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On January 5, 2024, the Third District Court of Appeal, upheld the Department of Water Resources’ (“DWR’s”) approval of amendments to long-term contracts with local government agencies that receive water through the State Water Project in Planning and Conservation League, et al v. Department of Water Resources, et al, etc. (2024) 98 Cal.App.5th 726. In a lengthy opinion, the court rejected challenges to the contract amendments asserted under CEQA, the Sacramento-San Joaquin Delta Reform Act, and the common law public trust doctrine. In upholding DWR’s EIR, the court rejected claims that DWR’s Environmental Impact Report (“EIR”) used an improper baseline by assuming full contract deliveries and unlawfully segmented the Project by not evaluating future activities that might flow from DWR’s approval of the longer-term contracts, among other claims.


The State Water Project is a collection of canals, pipelines, reservoirs, and hydroelectric power facilities that convey water from north to south. The State Water Project’s aim is to address the State’s fundamental water problem caused by the fact that most of the rain and snow fall in the north while the highest demand for water arises in the south. DWR has long-term contracts with 29 local government contractors for the sale, delivery, or use of water made available by the State Water Project. These contracts were originally executed in the 1960s with 75-year terms ending between 2035 and 2042. Under the contracts, each local government has participation rights in the State Water Project, including the right to receive a certain portion of available water supplies, in return for their proportional share of the costs of developing, operating, and maintaining the State Water Project. The amendments challenged here extend the contract terms to 2085 and make other changes to the contracts’ financial provisions. 

DWR proposed the contract extensions because the impending contract termination dates precluded DWR from selling bonds with 30-year maturity dates, which are customary. The shorter repayment period threatened to increase annual repayment costs to the contractors and other ratepayers. Circulated for public review in 2016, the draft EIR concluded that the amendments would have no environmental impact because they would not “create new water management measures, alter the existing authority to build new or modify existing [State Water Project] facilities, or change water allocation provisions of the [c]ontracts.” Because the amendments would not result in physical environmental impacts, the report also concluded that the amendments would have no cumulative impacts.  DWR certified the final EIR and approved the amendments in 2018.

DWR filed a validation action under Code of Civil Procedure section 860 and Government Code section 17700 to validate the amendments. Two groups of petitioners subsequently filed petitions for writ of mandate alleging that the amendments violated CEQA, the Delta Reform Act, and the public trust doctrine. The trial court consolidated the three actions and ruled in favor of DWR in all three cases. Appellants timely appealed and the Court of Appeal upheld approval of the amendments on all counts.

The EIR Complied With CEQA

Appellants asserted several CEQA violations, including violations related to the environmental baseline, segmentation, impact analysis, project description, alternatives analysis, and failure-to-recirculate. The court rejected all assertions under CEQA.

First, appellants argued that DWR used the incorrect baseline by including existing diversions under the contracts in the environmental baseline. The court rejected this theory by citing to the long-standing rule that where a project involves ongoing operations, the established levels of use and the associated physical impacts are considered part of the baseline.

Second, appellants argued that DWR improperly segmented the Project by not including analysis of the WaterFix project, which was a proposed additional Delta conveyance facility. The idea of an additional Delta conveyance facility had been around since the 1960s. DWR was working on the environmental review and approvals for a facility that consisted of two tunnels, but in 2017 plaintiffs filed lawsuits challenging the project and the Governor announced he did not support the project. DWR subsequently decertified the EIR for the WaterFix project. The court applied the Laurel Heights I rule that an EIR must include an analysis of the environmental effects of future expansion or other action that: (1) is a reasonably foreseeable consequence of the initial project; and (2) will likely change the scope or nature of the initial project or its environmental effects. Citing Banning Ranch, the court noted that two projects may properly undergo separate environmental review when the projects have different proponents, serve different purposes, or can be implemented independently. Here, the court held that DWR did not improperly piecemeal the contract amendments and the Delta conveyance project because the amendments serve an independent purpose. While some record evidence indicated that the amendments may be used to help finance the WaterFix project, the record also showed that the amendments were necessary for the existing operations of the State Water Project regardless of whether WaterFix moved forward.

