No Crystal Ball for Predicting Water Supplies

10.27.2010
Daily Journal

In a decision of significant importance to water agencies, purveyors and planners, the 1st District Court of Appeal recently upheld an urban water management plan prepared by the Sonoma County Water Agency. (Sonoma County Water Coalition v. Sonoma County Water Agency, Case No. A124556). Under state law, these plans must be prepared or updated every five years and provide the basis for water resource decision-making over a 20-year time horizon.

As noted by the court, an urban water management plan is a long-range planning tool "to ensure adequate water supplies to serve existing customers and future demands for water." The trial judge originally determined that the agency's plan was invalid and not supported by "substantial evidence." The Court of Appeal disagreed, reversing the lower court for failing "to accord deference to the expertise and discretion of the Agency." In a time when the projected certainty and availability of water supplies are complicated by prolonged drought conditions, environmental regulatory constraints, limits on imported water sources, and a variety of other factors, the decision provides needed clarification to the elements necessary to prepare a defensible urban water management plan.

The Sonoma County lawsuit was initiated by a coalition of 14 citizen organizations seeking to set aside the agency's urban water management plan. The organizations alleged that the agency's water estimates were inflated, did not adequately address environmental concerns, and failed to provide the detailed water supply information required by the Urban Water Management Planning Act, Water Code Section 10610 et seq.

The agency identified certain assumptions about future water supplies in its urban water management plan: that the presence of certain threatened and endangered species, including the chinook salmon, steelhead and coho salmon, would not substantially reduce the agency's supplies; that a planned "Water Supply Reliability Project" would be approved and constructed; that the State Water Resources Control Board would approve the agency's pending application to allow additional water diversions; that water quality issues from potential future wastewater projects would not have significant impacts on the agency's supplies; and others. The plan openly acknowledged that many of these assumptions depended on future decisions by other regulatory agencies, as well as certain unknown future conditions; however, the agency nonetheless concluded that the assumptions were reasonable and provided a supporting explanation.

The trial court did not agree with the agency's assumptions and findings, holding that Water Code Section 10610 et seq. requires urban water suppliers to identify alternatives for any less than certain supplies.

In reversing and remanding the trial court, the 1st District made several key findings. First, recognizing that "some level of uncertainty is a permanent, inherent feature of modern water management," the court held it was error for the trial court to substitute its judgment for that of the agency, and in doing so it failed to give appropriate deference to the agency's expertise. The court stated:

"Water management is subject to the vagaries of climate, competing demands from agricultural, industrial and residential uses, environmental constraints, and overlapping regulatory regimes at both the federal and state levels. In rejecting the Agency's conclusions, the [trial] court required a level of certainty not factually attainable and not required by the statute, and substituted its own judgment as to the reasonableness of the assumptions relied upon by the Agency. This was error."

The court further found that an urban water management plan is sufficiently specific and certain if the assumptions on which the agency's conclusions are based are explicitly recognized, articulated and supported by substantial evidence. The mere "possibility" that a water source may not be available in the future does not require an agency to develop a backup plan. The court held that the question the trial court should have addressed is whether the assumptions made by the agency are supported by substantial evidence - not whether alternative assumptions would have been more reasonable. The Urban Water Management Planning Act requires consideration of reasonable probabilities, not mere possibilities. The court concluded:

"If substantial evidence supports a water supplier's resource assumptions, it would be wasteful of the Agency's resources if it were nevertheless required to focus on development of detailed plans for alternatives that its own experts view as improbable. We find nothing in the Act that requires it to do so.... The administrative record and the Plan itself adequately demonstrate that Agency and its experts articulated the predicates for assumptions on which the Plan is based, and provided the factual basis and expert opinion to support those assumptions, while acknowledging the uncertainties inherent in the process. It considered reasonable probabilities - not simply possibilities - in its analyses, and the Agency did not abuse its discretion. [The Urban Water Management Planning Act] does not require more."

In addition, because an urban water management plan must be updated every five years, this "provides ample opportunity for the Agency to address and respond to maturing and tangible risks to long-term water supply projections." And matters requiring technical expertise deserve "as little judicial interference as possible." The court further distinguished these plans from "detailed project specific planning documents, such as those required under [California Environmental Quality Act]."

The court also rejected the argument that the urban water management plan was invalid because the agency did not coordinate with a variety of state and federal agencies, including the State Water Resources Control Board, the Army Corps of Engineers, the Federal Energy Regulatory Commission, and NOAA Fisheries. The court found that, in carrying out its duty to "coordinate," an agency has "considerable discretion" to determine which agencies are "appropriate" or "relevant" and whether coordination with a particular agency is "practicable."

In other specific rulings, the court found that the agency made reasonable assumptions regarding potential constraints under the Endangered Species Act, water quality issues, and compliance with demand management and conservation requirements.

In a time where the future availability of water supplies is complicated by multiple factors ranging from climate change, prolonged drought conditions, the endangered species act, limits on imported water sources, water quality, and other considerations, the reasoning and findings of the 1st District provide needed clarification on what water agencies must do to comply with the statutory mandate of preparing urban water management plans every five years. In reversing the trial court, the opinion adds to a growing trend of published decisions recognizing that uncertainty is endemic to the increasingly complex water supply planning that is needed to accommodate existing and future land and water resource development in California. (See, O.W.L. Foundation v. City of Rohnert Park (2008) 168 Cal.App.4th 568. 586). The court's decision makes it clear that urban water management plans must be supported by substantial evidence, but that standard does not require agencies to analyze "all possible eventualities" in their plans or a detailed analysis of "hypothetical" uncertainties in future water supplies. In making such determinations, deference will be given to the discretion and expertise of water agencies.

The court's decision is timely, coming just as the agency and urban water suppliers throughout California are preparing urban water management plans that must be approved by July 1, 2011 (recently extended from Dec. 31, 2010), and then submitted to the California Department of Water Resources.

Alfred E. Smith II is a partner at Nossaman and chair of the Water Practice Group. He specializes in water law, environmental and complex commercial litigation. He can be reached at (213) 612-7800 or asmith@nossaman.com.

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