Court Opinion

ID: 9928022
Source: CourtListenerOpinion
Date Created: 2024-01-30 18:03:38.999932+00
Date Added: 2024-06-11T09:46:28.539941
License: Public Domain

Filed 1/30/24 Kern Water Bank Authority v. Kern Local Agency Formation Commission CA5

                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIFTH APPELLATE DISTRICT

 KERN WATER BANK AUTHORITY et al.,
                                                                                             F085669
           Plaintiffs and Respondents,
                                                                            (Super. Ct. No. BCV-21-101310)
                    v.

 KERN LOCAL AGENCY FORMATION                                                              OPINION
 COMMISSION,

           Defendant and Appellant;

 BUENA VISTA WATER STORAGE
 DISTRICT et al.,

           Real Parties in Interest and Appellants.

         APPEAL from a judgment of the Superior Court of Kern County. Gregory A.
Pulskamp, Judge.
         McMurtrey, Hartsock, Worth & St. Lawrence, Isaac L. St. Lawrence, James A.
Worth; Gatzke Dillon & Ballance and David P. Hubbard for Defendant and Appellant
and Real Parties in Interest and Appellants.
         Young Wooldridge, Steven M. Torigiani and Brett A. Stroud; Nossaman, Robert
D. Thornton, David J. Miller; Klein DeNatale Goldner, Joseph D. Hughes, and R. Jeffrey
Warren for Plaintiffs and Respondents.
                                          -ooOoo-
       Real party in interest Buena Vista Water Storage District (Buena Vista) submitted
applications to the Kern Local Agency Formation Commission (Kern LAFCO) for an
annexation and a sphere-of-influence amendment. Kern LAFCO adopted resolutions
approving these applications. In a notice of exemption, Kern LAFCO stated the
annexation and sphere-of-influence amendment were exempt from review under the
California Environmental Quality Act (CEQA) (Pub. Resources Code,1 § 21000 et seq.)
because “it can be seen with certainty that there is no possibility” these activities “ha[ve]
the potential to have a significant adverse effect on the environment.”
       Kern Water Bank Authority and West Kern Water District petitioned for a
peremptory writ of mandate. They alleged Kern LAFCO’s approvals violated CEQA
because the requested annexation and sphere-of-influence amendment “are part of”
“and/or a step in the implementation of” a larger groundwater recovery project and Kern
LAFCO “failed to consider the [groundwater recovery p]roject’s potential to cause
foreseeable direct, indirect, and cumulative impacts on the environment.” The superior
court agreed with Kern Water Bank Authority and West Kern Water District, vacated the
approvals, and granted writ relief.
       On appeal, Kern LAFCO, Buena Vista, and Buena Vista Water Storage District
Groundwater Sustainability Agency (Buena Vista GSA; the other real party in interest)
contend the judgment must be reversed for two principal reasons. First, Kern Water
Bank Authority and West Kern Water District did not file a timely challenge. Second,

       1 Unless indicated otherwise, subsequent statutory citations refer to the Public
Resources Code.

                                              2.
Kern LAFCO’s approvals were “not part of” “or necessary to” the aforementioned
groundwater recovery project. We reject these contentions and affirm the judgment.2
                                     BACKGROUND
I.     The parties
       Buena Vista is a water storage district organized and existing pursuant to the
California Water Storage District Law (Wat. Code, § 39000 et seq.). Its boundaries are
located within Kern County. As a water storage district, Buena Vista is governed by an
elected board of directors that has regulatory and police powers to operate facilities for
storage and distribution of water. (See id., §§ 39059, 40302, 40658, 43000; Johnson v.
Arvin-Edison Water Storage Dist. (2009) 174 Cal.App.4th 729, 741.) According to
Buena Vista, since its inception in 1927, it “has stored available water in the groundwater
basin for use by its landowners in later dry years, when surface supplies are not
available.”

       2 Kern Water Bank Authority filed a “MOTION TO DISMISS APPEAL” on
March 23, 2023. We deferred our ruling pending consideration of the appeal on its
merits. Since we affirm the judgment on the merits, we need not consider this motion.
        In addition, we received requests for judicial notice from both sides. Appellants
asked us to judicially notice the following materials: (1) an April 2022 notice of
determination for the groundwater recovery project; (2) Kern Water Bank Authority and
West Kern Water District’s May 20, 2022 writ petition challenging Buena Vista’s
approval of the groundwater recovery project; (3) Buena Vista’s June 22, 2023 resolution
regarding the withdrawal of approval and certification of the final environmental impact
report (EIR) certification for the groundwater recovery project; (4) a June 30, 2023 case
management statement submitted by Kern Water Bank Authority; and (5) a June 30, 2023
revised case management statement filed by Buena Vista. Kern Water Bank Authority
asked us to judicially notice the following materials: (1) a document titled “Frequently
Asked Questions on Groundwater Sustainability Agencies” dated November 22, 2017,
which is available on the State Water Resource Control Board’s website; and (2) the
aforementioned June 22, 2023 resolution. We deferred our rulings pending consideration
of the appeal on its merits. Having done so, we deny these requests because the materials
are not germane to our analysis.

                                             3.
       Buena Vista GSA is a groundwater sustainability agency organized and existing
pursuant to the Sustainable Groundwater Management Act (SGMA) (Wat. Code, § 10720
et seq.). It is governed by members of Buena Vista’s board of directors and its
boundaries and jurisdictional area “coincide closely with those of” Buena Vista. Buena
Vista GSA was created in 2015 to manage a portion of the Kern County subbasin, a
“high-priority basin” “identified as having critical overdraft conditions.” In January
2020, Buena Vista GSA entered into a coordination agreement with four other
groundwater sustainability agencies: Henry Miller Water District; Kern Groundwater
Authority; Kern River Groundwater Sustainability Agency; and Olcese Water District
Groundwater Sustainability Agency. (See id., § 10727.6.) That same month, each of
these groundwater sustainability agencies submitted a groundwater sustainability plan
(GSP) for the Kern County subbasin to the Department of Water Resources. (See id.,
§ 10733.4, subd. (a).)
       Kern LAFCO is a local agency formation commission organized and existing
pursuant to the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000
(Reorganization Act) (Gov. Code, § 56000 et seq.). (See Protect Agricultural Land v.
Stanislaus County Local Agency Formation Com. (2014) 223 Cal.App.4th 550, 558
(Protect Agricultural Land) [“Each county in California is required to have a [local
agency formation commission].”].) Its principal office is in Bakersfield. “Among the
purposes of a [local agency formation commission] are discouraging urban sprawl,
preserving open-space and prime agricultural lands, encouraging the efficient provision
of government services, and encouraging the orderly formation and development of local
agencies based upon local conditions and circumstances.” (Gov. Code, § 56301.) “[A]
[local agency formation commission]’s statutory authority includes the power to approve
or disapprove (1) petitions for annexation, (2) proposals for changes of organization or
reorganization, and (3) requests by [local agencies] for amendments to their spheres of
influence.” (Protect Agricultural Land, supra, at p. 558, citing Gov. Code, §§ 56375,

