Ruling Reflects Crucial Shift in Water Policy

A judge’s recent decision to temporarily halt the largest housing project in Los Angeles County history is the latest sign of a fundamental shift in California that is forcing developers to prove their projects won’t exhaust water supplies.

Superior Court Judge Roger D. Randall on May 31 found that developers of the 22,000-home Newhall Ranch near Santa Clarita had not proved they could supply enough water to support the new community, especially during periods of drought.

The decision reflects the growing interest of state courts, Sacramento lawmakers and the attorney general’s office in addressing the limits that water supplies could eventually place on growth in California.

That link between growth and water supply could be the mechanism that finally forces local governments to reject large new subdivisions until sources of water are guaranteed, experts say.

A study by an Oakland utility district concluded, in fact, that of 57 major projects proposed statewide in 1996 and 1997, only four had backers that fully met legal requirements to analyze how much water the projects would receive during drought years and how their water use would affect neighbors.

In a 1995 study, the same utility identified 110 proposed “new towns” across the state that lacked reliable water supplies.

“Now you have this court saying, ‘We’re going to stop you unless you can show a reliable water supply.’ And that’s something new,” said Tim Quinn, deputy general manager of the Metropolitan Water District, which provides water to nearly 17 million people in Southern California.

“I’m not a no-growther,” Quinn added. “But this is undeniably an important policy decision that California has to grapple with. And we’re at the beginning of this adventure, not the end.”

Rare Decision Against Officials

Stanford law professor Barton “Buzz” Thompson, author of books on water policy and law, said Randall’s decision is a rare case in which a trial judge has second-guessed local officials and declared their analysis of water supplies incomplete.

“It is a landmark decision, where the holding of the court has tremendous implications for land development and water usage throughout the state,” Thompson said. “It sends a clear message to developers that their water supplies cannot rest on hope or guesses.”

Tim Coyle, a vice president of the California Building Industry Assn., said the decision is frustrating because California builds only half as many new houses as it needs each year.

“It is a big deal,” he said. “And it’s just an indication of what we’re going to face in the future. If we don’t increase the capacity of California to grow, it’s going to be a litigator’s dream.”

Randall’s ruling comes amid debate in the Legislature about whether to impose the principles of so-called “smart growth”--compact, efficient development--on local jurisdictions to stop the latest round of urban sprawl.

The Newhall Ranch decision was released May 31, one week after a panel of scientists warned Southern California water providers that they should get ready for another drought. During the last one, in 1986-92, agencies statewide rationed water as reservoirs dried up and lawns turned brown.

And on Friday, Gov. Gray Davis and U.S. Interior Secretary Bruce Babbitt announced a new state-federal program to increase California water supplies and allow the state’s growth to continue. The program includes new reservoir projects--such as the expansion of Shasta Dam--but emphasizes the need for local government to save, store and recycle water.

California will grow by 11 million residents by 2020, about half of that in its crowded southern region, according to state estimates.

By itself, Randall’s ruling is important, because it highlights an issue whose time has come and that could be a springboard for reform, state officials say.

“The issue of reliable water supplies in an era of finite natural resources is a subject that local decision-makers, state officials and land-use attorneys are all going to have to pay serious attention to,” said Richard Frank, chief assistant attorney general. “It’s an issue upon which we are focused, and an issue that will likely reappear in courthouses around the state.”

The Newhall Ranch case is the third in recent months in which the attorney general’s office has intervened to help stop development because of concerns about reliable water supplies, Frank said.

A state appeals court judge in Sacramento recently voided changes in El Dorado County’s general plan because it had not adequately shown the source of water for growth, Frank said. In Madera County, state lawyers helped persuade the Board of Supervisors to block construction of a large housing project along the San Joaquin River north of Fresno because of chronic water shortages and over-pumping of ground water.

Consultant Sees ‘Judicial Epiphany’

Two weeks before the Newhall Ranch ruling, in a similar case, a Riverside Superior Court judge struck down the city of Beaumont’s approval of a 1,200-dwelling project, finding that the city had not thoroughly analyzed the project’s effect on scarce water supplies.

