North Coast Rivers Alliance v. Westlands Water District (227 Cal. App. 4th 832, 2014)

Opinion

KANE, J.

In February 2012, Westlands Water District and its related distribution districts (together Water Districts or respondents) entered into two-year, interim renewal contracts with the United States Bureau of Reclamation (the Bureau) relating to the Bureau’s ongoing provision of Central Valley Project (CVP) water to Water Districts. The purpose of the interim renewal contracts was to continue the existing terms for water delivery in advance of the parties’ anticipated execution of new, long-term (25-year) renewal contracts, which process was awaiting the Bureau’s completion of environmental documentation necessary for the execution of such long-term agreements. When Water Districts approved the interim renewal contracts, they made specific findings that the renewals were exempt from the California Environmental Quality Act (CEQA; Pub. Resources Code, § 21000 et seq.). Accordingly, Water Districts did not undertake their own environmental review prior to such approvals. Thereafter, North Coast Rivers Alliance, Friends of the River, Save the American River Association, the California Sportfishing Protection Alliance and the Winnemem Wintu Tribe (collectively petitioners) filed a petition for writ of mandate in Fresno County Superior Court, contending that the interim renewal contracts were not exempt from CEQA and that Water Districts should have undertaken a full environmental review. The trial court disagreed and denied the petition for writ of mandate. Petitioners have appealed from the judgment of dismissal. Based on the record before us, we conclude that the matters contemplated in the interim renewal contracts were exempt from CEQA, including under the statutory exemption for ongoing pre-CEQA projects (Guidelines, § 15261) and the categorical exemption for the continued operation of existing facilities at the same level of use (Guidelines, § 15301). Therefore, we affirm the judgment below.

FACTS AND PROCEDURAL HISTORY

The Contracting Parties

The subject agreements were entered into by the Bureau and Water Districts, each of which are public entities. The Bureau is the federal agency that operates the CVP, administers CVP water and enters into contracts to provide that water to contractors such as Water Districts (known as water service contracts). Water Districts are public entities established for the purpose of receiving CVP water and distributing that water to end users (i.e., farmers) for beneficial use (i.e., irrigation to grow crops) on lands within Water Districts’ boundaries. (See, e.g., Wat. Code, § 37800 et seq. [relating to Westlands Water District].)

Westlands Water District, by far the largest of respondent districts, serves over 600,000 acres of farmland on the west side of the San Joaquin Valley. Westlands Water District has had water service contracts in place with the Bureau since the 1960’s and, through such contracts, has had a right to receive approximately 1 million acre-feet of CVP water per year, subject to water availability and other factors. The other two respondents, Westlands Distribution District No. 1 and Westlands Distribution District No. 2, which were formed more recently (in 2000 and 2002 respectively), have acquired additional CVP water rights by assignments from other water districts serving the area. Westlands Distribution District No. 1 and Westlands Distribution District No. 2, as the holders of those assigned water rights, are now the contracting parties for purposes of entering into renewals thereof.

With respect to Water Districts’ existing contractual rights to receive CVP water, the Bureau and Water Districts are willing to enter into long-term renewal contracts, but that prospect has been delayed by the Bureau’s failure to complete the required environmental documentation. In the meantime, the parties have agreed to a- series of interim renewal contracts in order to continue water deliveries on the same terms as before. The six 2-year interim renewal contracts entered into by the parties in 2012 are the subject of the instant appeal.

The CVP

Because the water that is the subject of the contracts between Water Districts and the Bureau is diverted, stored and delivered through CVP facilities (and is generally referred to as CVP water), we now explain what the CVP is and how it operates so that the issues before us may be seen within their larger context. The history and scale of the CVP are well chronicled in the case law. (See, e.g., Westlands Water Dist. v. U.S. (9th Cir. 2003) 337 F.3d 1092, 1095-1096 (Westlands).) In providing this general overview of the CVP, we shall draw upon the record below as well as on publicly known facts regarding the CVP that are reported in the case law.

The CVP is a federal reclamation project built within the major watersheds of the Sacramento and San Joaquin River systems and the Sacramento-San Joaquin Delta (Delta), providing water storage and distribution to the Central Valley of California. A recent federal opinion noted the following legal and factual background: “Reclamation projects are indispensible features of agriculture in the Western United States. ‘The Reclamation Act of 1902 set in motion a massive program to provide federal financing, construction, and operation of water storage and distribution projects to reclaim arid lands in many Western States.’ [Citations.] ... [1] The Central Valley Project (‘CVP’) is ‘a system of dams, reservoirs, levees, canals, pumping stations, hydro-power plants, and other infrastructure [that] distributes water throughout California’s vast Central Valley.’ [Citation.] The CVP was originally ‘taken over and executed’ by the United States under the Reclamation Act and was reauthorized by the Rivers and Harbors Act of 1937, Pub. L. No. 75-392, 50 Stat. 844, 850 (‘the CVP Act’). [Citation.]” (San Luis Unit Food Producers v. U.S. (9th Cir. 2013) 709 F.3d 798, 801 (San Luis Unit).) The Bureau is the agency within the United States Department of the Interior charged with administering the CVP. (Westlands, supra, 337 F.3d at p. 1096; San Luis Unit, supra, at p. 801.)

As built and operated, the' CVP is “the nation’s largest water reclamation project and California’s largest water supplier.” (In re Bay-Delta etc. (2008) 43 Cal.4th 1143, 1154 [77 Cal.Rptr.3d 578, 184 P.3d 709], fn. omitted.) It operates 21 reservoirs, 11 powerplants, and 500 miles of major canals and aqueducts. With total storage capacity of more than 12 million acre-feet, the CVP delivers approximately seven million acre-feet of water annually to over 250 water contractors, primarily for agricultural use in the Central Valley. (Id. at fn. 1.) The CVP “ ‘supplies two hundred water districts, providing water for about thirty million people, irrigating California’s most productive agricultural region and generating electricity at [numerous] powerplants.’ ” (San Luis & Delta-Mendota Water Authority v. U.S. (9th Cir. 2012) 672 F.3d 676, 682 (San Luis & Delta-Mendota), quoting Westlands Water Dist. v. U.S. Dept. of Interior (9th Cir. 2004) 376 F.3d 853, 861.) The Bureau operates the CVP under water rights granted by the State Water Resources Control Board (SWRCB). (In re Bay-Delta etc., supra, at p. 1154.)

