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After heavy lobbying by the energy industry, the federal government has inserted itself into California’s intensifying debate over proposals to build import terminals for liquefied natural gas (LNG) along the coast. Although it adds a new dimension of contention to the debate, the move by Congress to shift authority over terminal siting to the Federal Energy Regulatory Commission (FERC) will do little to quell what is shaping up to be one of the hottest environmental controversies to face the state in a generation. Nor will the federal government’s new role affect the projects furthest ahead in the permitting process. Liquefied natural gas is conventional natural gas that has been chilled to about 260 degrees below zero. At that temperature, the gas becomes a liquid and occupies only 1/600th of its original volume, making it feasible to transport it by ship in giant insulated tanks. The United States has four LNG import terminals — one each in Massachusetts, Maryland, Georgia and Louisiana —where the ships dock and unload their liquid cargo, which is then warmed to turn it back into a gas and either stored in tanks onshore or piped directly into the local gas utility’s transmission system. There are no import terminals serving the West Coast. But if energy companies get their way, there soon will be. Frustrated by the slow pace of regulatory approval — a process that typically involves numerous permits and reviews by local, state and federal agencies — the energy industry has been lobbying heavily over the past four years to streamline LNG terminal siting. The industry got most of what it wanted in the federal energy bill, which grants FERC “exclusive authority to approve or deny an application for the siting, construction, expansion or operation of an LNG terminal,” which the bill defines as “all natural gas facilities located onshore or in state waters” that are used to import or export gas. Paradoxically, the bill does not affect the two terminal proposals off the Ventura County coast that are leading candidates to be California’s first LNG terminal. They would be in federal waters and are therefore governed by another federal law, the Deepwater Port Act, which explicitly grants the governor of a neighboring state the power to veto LNG terminals in waters beyond the state’s 3-mile limit. Opponents of LNG development have been harshly critical of the effort to bypass state and local authority, which remained in the energy bill despite coastal lawmakers’ efforts to remove it. “Cutting the states out of any real role in LNG siting decisions is dangerous and unwarranted,” said Rep. Lois Capps (D-Santa Barbara). “This is a power grab by the administration.” Still, there is little doubt about market demand. Driven by a growing gap between stagnant domestic gas production and rising demand, energy companies have submitted plans for about 40 LNG import terminals in North America, including nine that could serve the West Coast: three in Oregon, four in Southern California and two in Baja. Those projects that have prompted the most controversy are one proposed for Long Beach Harbor — a regulatory long shot, given its proximity to a densely populated urban area and one of the busiest container ports in the world — and the two off the coast of Ventura County: Crystal Energy’s Clearwater Port would occupy an old oil platform 10.5 miles from land; BHP Billiton’s Cabrillo Port would be a floating terminal 14 miles offshore. Each port would receive two to three tanker shipments a week and would be capable of handling 800 million cubic feet of LNG per day, a quarter of the state’s residential gas consumption. To make their case for the terminals, the companies have painted a grim picture of impending crisis. “California now faces a severe energy shortage,” Crystal Energy warns on its website and in a brochure distributed throughout Ventura County in support of its proposal. “As the natural gas shortage drives the price of electricity up, business and jobs are disappearing from California.” The most vocal project opponents have made similarly hyperbolic claims, warning that accidents or terrorist attacks on tankers or terminals handling flammable LNG could unleash an apocalyptic cascade of tragedy and destruction. “A fiery inferno would engulf everything for 30 miles,” Oxnard attorney Tim Riley warns on his widely visited anti-LNG website. Neither of the extreme scenarios is accurate, according to independent energy analysts and safety experts. Domestic natural gas production is not keeping pace with U.S. demand, but the gap so far is a small one. It’s even smaller in California, where gas demand has fallen 20% during the past four years and is not projected to rise significantly for two decades. And according to a recent study by Sandia National Laboratories, the most extreme scenarios described by LNG safety skeptics — vast conflagrations that incinerate everything within a 30-mile radius of a tanker terminal — are highly improbable. Liquefied natural gas imports currently account for about 2% of the nation’s gas supply, according to the Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy. In its long-range forecast of supply and demand, the EIA projects that LNG imports are likely to increase to 15% of supply by 2025, driven by the combination of steadily increasing demand and flat or diminishing production from tapped-out domestic gas fields. “Our traditional supply basins in the United States are not keeping pace with demand,” said Rick Morrow, Southern California Gas Company’s vice president for customer service. Handling the increased load won’t require 40 new import terminals. According to the National Petroleum Council, an industry panel that advises the U.S. secretary of energy, all that is needed is expansion of the four existing U.S. terminals, plus construction of seven to nine more distributed among the nation’s Atlantic, Pacific and Gulf coasts. The West Coast market cannot absorb more than the capacity of one or two LNG terminals over the next decade, analysts predict. It is unlikely that any of the Southern California terminal proposals will be first out of the gate. San Diego-based Sempra Energy has received permits and is nearly ready to begin construction of an LNG terminal 14 miles north of Ensenada in Baja. That port will have a capacity of 1 billion cubic feet of gas a day and is expected to begin operation in 2008. About half that gas will be delivered to Mexico, according to the company. The other half will be available for sale to California customers, including Sempra’s corporate subsidiary, Southern California Gas Co. Contacts: Crystal Energy, (805) 830-6312. BHP Billiton, (805) 604-2785. Rep. Lois Capps, (202) 225-3601. California Energy Commission: www.energy.ca.gov/lng/index.html Federal Energy Regulatory Commission: http://www.ferc.gov/industries/gas/indus-act/lng-what.asp

The next round of housing element updates will be delayed by two years for all of Southern California outside of San Diego County and for the Bay Area. The two-year postponement might be extended to all jurisdictions except San Diego, although state officials have not made that decision. The state Department of Housing and Community Development has issued a formal letter delaying the regional housing needs allocation process (RHNA) for the Southern California Association of Governments (SCAG) region from 2006 to 2008. State officials have told representatives of the Association of Bay Area Governments (ABAG) orally that the RHNA process for the ABAG region also will be delayed two years — from 2007 to 2009 — although ABAG has not yet received formal, written notification of the postponement. Whether the state will grant postponements to other regions is uncertain, although the possibility is under discussion. Jurisdictions covered by the San Diego Association of Governments are not eligible for postponement and were supposed to file updated housing elements by June 30, although only one of 18 cities did so. The delays concern affordable housing advocates. “It extends the current planning for two years, and those two years were not planned for in housing elements,” said Mike Rawson, an attorney for the California Affordable Housing Law Project. “Failure to plan for this two-year period will result in the delay of development of housing units.” But SCAG Executive Director Mark Pisano said he doubted that the delay in his region would have significant implications “in terms of actual housing needs and production.” Said Pisano, “We know we have needs.” The process is supposed to work this way: State demographers and planners estimate how many housing units, and for what income levels, the state will need over a period of time. They assign the needed units at various income levels to all regions of the state. Councils of government (COGs) then allocate the region’s fair share among all cities and counties in the region. The cities and counties use their fair share numbers to update their general plan housing elements. Housing elements are supposed to be updated ever five years. The process works better on paper than in practice. The allocation of units to regions and within regions often involves difficult, and political, negotiation and even litigation. And no round of house element updates has ever lasted for only five years. Janet Ruggiero, Citrus Heights community development director and longtime American Planning Association leader, questioned whether planning for a five-year period was the best approach. “What are we really trying to achieve? What’s the best way to do it? The five-year window may not be reasonable any more,” she said. The SCAG delay was contemplated in legislation approved last year (AB 2158, Lowenthal), which permitted