Reported / Citable
Background
The City of American Canyon certified an environmental impact report (EIR) for the Giovannioni Logistics Center Project — a sizeable industrial warehouse development on undeveloped land within American Canyon’s city limits. American Canyon does not have its own groundwater. It draws roughly 5,200 acre-feet per year from the State Water Project and supplements that supply with water purchased from the neighboring City of Vallejo under a 1996 Agreement that allows up to 3,206 acre-feet of treated water plus additional permit and emergency raw water.
The City of Vallejo, as the contractual water supplier, sued under CEQA. Vallejo argued that American Canyon’s EIR failed to adequately disclose and analyze the project’s water-supply impacts under both CEQA Guidelines and Water Code sections 10910-10911 (the Water Supply Assessment statutes). Vallejo also pointed to a separate, ongoing contract dispute with American Canyon over the parties’ 1996 water agreement.
The trial court denied the writ petition. Vallejo appealed.
The Court’s Holding
The Court of Appeal affirmed. Reviewing the EIR under CEQA’s substantial-evidence standard, the court held that American Canyon adequately disclosed the project’s projected water demand, identified its supply sources (State Water Project allocations and Vallejo-supplied water under the 1996 Agreement), and analyzed reasonably foreseeable supply scenarios including drought years. The Water Code sections 10910 and 10911 require a water-supply assessment to address whether projected supplies are sufficient for project demand over a 20-year horizon, accounting for normal, single-dry, and multiple-dry years.
The court rejected Vallejo’s contention that the EIR was deficient because of the parallel contract litigation between the cities over the 1996 Agreement. CEQA does not require an EIR to forecast or assume the worst-case outcome of a contract dispute or to reflect future hypothetical losses of contractual supply. Until and unless the contract supply is actually altered, the EIR may rely on existing contractual entitlements as part of the projected water portfolio.
The court also rejected various more granular challenges to the EIR’s water-demand calculations and supply analyses, finding them supported by substantial evidence in the administrative record.
Key Takeaways
- An EIR’s water-supply analysis under CEQA and Water Code sections 10910-10911 may rely on the lead agency’s existing contractual water entitlements, even when those contracts are subject to ongoing litigation.
- CEQA does not require lead agencies to assume catastrophic loss of contractual water supplies; substantial-evidence support for the agency’s projections is enough.
- Neighboring jurisdictions cannot leverage their role as contractual water suppliers into broader CEQA veto power over development on the buyer’s side of the boundary.
- Substantial-evidence review on CEQA water-supply issues is highly deferential to the lead agency’s expert and consultant analyses, especially in normal-year and drought-year scenarios.
- Litigants challenging EIRs should focus on identifying actual gaps in the analysis, not theoretical disputes about how contractual rights might evolve over time.
Why It Matters
The decision is meaningful for California land-use, water, and CEQA practitioners. It confirms that lead agencies certifying EIRs for water-dependent projects can rely on existing contractual entitlements as part of their water-supply analysis, even when those contracts are litigated. That reduces the leverage neighboring jurisdictions have to use CEQA challenges as proxy weapons in inter-city water disputes.
For local governments, water districts, and developers, the case provides useful guidance on how to structure water-supply analyses for industrial and warehouse projects in northern California’s water-stressed corridors. The opinion underscores the importance of building a robust administrative record showing how the lead agency considered normal and dry-year supply scenarios and the consequences of foreseeable supply variability.