In North Coast Rivers Alliance v. Westlands Water District, (2014) Cal. App. LEXIS 590, the Court of Appeal for the Fifth District upheld the trial court’s denial of a petition for a writ of mandate challenging the renewal of interim water contracts between the Bureau of Reclamation (the Bureau) and Westlands Water District along with several other related water distribution districts (Water Districts). The court held that the Water Districts properly exempted the interim contract renewals from California Environmental Quality Act (CEQA) review as 1) pre-CEQA ongoing projects and 2) continued operation of an existing facility.
The interim water contracts were extensions of a 40-year agreement signed in 1963 between the Bureau and Westlands Water District, which required the Bureau to deliver water to Westlands through Central Valley Project (CVP) facilities. In 1992, the Central Valley Project Improvement Act (CVPIA) provided for extension of the water service contracts in up to 25-year increments. After two previous series of interim contracts expired, the Water Districts approved another series of interim contracts in 2012 and North Coast Rivers Alliance along with other community groups (Petitioners) challenged the interim contracts as improperly exempted from CEQA review.
The court first agreed with Petitioners that the statutory exemption for rate-setting did not apply. According to the court, the rate-setting exemption contemplates a situation in which an agency provides a service to the public and the agency decides it must increase a rate or begin to impose a rate. The rate-setting exemption did not apply in this case though because the service was being provided between government entities (the Bureau and Water Districts) rather than between an agency and the public.
Next, the court held that the statutory exemption for pre-CEQA ongoing projects applied to the 2012 interim contracts. The court considered whether the interim contracts were a “normal, intrinsic part of the ongoing operation of a project approved prior to CEQA, rather than an expansion or modification.” In examining the nature and scope of the pre-CEQA activity, the court found that the interim contracts renewed water delivery in the same quantity, using the same facilities that had been contracted for prior to 1970 when CEQA was enacted. Even though the new water distribution districts were established more recently, the renewal of these contracts did not expand the “underlying activity” at issue because they did not compel a greater allocation than the pre-CEQA contracts. The contracts only offered flexibility in years when normal water allocation was reduced. As a result, the court held that substantial evidence supported the Water Districts’ conclusion that the water contracted for in the interim contracts could be traced back to commitments made before the enactment of CEQA.
The court also held that the interim contracts satisfied the class 1 categorical exemption for continued operation of an existing facility because the interim contracts continued without any change to the arrangement between the Bureau and Water Districts. The court found that the unusual circumstances exception to a categorical exemption did not apply because the nature of renewing a contract with the same terms implies that whatever environmental impacts existed prior to the renewal would continue unchanged. Similarly, the court held that the cumulative impact exception did not apply because each interim contract is just a continuance of the previous environmental impacts.
The court held that the pre-CEQA statutory exemption for ongoing projects applied in this case even though the 1963 contract between the Bureau and Westlands Water District had expired. The court reasoned that the interim renewal contracts continuing the terms of the original agreement did not allocate any more water to the water districts than had already been contracted for. As a result, the size and scope of the pre-CEQA project and the nature of the “underlying activity” are critical in applying the statutory exemption for pre-CEQA projects.