                                             4.
56428, subd. (e).) “ ‘Annexation’ means the inclusion, attachment, or addition of
territory to a city or district” (Gov. Code, § 56017) and is an example of a change of
organization (see id., § 56021, subds. (c)–(d)). “ ‘Sphere of influence’ means a plan for
the probable physical boundaries and service area of a local agency, as determined by the
commission.” (Id., § 56076.)3 Under the Reorganization Act, annexation determinations
“shall be consistent with the spheres of influence of the local agencies affected by those
determinations.” (Gov. Code, § 56375.5.)
       West Kern Water District is a water district organized and existing pursuant to the
County Water District Law (Wat. Code, § 30000 et seq.). Under that law, such a district
“may store water for the benefit of the district, conserve water for future use, and
appropriate, acquire, and conserve water and water rights for any useful purpose” (id.,
§ 31021); “may operate water rights, works, property, rights, and privileges useful or
necessary to convey, supply, store, or make use of water for any [authorized] purpose”
(id., § 31022); and “may do any act necessary to furnish sufficient water in the district for
any present or future beneficial use” (id., § 31020). West Kern Water District operates
the North Recharge and Recovery Project and provides water for municipal and industrial
uses to those within its boundaries.
       Kern Water Bank Authority is a joint powers authority organized and existing
pursuant to the Joint Exercise of Powers Act (Gov. Code, § 6500 et seq.), which
“provides a means by which governmental agencies may join together to accomplish
goals that they could not accomplish alone, or that they might more efficiently and more

       3 “ ‘[A] “sphere of influence” is a prospective measure, charting what a city’s or a
district’s boundaries might be at some future point.’ [Citation.]” (Community Water
Coalition v. Santa Cruz County Local Agency Formation Com. (2011) 200 Cal.App.4th
1317, 1325, fn. 3.) “A district’s ‘sphere of influence’ is not necessarily coextensive with
its existing service area” (Modesto Irrigation Dist. v. Pacific Gas & Electric Co.
(N.D.Cal. 2004) 309 F.Supp.2d 1156, 1159, fn. 4), but “jurisdictional boundaries are ‘de
facto less expansive than “spheres of influence” ’ ” (Community Water Coalition, supra,
at p. 1325, fn. 3).

                                             5.
effectively accomplish together” (Robings v. Santa Monica Mountains Conservancy
(2010) 188 Cal.App.4th 952, 962). “Under that act, when authorized by their governing
bodies to do so, ‘two or more public agencies by agreement may jointly exercise any
power common to the contracting parties’ ” (Robings v. Santa Monica Mountains
Conservancy, supra, at p. 962, quoting Gov. Code, § 6502) and may join in the creation
of a separate entity to exercise those powers on their behalf (see Gov. Code, §§ 6507,
6542). Kern Water Bank Authority is comprised of six members: Dudley Ridge Water
District; Kern County Water Agency; Semitropic Water Storage District; Tejon-Castac
Water District; Westside Mutual Water Company; and Wheeler Ridge-Maricopa Water
Storage District. It operates the Kern Water Bank, which “stores available surface water
in wet years through a process of groundwater recharge using recharge ponds or basins
located [therein]” “for recovery and use in dry years when surface supplies are deficient.”
II.    The property at issue (“Subject Property”)
       The Subject Property consists of at least four parcels totaling approximately 630
acres, all of which lie outside the boundaries of both Buena Vista and Buena Vista GSA.
According to Buena Vista, it purchased these parcels in 2019 and 2020 and is the sole
owner and possessor thereof. The North Recharge and Recovery Project is located south
of the Subject Property. The Kern Water Bank is located southeast of the Subject
Property.
III.   History
       On June 3, 2020, Buena Vista’s board of directors adopted Resolution No. 4392
titled “A RESOLUTION OF APPLICATION PROPOSING PROCEEDINGS FOR
ANNEXATION OF TERRITORY TO [BUENA VISTA] AS THE PALMS
ANNEXATION.” The resolution stated in part:

              “WHEREAS, [Buena Vista] desires to propose a change of
       organization, to wit, the annexation to [Buena Vista] of the [Subject
       Property] pursuant to Section 56654, et seq., of the Government Code of
       the State of California; and

                                            6.
            “WHEREAS, the [Subject Property] is outside [Buena Vista]’s
      Sphere of Influence Boundary; and

             “WHEREAS, [Buena Vista] solely owns title to, and possesses, the
      lands to be annexed; and

              “WHEREAS, the property to be annexed is being developed for a
      groundwater recovery project and has not, and will not, receive water
      service from [Buena Vista] or be entitled to any of [Buena Vista]’s water
      rights.

            “NOW, THEREFORE, BE IT RESOLVED by [Buena Vista’s]
      Board of Directors . . . that it finds and determines as follows:

             “1.   That [Buena Vista] hereby proposes the annexation to [Buena
                   Vista] of the [Subject Property] . . . .

             “2.   That this proposal for change of organization, to wit,
                   annexation, is made pursuant to the [Reorganization Act], and
                   it is requested that proceedings be authorized for annexation
                   in accordance therewith.

             “3.   That the reason for the proposed change of organization is
                   that [Buena Vista], as the sole landowner, desires to use the
                   [S]ubject [P]roperty for groundwater recovery purposes and
                   management of groundwater in accordance with [SGMA].

             “4.   That the prospective groundwater recovery project will
                   comply with laws and regulations relating to the preparation
                   and adoption of the environmental documents as set forth in
                   [CEQA] which will be followed and all documents related to
                   its completion shall be submitted to [Kern LAFCO] by
                   [Buena Vista]’s representative. [¶] . . . [¶]

             “7.   That the [Subject Property] . . . is outside [Buena Vista]’s
                   Sphere of Influence Boundary.”
      On or around June 16, 2020, Buena Vista prepared a “NOTICE OF
PREPARATION AND INITIAL STUDY OF AN ENVIRONMENTAL IMPACT
REPORT AND PUBLIC SCOPING MEETING” “FOR THE PALMS
GROUNDWATER RECOVERY PROJECT.” The initial study described the Palms
Groundwater Recovery Project as “includ[ing] the development of conveyance pipelines

                                           7.
and [14] wells to facilitate the recovery of previously stored groundwater,” which would
take place not only within Buena Vista’s boundaries but also “an annexed area located to
the east [there]of,” i.e., the Subject Property. Recovered water would be “limited to no
more than 25,000 acre-feet” annually and “distributed to [Buena Vista’s] water users,”
“exchanged with other districts,” “sold to other industrial or municipal users,” and/or
“discharge[d] into the California Aqueduct to satisfy existing and future water contracts
between [Buena Vista] and other Public Water Agencies.” The initial study concluded
the Palms Groundwater Recovery Project had the potential to significantly impact
hydrology and water quality as well as biological, cultural, and tribal cultural resources,
all of which would be detailed in a subsequent EIR. The notice of preparation stated the
Palms Groundwater Recovery Project would “meet[] the requirements of the [SGMA].”
       Buena Vista completed a “SPHERE OF INFLUENCE AMENDMENT
APPLICATION” dated September 15, 2020, to Kern LAFCO. In response to the
prompt “Provide additional information that the agency deems relevant for the [sphere of
influence] amendment,” Buena Vista wrote:

       “[Sphere of influence] amendment is requested to match the new [Buena
       Vista] boundaries resulting [f]rom the requested annexation of lands owned
       by [Buena Vista].”
In response to the prompt “List the proposed land uses for the proposed amendment
area,” Buena Vista wrote: “Potential groundwater recovery project.”
       On September 18, 2020, Buena Vista filed a “Notice of Exemption” with regard
to the “Palms Annexation.” Under the heading “Reasons why project is exempt,” Buena
Vista wrote:

