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Court Defers to Agency Discretion in Water Case

Refusing to second-guess a decision made by a public agency based on substantial evidence, the First District Court of Appeal has upheld a Sonoma County urban water management plan.

The case resembled a great deal of land use and California Environmental Quality Act (CEQA) cases in which a plan or project opponent asks the court to scrutinize agency decision-makers by reweighing the evidence, and/or to expansively interpret the duties imposed by a particular statute. In Sonoma County Water Coalition v. Sonoma County Water Agency, a unanimous three-judge panel of the First District, Division Five, declined to take either approach.

The case involved the urban water management plan (UWMP) adopted by the Sonoma County Water Agency (SCWA). The agency is a water wholesaler whose service area covers portions of Sonoma and Marin counties and includes a population of approximately 600,000. Under state law, water providers must prepare or update an UWMP every five years and address the supply of water over the following 20 years.

The agency adopted the plan in 2006, and was sued by 14 environmental and agricultural organizations led the Sonoma County Water Coalition. The opponents sued on five general grounds: (1) lack of coordination with required agencies, (2) lack of the required detail within the plan, (3) failure to consider certain environmental factors, (4) failure to address the effect of recycled water on the future water supply and (5) failure to provide reasonable specificity with respect to water demand measures identified to address potential future water shortfalls.

Sonoma County Superior Court Judge Gary Nadler ruled favorably for the UWMP opponents. SCWA appealed, and the First District court reversed the lower court, in large part by concluding that Judge Nadler had failed to apply the required level of deference to the agency's decision.

A number of the opponents' challenges were constructed around the "possibility" argument. That is, the legal challenge was formulated by assaulting the decision on the possibility that one or more assumptions may not come to bear. For example, the challenged water management plan made certain key assumptions about future approval by the State Water Resources Control Board of additional diversions from the Russian River. The environmental and agricultural groups successfully argued to the trial court that, because this approval was not assured, the possibility existed that the future diversions might be denied. This type argument is frequently raised in land use or CEQA challenges because the contested project involves other agencies with independent regulatory control that influences future project implementation.

Here, the appellate court determined that the trial court erred in setting aside SCWA's decision, because there was substantial evidence in the record to support the agency's decision with respect to the future diversion and other future regulatory issues controlled by other agencies. In other words, an agency may rely upon a reasonable set of assumptions if the assumptions are supported by substantial evidence.

The appellate court also rejected as a matter of statutory interpretation that the law required the adopting agency to develop the UWMP predicated on a "bare possibility." In recognizing the deference owed to the adopting agency, the appellate court noted that the issue was not whether another planning assumption was more reasonable, but whether there was substantial evidence to support the assumption adopted by SCWA.

While the appellate decision does not explain the scope of the administrative record, from a practitioner's perspective it is clear that SCWA did its homework by providing supporting evidence for its key assumptions.

Another example of the possibility claim was the opponents' argument that there existed the potential for future groundwater contamination as a result of potential wastewater discharges by the City of Santa Rosa. This possibility was raised after the City of Santa Rosa circulated a request for CEQA scoping for a proposed wastewater project in the Russian River watershed. According to UWMP opponents, this wastewater discharge proposal rendered the UWMP invalid because it failed to account for the risk that wastewater discharges could contaminate the drinking water supply. The appellate court noted that the record before SCWA did not support the conclusion that this risk existed. No specific discharge project had been defined and the project was speculative. Perhaps more importantly, the record contained evidence supporting SCWA's conclusion that its water treatment and natural filtration systems would reasonably assure adequate water quality.

"Although others might well assess the significance of the risk presented by DCP [the wastewater discharge project] differently, it was again error for the [trial] court to substitute its judgment for that of the agency," Justice Terence Bruiniers wrote for the appellate court.

With respect to the coordination claim, the environmental and agricultural groups argued that SCWA was required to coordinate not only with all agencies that shared the same supply, but also with all agencies whose regulatory authority potentially impacted future supplies, such as the Army Corps of Engineers and Federal Energy Regulatory Commission. The appellate court concluded that none of the agencies identified by the opponents meet the statutory criteria of agencies "in the area" that shared the same water source or otherwise qualified as water management agencies. The fact that these other agencies' regulatory authority might impact future water supply did not bring them within the scope of the statute for purposes of coordination, the court ruled. The appellate court applied an abuse of discretion standard in reviewing the agency's decision not to coordinate with these other agencies.

This decision restates and highlights the role of substantial evidence in guiding a court as it reviews challenged agency actions. The court refused to sit in place of agency decision-makers, but, instead, reviewed challenged decisions while recognizing the expertise of the decision-makers and applying the statute as drafted. Although this case involved an urban water management plan, the decision should act as important guidance in the CEQA and land use context as well.

 

The Case:

Sonoma County Water Coalition v. Sonoma County Water Agency, No. 124556, 2010 DJDAR 15743. Filed October 8, 2010.

 

The Lawyers:

For Sonoma County Water Coalition: Stephan C. Volker, (510) 496-0600.

For Sonoma County Water Agency: Stephen L. Kostka, Bingham McCutchen, (415) 393-2000. 

 

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