In 1960, Congress authorized the construction of the San Luis Unit “ ‘as an integral part’ ” of the CVP (the San Luis Act; Pub.L. No. 86-488 (June 3, 1960) 74 Stat. 156). (San Luis Unit, supra, 709 F.3d at p. 802.) The San Luis Act states that the “ ‘principal purpose’ ” of the unit is to furnish water for irrigation. (Ibid.) The San Luis Unit of the CVP includes the San Luis Dam and the San Luis Reservoir, along with a system of canals, channels and pumping plants. The San Luis Reservoir was constructed on the west side of the San Joaquin Valley to store surplus water from the Delta and to provide water for irrigation and other purposes primarily in Merced, Fresno and Kings Counties. (Westlands, supra, 337 F.3d at p. 1096.) A pumping station at the Delta’s southern end draws varying amounts of water that is conveyed by canals to the San Luis Unit and Reservoir. (Ibid.) Water from the San Luis Unit of the CVP is delivered to contractors (e.g., Water Districts), which then provide water to the end users such as farmers on the west side of the Central Valley. (Westlands, supra, at p. 1096; see San Luis Unit, supra, at p. 802.) The interim renewal contracts at issue in the present case relate to the ongoing provision of water by the Bureau to Water Districts from the San Luis Unit of the CVP.

We note in passing that when the San Luis Unit was authorized by Congress in 1960, it was on the condition that adequate drainage from the area served by that unit was to be provided. (Firebaugh Canal Co. v. U.S. (9th Cir. 2000) 203 F.3d 568, 570.) The reason for such a requirement was the common knowledge that “[i]rrigation and drainage are inherently linked” and “[a]ny water project that brings fresh water to an agricultural area must take the salty water remaining after crops have been irrigated away from the service area.” (Id. at p. 571.) The statutory obligation to provide for such drainage was placed squarely on the United States Department of the Interior. (Ibid.;, see Firebaugh Canal Water Dist. v. U.S. (9th Cir. 2013) 712 F.3d 1296, 1298-1303.) That obligation remains unfulfilled. One of the long-term consequences of lack of adequate irrigation drainage is a buildup of salt content in the soil and groundwater, which poses a particular problem in much of the agricultural acreage served by Water Districts, since those lands sit on a shallow bed of hard or impervious clay and the water has nowhere to move or drain. Hence, a drainage solution will eventually be needed in order to maintain future agricultural productivity in such areas.

The Bureau Operates the CVP Subject to Environmental Laws and Other Factors

In the original 1937 CVP act, Congress prioritized the purposes of the CVP as “ ‘first, for river regulation, improvement of navigation, and flood control; second, for irrigation and domestic uses; and, third, for power.’ ” (San Luis Unit, supra, 709 F.3d at p. 801, quoting the 1937 CVP act, § 2.) In 1992, Congress passed the Central Valley Project, Improvement Act (the CVPIA; Pub.L. No. 102-575 (Oct. 30, 1992) 106 Stat. 4706), which, among other things, amended the original CVP act to reprioritize the objectives of the CVP. The CVPIA elevated the protection of fish and wildlife to one of the main purposes of the CVP, alongside of irrigation and domestic uses, and it reserved 800,000 acre-feet of CVP water for environmental and wildlife protection purposes. (CVPIA, §§ 3406(a) & (b)(2), 3404(c); see In re Bay-Delta etc., supra, 43 Cal.4th at p. 1154; San Luis Unit, supra, at pp. 801-802.) The CVPIA also expressly required the Bureau to operate the CVP to “meet all obligations under state and federal law, including but not limited to the federal Endangered Species Act, [title] 16 [United States Code section] 1531, et seq., and all decisions of the California [SWRCB] establishing conditions on applicable licenses and permits for the project.” (CVPIA, § 3406(b).)

As this regulatory overview confirms, the Bureau operates the CVP and allocates CVP water subject to a comprehensive scheme of environmental statutes and regulations, including the environmental requirements of the CVPIA, the federal Endangered Species Act of 1973 (16 U.S.C. § 1531 et seq.), and various state and federal regulations of Delta waterflow and water quality. (San Luis & Delta-Mendota, supra, 672 F.3d at pp. 682-683 [noting the Bureau’s control of the CVP water is subject to “a plethora of federal statutes and regulations governing” such matters as “the CVP yield,” “water quality,” and “the impact of the releases on the environment and wildlife”]; San Luis Unit, supra, 709 F.3d at p. 802.)

Of course, another major factor in the Bureau’s task of allocating water to contractors (such as Water Districts) is annual precipitation. The Bureau’s water plan states: “[The Bureau] holds contracts with many water districts and municipalities which commit the agency to provide up to a maximum quantity of water in any particular year. Each year, [the Bureau] must determine, based on meteorological and hydrological conditions and other operational and institutional factors, how much water can actually be delivered to each district and municipality. This is called the allocation process. Allocations are usually expressed as a percentage of the maximum contract volumes of water prescribed in the contracts held between [the Bureau] and the various water districts, municipalities and other entities.” (U.S. Dept. of the Interior, Bureau of Reclamation, Central Valley Project Water Plan (2011) p. 4 (CVP Water Plan).) However, in addition to considering the amount of water available from rainfall, expected snowpack runoff from the Sierra and reservoir storage, the Bureau also takes into account its obligations under environmental laws, which often significantly impact its determination of the amount of CVP water available to contractors.

Not infrequently, the Bureau must make its water allocation decisions during periods of drought. In its water service contracts with contractors, the Bureau includes standard provisions for the reduction of water quantities to contractors during a drought or water shortage. (San Luis Unit, supra, 709 F.3d at p. 802; Westlands, supra, 337 F.3d at p. 1097.) Even in such dry years when contractors’ allocations must be reduced due to inadequate rain and snow, the amount of water that the Bureau allocates to contractors is further limited by the constraints or mandates imposed on the Bureau by the CVPIA and other environmental laws. In practice, CVP water is made available to Water Districts only after the Bureau’s obligations under environmental laws are satisfied and the rights of holders of senior water rights are met. (San Luis Unit, supra, at p. 802.)