       “The instant project does not involve the construction or alteration of any
       facilities, or any change in existing uses of the property. The property will
       remain in its present condition until such time as plans for future use of the
       property are developed and fully considered. Any future use or
       development will be subject to further, separate, review for compliance
       with CEQA as necessary. In light of the foregoing, it can be seen with

                                             8.
       certainty that there is no possibility that the proposed project has the
       potential to have a significant adverse effect on the environment. As such,
       the proposed project is exempt from CEQA pursuant to CEQA
       Guidelines[4] Sections 15060(c)(2) and 15061(b)(3).”
       On October 2, 2020, Buena Vista submitted an “Application for Annexation”
titled “Palms Annexation” to Kern LAFCO. Under the heading “Nature of Proposal,”
Buena Vista wrote:

       “The nature of this proposal is to annex properties acquired by [Buena
       Vista] located outside its boundaries and sphere of influence . . . . As the
       sole owner of the [S]ubject [P]roperty, [Buena Vista] is proposing to utilize
       the property for a groundwater recovery project to better manage surface
       supplies and groundwater. [Buena Vista] is requesting that [Kern] LAFCO
       approve annexation of [these] properties and amend [Buena Vista]’s
       [sphere of influence] accordingly.”
In response to the prompt “Describe any planned development that would result from or
be facilitated by this proposed boundary change,” Buena Vista wrote: “[Buena Vista]
will consider using the property for a banked water recovery project.” Buena Vista
answered “No” to the question “Is the proposal area within the sphere of influence of the
annexing agency?” and—per instructions—attached its “SPHERE OF INFLUENCE
AMENDMENT APPLICATION.” In response to the prompt “Provide any other
comments or justifications regarding the proposal,” Buena Vista wrote:

       “All the parcels to be annexed are owned by [Buena Vista]. These lands
       are currently ‘white lands.’ Inclusion in [Buena Vista]’s territory will
       facilitate better groundwater management and compliance with SGMA.”

       4 In this opinion, “CEQA Guidelines” and “Guidelines” refer to California Code
of Regulations, title 14, section 15000 et seq., “the regulations for the implementation of
CEQA authorized by the Legislature” (Muzzy Ranch Co. v. Solano County Airport Land
Use Com. (2007) 41 Cal.4th 372, 380, fn. 2 (Muzzy Ranch)) and “ ‘prescribed by the
Secretary for Resources to be followed by all state and local agencies in California in the
implementation of [CEQA]’ ” (ibid.). “In interpreting CEQA, we accord the CEQA
Guidelines great weight except where they are clearly unauthorized or erroneous.” (Ibid.)

                                            9.
      In or around December 2020, Buena Vista prepared a draft EIR for the Palms
Groundwater Recovery Project, which identified the following as potentially significant
environmental impacts, among other things: (1) violations of water quality standards or
waste discharge requirements or substantial degradation of surface or groundwater
quality; (2) cumulative impacts causing groundwater level depletion; and (3) cumulative
impacts increasing the risk of subsidence. The draft EIR acknowledged “[i]mpacts to
SGMA sustainability goals” constituted an “area[] of controversy and issue[] of concern”
but assured the Palms Groundwater Recovery Project would still “meet[] the
requirements of SGMA.” It noted Buena Vista GSA—“bordered by” Kern Groundwater
Authority and Kern River Groundwater Sustainability Agency—“is the exclusive
[groundwater sustainability agency] within its territory with powers to comply with
SGMA [citation].”
      Kern Water Bank Authority submitted a letter dated January 18, 2021, to Buena
Vista objecting to the Palms Groundwater Recovery Project. Among other things, Kern
Water Bank Authority—a member agency of Kern Groundwater Authority5—argued:

             “[Kern Groundwater Authority] has jurisdiction over the area in
      which [Buena Vista] proposes to install new extraction wells. The water
      extracted from those wells would then be pumped out of [Kern
      Groundwater Authority’s] jurisdiction, in violation of the standards set by
      [Kern Groundwater Authority’s] members and the adopted GSP.”
      Kern Water Bank Authority also submitted a letter dated January 25, 2021, to
Kern LAFCO opposing approval of Buena Vista’s “proposed Palms Annexation.” Kern
Water Bank Authority asserted:

      “The annexation clearly cannot be approved based on a CEQA exemption.
      The Palms Annexation is a component of Buena Vista’s Palms
      Groundwater Recovery Project that may cause potentially significant

      5 Under SGMA, a combination of local agencies may form a groundwater
sustainability agency by using a joint powers agreement, memorandum of agreement, or
another legal agreement. (Wat. Code, § 10723.6, subd. (a).)

                                           10.
       unmitigated groundwater and water quality impacts and mine and export
       . . . groundwater from the [Kern Groundwater Authority]. That Project is
       currently under environmental review in an EIR. Thus, [Kern] LAFCO as a
       responsible agency[6] will need to consider the environmental effects of the
       Project as shown in the final EIR, prepared in compliance with CEQA, that
       are relevant to [Kern] LAFCO’s consideration of the annexation, and
       making the findings required by law including CEQA, before deciding
       whether or not to approve the Palms Annexation.”
       Kern Groundwater Authority—a joint powers authority organized and existing
pursuant to the Joint Exercise of Powers Act—submitted a letter dated January 27, 2021,
to Buena Vista objecting to the Palms Groundwater Recovery Project. Kern
Groundwater Authority reiterated:

              “The Proposed Project proposes to install new wells in [Kern
       Groundwater Authority]’s boundary and extract water from these wells.
       The [draft EIR] discloses that this extraction may result in the violation of
       minimum thresholds set by [Kern Groundwater Authority] members and
       included in [Kern Groundwater Authority’s] GSP. Because this impact is
       prohibited by SGMA, the Proposed Project is unlawful and cannot be
       approved.”
       Buena Vista submitted a letter dated February 18, 2021, to Kern LAFCO to
address objections raised in Kern Water Bank Authority’s January 25, 2021 letter. Buena
Vista maintained the Subject Property is a “ ‘whiteland[]’ ” “not currently within the
boundaries of any water district or local agency providing water services.” It explained:

       “[Kern Water Bank Authority] inaccurately claims that [the Subject
       Property is] within the [Kern Groundwater Authority’s] coverage area.
       Maps showing [groundwater sustainability agencies’] boundaries on [the
       Department of Water Resource]’s website have not been updated for some

       6 “ ‘Responsible agency’ means a public agency which proposes to carry out or
approve a project, for which a lead agency is preparing or has prepared an EIR or
negative declaration. For the purposes of CEQA, the term ‘responsible agency’ includes
all public agencies other than the lead agency which have discretionary approval power
over the project.” (Guidelines, § 15381; see Guidelines, § 15051, subd. (a) [“Where two
or more agencies will be involved with a project, . . . [¶] . . . [i]f the project will be
carried out by a public agency, that agency shall be the lead agency even if the project
would be located within the jurisdiction of another public agency.”].)

