In the latest setback for a proposed water project in the Sacramento-San Joaquin River Delta, a state appellate court has thrown out water permits and an environmental impact report approved by the State Water Resources Control Board. The court ruled that the water board improperly postponed decisions about end users of the Delta Wetlands project and regarding the project's environmental consequences.

The water board four years ago approved permits that allowed the private company behind the project to appropriate water and store it in shallow reservoirs on two Delta islands (see CP&DR Environment Watch, April 2001). The project calls for diverting water into the reservoirs during times of high flows and selling water during the dry season. Proponents say they could provide between 170,000 and 800,000 acre-feet of water per year. The project also includes converting two other islands from farmland into wildlife habitat.

Because the Cal-Fed Bay-Delta Program has proposed similar “in-Delta” storage, many people believe the Delta Wetlands proponents were pursuing the project so they could eventually sell it to Cal-Fed. Whatever the proponents' motivation has been, the project has received substantial opposition since first proposed during the late 1980s - years before Cal-Fed originated.

Only months before the case at hand was decided, the Third District Court of Appeal ruled that San Joaquin County had the authority to regulate the project (Delta Wetlands Properties v. County of San Joaquin, 121 Cal. App. 4th 128; see CP&DR Legal Digest, September 2004). That ruling was also a setback for Delta Wetlands proponents, who unsuccessfully argued that the county's requirement for a conditional use permit was counter to state law and was discriminatory.

The state water board approved the project in February 2001. Prior to that decision a number of project detractors - including the East Bay Municipal Utility District, the Contra Costa Water District, California Urban Water Agencies and the City of Stockton - signed settlement agreements with Delta Wetlands proponents. Still, the Central Delta Water Agency, the San Joaquin County Flood Control District, five reclamation districts, San Joaquin County and two farm companies challenged the water board's permits and environmental impact report in court. Sacramento County Superior Court Judge Gail Ohanesian ruled for the state, but a unanimous three-judge panel of the Third District Court of Appeal overturned the lower court.

The project opponents' primary argument was that the water board failed to require the proponents to specify the end uses, locations and amounts of water. Opponents further argued that without those end-use details, the EIR was inadequate.

The water board had approved the project based on a number of potential areas of use, which amounted to nearly the whole state. The water board conditioned the permits to require future determinations by staff members regarding specified uses and the ability to transport (or “wheel”) the water to purchasers. The EIR did not evaluate the consequences of the potential uses of water because those uses were too speculative.

Agreeing with the project opponents, the Third District said that this sort of postponement was improper.

“[U]nder the state constitution and the Water Code, an application for a permit to impound water in a reservoir must state, and the water board must determine, that an actual, intended beneficial use, in estimated amounts, will be made of the impounded waters. A general statement of potential beneficial use is insufficient and the board may not satisfy its statutory and constitutional obligations by conditioning a permit on a particular use and in amounts to be specified at some later date,” Justice Coleman Blease wrote for the court.

Citing numerous sections of the Water Code, the court ruled that the water board may not delegate such details. “Although the board may employ personnel to assist it (Water Code § 186), it may not delegate the authority to determine the merits of an application for a permit to appropriate water, except as provided by statute,” the court held.

Because the permits should designate end users and amounts of water, the EIR must then include “an analysis of the environmental impacts of the project relevant to the end user,” the court ruled.

The court rejected opponents' argument regarding an unmitigated significant loss of agricultural land. The court concluded the opponents' raised the argument too late - after the water board's public hearing had closed. Still, the court noted that some of the opponents have permitting authority and “a responsible agency with permit authority does reach its own conclusions whether and how to approve the project, notwithstanding the lead agency's approval of the project.”

The ruling could harm the prospects not only for the Delta Wetlands project, but also for any speculative water project that assumes buyers will come forward in the future.

The Case:
Central Delta Water Agency v. State Water Resources Control Board, No. C041749, 04 C.D.O.S. 10330, 2004 DJDAR 14015. Filed November 19, 2004. Modified December 16, 2004 at 2004 DJDAR 15010.
The Lawyers:
For Central Delta: Dante John Nomellini, Nomellini, Grilli & McDaniel, (209) 465-5883.
For the state: Clifford Lee, deputy attorney general, (415) 703-5546.
For real parties in interest: Anne J. Schneider, Ellison, Schneider & Harris, (916) 447-2166.