The Water Service Contracts and the Interim Renewals Thereof

Water service contracts with the Bureau are the prescribed legal arrangement through which CVP water is provided to contractors. The purposes of water service contracts are to establish the rates and other terms for water delivery, to produce sufficient revenue to recover an appropriate share of the federal government’s capital investment, and to repay the Bureau’s annual operation and maintenance costs. (43 U.S.C. § 485h(e).) Water service contracts are the mechanisms used to recover each contractor’s share of these costs as a condition for receiving CVP water. (Ibid.)

Here, the original water service contract between the Bureau and Westlands Water District was entered into in 1963, and it remained in effect for a period of 40 years, commencing with the first delivery of water from the San Luis Unit to Westlands Water District. Under the 1963 water service contract, Westlands Water District was entitled to receive up to 1,008,000 acre-feet per year, with a reduction to 900,000 acre-feet per year after 1979. However, additional water had been provided by the Bureau under a 1968 supplemental contract and by allocation decisions thereafter. In 1986, a stipulated court judgment (known as the Barcellos judgment) (Barcellos & Wolfsen, Inc. v. Westlands Water Dist. (E.D.Cal., No. CV 79-106-EDP) recognized that Westlands Water District was entitled to 250,000 acre-feet of water each year in addition to the 900,000 acre-feet per year indicated above (for a total of 1.15 million acre-feet per year). The 40-year period of the parties’ 1963 water service contract expired at the end of 2007. At that time, it was understood by both parties that the anticipated, long-term renewal of their water service contract would be for 1.15 million acre-feet of water. The 2012 interim renewal contract with Westlands Water District relates to this same 1.15 million acre-feet of water per year.

In 1992, long before the expiration of Westlands Water District’s 1963 water service contract (as described above), the CVPIA was enacted into law. The CVPIA provided that the Bureau “shall,” upon request, renew existing long-term water service contracts for a period of up to 25 years, but only after the Bureau first completed preparation of a programmatic environmental impact statement (EIS) that examined the effects on the environment of implementing the CVPIA, including the effects on the environment of renewing the existing long-term water service contracts. (CVPIA, §§ 3404(c), 3409.) Until that environmental documentation was completed, the Bureau was authorized by the CVPIA to enter into interim renewal contracts of up to three years on the first occasion, and for successive interim periods of up to two years in length thereafter. (CVPIA, § 3404(c).)

In 2007, when the original 1963 water service contract between the Bureau and Westlands Water District was about to expire, the Bureau had not yet completed its environmental documentation necessary for the execution of a long-term (25-year) renewal of the water service contract with Westlands Water District. Accordingly, at that time, Westlands Water District and the Bureau entered into a three-year interim renewal of the water service contract for 1.15 million acre-feet of water. In 2010, Westlands Water District and the Bureau entered into a two-year interim renewal contract on the same terms. In 2012, when the Bureau had still not completed its environmental documentation, the same parties entered into another two-year interim renewal contract on the same terms. That two-year interim renewal contract between Westlands Water District and the Bureau (contract No. 14-06-200-495A-IR3) is one of the six interim contracts at issue in the present appeal.

The other five interim renewal contracts challenged by petitioners were entered into by the Distribution Districts—specifically, four were entered into by Westlands Distribution District No. 1 and one by Westlands Distribution District No. 2, which contracts are briefly summarized below.

Westlands Distribution District No. 1 obtained an assignment of rights from Mercy Springs Water District to 6,260 acre-feet of CVP water, which represents a portion of Mercy Springs Water District’s rights under a water service contract entered into in 1967 between the Bureau and Mercy Springs Water District. Beginning in 2000, Westlands Distribution District No. 1 entered into a series of interim renewal contracts with the Bureau for this water. The 2012 two-year interim renewal contract between Westlands Distribution District No. 1 and the Bureau concerning this water (contract No. 14-06-200-3365A-IR13-B) is one of the contracts at issue in the present appeal.

In 2004, Westlands Distribution District No. 1 obtained an assignment of 2,500 acre-feet of CVP water from Centinella Water District, which rights had belonged to Centinella Water District pursuant to a 1977 water service contract with the Bureau. Since the assignment, Westlands Distribution District No. 1 entered into a series of interim renewal contracts with the Bureau concerning this water. The 2012 two-year interim renewal contract between Westlands Distribution District No. 1 and the Bureau concerning this water (contract No. 7-07-20-W0055-IR13-B) is one of the contracts at issue in the present appeal.

In 2005, Westlands Distribution District No. 1 was assigned 2,990 acre-feet of CVP water from Widren Water District, the rights to which had belonged to Widren Water District under a 1967 water services contract with the Bureau. Subsequent to the assignment, Westlands Distribution District No. 1 entered into a series of interim renewal contracts with the Bureau concerning this water. The 2012 two-year interim renewal contract between Westlands Distribution District No. 1 and the Bureau concerning this water (contract No. 14-06-200-8018-IR13-B) is one of the contracts at issue in the present appeal.

In 2007, Westlands Distribution District No. 1 entered into an agreement for the assignment of 27,000 acre-feet of CVP water from Broadview Water District. Broadview Water District had acquired the right to that volume of CVP water in a 1959 water service contract with the Bureau. Since the 2007 assignment, Westlands Distribution District No. 1 entered into a series of interim renewal contracts with the Bureau concerning this 27,000 acre-feet of water, including the 2012 two-year interim renewal contract (contract No. 14-06-200-8092-IR13), which is one of the contracts at issue in the present appeal.

In 2003, Westlands Distribution District No. 2 entered into an agreement for the assignment of 4,198 acre-feet of CVP water from Mercy Springs Water District. Subsequent to that assignment, Westlands Distribution District No. 2 entered into a series of interim renewal contracts with the Bureau concerning this water, including the 2012 two-year interim renewal contract (contract No. 14-06-200-3365A-IR13-C). That 2012 interim renewal contract is one of the contracts at issue in the present appeal.

Water Districts’ Approvals of the 2012 Interim Renewal Contracts

In December 2011, Water Districts approved the 2012 two-year interim renewal contracts at issue in this appeal and, in doing so, found that such renewals were exempt from the requirements of CEQA for several reasons. Water Districts’ resolutions found that the interim renewal contracts merely involved the ongoing receipt and delivery of water on identical terms as the prior water service contracts, with no expansion of service and no new facilities constructed. Further, Water Districts found that, to the extent the interim renewal contracts involved any changes, such changes related solely to rates, dates and other minor administrative matters. On these and related factual grounds, Water Districts made specific findings that the renewals were exempt from CEQA, including under the “[ojngoing” pre-CEQA project exemption (Guidelines, § 15261), the ratesetting exemption (Guidelines, § 15273) and the existing facilities exemption (Guidelines, § 15301).