“It’s a huge problem, when you consider that water is so scarce in California,” said San Francisco attorney Robert Goodman, who argued the case for homeowners. “And local officials seem eager to approve these projects without considering where the water comes from.”

Public policy and political change move in cycles in California, and the state is early in the cycle, said Peter Detwiler, veteran consultant for the Senate Local Government Committee. “But on certain issues there’s sort of a breakthrough epiphany that occurs. And I think Newhall Ranch might be the judicial epiphany on the need to balance water supplies with development.”

Assemblywoman Sheila Kuehl (D-Santa Monica), a former law professor who is pressing a bill that would require developers to prove water supplies before construction, said the Newhall Ranch decision is important.

“This decision puts the imprimatur of the court on the basic premise that appropriate planning should, by law, include the requirement of a secure water supply before a project is approved,” she said.

Randall did not make new law by requiring Newhall Ranch to identify its water supply and thoroughly analyze how the project’s water use could affect its neighbors. Judges have previously found those tasks to be a requirement of the California Environmental Quality Act.

Even without strong water guarantees, local governments often justify approving projects either by accepting water companies’ “will-serve” letters as reliable or by finding the projects’ benefits override their deficiencies. The Kuehl bill, to be heard by a Senate committee June 20, would take away such discretion and mandate that reliable water supplies be provided, even during drought.

In the Newhall Ranch case, Randall voided Los Angeles County’s approval of the project’s environmental study. He found that the Board of Supervisors could not have made an informed decision when it unanimously approved the 70,000-resident project in 1999, because the environmental analysis was incomplete.

The judge found Newhall Ranch’s explanation of where it planned to obtain water to include “mere guesses on the capacity of aquifers which, if wrong, could substantially impact water availability” to the people of Newhall Ranch and downstream in Ventura County. He questioned whether supplies from the State Water Project could actually be produced in dry years. And he said that the developer’s plan to gain water in stages as the project was built over 25 years was improper.

Court Ruling Surprised Experts

Randall’s decision is rare because judges--following the lead of the state Supreme Court--have been generally unwilling to stop projects because of flaws in environmental reports, say legal and planning experts.

“Most of the attorneys who follow this area of law were surprised by the Newhall decision,” said Randele Kanouse, author of the Kuehl bill and a lobbyist for the East Bay Municipal Utility District of Oakland. “But I think we’re going to see more like this. I believe this is the tip of the iceberg.”

On questions of water availability, the courts ruled against developers in only a few cases in the 1990s. The East Bay district sued Contra Costa County in 1990 and halted an 11,000-home development near San Ramon for nine years, until the builder acquired water rights from a San Joaquin Valley farmer. And in cases in Stanislaus and Mendocino counties, state appeals justices stopped development until adequate, dependable water supplies could be found.

These rulings followed closely the state’s longest drought since the Great Depression. By 1992, the end of that six-year drought, the State Water Project, which funnels Sierra Nevada water to Southern California, delivered only 30% of the water requested by urban users, and none requested by farmers.

In Southern California, the Metropolitan Water District, the water project’s largest customer, augmented its supplies by importing more than usual from the Colorado River and imposed rationing on retail water companies.

After the drought, state Sen. Jim Costa (D-Fresno) drew broad support in pushing through a new law that requires detailed analysis of the water supplies for new projects during normal and drought years.

“When the Costa bill was enacted, that was really the first linkage between water supplies and development,” said Jeanine Jones, drought preparedness manager at the state Department of Water Resources.

Three more bills were introduced in 1999 to strengthen the Costa bill.

Of those, only Kuehl’s is still alive. But even those who are convinced it will die a quick death in the Senate this month, say the issue won’t go away.

“Growth is such a huge issue in California, and we have to do it right,” said Quinn of the Metropolitan Water District. “These issues are not resolved quickly or easily. We’ll wrestle with them for decades.”