Every city official should understand the fundamentals pertaining to their city’s water supply situation. As discussed in the March issue of Western City, municipal water supply sources can vary enormously. How involved cities are with the generation and delivery of their water supply ranges from the “do it yourself” model to reliance upon wholesale water purveyors, who may generate the water supply or obtain it from large water development projects such as the State Water Project (SWP) or federal Central Valley Project (CVP).

Find out what other agencies, if any, your city works with and relies upon for its water supply. With that knowledge, you will be well positioned to grasp the importance of the new wave of laws that connect water with land use.

These laws increasingly affect what is permissible development and how your water supply “measures up” for the future. They also create new work for your staff and represent potential bases to challenge your actions and the actions of those who provide your city with its water supply.

Evolving Statewide Legislation

There are four major components to understanding how state water law is evolving:

1. Background law;
2. The Urban Water Management Planning Act;
3. Water supply assessments under SB 610; and
4. Verifications under SB 221.

Background Law

The stage is set by the Planning & Zoning Law (Gov’t Code section 65000 and following), which calls for cities to create general and specific plans. Water supply development (and probably water infrastructure) projects must be consistent with a city’s general plan. Internal consistency between elements of the general plan is also required. Although general plans are not required to have a water element, it is advisable to cover this topic, either as a discrete water element or elsewhere in the general plan.

When a city is considering whether to adopt or substantially amend a general plan, it must refer its proposal to specified entities, including any “public water system.” This can be a special district or other entity that supplies a city with water. A public water system must provide the land use planning agency with specified information regarding the water supply that will serve development anticipated in the general plan. Despite the fact that many cities provide their own water supply and commonly are the retail service provider, neither the Planning and Zoning Law nor case law directly address a city’s obligations when it is its own water supplier. In some instances, the city itself is the “public water system.”

The Urban Water Management Planning Act

Increased attention to the interaction between planning and water began more than 20 years ago with the 1984 Urban Water Management Planning Act (Water Code section 10610 and following). More recently, that act and other statutes began to impose what are perceived as new substantive obligations to directly connect evaluations of water supply with the ability to approve proposed new development.

Cities that are subject to the Urban Water Management Planning Act are those providing water for municipal purposes to more than 3,000 customers or supplying more than 3,000 acre-feet of water per year. The required plan contents are extensive but relatively general. The plan must cover a 20-year future horizon and be updated every five years.

Urban water management plans (UWMPs) are subject to public review, notice and hearing prior to adoption. UWMPs must be filed with the state Department of Water Resources. Historically, the state’s review of such plans has been relatively cursory, and the plans themselves have ranged widely from complex (or lengthy) documents to simple descriptions. Both the judiciary and the public are increasing their scrutiny of UWMPs.

The urban water management plan is becoming a base document for preparing other required water supply evaluations, including the water supply assessments and water supply verifications discussed in this article. They are a useful tool as well as a baseline against which your city’s other documents and actions will be compared.

Traditionally the water supplier and the land use decision-maker have been separate operators. There was rarely communication between the two, and each perceived its function as separate from that of the other. Even when the functions were housed in the same entity (a city, for example), they were performed independently. For years, there has been debate over whether water is a limiting factor in development. If there is less water, will development be pared back or even disappear? Or will it be done differently?

Ironically, it was not environmentalists but a water district that brought this debate to a new level in the early 1990s. The Environmental Impact Report (EIR) for major new development proposed in Contra Costa County reported that neighboring East Bay Municipal Utility District (EBMUD) water could be used as a source of supply. EBMUD believed its water supplies to be limited and did not want its existing users to be impacted by new largely out-of-district demands. It successfully challenged the EIR, forcing the developers to locate alternative supplies. EBMUD also sought longer-term relief in the Legislature. That effort breathed new life into the debate over the role of water in land use decision-making.

Two of the new laws spawned from that debate were SB 610 and SB 221.

Water Supply Assessments Under SB 610

In 2001, the California Legislature passed and the governor signed SB 610 (Costa – Chapter 643, Statutes of 2001). SB 610 requires the preparation of “water supply assessments” for larger new developments, including those with:

• More than 500 units of residential housing;
• Retail development exceeding 500,000 square feet; and
• Office space exceeding 250,000 square feet.

The assessment must be included as part of the California Environmental Quality Act (CEQA) document for the project and is subject to public review.