We note that the Bureau, prior to its approval of interim renewals, performed an environmental assessment under the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. § 4321 et seq.) concerning the two-year interim renewal contracts that related to CVP water from the San Luis Unit provided to six particular contractors, including Westlands Water District. The Bureau made findings under NEPA of no significant impact. That is, the interim renewals were “not a major federal action that would significantly affect the quality of the human environment and an environmental impact statement is not required . . . .” (U.S. Dept. of the Interior, Finding of No Significant Impact (Feb. 2010) p. 1.)

Petitioners’ CEQA Lawsuit

Following the approvals of the 2012 interim renewal contracts by Water Districts, petitioners filed their CEQA lawsuit—a petition for writ of mandate—seeking to set aside the approvals based on alleged failure to comply with CEQA. Petitioners’ lawsuit alleged that no exemption to CEQA was applicable and that Water Districts were required to undertake environmental review of the interim renewal contracts prior to any approvals thereof. As to potential adverse effects on the environment of entering into the interim renewal contracts, petitioners claimed that the water rights at issue would involve the diversion (by the Bureau) of a substantial volume of water from the Delta, thereby further affecting waterflows and water purity in the Delta and harming or endangering certain fish species within that fragile ecosystem. Additionally, petitioners alleged that Water Districts’ delivery of irrigation water to the lands served by Water Districts would contribute to a further buildup of contamination of the soils and water tables with salt, selenium and other pollutants. Since CEQA allegedly applied and was not followed by Water Districts, and because potentially significant environmental impacts were at stake, petitioners requested that the trial court set aside Water Districts’ approvals of the 2012 interim renewal contracts.

Trial Court’s Rulings

After petitioners’ lawsuit was filed, Water Districts moved to dismiss on several procedural grounds, including failure to exhaust administrative remedies, lack of standing, and failure to join an indispensable party. The motion to dismiss was denied.

The hearing on the merits of the petition for writ of mandate was held in the trial court on April 5, 2013. The parties filed trial briefs and appeared and presented oral argument. On April 16, 2013, the trial court issued its written order denying petitioners’ petition for writ of mandate.

In its written order, the trial court came to the same conclusions as Water Districts; the interim renewal contracts Were exempt from CEQA. As to the “ ‘rate-setting’ ” exemption found at section 21080, subdivision (b)(8), and. Guidelines section 15273, the trial court observed that the interim renewal contracts had the effect of setting rates between the Bureau and Water Districts and, in all other respects, merely continued existing water deliveries without any change. Therefore, the trial court found that this exemption to CEQA was applicable. The trial court next considered the “ ‘ongoing project’ ” exemption that is set forth in Guidelines section 15261, which the trial court explained was intended to remove from CEQA projects that “were authorized before the adoption of CEQA” and that have “not changed in such a way as to cause new environmental impacts.” In discussing this exemption, the trial court found that “the contracts merely continue the project that was originally authorized in 1965, long before CEQA was effective in November of 1970, and therefore the contracts fall within the ‘ongoing projects exemption.’ ” The trial court noted that although there had been some degree of expansion in water deliveries and distribution systems since 1970, “the current round of interim renewal contracts [were] not part of [that] expansion.” For these reasons, the trial court found that the ongoing projects exemption applied.

Finally, the trial court held that the “[e]xisting [facilities” exemption set forth in Guidelines section 15301 was applicable, since the interim renewal contracts “merely authorized continued water deliveries under the existing system and use of the distribution network to provide those water deliveries.” The trial court rejected petitioners’ argument that exceptions to this categorical exemption (relating to significant effects on the environment caused by unusual circumstances or cumulative impacts) defeated the existing facilities exemption. Inasmuch as the baseline for the interim renewal contracts was the environment as it existed in December 2011, including all environmental damages that already existed at that time, and because said contracts did not increase or change the existing water deliveries or construct new facilities, the exceptions to the exemption were not established.

In short, the trial court fully agreed with the findings of exemption adopted by Water Districts when the approvals were made.

Petitioners’ Appeal and Procedural Issues

After the trial court found the approvals of the 2012 interim renewal contracts were exempt from CEQA, it denied the petition for writ of mandate. A judgment of dismissal followed. Petitioners appeal from that judgment, arguing that Water Districts erred in making findings of exemption from CEQA.

Before proceeding, we note this is not petitioners’ first occasion to challenge Water Districts’ approvals of interim renewal contracts. Previously, petitioners appealed from a denial of a petition for writ of mandate to set aside the 2010 two-year interim renewal contracts—the six interim' renewal contracts that immediately preceded those at issue here. We concluded that the appeal was moot, since the contracts had expired while the appeal was pending and all activity under those contracts had ended. Thus, no effective relief concerning those 2010 contracts could be granted. (North Coast Rivers Alliance v. Westlands Water Dist. (Apr. 11, 2012, F062357) [nonpub. opn.].) Moreover, in light of the inadequacy of the administrative record, we declined to reach the issues under the discretionary exception by which a court may hear a moot case where the controversy is one that is likely to recur between the parties. (Ibid.; see Cucamongans United for Reasonable Expansion v. City of Rancho Cucamonga (2000) 82 Cal.App.4th 473, 47SM-80 [98 Cal.Rptr.2d 202] [stating discretionary exceptions to rules regarding mootness].) Although the issues were capable of repetition, yet evading review, we chose not to address the issues on such an incomplete record.

In the appeal now before us concerning the 2012 interim renewal contracts, the issues are likewise moot. The contracts expired in February 2014 and all activity under those contracts ended at that time. However, we believe the record in the present appeal is sufficient to allow us to resolve certain key issues that are likely to recur relating to Water Districts’ findings of exemption from CEQA and petitioners’ challenges thereto. Accordingly, we exercise our discretion to reach those issues in this otherwise moot case.