                                             11.
      time and are currently not completely accurate. Two of the subject parcels
      . . . were initially included within the [Kern Groundwater Authority] via a
      contract with Rosedale-Rio Bravo Water Storage District.[7] However, by
      way of letter dated April 22, 2019 . . . , [Buena Vista] withdrew from that
      agreement and from the [Kern Groundwater Authority] and elected to be
      included in [Buena Vista GSA]’s GSP.[8] Further, the landowner of the two
      other parcels . . . never entered into a ‘Whitelands Agreement’ to be
      covered in the [Kern Groundwater Authority]’s GSP. Rather, at the request
      of the landowner, these lands were included in [Buena Vista GSA’s] GSP.
      All of the lands that are proposed to be annexed are covered by [Buena
      Vista GSA’s] GSP.[9] Notwithstanding this fact, the proposed annexation
      does not change existing coverage for SGMA purposes.”
Buena Vista added:

      “As [Buena Vista] understands, [Kern] LAFC[O] considers SGMA
      compliance when considering proposed annexations, however, [Kern]
      LAFC[O] does not have the authority to detach lands from one
      [groundwater sustainability agency] and annex them into another.
      Therefore, the proposed annexation of these ‘whiteland’ parcels would not
      change which [groundwater sustainability agency] and GSP covers those
      lands for SGMA compliance.”
Buena Vista also remarked:

      “The [Palms Groundwater] Recovery Project is proposed on lands that
      include the parcels which are also the subject of the requested annexation,
      as well as other lands which are not identified in the annexation application.
      However, other than this fact, there is no connection between the Recovery
      Project and the proposed annexation. The desire to annex the subject
      parcels into [Buena Vista] has nothing to do with the Recovery Project, or
      any particular project that may or may not be developed. Rather, the
      property is being annexed for taxation purposes. The proposed annexation
      will be requested whether or not the Recovery Project goes forward.

      7 Rosedale-Rio Bravo Water Storage District is another member agency of Kern
Groundwater Authority.
      8 Buena Vista attached a copy of the April 22, 2019 letter.

      9 Following Kern LAFCO’s approvals, appellants have contradictorily argued the
Subject Property is covered by Kern Groundwater Authority’s GSP. We deem this
argument waived “based on common notions of fairness.” (Brandwein v. Butler (2013)
218 Cal.App.4th 1485, 1519.)

                                           12.
       Similarly, the Recovery Project is not dependent on the annexation. Public
       agencies throughout Kern County develop, construct, and operate projects
       on lands that are not within their boundaries. The Recovery Project would
       be no different and could proceed on the subject lands even if they are not
       annexed into [Buena Vista]. Whether or not the annexation is approved by
       [Kern] LAFC[O] will have no bearing on the Recovery Project. . . . It
       appears [Kern Water Bank Authority] has mistakenly assumed the
       proposed annexation is connected to the Recovery Project. Given that this
       is not accurate, the concerns raised in the [Kern Water Bank Authority]
       Letter regarding the impacts of the Recovery Project on the environment
       are not relevant to the proposed annexation and not appropriate for [Kern]
       LAFC[O]’s consideration.”
       West Kern Water District submitted a March 16, 2021 letter to Kern LAFCO
opposing approval of Buena Vista’s annexation request. West Kern Water District—
another member agency of Kern Groundwater Authority—“object[ed] to Buena Vista’s
assertion that the . . . annexation proposal [is] not a component of the Palms
[Groundwater Recovery] Project.” West Kern Water District argued “absent the
proposed annexation, the [Subject Property] would remain un-districted or ‘white area’
lands covered by the Kern Groundwater Authority and said recovery would take place
outside of [Buena Vista’s] service area and [groundwater sustainability agency].”
       Kern Water Bank Authority submitted a second letter dated April 23, 2021, to
Kern LAFCO, noting Buena Vista never mentioned “taxation purposes” as an objective
of annexation prior to the February 18, 2021 letter. Kern Water Bank Authority insisted
the annexation and sphere-of-influence amendment were not only “part of Buena
Vista[’s] Palms Groundwater [Recovery] Project” but also “a ‘step’ in the construction
and implementation of the Palms Groundwater Recovery Project.” Kern Water Bank
Authority explained:

       “The proposed annexation[] lands are within the jurisdiction of the [Kern
       Groundwater Authority]. Buena Vista seeks to transfer management of the
       groundwater from the [Kern Groundwater Authority] to the Buena Vista
       [GSA]. The lands cannot be transferred to the Buena Vista GSA without
       [Kern] LAFC[O]’s prior approval of the annexation.

                                            13.
       “[Kern Groundwater Authority] has drafted a [GSP] to comply with
       [SGMA] – the California law that requires sustainable management of
       groundwater. The [GSP] is under review by the Department of Water
       Resources . . . .

       “Under SGMA, the removal of the [Subject Property] from [Kern
       Groundwater Authority]’s boundaries cannot occur unless [Kern] LAFC[O]
       first approves the annexation. The annexation is a required step before
       [Buena Vista] may seek the approval of the California Department of Water
       Resources . . . to remove the [Subject Property] from [Kern Groundwater
       Authority], and to include the [Subject Property] within the Buena Vista
       GSA. [Citation.] The Department of Water Resources may not even
       consider the modification of the [Kern Groundwater Authority] and Buena
       Vista GSA boundaries unless [Kern] LAFC[O] first approves the
       annexation. [Citation.]

       “Buena Vista candidly admits that they intend to seek to replace [Kern
       Groundwater Authority], and to include the [Subject Property] within the
       jurisdiction of the Buena Vista GSA. The annexation will allow Buena
       Vista to manage the groundwater beneath the [Subject Property], and will
       eliminate the ability of [Kern Groundwater Authority] to manage the
       groundwater to comply with SGMA. However, without the annexation,
       neither Buena Vista nor the Buena Vista GSA have authority to manage the
       [Subject Property] under SGMA because the lands are located outside the
       jurisdictional boundaries of such local agencies. [Citation.]” (Boldface
       omitted.)
       On April 28, 2021, following “NOTICED PUBLIC HEARINGS,” Kern LAFCO
adopted (1) Resolution No. 21-03, which approved the amendment to Buena Vista’s
sphere of influence; and (2) Resolution No. 21-04, which approved the annexation to
Buena Vista. Internal documents demonstrate Kern LAFCO found: (1) the purpose of
the annexation was “to eliminate the requirements to collect property taxes”; (2) the
Palms Groundwater Recovery Project “is not dependent on the approval of the
annexation”; and (3) Kern Water Bank Authority and West Kern Water District’s
concerns regarding the Palms Groundwater Recovery Project “do not address the
application in hand.”
       On May 5, 2021, Kern LAFCO filed a “NOTICE OF EXEMPTION” for the
“[Buena Vista] Annexation No. 01 (Palms Annexation) and Sphere of Influence

                                            14.
Amendment.” Under the heading “Reasons why project is exempt,” Kern LAFCO’s
rationale mirrored the one given in Buena Vista’s notice of exemption:

       “The project does not involve the construction or alteration of any facilities,
       or any change in existing uses of the property. The property will remain in
       its present condition until such time as plans for future use of the property
       are developed and fully considered. Any future use or development will be
       subject to further, separate, review for compliance with CEQA as
       necessary. In light of the foregoing, it can be seen with certainty that there
       is no possibility that the proposed project has the potential to have a
       significant adverse effect on the environment. As such, the proposed
       project is exempt from CEQA pursuant to CEQA Guidelines Sections
       15060(c)(2) and 15061(b)(3).” (Boldface omitted.)
IV.    Legal proceedings
       On June 9, 2021, Kern Water Bank Authority and West Kern Water District filed a
“REVERSE VALIDATION ACTION; VERIFIED PETITION FOR
PEREMPTORY WRIT OF MANDATE AND COMPLAINT FOR INJUNCTIVE
AND DECLARATORY RELIEF.” They argued Kern LAFCO’s approvals of Buena
Vista’s applications for an annexation and a sphere-of-influence amendment were “part
of” and “a step in the implementation of” the Palms Groundwater Recovery Project and
Kern LAFCO “improperly relied on inapplicable exemptions from CEQA.” In response,
Kern LAFCO and Buena Vista asserted—among other things—the action was barred by
the applicable statute of limitations. Oral arguments were heard on October 20, 2022.
       In a ruling dated November 2, 2022, the superior court concluded Kern LAFCO’s
approvals violated CEQA, vacated said approvals, and granted writ relief. Specifically,
the court found (1) the writ petition was not barred by the statute of limitations; (2) the
“ ‘whole of the action’ ” “includes the [Palms Groundwater] Recovery Project and the
[a]nnexation”; (3) the annexation was “a necessary step in the [Palms Groundwater]
Recovery Project”; and (4) Guidelines sections 15060, subdivision (c)(2) and 15061,
subdivision (b)(3) did not apply. Judgment in favor of Kern Water Bank Authority and
West Kern Water District was entered November 30, 2022. Kern Water Bank Authority

                                             15.
filed a “NOTICE OF ENTRY OF JUDGMENT OR ORDER” on December 9, 2022.
Kern LAFCO, Buena Vista, and Buena Vista GSA filed a “NOTICE OF APPEAL” on
January 27, 2023.
                                       DISCUSSION
I.     CEQA overview
       “CEQA is a comprehensive scheme designed to provide long-term protection to
the environment.” (Mountain Lion Foundation v. Fish & Game Com. (1997) 16 Cal.4th
105, 112 (Mountain Lion), citing § 21001.) “CEQA contains a ‘substantive mandate’
requiring public agencies to refrain from approving projects with significant
environmental effects if ‘there are feasible alternatives or mitigation measures’ that can
substantially lessen or avoid those effects.” (County of San Diego v. Grossmont-
Cuyamaca Community College Dist. (2006) 141 Cal.App.4th 86, 98, italics omitted,
quoting Mountain Lion, supra, at p. 134.) A “ ‘[s]ignificant effect on the environment’
means a substantial, or potentially substantial, adverse change in any of the physical
conditions within the area affected by the project including land, air, water, minerals,
flora, fauna, ambient noise, and objects of historic or aesthetic significance.”
(Guidelines, § 15382.)
       A CEQA assessment is often represented as a three-step process, but the steps
themselves have been described differently. On the one hand, the California Supreme
Court detailed:

       “The first tier is jurisdictional, requiring that an agency conduct a
       preliminary review to determine whether an activity is subject to CEQA.
       (CEQA Guidelines, § 15060[10] . . . .) An activity that is not a ‘project’ as

       10 Subdivision (c) of Guidelines section 15060—titled “Preliminary Review”—
provides in part:
       “An activity is not subject to CEQA if: [¶] (1) The activity does not
       involve the exercise of discretionary powers by a public agency; [¶]
       (2) The activity will not result in a direct or reasonably foreseeable indirect

                                             16.
defined in the Public Resources Code (see § 21065) and the CEQA
Guidelines (see [Guidelines,] § 15378) is not subject to CEQA.[11] (CEQA
Guidelines, § 15060, subd. (c)(3).)

          “The second tier concerns exemptions from CEQA review. . . .
[¶] . . . [¶] If a public agency properly finds that a project is exempt from
CEQA, no further environmental review is necessary. [Citation.] The
agency need only prepare and file a notice of exemption [citations], citing

physical change in the environment; or [¶] (3) The activity is not a project
as defined in Section 15378 [of the Guidelines].”
11 Section 21065 provides in part:

“ ‘Project’ 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.
       [¶] . . . [¶]
       “(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.”
Guidelines section 15378 provides in part:

“(a) ‘Project’ 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
that is any of the following:

     “(1) An activity directly undertaken by any public agency including
     but not limited to public works construction and related activities
     clearing or grading of land, improvements to existing public
     structures, enactment and amendment of zoning ordinances, and the
     adoption and amendment of local General Plans or elements thereof
     . . . [¶] . . . [¶]

     “(3) An activity involving the issuance to a person of a lease, permit,
     license, certificate, or other entitlement for use by one or more public
     agencies. [¶] . . . [¶]

“(c) The 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.”

                                      17.
      the relevant statute or section of the CEQA Guidelines and including a brief
      statement of reasons to support the finding of exemption [citation]. If a
      project does not fall within an exemption, the agency must ‘conduct an
      initial study to determine if the project may have a significant effect on the
      environment.’ [Citation.] If there exists ‘no substantial evidence that the
      project or any of its aspects may cause a significant effect on the
      environment’ [citation], the agency must prepare a ‘negative declaration’
      that briefly describes the reasons supporting its determination [citation].

              “CEQA’s third tier applies if the agency determines substantial
      evidence exists that an aspect of the project may cause a significant effect
      on the environment. In that event, the agency must ensure that a full [EIR]
      is prepared on the proposed project. [Citations.]” (Muzzy Ranch, supra, 41
      Cal.4th at pp. 380–381; see Tulare Lake Canal Co. v. Stratford Public
      Utility Dist. (2023) 92 Cal.App.5th 380, 400, fn. 1 (Tulare Lake)
      [“(1) CEQA applicability, (2) exemption from environmental review, and
      (3) environmental review”].)
On the other hand, subdivision (k) of Guidelines section 15002 provides:

      “Three Step Process. An agency will normally take up to three separate
      steps in deciding which document to prepare for a project subject to CEQA.

             “(1) In the first step the lead agency[12] examines the project to
             determine whether the project is subject to CEQA at all. If the
             project is exempt, the process does not need to proceed any farther.
             The agency may prepare a notice of exemption. [Citations.]

             “(2) If the project is not exempt, the lead agency takes the second
             step and conducts an initial study [citation] to determine whether the
             project may have a significant effect on the environment. If the
             initial study shows that there is no substantial evidence that the
             project may have a significant effect, the lead agency prepares a
             negative declaration. [Citation.]

             “(3) If the initial study shows that the project may have a significant
             effect, the lead agency takes the third step and prepares an EIR.
             [Citation.]” (See Tulare Lake, supra, 92 Cal.App.5th at p. 400, fn. 1

      12 “ ‘Lead agency’ means the public agency which has the principal responsibility
for carrying out or approving a project. The lead agency will decide whether an EIR or
negative declaration will be required for the project and will cause the document to be
prepared.” (Guidelines, § 15367.)