SCAG to coordinate the RHNA process with planning for the regional transportation plan update, which occurs every three years. Under the previous schedule, SCAG was supposed to make a final allocation of local shares of new housing by June 30 of this year, and updated housing elements for the 200 cities and six counties in the SCAG region were due June 30, 2006. Those deadlines have now been pushed back by two years. The transportation plan is still due in 2007. With the postponement, jurisdictions in the nine-county ABAG region would have until June 30, 2009, to complete housing element updates. Of course, it would have been impossible for SCAG to meet the previous schedule because state officials have not determined the region’s fair share of statewide housing need. The state has not produced the numbers because there is no money in the budget. In fact, although SCAG leaders have talked for a while about synchronizing housing and transportation planning, money appears to be the major factor behind the RHNA delays. As part of a budget trailer bill passed in 2004 (SB 1102), state lawmakers narrowed the housing element requirement, and reinstated authority for cities, counties and councils of government to charge fees to pay for the RHNA process and housing element updates. Based on SB 1102, the Commission on State Mandates earlier this year ruled that the RHNA process and housing element updates are not reimbursable mandates — meaning that cities, counties and COGs are supposed to raise the money by levying fees on developers. Downshifting of the state’s budget problem to lower levels of government is not politically popular at the lower levels. Plus, said ABAG spokeswoman Kathleen Cha, COGs have no ability to charge developers. “The bottom line is there is no money for us to do the RHNA process,” Cha said. Pisano insisted that the SCAG postponement was based primarily on the desire to coordinate housing and transportation planning. Last time, the agency received one set of population projections for housing needs and a different set of estimates for transportation planning purposes, “and that caused a conflict,” Pisano said. Janet Huston, HCD Director of Communications and Government Affairs, said the agency recognizes SCAG’s intent. “The goal is to allow SCAG to sync up housing and transportation planning.” “The issue of resources is also a major factor,” Pisano acknowledged, “but the state is indicating that we can look to transportation for funding.” Some people argue that the system could shake loose funding from other sources, as well. For example, the state budget contains $5 million for HCD to grant to councils of government for regional “blueprint” planning. That money, either directly or indirectly, could pay for the RHNA process. Affordable housing attorney Rawson expressed skepticism that SCAG and ABAG could not find the money in their budgets to fund the process. Cha, however, said that ABAG’s 2000-01 RHNA process cost about $700,000, and the next round will cost even more because of additional data and analysis requirements. “There is no funding source to do this,” she said. Sam Mistrano, deputy director of the Southern California Association of Non-Profit Housing, was reluctant to assign blame for the delay, but he lamented it nonetheless. “It does on the one hand make sense to have the RHNA be processed along with the transportation numbers. On the other hand, it’s hard to figure out what the cities are doing right now,” Mistrano said. “The market is such that it is producing a lot of housing that no one can afford.” Accurate statistics regarding production of housing units for various income levels would be useful, Mistrano said. The RHNA process could help, but it is always difficult to measure actual production of affordable housing units, he said. Interestingly, the delays for SCAG and AGAB housing element updates come at a time when housing element compliance is at an all-time high — 72% of cities have certified housing elements, according to HCD — and HCD Director Lucy Dunn is crisscrossing the state talking about the importance of planning for housing. During a recent speech to a League of California Cities conference, Dunn insisted that there is a connection running from planning for housing to plan implementation to actual housing construction. She pointed out that the 72% of jurisdictions with certified elements are producing 80% of the state’s housing units, including about 90% of the multi-family units. Dunn, other HCD officials and some lawmakers have also talked about increasing incentives for housing production, as well as increasing penalties for failure to adopt certified housing elements and blocking housing development. Business Transportation and Housing Agency Secretary Sunne McPeak has insisted in speeches that every city must provide for its own natural population growth as well as employees of its home companies. Although those messages have not always been popular with local government elected officials and planners, they find acceptance among affordable housing advocates and builders. Now, the RHNA delays have housing advocates asking questions. Contacts: Mike Rawson, California Affordable Housing Law Project, (510) 891-9794. Sam Mistrano, Southern California Association of Non-Profit Housing, (213) 480-1249. Janet Huston, California Department of Housing and Community Development, (916) 324-4477. Mark Pisano, Southern California Association of Governments, (213) 236-1961.

Few housing policies are as inherently controversial as inclusionary zoning — the requirement that market-rate home builders provide a certain percentage (usually 10% to 20%) of their new units for very low-, low- or moderate-income families. Inclusionary zoning is commonly a way that cities and counties propose to meet their fair-share housing requirements. Typically, for-profit homebuilders strongly oppose inclusionary policies because, the builders argue, market-rate builders and buyers end up subsidizing homes for people of more modest means. Affordable housing advocates and non-profit builders just as strongly endorse inclusionary zoning as one important way to provide housing for low- and moderate-income families. But last year, when the Non-Profit Housing Association of Northern California (NPH) announced it had received grants from seven foundations for the purpose of accelerating adoption of inclusionary housing policies, the Home Builders Association of Northern California (HBANC) asked to start a discussion. “It seemed like we had a lot of common areas we could explore,” NPH Executive Director Dianne Spaulding recalled of the initial meeting. So six representatives of each group met intermittently for about a year. The end result was the release in August of a report, “On Common Ground: Joint Principles on Inclusionary Housing Policies.” The report contains a number of recommendations for planners and local governments. More than anything, “On Common Ground” emphasizes flexibility in how market-rate builders satisfy inclusionary requirements. The report recommends permitting builders to provide differing types of for-sale units, donate land to local government or a non-profit developer, construct units off-site under certain conditions, and pool or transfer credits for providing affordable units. “To the extent that communities have affordable housing policies, we should make sure those policies are as efficient as possible,” said Joseph Perkins, President and CEO of the home builders group. “Many jurisdictions have just a one-size fits all approach as to how to provide for affordable housing.” For an example, Spaulding pointed to a joint venture in Hayward involving the for-profit DeSilva Group and the non-profit Eden Housing. Under the city’s policy, DeSilva would have had to provide 26 houses in its project for moderate-income buyers to satisfy the inclusionary zoning requirement. Instead, the two developers worked out a deal with the city in which DeSilva donated three acres elsewhere in town for development of about 75 apartments for very low- and low-income residents. DeSilva got to build the project it wanted, Spaulding said, while about three times as many restricted units were provided, and for the poorest families. “Our problem is not development at the market rate. That’s historically the situation in the Bay Area,” Spaulding said. The flexibility provisions might be the easy part of the report. Harder to sell will be the funding recommendations. The report urges local governments to raise money via bonds or other measures, waive or subsidize processing and impact fees for inclusionary units, and devote at least 50% of redevelopment tax increment to affordable housing. The law now requires 20% of tax increment go to housing. Perkins said he expects a negative initial reaction to the funding recommendations. But, he contended, local funding has a multiplier effect that makes other policies and funding more productive. “This is a burden that should be shared by all,” Perkins said. “Local jurisdictions need to share the burden with the home builders, the for-profit and the non-profit builders.” A number of changes, Spaulding emphasized, would cost cities and counties very little: adopting more flexible policies, pre-entitling land, providing greater density bonuses, and excluding affordable units from building permit caps. According to Spaulding, 55% of the Bay Area’s 110 cities and nine counties have inclusionary zoning. The two organizations will now press the other 45% to adopt inclusionary policies, and will ask the 55% with existing policies to make changes. Contacts: Dianne Spaulding, Non-Profit Housing Association of Northern California, (415) 989-8160. Joseph Perkins, Home Builders Association of Northern California, (925) 820-7626.