DISCUSSION

I. Standard of Review

Appellate review under CEQA is de novo in the sense that we review the agency’s actions as opposed to the trial court’s decision. (Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal.4th 412, 427 [53 Cal.Rptr.3d 821, 150 P.3d 709] (Vineyard Area).) However, our inquiry extends only to whether there was a prejudicial abuse of discretion. (§ 21168.5.) “Such an abuse is established ‘if the agency has not proceeded in a manner required by law or if the determination or decision is not supported by substantial evidence.’ [Citations.]” (Vineyard Area, supra, at pp. 426-427, fn. omitted.) Therefore, we resolve the CEQA issues before us by independently determining whether the administrative record demonstrates any legal error by Water Districts and whether it contains substantial evidence to support Water Districts’ factual determinations.

The instant appeal challenges Water Districts’ determinations that the 2012 interim renewal contracts (or the activities authorized thereby) were exempt from CEQA. CEQA exemptions are of two types—statutory and categorical—both of which were asserted by Water Districts. Since both types of exemptions' are at issue in this appeal, we briefly explain the differences between them and the manner in which the standard of review plays out in our consideration of each type of exemption.

A. Statutory Exemptions

Statutory exemptions, as the term implies, are those enacted by the Legislature. “Because CEQA is statutory in origin, the Legislature has the power to create exemptions from its requirements. Projects and activities can be made wholly or partially exempt, as the Legislature chooses, regardless of their potential for adverse [environmental] consequences.” (Great Oaks Water Co. v. Santa Clara Valley Water Dist. (2009) 170 Cal.App.4th 956, 966, fn. 8 [88 Cal.Rptr.3d 506] (Great Oaks), relying on Napa Valley Wine Train, Inc. v. Public Utilities Com. (1990) 50 Cal.3d 370, 376, 382 [267 Cal.Rptr. 569, 787 P.2d 976] [as to each statutory exemption, the Legislature has determined that the exemption promoted an interest important enough to justify foregoing CEQA compliance].) “A critical difference between statutory and categorical exemptions is that statutory exemptions are absolute, which is to say that the exemption applies if the project fits within its terms. Categorical exemptions, on the other hand, are subject to exceptions that defeat the use of the exemption and the agency considers the possible application of an exception in the exemption determination.” (Great Oaks, supra, at p. 966, fn. 8.)

An agency’s finding that a statutory exemption applies to a project will be upheld if substantial evidence supports the finding of exemption. (Concerned Dublin Citizens v. City of Dublin (2013) 214 Cal.App.4th 1301, 1311 [154 Cal.Rptr.3d 682].) “In determining whether an agency’s findings concerning the use of a statutory exemption from CEQA may be upheld, we review the administrative record to see that substantial evidence supports each element of the exemption. [Citations.] ‘There must be “substantial evidence that the [activity is] within the exempt category of projects.” [Citation.] That evidence may be found in the information submitted in connection with the project, including at any hearings that the agency chooses to hold. [Citation.]’ [Citation.] . . . [0]ur application of substantial evidence review in the context of a challenge to an agency’s use of a statutory exemption means we determine whether the administrative record contains relevant information that a reasonable mind might accept as sufficient to support the conclusion reached. All conflicts in the evidence are resolved in support of the agency’s action and we indulge all reasonable inferences to support the agency’s findings, if possible. [Citations.]” (Great Oaks, supra, 170 Cal.App.4th at p. 973.)

On the other hand, if we are required to construe the scope of a statutory exemption, to that extent the issue becomes one of statutory interpretation to which we apply de novo review. (Del Cerro Mobile Estates v. City of Placentia (2011) 197 Cal.App.4th 173, 179 [127 Cal.Rptr.3d 413]; Bus Riders Union v. Los Angeles County Metropolitan Transportation Agency (2009) 179 Cal.App.4th 101, 106-107 [101 Cal.Rptr.3d 385].)

B. Categorical Exemptions

As directed by the Legislature in section 21084, the Guidelines adopted by the Secretary of the Natural Resources Agency to implement CEQA must include “a list of classes of projects that have been determined not to have a significant effect on the environment and that shall be exempt from this division.” (§ 21084, subd. (a).) The Guidelines contain such a list of exempt classes of projects, which are known as categorical exemptions. (Guidelines, § 15300 et seq.) These are nonstatutory exemptions for categories of projects that ordinarily have no significant effect on the environment. For example, as will be discussed later in this opinion, there is a categorical exemption provided in the Guidelines for “[ejxisting [facilities,” which is defined as the “operation ... of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency’s determination.” (Guidelines, § 15301.) In contrast to statutory exemptions, the categorical exemptions are subject to exceptions. Section 15300.2, subdivision (c), of the Guidelines states an important exception: “A categorical exemption shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” Another exception to the categorical exemptions states: “All exemptions for these classes are inapplicable when the cumulative impact of successive projects of the same type in the same place, over time is significant.” (Id., subd. (b).)

If an agency has established that a project comes within a categorical exemption, the burden shifts to the party challenging the exemption to show that it falls into one of the exceptions. (Fairbank v. City of Mill Valley (1999) 75 Cal.App.4th 1243, 1259 [89 Cal.Rptr.2d 233] (Fairbank).) We apply the substantial evidence test to an agency’s factual determination that a project comes within the scope of a categorical exemption. (Committee to Save the Hollywoodland Specific Plan v. City of Los Angeles (2008) 161 Cal.App.4th 1168, 1187 [74 Cal.Rptr.3d 665]; Fairbank, supra, at p. 1251.)

Less clear is the standard of review that is applicable to the second part of the agency’s analysis—namely, whether an exception to the categorical exemption exists. On this question, there is a split of authority. (Fairbank, supra, 75 Cal.App.4th at pp. 1259-1260 [describing split of authority].) One line of cases has applied the “ ‘fair argument’ ” standard, holding that a finding of categorical exemption cannot be sustained if there is a fair argument based on substantial evidence in the record that an exception applies (e.g., a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances), even where the agency is also presented with substantial evidence to the contrary. (Ibid. [noting a rationale cited for this approach is the analogy to challenges to negative declarations]; see Committee to Save the Hollywoodland Specific Plan v. City of Los Angeles, supra, 161 Cal.App.4th at p. 1187.) A number of recent appellate cases have applied the fair argument standard to whether an exception has been established, including Voices for Rural Living v. El Dorado Irrigation Dist. (2012) 209 Cal.App.4th 1096, 1108 [147 Cal.Rptr.3d 480], Banker’s Hill, Hillcrest, Park West Community Preservation Group v. City of San Diego (2006) 139 Cal.App.4th 249, 262 [42 Cal.Rptr.3d 537] (Banker’s Hill), and Azusa Land Reclamation Co. v. Main San Gabriel Basin Watermaster (1997) 52 Cal.App.4th 1165, 1202-1204 [61 Cal.Rptr.2d 447] (Azusa Land).

