts to tackle. As set forth in greater detail below, California courts have started to weigh in on WSAs and how they fit within the land use planning and approval process. A. WSAs and CEQA Analyses are Not Created Equal: Vineyard Area Citizens for Responsible Growth v. City of Rancho Cordova (2007) 40 Cal.4th 412 Last year the California Supreme Court articulated its most recent standard for evaluating the sufficiency of water supplies in connection with a city s CEQA and land use approval process. In Vineyard Area Citizens for Responsible Growth v. City of Rancho Cordova (2007) 40 Cal.4th 412 ( Vineyard ), the Supreme Court struck down an EIR prepared for a community and specific plan mixed-use development project. The EIR addressed multiple impacts, but the Court invalidated the EIR in large part on the basis of an insufficient water supply analysis relative to the project s long-term needs. At the outset, Vineyard is notable for its discussion of SB 610 and SB 221 requirements, wherein the Court remarked: The plans and estimates that Water Code section mandates for future water supplies at the time of any approval subject to CEQA must, under Government Code section , be replaced by firm assurances at the subdivision map approval stage. (Vineyard, supra, 40 Cal.4th at 434.) However, the Court expressly declined to address the sufficiency of any WSA or WV that may have been prepared for that project. (Id. at 436.) Instead, Vineyard is regarded as a pure CEQA decision, confirming that the ultimate objective of an EIR s water supply analysis as with any CEQA analysis is to allow informed decision making with regard to the availability and reliability of water supplies to serve the proposed project and the potentially significant environmental impacts of utilizing that supply. To this end, Vineyard has been interpreted as establishing four general rules that must be satisfied in an EIR s water supply analysis. First, CEQA s informational purposes are not satisfied by an EIR that simply ignores or assumes a solution to the problem of supplying water to a proposed land use project; thus, an EIR must present sufficient facts to evaluate the pros and cons of supplying the amount of water the project will need. (Vineyard, supra, 40 Cal.4th at 431.) Second, a water supply analysis for a large, long-term development project (such as the master planned community at issue in Vineyard, scheduled to be built and occupied over several -14-

15 years and throughout multiple phases) cannot be limited to the water supply for the first stage or the first few years. Rather, the EIR must assume that all phases of the project will eventually be built and will need water and, therefore, must analyze, to the extent reasonably possible, the impacts of providing water to the entire proposed project. (Id. at 435.) Third, future water supplies identified to serve the project must bear a likelihood of actually proving available; purely speculative or unrealistic allocations, i.e., paper water entitlements, are not sufficient. In this regard, the EIR s discussion must include a reasoned analysis of the circumstances affecting the likelihood of the water supply availability. (Id. at 432.) Fourth, in cases where uncertainty regarding the actual availability and reliability of a future water source remains after a complete discussion and analysis, an EIR must discuss possible replacement or alternative sources of water and must analyze the environmental consequences of utilizing such alternative sources. (Id.) Also notable from Vineyard is the Court s discussion of a sliding-scale of water supply certainty required in an EIR: [T]he burden of identifying likely water sources for a project varies with the stage of project approval involved; the necessary degree of confidence involved for approval of a conceptual plan is much lower than for issuance of building permits. (Vineyard, 40 Cal.4th 412, 434.) Accordingly, the Court found that: Although the FEIR did not demonstrate a level of certainty regarding future supplies comparable to that required for subdivision approval under Government Code section , CEQA does not demand such certainty at the relatively early planning stage involved here. (Vineyard, supra, 40 Cal.4th at 437.) At the same time, however, the Court made clear that the water supply analysis for a large development project cannot be deferred to later tiers or phases of environmental review. (Id., at 431.) With these principles established, the Court went on to hold: [T]o satisfy CEQA, an EIR for a specific plan need not demonstrate certainty regarding the project s future water supplies. To the extent a subsequent subdivision proposal relies on different water sources than were proposed in the specific plan it implements, or the likely availability of the intended water sources has changed between the time of the specific plan and the subdivision application (or more has been learned about the impacts of exploiting those sources), changes in the project, the surrounding circumstances or the available information would exist within the meaning of section 21166, requiring additional CEQA analysis. (Id. at 438.) The ultimate question under CEQA, moreover, is not whether an EIR establishes a likely source of water, but whether it adequately addresses the reasonably foreseeable impacts of supplying water to the project. If the uncertainties inherent in long-term land use and water planning make it impossible to confidently identify the future water sources, an EIR may satisfy CEQA if it acknowledges the degree of uncertainty involved, discusses the reasonably foreseeable alternatives including alternative water sources and -15-

16 the option of curtailing the development if sufficient water is not available for later phases and discloses the significant foreseeable environmental effects of each alternative, as well as mitigation measures to minimize each adverse impact. (Id. at 434.) The discussions above regarding Vineyard and SB 610 illustrate that neither necessarily precludes a city from approving a project if sufficient water supplies cannot be identified with certainty. Moreover, the conclusions set forth in a WSA form only a part of the city s analyses and conclusions with respect to water supply sufficiency and project approval. B. WSAs are Not Subject to Direct Legal Challenge: California Water Impact Network v. Newhall County Water District (2008) 161 Cal.App.4th 1464 In California Water Impact Network v. Newhall County Water District (2008) 161 Cal.App.4th 1464 ( CWIN ), the Court of Appeal for the Second District addressed the issue of whether WSAs are judicially reviewable prior to the certification of an EIR and project approval. The case involved a challenge brought against the Newhall County Water District (District) for its approval of a WSA prepared for a proposed 584-acre industrial park located in the City of Santa Clarita. At the City s request, the District prepared the WSA for the project. After the District approved the WSA but before the City had incorporated the document in its EIR, plaintiffs filed a petition for writ of mandate challenging the legal adequacy of the WSA under SB 610. (CWIN, supra, 161 Cal.App.4th 1464, 1474.) The District (along with the City and the project applicant) filed a motion for judgment on the pleadings asserting, among other things, that the WSA was a technical, informational document and not a final act or determination subject to judicial review. (Id.) The trial court ruled in favor of the District, observing that WSAs are not immune from judicial review, but must be challenged and reviewed as part of CEQA review. (Id. at 1475.) The appellate court affirmed, holding the WSA was an interlocutory and preliminary step in the EIR process and therefore not final for mandamus purposes when the petition was filed. (Id. at 1486, 1488.) Notably, the court in CWIN explained its holding in the context of the express language of SB 610, stating: Once the WSA is approved by the water provider s governing board the WSA is submitted to the lead agency. The lead agency may then evaluate the information included in the WSA. (Wat. Code 10911, subd. (c).) The power to evaluate the WSA necessarily invests the lead agency with the authority to consider, assess and examine the quality of the information in the WSA and endows the lead agency with the right to pass judgment upon the WSA. While the lead agency must include the WSA in the EIR, the lead agency is not required to accept the WSA s conclusions. The lead agency may in evaluating the WSA accept or disagree with the water provider s analysis or may request additional information from the water provider. In any event, the lead agency is required by statute to make the ultimate determination, based on the entire record, whether water supplies are sufficient. (Wat. Code 10911, subd. (c).) The lead agency may make a finding -16-