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Well, well, well . . . Supreme Court finds well permits not always ministerial and may be subject to CEQA

In Protecting Our Water and Environmental Resources v. County of Stanislaus (Case No. S251709) (“POWER”), the California Supreme Court recently found that the long-standing practice of treating all well construction permits as “ministerial” and therefore, not requiring  review under the California Environmental Quality Act (“CEQA”), violated CEQA.

As the Court explained, ministerial projects are those “for which the law requires an agency to act in a set way without allowing the agency to use its own judgment,” while discretionary projects are those where the lead agency “is empowered to disapprove or condition approval of a project based on environmental concerns that might be uncovered by CEQA review.” Environmental review is thus only required when an agency is authorized to respond to environmental concerns by conditioning the project (i.e., by exercising discretion).

Some background on well permits may be helpful here. The Department of Water Resources (“DWR”) Bulletin 74 delineates minimum technical standards for the construction of new groundwater wells. Although well permitting agencies have authority to adopt standards that are more stringent than Bulletin 74, most jurisdictions, including Stanislaus County (“County”), directly incorporate Bulletin 74 standards into their local well ordinances. In our experience, where a proposed well complies with Bulletin 74 standards, the agency typically treats the permit as a ministerial project not requiring CEQA review. The petitioners, Protecting Our Water and Environmental Resources (“POWER”), challenged this categorical treatment, claiming Bulletin 74 gives the County discretion to address concerns relating to environmental impacts, and arguing that all new well construction permits should be treated as discretionary projects under CEQA.

While the court did not go as far as POWER requested, it found that the County cannot treat all well construction permits as ministerial because, in some cases, Bulletin 74 authorizes the County to exercise judgment over environmental issues. For example, Bulletin 74 gives the permitting agency discretion to determine the appropriate well location when the well is near a source of contamination.

Notably, the Court rejected POWER’s contention that all well construction permits should be deemed discretionary projects. The Court found that where the County issues a well construction permit under Bulletin 74 standards that do not authorize County discretion—e.g., where the well is not near a contamination source—issuance of the well permit may be treated as a ministerial project.

What to expect from here?

The Court’s decision will impact well permitting authorities across the state. Agencies will need to determine if and when their ordinances and regulations grant them authority to condition approval or deny a well construction permit, and undertake actions to ensure compliance with CEQA. We see several possible responses.

One practical response may be to revise the well ordinances to omit discretion and add more detail as to how to issue well construction permits. For example, agencies may amend ordinances to provide fixed well siting standards in the vicinity of a contamination source under any scenario, and require a variance permit (a discretionary project) to deviate from those standards. This course of action, however, could require a significant amount of agency investment to develop the necessary standards. 

Agencies may also choose to leave their well construction ordinances and regulations as-is and consider whether a CEQA categorical exemption may apply on a case-by-case basis. In that scenario, project applicants could carry a significant financial burden in undertaking the level of environmental review deemed necessary by the permitting agency.

If local agencies find adapting their ordinances too onerous, or if there is an uptick in CEQA litigation related to well permit issuance, agencies could look to the state for a fix, such as a statutory exemption from CEQA for issuance of well permits in certain circumstances, or for DWR to develop new “ministerial” well permit standards. DWR is currently in the process of updating Bulletin 74, creating the possibility that agencies lobby DWR to omit language providing discretion in Bulletin 74 and the Statewide Model Well Ordinance.

Some of you may be wondering whether the POWER decision will impact the state’s implementation of the Sustainable Groundwater Management Act (“SGMA”). In a word, yes. Water Code section 10726.4 allows counties to give a local groundwater sustainability agency (“GSA”) the authority to issue new well permits. Although permit authority may be critical for some GSAs to implement SGMA, a newly formed GSA must consider whether it has the institutional capacity to manage CEQA review for discretionary well permits. Further, even if a GSA does not assume well permit authority from the lead agency, a GSA can impose spacing requirements on new wells to minimize well interference. Following POWER, a GSA must consider whether its proposed well spacing requirements would require discretionary review by the lead agency and trigger CEQA. Either way, this decision will force GSAs and local agencies to assess how POWER may affect new well permits going forward.

Finally, looking beyond well permits, the court’s critique of the County’s well permit ordinance may trigger additional soul-searching for lead agencies with respect to other permits agencies traditionally view as ministerial.


Authors

Mack Carlson, Associate; Elisabeth L. Esposito, Associate; Christopher R. Guillen, Associate; Ryan Waterman, Shareholder

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