A lawsuit challenging a Wal-Mart store on the grounds that it would create downtown urban decay was rejected by the Third District Court of Appeal. The court did rule, however, that the Central Valley city of Anderson needed to require additional money to pay for the project’s fair-share for improvements to a freeway interchange. The ruling stands in contrast to a recent decision by the Fifth District Court of Appeal over construction of two Wal-Mart supercenters in Bakersfield. In , 124 Cal.App.4th 1184 (2004), the court ruled that the city needed to address the potential for projects to cause urban decay, consider the combined impacts of two shopping centers, and correlate the projects’ air quality impacts to effects on human respiratory health (see , January 2005). In the City of Anderson in Shasta County, FHK Companies had proposed building a 184,000-square-foot Wal-Mart supercenter, which would operate 24 hours a day and combine a typical Wal-Mart store with a full supermarket. The development, located close to Interstate 5, was proposed to include several other buildings and a gas station. The developer eventually severed the gas station from the plans. In contrast to , the Court of Appeal in the Anderson case determined that the city had studied potential urban decay. The city found that the supercenter would compete on a regional basis with stores in Red Bluff and Redding, and with outlying shopping centers in Anderson, rather than only with downtown’s businesses. The city’s own study did find that two downtown pharmacies would be impacted by the Wal-Mart, but other downtown businesses “may actually benefit from increased local retail traffic,” Acting Presiding Justice Rod Davis wrote for the court. “As a small, growing town with a population of 9,500, city noted that its potential for urban decay is less than that of a typical declining ‘rust-belt’ city.” In its ruling, the court noted that the city’s report on urban decay, “along with the studies from other communities and the public comment, present substantial evidence that the project could add to the blight in the city’s central business district. But a good argument can be made that city also presented substantial evidence that the project will not do so.” Steven Herum, the attorney for Anderson First Coalition, the group that brought the suit, said, “I think the appellate court took too deferential of a method of reviewing the City Council’s actions.” Art Friedman, an attorney for Wal-Mart, agreed that the case was about the court being deferential in such circumstances. “Where the city considers and analyzes an indirect economic impact of a development project’s potential to cause urban blight, the courts are going to be deferential as long as the city’s conclusion is supported by substantial evidence,” Friedman said. The unanimous three-judge panel did rule in favor of the Anderson First Coalition on a traffic matter involving improvements to an interchange at Deschutes Road on Interstate 5 near the project. According to CEQA Guidelines 15130 subdivision (a)(3), a single project’s contribution to a cumulative impact is deemed less than significant if the project is required to implement or fund its “fair share” of a mitigation measure designed to alleviate the cumulative impact. To be sufficient under CEQA, the court said that the Wal-Mart development’s fair share mitigation fee must be $657,930, instead of the $611,214 fee specified in the mitigation measure. “ e have had to consider the coalition’s claim that the I-5 interchange improvements and the project’s fair-share mitigation fee toward those improvements were too speculative to be considered adequate mitigation measures,” Justice Davis wrote The court rejected several other claims by the Anderson First Coalition, which had argued that the EIR for the project had two significant defects, described in the ruling as “the elusive and inadequate descriptions regarding the project’s total size, and the inadequate traffic and air quality analyses for the entire project.” But the court said the gas station portion had been dropped from the project and should it be proposed again, “ t will have to be environmentally reviewed as to its own impacts and together with the project as to its cumulative impacts.” The case: , No. C047605, 05 C.D.O.S. 5899, 2005 DJDAR 8085. Filed June 30, 2005. The Lawyers: For Anderson First: Steven Herum, Herum, Crabtree and Brown, (209) 472-7700. For the city: Michael C. Fitzpatrick, (530) 245-4391. For Wal-Mart: Arthur Friedman, Steefel, Levitt & Weiss (415) 403-3205

An appellate court panel has overturned a lower court’s decision ordering Community Bank of Central California to return $4.4 million to King City. The city says the money was a deposit, and the city wants the money back. The bank says the money was collateral for a bank loan to the developer of a downtown redevelopment project. Because the developer defaulted on the loan, the bank wants to keep the money. Monterey County Superior Court Judge Kay Kingsley had ruled for King City. However, the Sixth District Court of Appeal determined that Judge Kingsley made a number of errors, including not permitting the bank to perform discovery, the process by which the bank would obtain facts known by the city. According to the Sixth District’s decision, the facts of the case are anything but clear, and the lower court should not have issued a ruling without knowing more. Among the outstanding questions are whether the City Council — or the redevelopment agency board, which has the same members as the City Council — authorized the deposit with the bank, and whether the money was city general fund money, or redevelopment agency money. The amount of money at issue is nearly as much as King City’s annual general fund budget. Last year, King City arranged for a loan from Monterey County and closed nonessential offices for a period in order to avoid bankruptcy. In early 2000, the council/redevelopment board approved a proposal to loan money from the King City Revolving Loan Fund to Town Square Partners, the developer of a block-long redevelopment project featuring a cinema, offices, retail stores and a community college satellite campus. The project, completed several years ago, was intended to anchor a downtown renewal. In March 2000, the redevelopment agency board approved a loan of up to $3.85 million to Town Square Partners. In April 2000, the city treasurer deposited about $3.8 million into an interest-bearing, two-year certificate of deposit at Community Bank. At about the same time, the mayor assigned the money to the bank as collateral for a $3.8 million debt incurred by Town Square Partners. Several months later, the city increased its deposit to $4.4 million. Again, the mayor signed an “assignment of deposit” stating the money was collateral for the Town Square Partners loan. A couple years later, the city notified the bank that the city intended to redeem the CD. The bank refused because the developer was unwilling, or unable, to repay the loan. On April 3, 2003, the city filed a petition for writ of mandate demanding that the bank immediately return the $4.4 million “in general fund monies.” The legal process then moved very quickly. On June 11, 2003, Judge Kingsley ruled that the action taken in February 2000 did not comply with certain Government Code regulations. She decided that the “action” was not authorized by law, and, therefore, was “a gift of public funds.” The bank appealed, and a unanimous three-judge panel of the Sixth District overturned the lower court. Much of the appellate court’s opinion addressed procedural issues, especially the trial court judge’s heavy reliance on minutes of council/board meetings, unwillingness to allow some evidence into the case and refusal to permit discovery by the bank. The Sixth District clearly was dissatisfied with the city’s presentation of the facts and with the city’s procedural maneuvering — which the court referred to as the “city’s kaleidoscope of ever-shifting claims, contentions, sidesteps and deflections.” The Sixth District found that the city “made no attempt to establish that the funds in question were deposited with bank ‘for safekeeping.’ There is no testimony by the treasurer or any other city official that anyone intended the funds to be held by bank as ordinary city assets, let alone assets subject to withdrawal on demand. On the contrary, such evidence as appears in this record suggests the opposite — that everyone concerned intended the deposit to be placed at risk as security for a loan by bank to a third party.” The court repeatedly sided with the bank’s assertion that more facts need to be presented, among them evidence of where the money originated. The city contended the money is from the general fund; the bank argued the money appeared to come from a 1998 redevelopment bond. “ urely city was quite capable of disclosing the true history of the funds,” Presiding Justice Conrad Rushing wrote for the court. “Its persistent failure, indeed refusal to do so should have raised alarm bells as to the true nature and merits of its claims, as least as presently pleaded. “Issues about the true ownership, source, or character of funds are rarely resolved merely by consulting the title on a given account or asset. In the absence of contrary authority — and city has offered none — we will not give dispositive effect to the label city chooses to attach to funds in its custody,” Rushing continued. The Sixth District found that the lower court’s near total reliance on “official minutes and resolutions” was erroneous. At the city’s urging, the trial court barred other evidence as inadmissible. The Sixth District conceded that courts do not accept testimony from current or former public officials concerning legislative actions. However, where the issue is the “collective intent of the legislature … courts may and must consult extrinsic evidence including circumstances and information known to the legislature at the time of the enactment, public records of the collective deliberations and expressions of intent collectively adopted by them.” The minutes, the Sixth District noted, are confusing about which entity’s funds were being loaned and exactly what the council/board authorized. The court returned the case to the trial court for further proceedings. The Case: , Nos. H026888 and H027166, 2005 DJDAR 9344. Filed August 2, 2005. The Lawyers: For King City: David Alan Juhnke, Sinsheimer, Schiebelhut & Baggett, (805) 541-2800. For Community Bank: Richard Carlston, Miller, Star & Regalia, (925) 935-9400.

The director of the state Department of Conservation has standing to sue a local agency over mining and reclamation plans approved by the local agency, the state Supreme Court has ruled unanimously. The ruling was a clear victory for state enforcement of the Surface Mining and Reclamation Act (SMARA), which regulates all surface mines in California. The Supreme Court overturned a divided appellate court panel, which had ruled that only the State Mining and Geology Board — and not the department’s director — had standing to sue, meaning the director did not have the authority to seek judicial review of an alleged impropriety. “ he Legislature has not crafted SMARA to deprive the director of standing to seek mandate as a remedy when a local lead agency approves allegedly inadequate reclamation plans or financial assurances,” Justice Kathryn Werdegar wrote for the court. “Rather, correctly understood, the director’s standing to prosecute this petition for a writ of mandate derives from his ‘beneficial interest’ — under SMARA and, generally, as a state officer charged with serving the public interest — in the adequacy of approved reclamation plans and financial assurances.” “To deny the director standing here would free surface mine operators who manage to obtain local lead agency approval of inadequate reclamation plans or financial assurances to do less than SMARA requires” Werdegar wrote. Adopted in 1975, SMARA (Public Resources Code § 2710 et seq.) requires surface mining operators to receive approval for reclamation plans that specify how mined land will be treated so the land is usable in the future, and to provide financial assurances that reclamation will be completed. Ten years ago, the conservation director and the Mining and Geology Board sought to enforce SMARA regulations on Loring Brunius, who was operating Weber Creek Quarry and Diamond Quarry in El Dorado County without approved reclamation plans or financial assurances. Brunius successfully fought the state’s attempt to close the mines when he filed plans with the county. The conservation director commented that the plans and financial assurances were inadequate, but the county approved them in 1997, along with a mitigated negative declaration. The director sued the county, alleging that the reclamation plans violated SMARA; that the financial assurances were inadequate; that the county’s mitigated negative declaration was inadequate under the California Environmental Quality Act (CEQA); that the county had erroneously concluded Brunius had a pre-SMARA vested right to operated Weber Creek Quarry without a permit; and that the county unlawfully let operations expand at Diamond Quarry. The trial court ruled that the director did not have standing to challenge the vested rights or the SMARA matters, and dismissed the CEQA claims. In a 2-1 decision, the Third District Court of Appeal ruled that the director did not have standing to pursue any of the claims — a decision hailed by mining trade associations that had intervened in the litigation. The state Supreme Court then accepted the case, but only to decide the procedural question of whether the director of Department of Conservation had standing to seek relief in court. According to state’s high court, both the Third District majority and the dissenting justice incorrectly analyzed the issue of the director’s standing to sue. The high court reviewed at length the director’s role in the regulatory scheme. The director may review and comment on “every reclamation plan submitted to a lead agency for approval.” Those comments are advisory, but “the general interest his review serves, patently, is SMARA compliance,” Werdegar wrote. Once a city or county approves a reclamation plan, the director has authority to ensure state law and the reclamation plan are implemented. Under certain circumstances, the director may even seek forfeiture of the financial assurances and undertake mine reclamation. Thus, state law gives the director “a substantial interest in reclamation plans and financial assurances being both legally consistent with SMARA and practically adequate to accomplish SMARA’s goals and state reclamation policy,” the court ruled. The court did not divide the distinction between the director and the Mining and Geology Board that the Third District found. And, the court pointed out, in this case there was no evidence the board disapproved of the lawsuits. In fact, the board was so dissatisfied with El Dorado County that it assumed lead agency functions from the county. However, even then, the board could not retroactively alter the reclamation plans in question because the county had already approved them. So there was no conflict between the director’s lawsuit and the board’s assumed role as lead agency. The high court also upheld the director’s standing in regards to the vested rights and CEQA claims. “If a local lead agency’s erroneous recognition of a vested right to mine were immune from judicial review, the department could find itself without leverage to enforce the Legislature’s intention that the operator conduct and pay for reclamation,” Werdegar wrote. And, the court held, the director “was entitled to adequate CEQA information.” The court sent the eight-year-old case back to El Dorado County Superior Court for further proceedings. The Case: , No. S116870, 05 C.D.O.S. 6967, 2005 DJDAR 9534. Filed August 8, 2005. The Lawyers: For the Department of Conservation: Richard Thalhammer, deputy attorney general, (916) 445-9555. For El Dorado County: Mark Harrison, The Diepenbrock Law Firm, (916) 446-4469. For Loring Brunius: David Becker, Becker & Runkle, (530) 676-6464.

