California Legal Brief

The Rule of Department of Water Resources v. The Metropolitan Water District of Southern California is that a state agency's definition of a proposed program must be sufficiently definite to ascertain whether it qualifies as a statutory "modification" of an existing authorized project rather than a new unit requiring separate legislative approval, under circumstances where the agency seeks to validate revenue bonds based on broad definitional language that fails to establish clear boundaries or purposes for the proposed facilities.

Appeal from judgment after bench trial in Superior Court, Sacramento County.

Plaintiff Appellant was Department of Water Resources — the state agency seeking to validate its authority to issue revenue bonds for planning and constructing the "Delta Program" defined as "facilities for the conveyance of water in, about and through the Sacramento-San Joaquin Delta."

Defendant Respondents were various parties including Sierra Club, environmental groups, state water contractors, taxpayer associations, and public agencies — entities opposing validation of the bonds and challenging DWR's compliance with environmental laws.

The suit sounded in statutory validation proceedings and administrative/environmental law challenges. Cross-claims included CEQA violations, Delta Reform Act violations, and public trust doctrine claims.

The key substantive facts leading to the suit were DWR's August 2020 adoption of Bond Resolutions authorizing "Delta Program Revenue Bonds" to fund planning, design, and potential construction of water conveyance facilities through the Sacramento-San Joaquin Delta, with DWR defining "Delta Program" as "facilities for the conveyance of water in, about and through the Sacramento-San Joaquin Delta, subject to such further specification thereof as [DWR] in its discretion may adopt," while relying on Water Code section 11260's authority to make "further modifications" to the legislatively-authorized Feather River Project rather than seeking approval for a new project unit under section 11290.

The procedural result leading to the Appeal: The trial court denied validation and dismissed the CEQA petition, ruling that DWR exceeded its delegated authority under Water Code section 11260 because the definition of the Delta Program was too vague and uncertain to ascertain whether it qualifies as a "further modification" of the Feather River Project.

The key question(s) on Appeal: Whether the Delta Program, as defined in the Bond Resolutions, qualifies as a "further modification" of the Feather River Project under Water Code section 11260, such that it falls within DWR's delegated authority to issue revenue bonds.

The Appellate Court held that DWR's definition of the Delta Program exceeded the scope of its authority under section 11260 because the contours of the Delta Program are so ill-defined that it is impossible to ascertain whether any future Delta Program facilities will serve the objectives, purposes, and effects of the Feather River Project, or instead constitute a new and different "unit" of the State Water Project requiring authorization under section 11290.

The case is inapplicable when an agency provides sufficiently specific definitions and parameters for proposed modifications that clearly tie the modifications to the original project's objectives, purposes, and effects, or when an agency properly relies on statutory authority to add new project units rather than claiming modification authority.

The case leaves open the precise scope of an agency's "further modification" authority under section 11260, the specific level of detail required in bond resolution definitions to support validation, and whether different definitional language could satisfy the statutory requirements for modifications versus new units.