                                           18.
              [“[T]he Guidelines’ approach recognizes three steps correlated to the
              document produced at the end of that step.”].)
“[T]he first step in the Guidelines encompasses the Supreme Court’s first two tiers. The
Supreme Court’s third tier encompasses the Guidelines’ second and third steps—an
initial study that results in the adoption of a negative declaration or leads to the third step
and the preparation of an [EIR].” (Tulare Lake, supra, 92 Cal.App.5th at p. 400, fn. 1.)
       Generally, “[w]henever a project may have a significant and adverse physical
effect on the environment, an EIR must be prepared and certified.” (Mountain Lion,
supra, 16 Cal.4th at p. 113, citing § 21100, subd. (a); see Sundstrom v. County of
Mendocino (1988) 202 Cal.App.3d 296, 309 [“ ‘[T]he word “may” connotes a
“reasonable possibility.” ’ ”].) The EIR “is the mechanism prescribed by CEQA to force
informed decision making and to expose the decision making process to public scrutiny.”
(Planning & Conservation League v. Department of Water Resources (2000) 83
Cal.App.4th 892, 910.) As “ ‘the heart of CEQA’ ” (Laurel Heights Improvement Assn.
v. Regents of University of California (1988) 47 Cal.3d 376, 392, quoting Guidelines,
§ 15003, subd. (a)), the EIR “provides the public and responsible government agencies
with detailed information on the potential environmental consequences of an agency’s
proposed decision” (Mountain Lion, supra, at p. 113).
       “The Legislature has provided that certain projects, such as ministerial projects
and repairs to public service facilities of an emergency nature, are exempt.” (Muzzy
Ranch, supra, 41 Cal.4th at p. 380; see § 21080, subd. (b); Guidelines, § 15260 et seq.)
“In addition, pursuant to the Legislature’s command [citation], the CEQA Guidelines list
categorical exemptions or ‘classes of projects’ that the resources agency has determined
to be exempt per se because they do not have a significant effect on the environment.”
(Muzzy Ranch, supra, at p. 380; see Guidelines, § 15300 et seq.) “A project that qualifies
for neither a statutory nor a categorical exemption may nonetheless be found exempt
under what is sometimes called the ‘commonsense’ exemption, which applies ‘[w]here it

                                              19.
can be seen with certainty that there is no possibility that the activity in question may
have a significant effect on the environment.’ ” (Muzzy Ranch, supra, at p. 380, quoting
Guidelines, § 15061, subd. (b)(3).) “If a public agency properly finds that a project is
exempt from CEQA, no further environmental review is necessary.” (Muzzy Ranch,
supra, at p. 380.)

II.    Kern Water Bank Authority and West Kern Water District timely
       challenged Kern LAFCO’s approvals.
       a. Standard of review
       “Where the underlying facts are not disputed, we review a finding regarding the
applicability of CEQA’s statute of limitations de novo.” (American Chemistry Council v.
Department of Toxic Substances Control (2022) 86 Cal.App.5th 146, 201.)
       b. Analysis
       “When a public agency decides that a project is exempt from CEQA pursuant to
[Guidelines] Section 15061, and the public agency approves or determines to carry out
the project, the agency may, file a notice of exemption.” (Guidelines, § 15062, subd. (a);
accord, Guidelines, § 15374; see Guidelines, § 15005, subd. (c) [“ ‘May’ identifies a
permissive element which is left fully to the discretion of the public agencies
involved.”].) “Such a notice may also be filed by an applicant where such a
determination has been made by a public agency which must approve the project.”
(Guidelines, § 15374; accord, Guidelines, § 15062, subd. (c).) “ ‘Applicant’ means a
person who proposes to carry out a project which needs a lease, permit, license,
certificate, or other entitlement for use or financial assistance from one or more public
agencies when that person applies for the governmental approval or assistance.”
(Guidelines, § 15351; see Guidelines, § 15376 [“ ‘Person’ includes any person, firm,
association, organization, partnership, business, trust, corporation, limited liability
company, company, district, city, county, city and county, town, the state, and any of the
agencies and political subdivisions of such entities . . . .”].)

                                               20.
       “The benefit that a public agency and project proponent receive from filing a
notice of exemption is a shorter statute of limitations.” (Coalition for Clean Air v. City of
Visalia (2012) 209 Cal.App.4th 408, 420 (Coalition).) “The filing of a Notice of
Exemption and the posting on the list of notices start a 35 day statute of limitations period
on legal challenges to the agency’s decision that the project is exempt from CEQA. If a
Notice of Exemption is not filed, a 180 day statute of limitations will apply.”
(Guidelines, § 15062, subd. (d); see § 21167, subd. (d); see also San Lorenzo Valley
Community Advocates for Responsible Education v. San Lorenzo Valley Unified School
Dist. (2006) 139 Cal.App.4th 1356, 1385 [“ ‘A notice of exemption has no significance
other than to trigger the running of the limitations period.’ ”].)
       “The notice shall be filed, if at all, after approval of the project.” (Guidelines,
§ 15062, subd. (a).) Likewise, “[t]he notice shall not be filed, with the county clerk or
OPR[13] until the project has been approved.” (Guidelines, § 15062, subd. (b).) “[T]he
foregoing provisions of Guidelines section 15062 unambiguously require notices of
exemption to be filed after the project has been approved.” (Coalition, supra, 209
Cal.App.4th at p. 423; see Guidelines, § 15005, subd. (a) [“ ‘Must’ or ‘shall’ identifies a
mandatory element which all public agencies are required to follow.”].) “It follows that
filing a notice of exemption before project approval does not begin the running of the 35-
day limitations period . . . .” (Coalition, supra, at p. 423.)
       Here, Buena Vista adopted a June 3, 2020 resolution to apply for the annexation of
the Subject Property and submitted its applications for said annexation and a sphere-of-
influence amendment to Kern LAFCO on October 2, 2020. Pursuant to its statutory
authority (see Protect Agricultural Land, supra, 223 Cal.App.4th at p. 558), Kern
LAFCO approved these applications on April 28, 2021. Thereafter, on May 5, 2021,
Kern LAFCO filed a notice of exemption. On June 9, 2021, exactly 35 days after this

       13 “OPR” refers to “Office of Planning and Research.” (See Guidelines, § 15023.)

                                              21.
notice was filed, Kern Water Bank Authority and West Kern Water District filed their
writ petition. Thus, Kern LAFCO’s approvals were timely challenged.
       Appellants argue Kern Water Bank Authority and West Kern Water District’s
action was “barred by the statute of limitations” because they “attacked the wrong [notice
of exemption].” (Boldface & capitalization omitted.) They point out Buena Vista filed
its own notice of exemption on September 18, 2020. While a notice of exemption may be
filed by the applicant (Guidelines, § 15374), Buena Vista’s notice of exemption was filed
more than seven months before Kern LAFCO’s approvals. As mentioned, the Guidelines
unequivocally state a notice of exemption “shall be filed, if at all, after approval of the
project.” (Guidelines, § 15062, subd. (a), italics added.)14
       Curiously, although appellants apparently concede Kern LAFCO has the power to
approve annexation proposals and—in fact—“approved Buena Vista’s annexation
request,” they nonetheless contend Buena Vista’s adoption of Resolution No. 4392 on
June 3, 2020, constituted “approval of the annexation decision” because it “initiated the
annexation process” and “there would have been nothing for [Kern] LAFCO to consider
or act upon” “[w]ithout it.” “ ‘Approval’ means the decision by a public agency which

       14 Appellants emphasize Buena Vista was the lead agency (see ante, fn. 12)
whereas Kern LAFCO was a responsible agency (see ante, fn. 6). These observations do
not change the fact the filing of Buena Vista’s notice of exemption predated Kern
LAFCO’s approvals by 222 days.
        To the extent appellants suggest CEQA does not permit challenges aimed at a
responsible agency’s action, we reject the notion. A responsible agency still retains
“discretionary approval power over [a] project.” (Guidelines, § 15381.) Although the
authority of a responsible agency to disapprove a project is more limited than that of a
lead agency (Guidelines, § 15042), a responsible agency is still empowered to “refuse to
approve a project in order to avoid direct or indirect environmental effects of that part of
the project which the responsible agency would be called on to carry out or approve”
(ibid.). A lawsuit may allege a responsible agency’s approval violates CEQA. (See, e.g.,
Protect Agricultural Land, supra, 223 Cal.App.4th at p. 555 [the plaintiff pursued CEQA
claim against a local agency formation commission that approved lead agency’s
application for an annexation and sphere-of-influence modification].)

