Best, Best and Krieger Legal Alert: Judge Tentatively Rules against Plaintiffs Challenging Monterey Amendment Water Deal

JANUARY 11, 2013

A judge has tentatively ruled that it is too late for plaintiffs to seek to invalidate the Monterey Amendment, a key agreement that deals with water shortages affecting the State Water Project.

The judge’s proposed ruling was issued last month in a Sacramento Superior Court trial of time-limit defenses. Plaintiffs in the case are challenging a revised environmental impact report (EIR) that analyzes operational changes to the State Water Project. The Monterey Amendment, reached more than 17 years ago, was the main focus of the updated EIR.

Plaintiffs had alleged that court orders and a settlement in earlier litigation had voided the Monterey Amendment and then later reactivated it, thus setting up the possibility for a new challenge under the Validation Act. That act significantly limits the time within which a public agency contract can be challenged, offering a level of certainty to the agency. The court held that the Amendment had never gone out of existence, and that the time for bringing an action challenging its legality had expired years ago.

The Monterey Amendment was reached in 1994 between the California Department of Water Resources (DWR) and State Water Project contractors to deal with water shortages affecting the State Water Project, which delivers water to 25 million Californians and irrigates some 750,000 acres of farmland. The Amendment included the transfer of the underutilized Kern Water Bank from DWR to a joint powers authority. The original 1995 EIR was challenged by environmental groups and decertified in that earlier litigation, which was eventually settled, resulting in the revised EIR in 2010.

In the current litigation it was alleged that the decertification had automatically resulted in the Monterey Amendment and the Kern Water Bank transfer becoming void. The court disagreed, finding that plaintiffs had improperly mixed the way the California Environmental Quality Act (CEQA) deals with “projects” and the way the Validation Act deals with contracts.   The court found that when an EIR is decertified it does not always mean that any approvals having to do with the project automatically cease to exist.

The parties have until January 18th to file written objections to the proposed decision. The CEQA cause of action challenging the 2010 revised EIR itself has yet to be tried; however, if ultimately affirmed, the decision would support the argument that the invalidation of an EIR may not always result in a “clean slate,” by automatically invalidating all approvals associated with the project. In some situations a court order setting aside an EIR can be fashioned to preserve the validity of underlying project contracts.

For more information about the litigation or issues related to water projects, CEQA or the Validation Act, please contact Rob Sawyer or a Best Best & Krieger attorney in the Environmental Law and Natural Resources practice group.

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