Other cases have applied an ordinary substantial evidence test to questions of fact regarding exceptions to categorical exemptions, deferring to the express or implied findings of the local agency that found a categorical exemption applicable. (Fairbank, supra, 75 Cal.App.4th at pp. 1259-1260.) Such cases include Santa Monica Chamber of Commerce v. City of Santa Monica (2002) 101 Cal.App.4th 786, 796 [124 Cal.Rptr.2d 731] (Santa Monica), City of Pasadena v. State of California (1993) 14 Cal.App.4th 810, 824 [17 Cal.Rptr.2d 766], Centinela Hospital Assn. v. City of Inglewood (1990) 225 Cal.App.3d 1586, 1601 [275 Cal.Rptr. 901], and Dehne v. County of Santa Clara (1981) 115 Cal.App.3d 827, 844-845 [171 Cal.Rptr. 753],

We do not need to decide which view is correct because, here, the result is the same even under the less deferential fair argument standard, as will be seen in the part of this opinion discussing Water Districts’ claim of categorical exemption for existing facilities. But first we shall consider the statutory exemptions.

II. Statutory Ratesetting Exemption

Section 21080, subdivision (b), enumerates certain “activities” to which CEQA does not apply. Subdivision (b)(8) thereof provides that CEQA does not apply to “[t]he establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges by public agencies which the public agency finds are for the purpose of (A) meeting operating expenses, including employee wage rates and fringe benefits, (B) purchasing or leasing supplies, equipment, or materials, (C) meeting financial reserve needs and requirements, (D) obtaining funds for capital projects necessary to maintain service within existing service areas, or (E) obtaining funds necessary to maintain those intracity transfers as are authorized by city charter. . . ,” (§ 21080, subd. (b)(8); see Guidelines, § 15273.) Under this statutory exemption, an agency’s setting of rates, fares, tolls or other charges to further one or more of the exempt purposes in the provision (e.g., to maintain existing services or meet operating expenses) does not require CEQA review. (Great Oaks, supra, 170 Cal.App.4th at p. 969; Bus Riders Union v. Los Angeles County Metropolitan Transportation Agency, supra, 179 Cal.App.4th at pp. 103, 107-108.) The Guidelines clarify, however, that “[r]ate increases to fund capital projects for the expansion of a system remain subject to CEQA.” (Guidelines, § 15273, subd. (b).) In order to qualify for this exemption, the agency is required to incorporate written findings in the record of any proceeding in which an exemption under this section is claimed, and such findings must set forth with specificity the basis for the claim of exemption. (§ 21080, subd. (b)(8); Guidelines, § 15273, subd. (c).)

Water Districts assert that the ratesetting exemption was applicable in this case because the 2012 interim renewal contracts kept the status quo in place and incorporated the terms of prior interim agreements between the parties, without change, some of which had previously included a schedule of water rates. In approving the 2012 interim renewal contracts, Water Districts made express findings that the renewals Would simply provide for continued water delivery on the same terms, using the same facilities, without any change or expansion of existing use. As to rates, Water Districts’ 2011 resolutions claimed that the renewals involved only adjustments to rates and related administrative terms to meet operating expenses. However, the 2012 interim renewal agreements make no mention of any setting or adjustment of rates.

Arguing for the opposite result, petitioners contend that the record does not support the application of the exemption because the 2012 interim renewal contracts did not specify that any action was being taken concerning rates by Water Districts. We agree with petitioners on this issue.

We begin by noting the factual situation that is generally contemplated by this statutory exemption. In light of the exemption’s reference to rates, tolls and fares charged by public agencies, and the fact that the listed exempt purposes relate to defraying or meeting agency expenses, it appears that the exemption is primarily concerned with the situation where a public agency provides services to customers or the public (e.g., bus transportation) and decides that it must either impose a charge, or alter the amount already charged, for such services (e.g., bus fare increase). (§ 21080, subd. (b)(8).) The cases are consistent with this understanding. In each of the appellate decisions affirming the application of the ratesetting exemption, a public agency had approved or raised certain rates or fares charged in order to maintain existing levels of service, meet operational expenses related to such services and/or fulfill other exempt purposes under the statute. (See, e.g., Bus Riders Union v. Los Angeles County Metropolitan Transportation Agency, supra, 179 Cal.App.4th at pp. 103, 107-108 [exemption applied to bus fares raised by public agency to meet operational expenses and obtain funding needed to maintain service within existing service areas]; Great Oaks, supra, 170 Cal.App.4th at pp. 973-975 [exemption applied to groundwater rate increases approved for purposes of meeting operational expenses and maintaining service levels in existing service areas]; Surfrider Foundation v. California Coastal Com. (1994) 26 Cal.App.4th 151, 155-156 [31 Cal.Rptr.2d 374] [exemption applied to California’s Department of Parks and Recreation’s decision to install devices for collection of parking fees at state park beaches, and same exemption applied to the California Coastal Commission’s subsequent approval of the department’s decision]; Condit v. Solvang Mun. Improvement Dist. (1983) 146 Cal.App.3d 997, 1001 [194 Cal.Rptr. 683] [the district’s increase in rates and connection fees for water service to maintain existing service levels was exempt from CEQA].)

Here, the record does not support a finding that, by approving the 2012 interim renewal contracts, Water Districts were thereby setting, adjusting or approving rates charged to customers of Water Districts. Therefore, the present case does not fit within the standard factual pattern for this exemption, as described above. And even assuming (without deciding) that the statutory exemption could potentially apply to the rates that Water Districts were required to pay to the Bureau for the supplies of CVP water delivered by the Bureau to Water Districts, the 2012 interim renewal contracts were silent regarding any such rates. Although it is true the 2012 interim renewal contracts incorporated previous interim agreements, the effect of which was to continue the status quo without change in regard to all preexisting terms (including rate obligations), the 2012 interim renewal contracts did not expressly mention rates or specify that any action was being taken on the issue of rates as such. Nothing explicit was said therein about adjusting, approving or establishing rates. Without more, the record does not show that the 2012 interim renewal contracts (and the approvals thereof) were, in substance, ratesetting actions by Water Districts. Therefore, even assuming for the sake of argument that this statutory exemption could, in a proper case, be applied to Water Districts concerning the rates that Water Districts had to pay to the Bureau for CVP water, the exemption was not established by substantial evidence in the present record.