President Bush’s signature on the federal transportation bill in August opened the spigot for $21.6 billion in federal money for California. The bill funds hundreds of specific projects, ranging from a $25 million “non-motorized transportation pilot program” in Marin County to carpool lanes on the San Diego Freeway in Los Angeles to a study of a new transportation corridor between western Riverside County and Orange County. And the bill received praise from numerous California officials, including Gov. Schwarzenegger, new Los Angeles Mayor Antonio Villaraigosa and regional transportation planners. However, it is clear that the Safe, Accountable, Flexible and Efficient Transportation Equity Act: A Legacy for Users of 2005 (SAFETEA: LU) is no panacea for solving California’s infamous traffic congestion. Although the bill raises the minimum return of gas tax to each state from 90.5% to 92%, California remains a “donor state.” Additionally, some of the projects earmarked for funding are already complete or are safety retrofits, meaning that the federal dollars for those projects will do nothing to increase capacity or mobility. In fact, the second follow-up to the Intermodal Surface Transportation Efficiency Act of 1991 is markedly different from its predecessors in the number of projects for which money was specifically earmarked. The bill provides money for 350 projects in California and 6,300 nationwide, thousands more than received “earmarks” in the previous transportation bills. The earmarks raised questions about true need. For example, the nine-county Bay Area region, home to some of the country’s worst traffic congestion, received earmarks totaling $733 million. Meanwhile Kern County, which has about 10% of the Bay Area’s population, received $726 million in earmarks. The difference? House Ways and Means Committee Chairman Bill Thomas hails from Bakersfield. Just before Bush signed the bill, Thomas boasted to the of the “gift to Kern County.” The largesse heaped on Kern County did not go unnoticed by supporters of the Alameda Corridor East (ACE) project, a planned $2.5 billion rail corridor running from the Los Angeles railyards through the San Gabriel Valley to Pomona. Spurred by ongoing growth at the ports in Los Angeles and Long Beach, the ACE is intended to expand rail capacity and eliminate many at-grade crossings. The Southern California Association of Governments (SCAG) made the ACE project its top priority. At one time during the two-year debate over the transportation bill, ACE was in line to get close to $900 million. In the end, the project received $178 million, an amount that angered the area’s largely Republican congressional delegation. The southern half of the ACE corridor also went lacking. The $600 million OnTrac project headed up by the City of Placentia received $39 million; local proponents had sought $225 million. The limited federal allocation appears to mean the end of the plan to dig a trench for the rail line through Placentia (see , February 2005). Still, SCAG officials were publicly upbeat about SAFETEA: LU. They noted that the ACE project did receive enough money to move forward, an I-405 carpool lane got $130 million, and expansion of the Desmond Bridge, which serves the ports, received $100 million. “We are encouraged by the growing degree of regional cooperation,” SCAG spokesman Jeff Lustgarten said. “Historically, other regions have done a better job of getting behind one or two specific projects.” Ellen Roundtree, director of governmental affairs for the San Diego Association of Governments, noted that the transportation bill imposes a number of new requirements for planning, mitigation and “consultation,” and places Indian tribes into the process for the first time. “We think consultation is good, and we think public participation is good,” Roundtree said. However, what exactly Congress means by “consultation” is unclear, she said. In other interesting twists, the transportation bill exempted the BART extension to San Jose from new Federal Transit Administration cost-effectiveness standards. The bill language helps keep the struggling project alive. In the San Bernardino County city of Rialto, the bill transferred 200 acres of federal land to the city, a move that could permit the city to close the general aviation airport. The city would like to see industrial development on the site. For the most part, SAFETEA: LU maintains the principles of ISTEA, such as emphasizing multi-modalism, links between transportation projects and air quality, and regional decision making. The bill even increases funding for metropolitan planning organizations by 25%. Paul Zykofsky, director of land use and transportation programs at the Local Government Commission, endorsed the bill’s provisions making “Safe Route to School” a federal program for the first time, and making permanent the Transportation, Community and System Preservation program. As a pilot project in the last transportation bill, TCSP funded innovative projects such as a study of zoning code reform in Fresno, Zykofsky said. Still, there is an impression that the bill wrongly favors highways at a time of rapidly rising gasoline prices. Anne Canby, president of the transit-oriented Surface Transportation Policy Project, expressed disappointment “that Congress chose not to augment commitments to local decision-makers, raise transit’s share of total funding, increase eligibility for freight and passenger rail investment, improve the environment by dedicating resources to cleaning up highway runoff, and promote more walking and bicycling.” More than anything, though, SAFETEA: LU makes clear that local agencies will have to pay for future capital improvements. SCAG spokesman Lustgarten said projections are that state and federal funds combined will pay only 25% of transportation project costs by 2030. Thus, the absence of the $470 million project to widen Interstate 5 in Los Angeles County from the list of SAFETEA: LU earmarks may be a sign of the future.

