February Hathaway Duke Archives

The Vineyard EIR Water Services Principles Applied

SCOPE v. County of Los Angeles (November 26, 2007, B189116) 157 Cal. App. 4th 149

By Maria Pracher and Misti Schmidt

Last November the California Court of Appeal for the Second District issued the first appellate opinion to apply the four principles delineated by the California Supreme Court in Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova, 40 Cal. 4th 412 ("Vineyard").  These principles govern whether the water services discussion in an Environmental Impact Report ("EIR") sufficiently analyzes the availability of future water supplies.  Santa Clarita Organization for Planning the Environment, et al.,  v. County of Los Angeles, 157 Cal. App. 4th 149, Civil No. B189116 at 9 (November 26, 2007) ("SCOPE").  Briefly, the Vineyard principles are:

1. The EIR must evaluate the issue of supplying water to the land use project.  Vineyard, 40 Cal. 4th at 430-431.

2. The water supply analysis for large projects cannot be limited to the first stage of construction or the first few years of the project.  Id. at 431.

3. The availability of the future water supplies identified in the EIR must be likely rather than speculative and the EIR must analyze the factors affecting that likelihood.  Id. at 432.

4. If it is impossible to determine that future water sources will be available, the EIR must discuss alternative water sources and the associated environmental consequences.  Id.

In SCOPE, plaintiff environmental organization argued that the EIR at issue insufficiently analyzed the availability of future water supplies for a proposed residential and commercial development in Los Angeles County.  According to plaintiff, the EIR was improperly certified by the County because, under the third Vineyard principle, it relied on a water transfer agreement (the Kern-Castaic transfer) that could be affected by the ongoing litigation over the Monterey Settlement Agreement and because the Monterey Settlement Agreement did not list this transfer agreement as final or permanent.  Thus, plaintiff argued that the Kern-Castaic transfer could not be relied upon in the EIR as a permanent water source. 

The court rejected this argument.  Noting that the EIR adequately disclosed the potential for the Monterey Settlement Agreement litigation to affect the Kern-Castaic transfer agreement and discussed the reasons why an adverse outcome in the litigation would not invalidate the transfer agreement.  The court examined the plaintiff’s arguments for why the Kern-Castaic transfer agreement could be invalidated by the Monterey Settlement Agreement litigation and rejected those arguments as unsupported by law or facts.  The court found that existing law and contracts support the validity of the Kern-Castaic transfer agreement regardless of the outcome of the Monterey litigation. 

The court also rejected plaintiff’s claim that a letter from the Department of Water Resources (DWR) referencing the availability of a new model to assess water supply rendered the EIR inadequate.  In its letter, the DWR stated that the  new model may cause only slightly different results and the DWR found the draft EIR adequately discussed state water project reliability and the post-Monterey Agreement conditions.  Thus, the court concluded that this letter did not support plaintiff’s claims.  Additionally, the court rejected plaintiff’s argument that the EIR was inadequate because it did not discuss the factors the DWR must consider if it is required to prepare a revised Monterey Agreement EIR.  Since the Kern-Castaic agreement was not dependent on the Monterey Agreement, the court determined that such a discussion was not necessary.  In dismissing plaintiff’s claim that the EIR could not be certified until the revised EIR for the Monterey Agreement is certified, the court reiterated that the EIR’s water supply analysis was not dependent on the outcome of the Monterey Agreement litigation. 

Plaintiff also argues that the EIR was improperly certified because, under the fourth Vineyard principle, the EIR should have included a discussion of alternative water sources should the Kern-Castaic transfer fail.  Relying on the language from Vineyard, the court noted that the fourth principle applies only if it is "impossible to confidently determine" whether the water source will be available.  Given its discussion under the third principle above, the court concluded that the certainty of the Kern-Castaic transfer’s validity was likely and thus it could be confidently determined that the water supply for the project will be available.  Consequently, no discussion of alternatives sources was necessary.

In sum, the court found that the EIR satisfied the Vineyard principles because the EIR discussed the water supply issue, the record contained substantial evidence demonstrating the likelihood that the water from the Kern-Castaic transfer agreement would be available for the project’s near- and long-term needs, the EIR did not improperly defer analysis to later stages, and the EIR did not rely on demonstrably illusory supplies.

For further information, please contact Maria Pracher and Misti Schmidt. Maria Pracher is a partner in the Real Estate, Land Use and Environmental Practice Group in the firm’s San Francisco office. Misti Schmidt is an associate in the Real Estate, Land Use and Environmental Practice Group in the firm’s San Francisco office.