III. Statutory Exemption for Pre-CEQA Ongoing Projects

In implementing CEQA, the Guidelines recognize a statutory exemption for a project approved prior to November 23, 1970, that is still “being carried out” by the public agency. (Guidelines, § 15261, subd. (a) (Guidelines, § 15261(a)).) Because November 23, 1970, is the date that CEQA took effect (Friends of Mammoth v. Board of Supervisors (1972) 8 Cal.3d 247, 272 [104 Cal.Rptr. 761, 502 P.2d 1049] (Friends of Mammoth); Stats. 1970, ch. 1433, § 1, p. 2780 et seq.), the exemption is evidently founded, at least in part, on the fact that CEQA, as a statutory enactment, was intended by the Legislature to have a prospective, not retroactive, application. (See, e.g., Communities for a Better Environment v. South Coast Air Quality Management Dist. (2010) 48 Cal.4th 310, 325, fn. 10 [106 Cal.Rptr.3d 502, 226 P.3d 985] (Communities for a Better Environment) [noting that CEQA does not apply retroactively to pre-CEQA projects]; Nacimiento Regional Water Management Advisory Com. v. Monterey County Water Resources Agency (1993) 15 Cal.App.4th 200, 201, 206 [19 Cal.Rptr.2d 1] (Nacimiento) [annual water releases from dam/reservoir built prior to enactment of CEQA were exempt as integral part of ongoing pre-CEQA project; parallel federal cases closely considered since NEPA, “like CEQA, . . . does not apply retroactively”]; Remy et al., Guide to CEQA: Cal. Environmental Quality Act (11th ed. 2007) p. 121; see also Quarry v. Doe I (2012) 53 Cal.4th 945, 955 [139 Cal.Rptr.3d 3, 272 P.3d 977] [all statutes presumed to be prospective, not retroactive, unless a contrary intention is clearly indicated by Legislature]; §§ 21169-21171.)

The full text of section 15261(a) of the Guidelines provides, under the heading Ongoing Project, as follows: project, including the alternative of ‘no project’ or halting the project; provided that a project subject to the National Environmental Policy Act (NEPA) shall be exempt from CEQA as an on-going project if, under regulations promulgated under NEPA, the project would be too far advanced as of January 1, 1970, to require preparation of an EIS.

“If a project being carried out by a public agency was approved prior to November 23, 1970, the project shall be exempt from CEQA unless either of the following conditions exists:

“(1) A substantial portion of public funds allocated for the project have not been spent, and it is still feasible to modify the project to mitigate potentially adverse environmental effects, or to choose feasible alternatives to the

“(2) A public agency proposes to modify the project in such a way that the project might have a new significant effect on the environment.”

As this language clearly indicates, the exemption includes the situation where a public agency carries out an action today that is an inherent part of an ongoing project approved before CEQA took effect. (Guidelines, § 15261(a) [the project “approved” prior to Nov. 23, 1970, is “being carried out” by the agency].) The key issue in analyzing the exemption is whether the challenged action is “a normal, intrinsic part of the ongoing operation” of a project approved prior to CEQA, rather than an expansion or modification thereof. (Nacimiento, supra, 15 Cal.App.4th at p. 205; accord, County of Amador v. El Dorado County Water Agency (1999) 76 Cal.App.4th 931, 968-969 [91 Cal.Rptr.2d 66] (Amador).)

In Nacimiento, a government agency built a dam and reservoir prior to the enactment of CEQA. The agency’s application to build the project had provided for operation of a reservoir, including the storing and periodic release of water in varying amounts and for different uses. The plaintiff in that case challenged the agency’s 1991 decision to release large amounts of water that year to benefit various interests downstream. The appellate court held that the agency’s annual decision to release water to competing interests was an inherent part of an ongoing project and exempt from CEQA. (Nacimiento, supra, 15 Cal.App.4th at pp. 201, 204-208.) The court explained: “Whether an activity requires environmental review depends upon whether it expands or enlarges project facilities or whether it merely monitors and adjusts the operation of existing facilities to meet fluctuating conditions.” (Id. at p. 205.) Since the project in that case did not involve enlargement of capacity to divert water or make other material revisions, but instead continued operations within existing parameters, it fell within the ongoing project exemption and did not require CEQA review. (Nacimiento, supra, at pp. 207-208; see Amador, supra, 76 Cal.App.4th at pp. 968-969 [stating the same test, but holding the exemption did not apply there because of “remarkable” change in proposed operation of the project from nonconsumptive to consumptive water use]; cf. County of Inyo v. Yorty (1973) 32 Cal.App.3d 795, 806-808 [108 Cal.Rptr. 377] [the city’s additional pumping facilities and expanded groundwater extraction increased the intensity and scope of the original aqueduct program; therefore, environmental review of the expanded groundwater extraction was required].)

In the instant appeal, petitioners argue that the exemption for ongoing projects did not apply because there were expanded operations in the years after CEQA took effect, creating significant effects on the environment beyond that of the originally conceived project. Allegedly, the 2012 approvals necessarily included the post-CEQA expansions and, therefore, could not come within the terms of the exemption. Taking the contrary position, Water Districts maintain that substantial evidence in the record adequately supported their findings that the 2012 interim renewal contracts and the activity contemplated therein came within the scope of the exemption for pre-CEQA ongoing projects.

We conclude Water Districts are correct. That is, there is substantial evidence in the record to support the Water Districts’ claim of statutory exemption under Guidelines section 15261(a). As explained in due course below, this conclusion is evidenced by a comparison of the nature of the original pre-CEQA project and the current activity challenged by petitioners. That comparison reflects that the matters presently challenged by petitioners are merely an incidental part of the original, ongoing pre-CEQA project—and therefore exempt.