The “public water system” that would supply water for the project must be identified and requested to prepare a water supply assessment. This could be a local water district or other water wholesale or retail supplier. As with the Urban Water Management Planning Act, if there is no such entity, the city must prepare the water supply assessment. There is a 90-day period in which to submit the water supply assessment once a request for it has been made. If the request is submitted early in the process, the assessment may be somewhat dated by the time the CEQA public review process concludes and the project comes before the city council.

The city must determine whether projected water supplies will be sufficient to satisfy project demands, in addition to existing and planned future uses. The public water system — or the city, if it is preparing the assessment — must submit plans for acquiring additional water supplies if it concludes that existing supplies are or will be insufficient. The city may approve the project even if supplies are not sufficient, provided that it includes that determination of insufficiency in its findings.

The water supply assessment becomes part of the project environmental document (such as an EIR) under CEQA.

Water Supply VerificationsUnder SB 221

On a parallel track in 2001, but with different criteria, SB 221 (Kuehl – Chapter 642, Statutes of 2001) became law. It requires preparation of “water supply verifications” as a condition of approving large subdivisions. This typically occurs later in the process than the water supply assessment required by SB 610. SB 221 requires a showing of a “sufficient” water supply to serve the new development. It may comprise existing and projected supplies, provided that the projected supply is not “paper” (that is to say, illusory) water. In some respects, SB 221’s standards are more rigorous than those of SB 610. Another difference is that SB 211 provides exemptions for infill and low-income residential projects. The verification is to be prepared and submitted within 90 days by a “public water system,” which in some cases is the city itself. There is no requirement that the verification be included in the environmental document for the development. The SB 221 process occurs separately from, and usually later than, the CEQA process.

Courts Weigh in With a Number of Recent Rulings

The courts appear to be aware of both the new laws and increasing public focus on this topic. There are few cases on the new laws themselves; CEQA is frequently the vehicle to address the intersection of these two areas of law and policy.

CEQA has always required analysis of water supplies for a proposed project. A compendium of cases now addresses more closely the adequacy of existing and planned water supplies for development. CEQA itself may not require that water supplies be certain (for example, existing or highly likely to be achieved), but the courts seem to be upping the ante in this respect. They are also linking the timing of water supply development with land use actions in an unprecedented and — from a practical standpoint, problematic — manner.

CEQA was largely designed as a disclosure law to inform council members and the public of environmental impacts rather than a law dictating a substantive outcome. It is possibly being used to reach further into local and regional decision-making.

A few examples provide the flavor of relatively recent judicial decisions. In some cases, courts are re-evaluating longstanding commonly accepted assumptions. In 2000, a court rejected a forecast under CEQA that the full volume of SWP contract water supply would be available because the amount of water projected to be developed by the SWP had not yet been achieved, and there appeared no practical prospect that it would. This case reinforces that water supplies should be examined to see if they are “paper” water supplies before relying upon them for future use.

“Paper” Water Versus the Real Thing

Identifying a portion of the SWP contract water supply as “paper” water has real impacts for those relying on the SWP. In Los Angeles County, for instance, an EIR for a 2,500+ unit residential and mixed-use development was invalidated for failure to disclose and evaluate the differences between SWP “entitlements” (the face value on the contract) and actual water supply in wet, normal and dry years. The EIR’s water analysis deficiencies were not cured by a condition requiring the developer to demonstrate an adequate supply at the subdivision recordation stage. This is important because historically cities have had less information and certainty at the time of earlier land use approvals for large developments than is available at later dates closer to the actual development. Timing does matter!

Water Development Projects

Another area where timing matters, but is not yet synchronized, is water development projects. At least one case now requires that the supply proposed to be developed or acquired be fully covered by the applicable general plan. On the surface, this makes sense. However, water development projects increasingly require very long lead times. If a general plan has been recently updated and covers a horizon of 20 years, this should not be a problem. If a general plan is older and its remaining horizon is five or so years, this can be a very real problem. Your UWMP may cover the future development for which you as a responsible city official need to plan a water supply, but your general plan may not. If your city needs to acquire or otherwise develop an additional supply, this is an important consideration.