The Feds Big Bet: What it Might mean for Mortgage Rates

The other day, we kicked around the idea of Fed Chairman Bernanke’s condundrum: He is cutting rates, yet many long term rates - including fixed rate mortgages - are going up. So, since Mr. B spent the last two days testifying before congress, it might be a worthwhile excercise to tease out his thoughts on the same in an attempt to get an idea what this may portend for Mortgage Rates. First from Forbes, while not in so many words, we have Bernanke confirming the ‘conundrum’: ‘We have a problem, which is that the spreads between the Treasury rates and lending rates are widening…So in that particular area, it’s been more difficult to lower long-term mortgage rates through Fed action,’ he said.’ Yet, by all indications, and even in the face of what appears to be increasing inflation, the Fed will continue to cut. From Chairman Bernanke: ‘…downside risks to growth remain. The FOMC will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.’ So what then, about inflation - the primary reason many lending rates have risen in the face of the Fed cuts? Again from Mr. B: ‘The projections recently submitted by FOMC participants indicate that overall PCE inflation was expected to moderate significantly in 2008, to between 2.1 percent and 2.4 percent (the central tendency of the projections). A key assumption underlying those projections was that energy and food prices would begin to flatten out, as was implied by quotes on futures markets. In addition, diminishing pressure on resources is also consistent with the projected slowing in inflation.’ And therein lies the key: The Fed has placed a bet that we are in a (potentially nasty) recession, and if true, inflation will take care of itself. The key takeaway: If the Fed is right, and continues to ratchet down short term rates, we can expect fixed rate mortgages to fall in 2008 (ARMS have already dropped.) That is a big bet, and we hope a correct one.

2 Sentenced in Montana For Misreps to Lender

Scott William Hilgers, 34, and Todd Jeremy Rice, 34, both of Helena, Montana, were sentenced in connection with their guilty pleas to conspiracy to scheme to defraud mortgage companies/wire fraud.  Hilgers was sentenced to a term of 60 months in p…

New Orleans Man Sentenced For Flipping Scheme

Robert Green, 52, New Orleans, Louisiana, was sentenced by the Honorable A. J. McNamara to five (5) years probation pursuant to his plea of guilty to conspiracy to make false statements to obtain HUD insurance.  The defendant was also ordered to p…

Another Conundrum: Will Mortgage Rates Continue to Rise in Spite of Fed Cuts?

A great graphic from today’s Wall Street Journal illustrating a fact that we’ve harped on around here for a while - that despite the recent flurry of Fed Cuts, mortgage rates have mostly moved in the opposite direction, and the housing market woes continue unabated: There are two reasons mortgage rates haven’t responded more to the Fed’s rate cuts. One is that long-term Treasury yields, which are the benchmark for most mortgage rates, have risen recently, perhaps because of increased concern about inflation as the prices of oil and other commodities soar. The other is that the spread between mortgage rates and Treasury rates has widened as investors and banks become increasingly reluctant to make home loans.” If you’ll remember, back in 2005, the Greenspan Fed was similarly vexed by their inability to influence mortgage and other long term rates (the infamous ‘conundrum’ speach.) Despite hiking rates 17 times in an attempt to cool an overheated housing market, rates stayed low, and lenders did nothing but create ever looser credit standards in an attempt to continue the party. That party, of course, left the housing and credit markets with one hell of a hangover, which the Bernanke Fed is trying to cure (hair of the dog, anyone?) So now Fed faces precisely the opposite problem: They are cutting rates, hoping to prevent a housing and general economic meltdown, yet rates are beginning to rise, and credit standards for all types of loans - from credit cards, to mortgages, to auto loans - are getting tighter. Somwhere in this there is a lesson for economists and future Fed Chairman. Decline in Home Prices Accelerates [

Real Estate Agent Pleads Not Guilty In Ohio Fraud Scheme

Scott McCann, 45, Columbus, Ohio, has been arraigned and plead not guilty to charges stemming from a mortgage fraud scheme involving several Ohio properties.  McCann was released on $100,000 bond with strict orders not to contact other persons inv…

2 Arrested in So Cal Real Estate Fraud Conspiracy

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Indiana Man Convicted of Swindling Seniors

Jason Keigley, Indianapolis, Indiana, has been found guilty in Hendricks County Superior Court of swindling money from seniors through a fraudulent investment and mortgage scheme. Keigley was convicted of the following charges: the offer or sale of a…

Ohio Restaurant Owner And Agent Indicted On Fraud Charges

Gihan Ahmed Ismail Zalat aka Gigi Zalat, 40, and Scott McCann, 45, both of Columbus, Ohio, were separately indicted for a mortgage fraud scheme involving several Ohio properties.  Zalat and McCann are charged with engaging in a pattern of corrupt …

Conviction in Massive Georgia Ponzi Scheme Case

Anthony G. Christou, 57, Dunwoody, Georgia, was convicted by a jury in federal district court following a five day trial on charges of wire fraud and money laundering relating to an investment fraud scheme. According to the United States Attorney for…