A ruling in an endangered species case from Arizona demonstrates how sharply divided federal judges are regarding the legal protections afforded to rare animals and plants. In an extremely short opinion, a Ninth U.S. Circuit Court of Appeals panel ruled 2-1 that the Army Corps of Engineers was not obliged to consult with the U.S. Fish and Wildlife Service (USFWS) regarding the impacts of two proposed housing developments on the ferruginous pygmy owl. The court majority indicated that it was not convinced the owl was deserving of special protection, and that the Corps had no duty to consult with USFWS because the sites were not designated critical habitat. The decision drew an extremely sharp dissent from Judge Warren Ferguson, who said the ruling drives the owls “closer to extinction.” In 2001, the Corps of Engineers issued Clean Water Act § 404 permits for a 600-acre development in Marana, Arizona, and for a 440-acre project in Pinal County. The Corps determined that the housing subdivisions would have no effect on the ferruginous pygmy owl, and declined to consult with the Fish and Wildlife Service despite USFWS requests under Section 7 of the Endangered Species Act. The Defenders of Wildlife and the Center for Biological Diversity sued the Corps of Engineers, charging that the Corps had violated the Endangered Species Act and the Administrative Procedures Act. U.S. District Court Judge Cindy Jorgenson ruled for the Corps of Engineers. With a five-paragraph analysis, the Ninth Circuit upheld the lower court. Although the Fish and Wildlife Service can request Section 7 consultation, “ othing in the regulations mandates the action agency to enter into consultation after it receives such a request,” Judge John Noonan wrote for the two-judge majority. Noonan cited federal regulations from 1986 that say a federal agency (in this case, the Corps of Engineers) has “the ultimate duty” to ensure its actions do not jeopardize listed species or modify critical habitat. The federal agency also makes the final decision regarding consultation, the court ruled. Noonan also pointed out that one day after the district court ruled, the Ninth Circuit issued its decision in , 340 F.3d 835 (2003.) In , the Ninth Circuit ordered the Fish and Wildlife Service to reconsider its determination that the Arizona pygmy owl was a “distinct population segment” different from pygmy owls in Texas and Mexico and deserving of listing under the Endangered Species Act. In the case at hand, Noonan noted that the district court never followed up on the decision by setting aside the USFWS listing decision, that the Service has not set a timetable for reconsideration, and that “a listing rule that this court found to be arbitrary and capricious on August 19, 2003, is still alive in Arizona in April 2005 with no foreseeable termination in sight.” Although obviously disturbed that its 2003 decision appeared to be having little effect, the court said it was upholding Judge Jorgenson’s decision in the present case because it “rested on the firm foundation that no pygmy owls had been found to live within either project area.” The Pinal County project site had been designated as critical habitat, but the decision vacated the critical habitat designation and the Service has not since redesignated it, Noonan wrote. In his dissent, Judge Ferguson got right to the point: “In tersely affirming the District Court’s judgment, the majority ignores the plain language of the Endangered Species Act’s implementing regulations, trivializes the vital process of inter-agency consultation, and ultimately drives closer to extinctions the few existing Arizona pygmy owls. The Army Corps of Engineers’ decision to forego consultation with the Fish and Wildlife Service was both arbitrary and capricious given the Service’s persistent and persuasive objections to the two real estate developments at issue.” According to Ferguson, the threshold for requiring Section 7 consultation is low. Any activity that “may affect” a listed species or critical habitat triggers the formal consultation requirement. There was evidence that both projects may affect the pygmy owls and their habitat, Ferguson wrote. “It may be that further discussion and investigation could vindicate the Corps’ present position, but the Corps cannot be permitted to risk endangering the Arizona pygmy owl by foregoing any consultation with the service,” Ferguson wrote. The case “has no bearing” because the Arizona pygmy owl remains protected under the Endangered Species Act, wrote Ferguson. The Case: , No. 03-16884, 05 C.D.O.S. 6115, 2005 DJDAR 8375. Filed July 12, 2005. The Lawyers: For Defenders of Wildlife: Michael Senatore, (202) 682-9400. For Flowers: Todd Aagaard, U.S. Department of Justice, (202) 514-2217.

The U.S. Supreme Court’s controversial decision backing the use of eminent domain for economic development purposes is creating a backlash in California that could have significant ramifications for redevelopment. A state constitutional amendment to limit the use of eminent domain has been introduced in Sacramento with both Republicans and conservative Democrats as co-authors. Meanwhile, local redevelopment agencies are having to defend their practices from questioning by governing board members and the public. The proposed state constitutional amendment would prohibit the use of eminent domain for “private use.” The measure would require that property taken via eminent domain must remain in public ownership or be provided for utilities. If approved by state voters, the measure would end redevelopment agencies’ common practice of taking property via eminent domain — or at least under the threat of eminent domain — and then providing the property to a private entity for commercial, industrial or residential development. Supporters of the proposal hope to have hearings at the state Capitol this month, and to get the measure placed on the ballot either this November or in June 2006. The Supreme Court’s decision in “opened a new era when the rich and powerful can use government to seize the property of ordinary citizens for private gain,” state Sen. Tom McClintock (R-Thousand Oaks) said while introducing a proposed constitutional amendment. “It may now literally take the house of a person it doesn’t like and give it to a person that it does like.” California Redevelopment Association Executive Director John Shirey countered that the news media has “grossly misinterpreted” the ruling. “There is a belief out there that if a developer wants your house, he can knock on your door one day and take it away from you,” Shirey said. “The truth is the decision did not change California law. The truth is that California law has many protections for property owners.” State lawmakers and their staffs drafted the measure with assistance from property rights advocates at the Pacific Legal Foundation (PLF). Tim Sandefur, a PLF attorney, said his organization received inquiries from both conservative and liberal lawmakers after the Supreme Court issued its decision in late June. He characterized as part of “a fundamental drift away from the purpose of government.” The proposed legislation does not attempt to define “public use.” Instead, the key provision is this: “Property taken by eminent domain shall be owned and occupied by the condemnor or may be leased only to entities that are regulated by the Public Utilities Commission.” “We don’t put any limits there,” said John Stoos, chief consultant to McClintock. “Theoretically, if a city wanted to buy a hotel and run a hotel, it could. We would think that’s bad policy and would oppose it.” In , the court ruled 5-4 that the City of New London, Connecticut, could take private property from nine homeowners so that the property would be available for a large, mixed-use development (see , July 2005). Under the Fifth Amendment, the government may take private property for public use as long as the government provides just compensation. Justice John Paul Stevens wrote that there was “no basis for exempting economic development” from the broad definition of “public use.” The reaction was immediate and negative. Public opinion polls showed widespread opposition to the ruling. Lawmakers in at least half a dozen states proposed measures to limit use of eminent domain. In Washington, lawmakers in both houses of Congress introduced bills that would withhold federal funds from