A. CEQA’s Definition of a Project

Before considering whether there is an ongoing pre-CEQA project here, we first note how CEQA defines a project. Under CEQA, a “ ‘[p]roject’ means an activity which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and which is any of the following: [][] (a) An activity directly undertaken by any public agency. ['][] (b) An activity undertaken by a person which is supported, in whole or in part, through contracts, grants, subsidies, loans, or other forms of assistance from one or more public agencies, [f] (c) An activity that involves the issuance to a person of a lease, permit, license, certificate, or other entitlement for use by one or more public agencies.” (§ 21065.) The Guidelines elaborate that a “ ‘[p]roject’ means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment . . .” and which is undertaken, supported or approved by a public agency. (Guidelines, § 15378, italics added.) The Guidelines further clarify that “[t]he term ‘project’ refers to the activity which is being approved and which may be subject to several discretionary approvals by governmental agencies. The term ‘project’ does not mean each separate governmental approval.” (Guidelines, § 15378, subd. (c), italics added.) The question of the nature or scope of a project may be decided by the appellate court based on undisputed facts in the record. (Nelson v. County of Kern (2010) 190 Cal.App.4th 252, 272 [118 Cal.Rptr.3d 736].)

B. The Pre-CEQA Ongoing Project

Our next step is to ascertain the nature of the original project or activity that was approved prior to November 23, 1970. Since we will be discussing matters that occurred long before the two Distribution Districts were formed, the focus of our discussion of pre-CEQA events will be on Westlands Water District. Consistent with the parties’ briefing of this issue, our examination of the record will include both (i) the water distribution facilities constructed for Westlands Water District’s use and operation and (ii) the CVP water that (depending on availability) Westlands Water District was entitled to receive and distribute annually for use on lands within Westlands Water District’s service area.

1. Water Delivery Facilities Approved Pre-CEQA

“ ‘Approval’ means the decision by a public agency which commits the agency to a definite course of action in regard to a project intended to be carried out by any person. . . .” (Guidelines, § 15352, subd. (a).) Contracts by which the public agency has effectively committed itself to a definite course of action on a project are sufficient to constitute approval. (See Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116, 134-139 [84 Cal.Rptr.3d 614, 194 P.3d 344] (Save Tara); City of Santee v. County of San Diego (2010) 186 Cal.App.4th 55, 66-68 [111 Cal.Rptr.3d 47] [applying Save Tara principles to agreements between public agencies regarding a public project]; City of Irvine v. County of Orange (2013) 221 Cal.App.4th 846, 859 [164 Cal.Rptr.3d 586] [same].) Generally speaking, an agency acts to approve a proposed course of action when it makes its earliest firm commitment to it, not when the final or last discretionary approval is made. (Save Tara, supra, at p. 134.)

At this point in our analysis, we consider the facilities aspect of the purported ongoing project. That is, we determine whether the record is sufficient to support the conclusion that Westlands Water District, by means of contractual commitments or other agency determinations made prior to CEQA’s enactment, approved at that time the constmction of its water distribution facilities, including the canals, laterals and other infrastructure that currently is used to receive and deliver its CVP water supplies. We believe that such a conclusion is supported by substantial evidence, as explained below. (See Great Oaks, supra, 170 Cal.App.4th at p. 973 [substantial evidence test applies to factual questions regarding application of statutory exemption].)

On April 1, 1965, Westlands Water District entered into a contract with the Bureau providing for the construction of a “water distribution and drainage collector system.” (U.S. Dept. of the Interior, Bureau of Reclamation, Contract Between U.S. & Westlands Water Dist. (Apr. 1, 1965) p. 2.) The water distribution system was to include a lateral conveyance system, primarily of enclosed pipe and related facilities, all of which was to generally conform to an attached plan in an exhibit A thereto (a feasibility plan showing the layout and approximate location of the laterals and sublaterals). By executing the contract, the Bureau agreed to construct such facilities at a total cost not to exceed $157,048,000, and Westlands Water District agreed to repay such construction costs and other related expenses over a period of 40 years. The construction was to be carried out in several phases, with the final two phases to begin no later than specified dates in the mid-to-late 1970’s. The water distribution system was to provide facilities for the delivery of CVP water to irrigable lands within Westlands Water District’s boundaries, consisting at that time of approximately 400,000 acres. On April 14, 1964, Westlands Water District approved the above contract by resolution No. 150-64, stating that “it is contemplated that the extent of the . . . distribution facilities, required for the lands within the District will increase over a period of years and, therefore, it is desirable that provision for their ultimate construction be made at this time . . . .”

Effective June 29, 1965, the Legislature enacted special legislation known as the Westlands Water District Merger Law (Wat. Code, § 37800 et seq.), which merged the adjacent West Plains Water Storage District into Westlands Water District. West Plains Water Storage District had serviced the water needs of the neighboring lands on the westerly side of Westlands Water District. The purpose of the merger was to secure greater economy of administration and more effective utilization of CVP water from the San Luis Unit in order to maximize the beneficial use of CVP water in the area. (Wat. Code,. §§ 37801, 37820-37821.) The law affirmed that Westlands Water District, as the surviving entity, “is a public agency of the state.” (Wat. Code, § 37823.) Lands within the original premerger area of Westlands Water District (sometimes called Priority Area I) were to continue to have prior water rights (pursuant to an existing contract with the Bureau) over the new lands added by virtue of the merger with West Plains Water Storage District (sometimes called Priority Area II). (Wat. Code, § 37856.) Documents in the administrative record reflect that the merger added approximately 200,000 acres to Westlands Water District; thus, after the merger, Westlands Water District’s service area encompassed more than 600,000 acres.

In 1965, after the above described merger, Westlands Water District adopted a resolution that requested and authorized the Bureau to immediately begin the work necessary for construction of a sufficient water delivery system for the enlarged district pursuant to the existing repayment plan in the April 1, 1965, construction contract and invited negotiation of any amendatory repayment plan as the Bureau may deem necessary. In 1966, a plat was prepared identifying rights-of-way for distribution system laterals serving all of the areas within Westlands Water District’s postmerger boundaries. By 1968, the Bureau’s official publications and other written documentation acknowledged that the water distribution system under construction by the Bureau would be used to serve approximately 600,000 acres of Westlands Water District. During that same year, the Bureau and Westlands Water District entered into a supplemental contract to expedite the construction of the water distribution system within Westlands Water District’s boundaries (understood as comprising approximately 600,000 acres), which contract also provided for Westlands Water District to receive an additional 1.4 million acre-feet of water within a 10-year period (the 1968 supplemental contract). The 1968 supplemental contract (entitled Contract for Short Term Water Service) was approved by resolution of Westlands Water District in 1968.

In our estimation, the foregoing evidence was more than sufficient to show that prior to November 23, 197