                                             22.
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).) Under appellants’ view,
however, a local agency formation commission becomes obligated to approve an
applicant’s requests for an annexation and a sphere-of-influence amendment once the
applicant manifests a mere intent to make them. In other words, “approval” of such
applications precedes the actual submission thereof to the authorized decisionmaker. We
refuse to countenance such absurd logic.

III.   Kern LAFCO’s approvals of Buena Vista’s annexation and sphere-of-
       influence amendment applications constituted a prejudicial abuse of
       discretion.
       a. Standard of review
       “In reviewing an agency’s compliance with CEQA in the course of its legislative
or quasi-legislative actions, the courts’ inquiry ‘shall extend only to whether there was a
prejudicial abuse of discretion.’ ” (Vineyard Area Citizens for Responsible Growth, Inc.
v. City of Rancho Cordova (2007) 40 Cal.4th 412, 426 (Vineyard), quoting § 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, supra, at pp. 426–427.) “[A] reviewing court must adjust its
scrutiny to the nature of the alleged defect . . . .” (Id. at p. 435.) Where the alleged defect
predominantly relates to a legal error, the courts determine de novo whether the agency
either complied with “ ‘legislatively mandated CEQA requirements’ [citation]” or
“ ‘failed to proceed in the manner prescribed by CEQA.’ [Citations.]” (Ibid.) Where the
alleged defect predominantly relates to a factual dispute, “the agency’s conclusion would
be reviewed only for substantial evidence.” (Ibid.)
       “An appellate court’s review of the administrative record for legal error and
substantial evidence in a CEQA case, as in other mandamus cases, is the same as the trial
court’s: [t]he appellate court reviews the agency’s action, not the trial court’s decision; in

                                             23.
that sense appellate judicial review under CEQA is de novo.” (Vineyard, supra, 40
Cal.4th at p. 427; see Association of Irritated Residents v. County of Madera (2003) 107
Cal.App.4th 1383, 1390 [“ ‘The appellate court reviews the administrative record
independently; the trial court’s conclusions are not binding on it.’ ”].)
       b. Analysis

               i. Kern LAFCO’s approvals and the Palm Groundwater Recovery
                  Project constituted the “whole of an action.”
       “ ‘Project’ is a term of art.” (Banning Ranch Conservancy v. City of Newport
Beach (2012) 211 Cal.App.4th 1209, 1220.) Section 21065 broadly defines a
“ ‘[p]roject’ ” as “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. [¶] . . . [¶] (c) An activity that involves the issuance to a [district, city, county,
city and county, town, the state, and any of the agencies and political subdivisions of such
entities] of a lease, permit, license, certificate, or other entitlement for use by one or more
public agencies.” (See ante, fn. 11.) “The statutory definition is augmented by the
Guidelines, which define a ‘project’ as ‘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 . . . .’ ” (Tuolumne County
Citizens for Responsible Growth, Inc. v. City of Sonora (2007) 155 Cal.App.4th 1214,
1222 (Tuolumne), quoting Guidelines, § 15378, subd. (a); see ante, fn. 11.) Additionally,
(1) under Guidelines section 15378, subdivision (c), “[t]he term ‘project’ refers to the
activity which is being approved and which may be subject to several discretionary
approvals by governmental agencies” and “does not mean each separate governmental
approval” (see ante, fn. 11); and (2) under Guidelines section 15165, “[w]here an
individual project is a necessary precedent for action on a larger project . . . with
significant environmental effect, an EIR must address itself to the scope of the larger

                                              24.
project” (accord, Bozung v. Local Agency Formation Com. (1975) 13 Cal.3d 263, 284,
fn. 27 (Bozung) [quoting former § 15069 of the Guidelines], superseded by statute on
other grounds as stated in Natural Resources Defense Council, Inc. v. City of Los Angeles
(2002) 103 Cal.App.4th 268, 271, fn. 2).
       “The California Supreme Court has considered how to interpret the word ‘project’
and concluded that CEQA is ‘to be interpreted in such manner as to afford the fullest
possible protection to the environment within the reasonable scope of the statutory
language.’ [Citation.]” (Tuolumne, supra, 155 Cal.App.4th at p. 1222; see CREED-21 v.
City of San Diego (2015) 234 Cal.App.4th 488, 503 [“ ‘ “Project” is given a broad
interpretation in order to maximize protection of the environment.’ ”].) “This big picture
approach . . . prevents a proponent or a public agency from avoiding CEQA requirements
by dividing a project into smaller components which, when considered separately, may
not have a significant environmental effect.” (Nelson v. County of Kern (2010) 190
Cal.App.4th 252, 271; accord, Tuolumne, supra, 155 Cal.App.4th at pp. 1222–1223.)
       “[T]he question concerning which acts constitute the ‘whole of an action’ for
purposes of Guidelines section 15378 is a question of law that appellate courts
independently decide based on the undisputed facts in the record.” (Tuolumne, supra,
155 Cal.App.4th at p. 1224; see Friends of College of San Mateo Gardens v. San Mateo
County Community College Dist. (2016) 1 Cal.5th 937, 952 [“Whether a proposed
activity is a project within the meaning of CEQA is . . . a predominantly legal question,
for it depends on whether ‘undisputed data in the record on appeal’ satisfy the detailed
statutory definition of the term ‘project.’ ”]; see also Save Our Peninsula Committee v.
Monterey County Bd. of Supervisors (2001) 87 Cal.App.4th 99, 118 [“[Q]uestions of
interpretation or application of the requirements of CEQA are matters of law.”].)
       Here, there is no dispute the Palms Groundwater Recovery Project is an activity
that may cause physical changes in the environment. (See ante, at p. 10.) The issue is
whether the Palms Groundwater Recovery Project and Kern LAFCO’s approvals of