states or local governments that use eminent domain for private development. While in agreement with the decision, redevelopment supporters in California said the ruling would have little immediate effect because state law already limits the use of eminent domain for private development to instances in which the property being taken is blighted. But backers of SCA 15 and ACA 22 (La Malfa), identical measures seeking to restrict eminent domain, believe California’s current protections for property owners are inadequate. They point out that “blight” was loosely defined for many years, leading to redevelopment projects in wealthy communities and on undeveloped land. Stoos pointed as an example to Rancho Mirage, a wealthy retirement and resort town whose two redevelopment project areas cover nearly the entire desert city. “We don’t think we stop the good part of redevelopment,” Stoos said. “We’re not against renewing urban areas or doing redevelopment.” The measure’s backers believe that private developers should buy property on the free market, Stoos said. Four Democrats have signed on as supporters of SCA 15 and ACA 22, including Sen. Dean Florez (D-Shafter), who joined McClintock at a press conference introducing SCA 15. The proposed constitutional amendments need two-thirds approval by the Legislature to qualify for the ballot. If the Legislature does not approve either ACA 22 or SCA 15, an initiative is likely. Both sides appear to agree upon one thing: If a measure qualifies for the ballot, voters will probably approve it because of the emotional nature of the issues. “We see this as a direct attack on redevelopment,” said the CRA’s Shirey. “With the misinformation in the public, this thing could easily gain legs and move forward.” Shirey conceded that project areas exist that could not be created today under the 1993 redevelopment reforms. But, Shirey noted, eminent domain authority for redevelopment last only 12 years. The powers may be renewed, but today’s standards for determining blight apply, he said. Redevelopment backers contend that their efforts to improve the lot of poor, blighted neighborhoods are a fundamental purpose of government. And they lamented the potential loss of eminent domain as a tool. “To do significant redevelopment in built-out communities, you have to have the ability to acquire parcels,” said Jim Kennedy, executive director of the Contra Costa County Redevelopment Agency. One of the agency’s most successful projects is a transit-oriented development around the Pleasant Hill BART station: 2,300 housing units within a quarter mile of transit, plus 2 million square feet of commercial space (see , May 1994). “None of that would have been do-able without eminent domain,” Kennedy said. Although extensive development had been proposed around the BART station for years, nothing got built because infrastructure costs scared away private developers. The redevelopment project involved assembling about 250 parcels on 125 acres into 13 development sites. The redevelopment agency assembled 10 of the sites. The agency commenced eminent domain proceedings against about 40 holdout property owners. All but about 15 of those settled during negotiations. The final holdouts argued about price, not about land use, Kennedy said. A more recent and more modest Contra Costa redevelopment project in North Richmond replaced a handful of dilapidated single-family houses and some broken-down, housing authority-owned units with 54 new housing units, a neighborhood retail center and a public health clinic. The redevelopment agency used eminent domain to acquire two of the parcels from property owners who were holding out for higher prices. “It’s the prototype of an extremely blighted area,” Kennedy said of North Richmond. Without eminent domain to acquire property from the two holdout property owners, the project would not have been feasible, he said. In Sacramento, Traci Michel, a senior project manager with the city’s redevelopment agency, recalled a project that brought the first new grocery store in decades to the impoverished Oak Park neighborhood. That project would not have gone forward without the city using eminent domain to deal with one reluctant property owner, she said. “There are a lot of really great projects that needed the power of eminent domain — very successful projects that the community wants,” Michel said. How far the state legislation will get is uncertain. Authors introduced the bills just before the Legislature went on summer break. Leaders of either house could procedurally stall the bills fairly easily, although it appears that there will be hearings this month. Supporters believe that big-box retailers, who often benefit from redevelopment practices, will fight hard to kill the legislation. The League of California Cities has already begun rallying opposition, arguing that the proposed restrictions would harm job creation and affordable housing construction. The reaction to has not been limited to Sacramento and Washington. In San Diego County, Supervisors Bill Horn and Ron Roberts said Kelo “sets a dangerous precedent and goes beyond the accepted use of eminent domain for public benefit in the County of San Diego.” The Board of Supervisors voted unanimously to review all county eminent domain policies. “I want to make sure that this can’t happen — that the government can’t take property for economic benefit,” Horn said. “I think the county needs to take a strong stance on the property rights issue.” Los Angeles County supervisors are scheduled to consider eminent domain policy revisions this month. Supervisor Michael Antonovich denounced the use of eminent domain for economic development. In Riverside, the City Council gave preliminary approval to a formal policy of not taking owner-occupied, single-family residences by eminent domain in a controversial new redevelopment project area. Contacts: John Stoos, office of state Sen. Tom McClintock, (916) 651-4019. Tim Sandefur, Pacific Legal Foundation, (916) 718-8572. John Shirey, California Redevelopment Agency, (916) 448-8760. Jim Kennedy, Contra Costa Redevelopment Agency, (925) 335-7200. Bill Horn, San Diego County supervisor, (619) 531-5555.

A limit on the amount of trash that can be discharged into the Los Angeles River has been upheld by the Ninth U.S. Circuit Court of Appeals. The court rejected a challenge filed by 22 cities in Los Angeles County to a limit established by the Los Angeles Regional Water Quality Control Board. The federal Clean Water Act requires regulatory agencies to establish TMDLs (total maximum daily loads) for pollutants in “impaired” water bodies. In 1997, environmental groups sued the U.S. Environmental Protection Agency for not establishing TMDLs for the Los Angeles region. The lawsuit resulted in a consent decree in which the EPA agreed to set TMDLs for all significant sources of water pollution, including stormwater and urban runoff. One of the required TMDLs was for trash in the Los Angeles River watershed. The consent decree gave the regional board until March 2001 to submit a trash TMDL. After the regional board missed the deadline, EPA established its own trash TMDL in March 2002. Five months later, the regional board submitted a more comprehensive trash TMDL to the EPA. The EPA approved the regional board’s TMDL, which effectively superceded the federal version. Unhappy with the restrictions established by the regional board, the cities sued the EPA, arguing that the state regulations may not supercede the federal TMDL. A federal district court ruled for the EPA. On appeal, the Ninth Circuit upheld the lower court. The cities relied on the “constructive submission” doctrine. Under this argument, the state’s failure to meet the deadline triggered the EPA’s duty to prepare a TMDL and eliminated the state’s authority to act. The court disagreed, holding that the Clean Water Act provides for action at both the state and federal levels. “So long as the state does not attempt to adopt more lenient pollution control measures than those already in place under the Act, the Clean Water Act does not prohibit state action,” Judge William Canby Jr. wrote for the court. The decision was a disappointment to a number of jurisdictions fighting TMDLs that were prepared by regional boards after initial EPA action. The case is , No. 03-16309, 05 C.D.O.S. 5144, 2005 DJDAR 7066. It was filed June 15, 2005.