Degree of Certainty Required

You should be aware of two recent and controversial cases. The first involves the debate as to how much certainty is required for water supply at different phases of the development process. In the first case, the EIR for this Sacramento area project addressed a community plan and a specific plan. At this planning stage, CEQA may reasonably require less certainty than is required later — for example, at the time of tentative maps or use permits. The project’s first phase was to rely on groundwater, and the entire project would be served eventually by a combination of surface and groundwater. The projected surface water supply was yet to be developed. The California Supreme Court has accepted review of this case, and it’s hoped that the decision will clarify the degree of certainty required.

“Reduced Water Exports”

In January 2006, the California Supreme Court accepted review of another significant water case. The appellate court invalidated the Programmatic Environmental Impact Statement/Environmental Impact Report (PEIS/EIR) for the Bay Delta CALFED Program. It held that the PEIS/ EIR failed to discuss the impacts of increased diversions in adequate detail. The court also discussed at length the history of water development in California, ongoing issues with Delta pumping, and the relationship between water and population growth. It concluded that the alternatives evaluated in the PEIS/EIR weren’t sufficient because there was no alternative assuming reduced exports from the San Francisco Bay Delta to the San Joaquin Valley and Southern California.

This case is significant because of the reasoning that the court used to premise its requirement of a “reduced water export” alternative. The court appeared to assume that if the surface water supply generated by the projected pumping decreased, demand would similarly decrease because population levels in Southern California would stabilize. The court further assumed that this would be a meritorious result. Demand reduction is one of the possible outcomes of curtailing Delta pumping; another is that groundwater pumping would increase, or other sources of supply such as desalination might be tapped. This case is worth watching with respect to the grounds upon which additional environmental review of water projects can be required. Is this a case of a court looking at the big picture of Delta water development and impacts or one of unsupported judicial “activism”? Stay tuned.

These are only a few of the cases at the emerging nexus between land use and water supply, and they illustrate its increasing scope. Cities are well advised to keep at least one eye on this ball and to prepare their UWMPs, general plan updates, CEQA documents, water supply assessments and other water-related documents with this developing body of law in mind.

Practical Advice

This area of law and politics is complex, but that’s one of the reasons it’s so interesting. As you learn, keep in mind that there are very practical things you can do. The first is to develop a basic understanding of your city’s water supply, including its geography, institutional and contractual setting, conveyance and limiting factors. For example:

• What are your city’s water supply strengths? Vulnerable features? What are the relevant environmental considerations?
• What direction does your city need to move in to maintain or increase the capability of its supply to support the city’s present and future demands? What options are available to the city and how will they affect its other resources?

How do the foregoing facts relate to future development in your city? Statewide, the diagnosis is that we should have room to grow, at least from a water supply standpoint. Take a look at the state Department of Water Resources’ new statewide Water Plan (online at www.waterplan.water.ca.gov). Note that the water supply prognosis varies enormously from jurisdiction to jurisdiction and region to region. Another source of information about California’s water future and local jurisdictions’ response to SB 221 is the Public Policy Institute of California report Water for Growth: California’s New Frontier (online at www.ppic.com).

Your city should have recently adopted an updated urban water management plan; these updates were due to be completed by the end of 2005. In addition, your city may have prepared water supply assessments for larger developments or water supply verifications. Examine their content and consider their implications for land use decisions you are likely to face.

It would be fruitful to verify that the CEQA documents (EIRs, mitigated negative declarations) being prepared for projects in your city accurately and thoroughly describe your water supply. Do not assume that what has been done in the past is adequate. Typically a “cut and paste” approach is used for efficiency, and the person doing the cutting and pasting may not be aware of new developments, including how much of the available supply has already been allocated or changes in the availability of supply due to external developments.

Periodic updates for council members and senior staff regarding factual, legal and political developments affecting your water supply may be useful.

Every city can and should have a clear understanding of its water portfolio, the strategy to strengthen or maintain that resource, and what factors affect the success of that strategy.

Martha Lennihan works with many cities and other public and private entities on water and related natural resource law issues. Her statewide practice reflects more than 20 years of experience with issues such as surface and ground water, fish and wildlife, and endangered species laws and institutions. She can be reached at mlennihan@lennihan.net.

Editor’s Note

This article is the second installment in a two-part series and examines the law interconnecting water supply with land use decision-making and areas of major concern to California cities. The first part of the series, “What City Officials Should Know About Their City’s Water Supply,” appeared in the March issue of Western City.

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This article appears in the April 2006 issue of Western City
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