Third, appellants challenged the EIR’s analysis of direct, indirect, and cumulative impacts. Appellants argued that DWR was required to consider the impacts of an additional 50 years of existing State Water Project operations. The court held that this contention lacked merit because it upheld DWR’s baseline. The baseline principle here means that the existing State Water Project operations are part of the baseline and are not impacts of the amendments. Appellants also argued that DWR should have analyzed the direct and indirect impacts of facilitating the WaterFix project. The court held that whether the WaterFix project will be built in the future is speculative as to both its timing and scope, and lead agencies are not required to speculate regarding potential impacts. Similarly, the court held that DWR was not required to analyze the impacts of capital projects DWR might eventually fund through the amendments because the causal link between the amendments and potential future capital projects was too attenuated. As to cumulative impacts, the court held that the EIR was not required to analyze them because, by definition, the project had none because the project itself had no significant impacts.

Fourth, the court upheld the EIR’s project description because it found that appellants’ arguments lacked support from evidence in the record. CEQA requires an accurate and stable project description. The court found that the EIR’s project description met this standard and appellants’ arguments to the contrary lacked merit.

Fifth, the court held that EIR presented a reasonable range of alternatives and that DWR’s no-project alternative complied with CEQA. An EIR must describe a range of reasonable alternatives to a project that would feasibly attain most of the project’s basic objectives while avoiding or substantially lessening any of the project’s significant effects. In upholding the EIR’s alternatives analysis, the court emphasized that when an EIR discusses a reasonable range of alternatives it does not need to discuss alternatives substantially similar to those already discussed. The court also noted that a lead agency may properly reject alternatives that do not address the problems it seeks to solve based on its project objectives.

The court similarly upheld DWR’s no-project alternative where DWR would continue to operate and finance the State Water Project under the terms of the current contracts. Appellants argued that DWR should have analyzed an alternative that contemplated expiration of the contracts and termination of water deliveries. The court disagreed, holding that the no-project alternative offered a plausible vision of a future in which the amendments were not approved.

Sixth, the court upheld DWR’s decision to not recirculate the draft EIR. CEQA requires recirculation when the lead agency adds “significant new information” to the final EIR before certifying it. The court found that appellants failed to provide record citations showing new information that was added to the final EIR. The court also found that additional analysis provided in the final EIR in response to public comments did not disclose new or increased project effects, and instead merely clarified why an alternative was rejected. The EIR thus withstood challenge in full.

Amendments to Water Supply Contracts Were Not “Covered Actions” Under the Delta Reform Act

Under the Delta Reform Act, a state agency that proposes to undertake a “covered action” must prepare a written certification of consistency with the Delta Plan, before initiating the project. DWR did not prepare a certification of consistency because it did not consider the amendments a “covered action.” The Court of Appeal drew on several legislative findings and policy goals stated in the Delta Reform Act to conclude that: (1) the Delta Reform Act is focused on “future developments” not existing uses; (2) a covered action must physically take place in the Delta or Suisun Marsh; (3) a covered action must have a significant impact on either providing a more reliable water supply for California or protecting, restoring, and enhancing the Delta ecosystem; and (4) the legislature intended to exempt the existing State Water Project from a covered action. The court held that the amendments were not a “covered action” because the amendments do not physically occur in the Delta or change the developed uses of the State Water Project. 

DWR’s Contract Amendments Were Not Subject to the Public Trust Doctrine

Appellants further argued that DWR violated the public trust doctrine when approving the contract amendments. The public trust doctrine recognizes that the sovereign owns all of its navigable waterways and the lands lying beneath them as trustee of a public trust for the benefit of the people. In National Audubon Society v. Superior Court of Alpine City (1983) 33 Cal.3d 419 (“National Audubon”), the California Supreme Court held that the public trust doctrine protects navigable waterways from harm cause by diversion of non-navigable tributaries and that previously granted water rights are held subject to the public trust. The National Audubon Court held that “the state has an affirmative duty to take the public trust into account in the planning and allocation of water resources.” (Id. at 446.) Appellants argued that DWR failed to perform this affirmative duty when it granted contract extensions to water yielded by the State Water Project. The Court of Appeal held that this affirmative duty did not apply to DWR here because DWR, in merely extending previously-issued water supply contracts, was not approving water diversions—i.e., DWR was not planning or allocating water resources. The Court of Appeal further held that approving the amendments would not have an impact on public trust resources, so DWR had no obligation to weigh the public interests or consider additional protections to those interests.   

Conclusion and Implications

The court applied several well-established CEQA rules and principles in rejecting Appellants various claims. Much of the case turned on the court’s approval of the environmental baseline utilized in the EIR, and the general principle that existing facilities and continuing operations are normally considered part of the existing baseline. The case also provides useful insights into the scope of the Delta Reform Act and common law public trust doctrine.