An appellate court has thrown out a mitigated negative declaration that the City of Los Angeles approved for a 21-lot subdivision in the Sunland area. The court ruled that project opponents had made a fair argument that the project may have a significant impact on wildlife and traffic. In 1999, California Home Development LLC applied for a tentative tract map to subdivide 17 acres on Wheatland Avenue into 28 residential lots. The area is a semi-rural one in which many residents have horses. The city had approved a similar 28-lot subdivision in 1990 — California Home called it the “same project” — but the 1990 version was never built. Various city advisory and planning panels approved the project (reducing it to 23 lots) and a mitigated negative declaration. Under the California Environmental Quality Act (CEQA), a mitigated negative declaration states that a project, as revised prior to an agency’s consideration, will not harm the environment, and, therefore, no environmental impact report is required. Ultimately, the City Council in mid-2000 adopted the mitigated negative declaration and approved the 23-lot subdivision. Area resident Maria Mejia sued, arguing that the city violated CEQA. A trial court in July 2001 ruled for Mejia and ordered the city to set aside project approval because the city failed to give proper notice that it intended to adopt a mitigated negative declaration. The city started over. It prepared a new initial study that identified several potentially significant environmental impacts, but found that those impacts could be mitigated. At a March 2002 hearing, an advisory agency was not satisfied and told the planning department to reconsider impacts to, among other things, wildlife, traffic, drainage and trees. The planning department then prepared another initial study and proposed mitigated negative declaration in May 2002 — only to draft yet another initial study and mitigated negative declaration for a 21-lot subdivision. In late 2002, the advisory agency approved a mitigated negative declaration with two modified conditions, and the tentative tract map. On appeal, the Planning Commission and the City Council upheld the tract map and mitigated negative declaration, although the City Council added 10 more conditions. Mejia sued again, but this time she lost at the trial court. On appeal, a unanimous three-judge panel of the Second District Court of Appeal overruled the lower court. The appellate panel first found that the administrative record prepared by the city was incomplete because it contained no documents from the period before the 2001 trial court decision overturning project approval. Mejia had sought to have some of the missing documents added to the record, but she did not get far with the Superior Court. Among the documents Mejia wanted the court to review — and which the Second District was willing to consider — was a biotic assessment prepared in 1989. The assessment stated that the proposed subdivision site was “relatively rich in animal life,” including some rare birds. The site also provided a small mammal movement corridor. “One should expect that any urbanization on the site will have negative impacts on most animal numbers,” the study said. The city did not prepare a new biotic assessment for the latest subdivision proposals. Instead, the city’s initial study concluded “the project will not impact areas containing significant ecological resources.” Based on the 1989 assessment and the testimony of residents who have observed golden eagles, other resident and migratory birds, and various mammals and reptiles, the court found that a fair argument could be made that the proposed development may impact wildlife. “The mitigation measures set forth in the mitigated negative declaration as conditions of project approval were not designed to mitigate significant impacts on wildlife because the city did not acknowledge any potentially significant impact on animal wildlife,” Justice Walter Croskey wrote for the Second District. Regarding potential impacts to traffic, the city relied heavily on its own thresholds of significance. Under that policy, a single-family home development of fewer than 40 units is considered to have an insignificant impact on traffic. However, the court ruled that a project’s falling below a threshold of significance “does not relieve a public agency of the duty to consider the evidence under the fair argument standard.” In this case, that evidence included testimony from residents regarding conflicts between motorists, equestrians and pedestrians — all of whom share Wheatland Avenue. “In light of the public comments and absent more careful consideration by city engineers and planners,” Croskey wrote, “the evidence supports a fair argument that the increased traffic on Wheatland Avenue as a result of the project would be substantial considering the users of the road.” The court overturned the project approval and ordered preparation of an EIR. The Case: , No. B174453, 05 C.D.O.S. 5264, 2005 DJDAR 7181. Filed May 27, 2005. Ordered published June 16, 2005. The Lawyers: For Mejia: Maria Mejia for herself. For the city: Jack Brown, assistant city attorney, (213) 978-8177. For California Home Development: L. Douglas Brown, (310) 277-7747.

Although it was overshadowed by higher-profile cases, a California water controversy decided in late June by the U.S. Supreme Court might have been the most closely watched case by California farmers, water districts and environmentalists. The case, , concerned the ability of farmers who get water from an irrigation district to sue the Bureau of Reclamation over water delivery cutbacks. The Supreme Court unanimously ruled that individual farmers could not sue the federal government in such instances. The decision relieved environmentalists, who feared that permitting individual lawsuits over Bureau of Reclamation water decisions would lead to widespread litigation and possibly push the Bureau away from allocating more water for the environment. The farmers in this case are in the Westlands Water District, the nation’s largest irrigation district. It delivers more than 1 million-acre feet of water to a 600,000-acre district along Interstate 5 in Fresno and Kings counties. In 1992, Congress passed the Central Valley Project Improvement Act, which forced the Bureau of Reclamation to dedicate some water from the Central Valley Project to fish and wildlife habitat. The following year, the Bureau announced a 50% reduction in deliveries to water districts south of the Sacramento-San Joaquin River Delta, primarily to aid endangered Chinook salmon. Westlands and other water districts sued the Bureau, but the sides settled two years later as part of negotiations that led to creation of the Cal-Fed Bay Delta program. About two dozen landowners and water uses in Westlands, however, wanted to continue the litigation. They argued that they had a right to the water that the Bureau was withholding, and they requested $32 million in compensation. The farmers contended that, although they were not parties to the water delivery contract between the Bureau and the Westlands district, they were “third party beneficiaries” who could sue to enforce the contract’s provisions. A federal district court and the Ninth U.S. Circuit Court of Appeals ruled that sovereign immunity barred the farmers’ lawsuit. Essentially, the federal government can decide who may sue it, and the farmers were not eligible. The Supreme Court accepted the farmers’ case apparently because the decision conflicted with a 1984 case, , 749 F.2d 1571, in which farmers in a State of Washington irrigation district were allowed to sue the federal government. At the high court, the farmers argued that a waiver from sovereign immunity contained in the Reclamation Reform Act of 1982 (43 U.S.C. § 390uu) permitted their lawsuit. That section permits lawsuits seeking adjudication of rights contained in any contract signed under federal reclamation law. In a unanimous opinion written by Justice Clarence Thomas, the high court said that the Westlands farmers were misreading § 390uu. “Section 390uu grants consent ‘to join the United States as a necessary party defendant in any suit to adjudicate’ certain rights under a federal reclamation contract,” Thomas wrote. “This language is best interpreted to grant consent to join the United States in an action between other parties — for example, two water districts, or a water district and its members — when the action requires construction of a reclamation contract and joinder of the United States is necessary. It does not permit a plaintiff to sue the United States alone.” “The statute does not waive immunity from suits directly against the United State,” Thomas concluded. After the Supreme Court issued the ruling, the farmers involved said they might seek compensation in the U.S. Court of Federal Claims — a possibility that the Supreme Court justices themselves raised during oral argument. The Case: , No. 03-1566, 05 C.D.O.S. 5484, 2005 DJDAR 7505. Filed June 23, 2005. The Lawyers: For Orff: William Smiland, Smiland, Khachigian & Chester, (213) 891-1010. For the U.S.: Jeffrey Minear, assistant U.S. solicitor general, (202) 514-2217. For Westlands Water District: Stuart Somach, Somach, Simmons & Dunn, (916) 446-7979.