California Drought Advisory – Drought Impact on Land Use Process

The Governor’s declaration of a water emergency, the issuance of water use reduction requirements and the State’s cutbacks in water supply to local water purveyors have brought issues relating to the ongoing drought to a head.  Water has always been a significant issue in the land use entitlement process in California.  The impact of development on water supply is required to be analyzed under existing laws such as the California Environmental Quality Act (CEQA), General Plans, zoning regulations and the Subdivision Map Act (SMA).  So, an important question for both local agencies and developers is – have you considered how the recent, dramatic changes in water regulations and availability will affect land use projects that are trying to obtain entitlements or are already approved?

Water demand and availability are central issues throughout the entitlement process for land use projects.  Water issues are addressed in the beginning stages of project development until the last step of project approval.  In developing a project, water demand and use is one of the central considerations.  Project formulation includes a calculation of water demand for the proposed use and availability of water sources.  Developers can be proactive by including measures in their project proposals that will reduce water demand beyond existing requirements.  Similar to the incorporation of energy efficiency measures as part of the movement towards green development, new development can include additional measures that will reduce water use.

Satisfaction of existing parts of the land use development regulatory regime relating to water use and availability may become more difficult due to new water restrictions and shortages.  Existing water analysis requirements as part of the land use process include CEQA, water supply assessments under the Water Code and water supply verifications under the SMA.  Land use authorities also may have water policies and programs that projects must meet under General Plan, Zoning Code or other land use regulations.  New water regulations and restrictions may present significant challenges in analyzing the availability and sufficiency of water supply to serve the project under existing regulations.  So, a critical part of project processing will be the completion of an analysis to show how the project’s water demand is met by the reduced available supply and that the project will not adversely impact newly enacted water use restrictions.  This analysis is required before the project entitlements are brought to the decision makers for approval.

Approval of new development projects also may be more difficult.  Several existing laws require formal findings on water availability before a project can be approved.  Examples of these requirements are findings under CEQA, SMA and other planning and zoning regulations.  New restrictions and regulations may delay the entitlement process.  The water shortage may even possibly provide grounds for project denials in certain instances.  In addition, the final approval process will provide opportunities for the imposition of mitigation measures and conditions of approval to reduce water use.  The impact of these regulations on the project may be significant.  The new conditions may affect the economics of the project or the timing of when the project can be built.  The increased spotlight on water issues also may lead to new avenues of legal challenge by project opponents.

In addition to the existing regulatory regime that involves water issues, land use authorities may be considering the adoption of further regulations in response to the mandated reductions in water use.  These may include restrictions on outdoor and indoor water use through local amendments to the building code or other means.  So, projects in processing may face a new and enhanced set of water regulations.  Examples of new regulations may include restrictions on outdoor water use for landscaping such as that proposed under the Governor’s Executive Order #11.  On the flip side, there also are adopted and proposed exemptions from CEQA for the development of new water supplies.  The Governor issued an order exempting State agencies and certain actions from CEQA in carrying out orders in response to the drought declaration.  In addition, State legislation has been proposed to establish CEQA exemptions for actions relating to augmenting water supply.

Entitled projects may not be completely clear of adverse impacts from the drought’s effects on water supply and use restrictions.  Due to the impacts of the recession, there are a large number of entitled projects that have not been built.  Many of these projects are now moving forward.  The question is whether new regulations or restrictions can be imposed on these entitlements.  Certain agencies may consider moratoria on new building permits or water connections.  The question of vested rights will come into play.  Since the basis for new regulations will likely be the declaration and findings of an emergency, there may be a basis for regulation of entitled but not built projects to address water shortage.

Meyers Nave’s Multidisciplinary Drought Response Team: For nearly three decades, Meyers Nave has assisted public and private clients confronted with complex regulatory and legal challenges. California’s historic drought is raising the stakes and increasing the complexity of water issues that were difficult in times of normal water supply. The drought has also spurred development of new laws and regulations, including the State Water Resources Control Board’s emergency regulations and the Sustainable Groundwater Management Act. The most creative, effective and practical solutions to these new challenges require the comprehensive expertise of our multidisciplinary Drought Response Team, which consists of attorneys who specialize in all key areas of law including Land Use, Environmental, Litigation, Eminent Domain, Infrastructure Development, Construction, and Public Agency, Contracts and Finance. Our Land Use and Environmental attorneys are at the forefront of the analysis of water supply for development projects. Meyers Nave attorneys were involved in the seminal California Supreme Court Vineyards case that established the CEQA law on water supply analysis. We have advised clients on hundreds of projects regarding procurement of water supply, the development of water reduction measures, and compliance with all laws relating to water supply and use in the entitlement process. www.meyersnave.com