                                            25.
Buena Vista’s applications for the annexation and sphere-of-influence amendment
constituted the whole of an action. We conclude they do.
       A local agency formation commission’s approval of an annexation request is both
“[a]n activity directly undertaken by any public agency” (§ 21065, subd. (a)) and “[a]n
activity that involves the issuance to a person of . . . [an] entitlement for use by one or
more public agencies” (§ 21065, subd. (c); see Guidelines, § 15376 [“ ‘[p]erson’ ”
includes any “district, city, county, city and county, town, the state, and any of the
agencies and political subdivisions of such entities”]). (Accord, Bozung, supra, 13
Cal.3d at pp. 278–279.) Because Buena Vista submitted its applications for the
annexation and sphere-of-influence amendment together, and annexation determinations
must be “consistent with the spheres of influence of the local agencies affected by those
determinations” (Gov. Code, § 56375.5), Kern LAFCO treated the two applications as a
single application for annexation. In the abstract, the act of granting what amounts to a
“piece of paper” (Bozung, supra, at p. 279) does not directly affect the environment
(ibid.; People ex rel. Younger v. Local Agency Formation Com. (1978) 81 Cal.App.3d
464, 479). However, in view of CEQA, the Guidelines, and the aforementioned legal
authority, such a “myopic analysis” (Association for a Cleaner Environment v. Yosemite
Community College Dist. (2004) 116 Cal.App.4th 629, 639) is improper. Instead, we
“examine how closely related” the approvals are to “the overall objective of” the Palms
Groundwater Recovery Project. (Tuolumne, supra, 155 Cal.App.4th at p. 1226.) If the
approvals are “among the ‘various steps which taken together obtain an objective’ ”
(ibid.), this relationship is “sufficiently close” (ibid.). (Cf. Bozung, supra, at pp. 269–
270, 281 [development of agricultural land for residential, commercial, and recreational
uses depended upon local agency formation commission’s approval of annexation
removing land from county’s zoning authority].)
       As mentioned, Buena Vista adopted a resolution to apply for the annexation of the
Subject Property. This resolution unambiguously declared the Subject Property “is

                                              26.
outside [Buena Vista]’s Sphere of Influence Boundary” and “the reason for the proposed
change of organization is that [Buena Vista], as the sole landowner, desires to use the
[S]ubject [P]roperty for groundwater recovery purposes and management of groundwater
in accordance with [SGMA].” In its annexation application, Buena Vista reiterated the
Subject Property was “outside its boundaries and sphere of influence”; stated an
annexation “will facilitate better groundwater management and compliance with
SGMA”; and indicated a “banked water recovery project” “would result from or be
facilitated by th[e] proposed boundary change.” Both the notice of preparation/initial
study and the draft EIR of the Palms Groundwater Recovery Project claimed the
requirements of SGMA would be satisfied.
       SGMA was enacted in 2014 to—among other things—“provide for the sustainable
management of groundwater basins” (Wat. Code, § 10720.1, subd. (a)) “through the
actions of local governmental agencies to the greatest extent feasible” (id., subd. (h)) and
“provide local groundwater agencies with the authority and the technical and financial
assistance necessary to sustainably manage groundwater” (id., subd. (d)). Under SGMA,
local agencies—i.e., those that have “water supply, water management, or land use
responsibilities within a groundwater basin” (Wat. Code, § 10721, subd. (n))—are
allowed to form groundwater sustainability agencies, which “manage and regulate
groundwater basins through adoption and implementation of [GSP’s].” (Environmental
Law Foundation v. State Water Resources Control Bd. (2018) 26 Cal.App.5th 844, 863;
see Wat. Code, §§ 10723, 10727, 10727.2.)15, 16 Among other things, a GSP must

       15 In particular, “Groundwater sustainability agencies are obligated to develop and
implement a [GSP] for a high priority groundwater basin” (City of Marina v. County of
Monterey (2023) 97 Cal.App.5th 17, 24, citing Wat. Code, §§ 10727, subd. (a), 10728.4)
such as the Kern County subbasin (see King & Gardiner Farms, LLC v. County of Kern
(2020) 45 Cal.App.5th 814, 840–841).
       16 “Within 30 days of deciding to become or form a groundwater sustainability
agency, the local agency or combination of local agencies shall inform the [Department
of Water Resources] of its decision and its intent to undertake sustainable groundwater

                                            27.
contain a description of the aquifer system underlying the basin (Wat. Code, § 10727.2,
subd. (a)), including a map identifying the area of the basin and “the boundaries of the
groundwater sustainability agencies that overlie the basin that have or are developing
[GSP’s]” (id., subd. (a)(4)); milestones to achieve sustainability goals (id., subd. (b)); and
measures to monitor and manage groundwater levels and quality (id., subds. (d)–(f)).
GSP’s are subject to review by the Department of Water Resources. (See Wat. Code,
§§ 10733, 10733.4, 10733.8.)
       After adopting a GSP and submitting it to the Department of Water Resources, a
groundwater sustainability agency may exercise an assortment of powers to carry out the
purposes of SGMA. (Wat. Code, § 10725, subd. (a); see id., §§ 10725–10726.9, 10730–
10732.2). For example, a groundwater sustainability agency may conduct investigations
(id., § 10725.4); mandate registration of groundwater extraction facilities (id., § 10725.6);
require groundwater extraction facility owners or operators to purchase and install water-
measuring devices (id., § 10725.8, subds. (a)–(b)); require groundwater extraction facility
owners or operators to file annual statements setting forth the total extraction of
groundwater during the previous water year (id., subd. (c)); impose spacing requirements
on new groundwater well construction (Wat. Code, § 10726.4, subd. (a)(1)); regulate,
limit, or suspend extractions from individual groundwater wells or groundwater wells in
the aggregate (id., subd. (a)(2)); regulate, limit, or suspend construction of new
groundwater wells (ibid.); impose fees on groundwater extraction (Wat. Code, § 10730,
subd. (a)); and impose civil penalties on those who extract groundwater in excess of
authorized amounts (id., § 10732). Moreover, a groundwater sustainability agency “may

management.” (Wat. Code, § 10723.8, subd. (a).) The notification must include—
among other things—the local agency’s “service area boundaries.” (Id., subd. (a)(1).)
“[A]fter the decision to be a groundwater sustainability agency takes effect, the
groundwater sustainability agency shall be presumed to be the exclusive groundwater
sustainability agency within the area of the basin within the service area of the local
agency that the local agency is managing as described in the notice.” (Id., subd. (d).)

                                             28.
perform any act necessary or proper to carry out [SGMA’s] purposes . . . .” (Wat. Code,
§ 10725.2, subd. (a).)
       “Nothing in [SGMA], or in any groundwater management plan adopted pursuant
to [SGMA], determines or alters surface water rights or groundwater rights under
common law or any provision of law that determines or grants surface water rights.”
(Wat. Code, § 10720.5, subd. (b).) “Nothing in [SGMA] shall be construed as
authorizing a local agency to make a binding determination of the water rights of any
person or entity, or to impose fees or regulatory requirements on activities outside the
boundaries of the local agency.” (Wat. Code, § 10726.8, subd. (b), italics added.)
       According to Buena Vista, Buena Vista GSA “is the exclusive [groundwater
sustainability agency] within its territory with powers to comply with SGMA.” However,
while Buena Vista advised Kern LAFCO in a February 18, 2021 letter that the Subject
Property was “included in” or “covered by” Buena Vista GSA’s GSP, the record shows
the Subject Property lies outside Buena Vista and Buena Vista GSA’s aligned
boundaries. In view of Water Code section 10726.8, subdivision (b), Buena Vista GSA
lacked the authority to impose regulatory requirements—via the GSP or otherwise—on
activities carried out on the Subject Property. To overcome this provision, Buena Vista
and Buena Vista GSA’s aligned boundaries must be modified to incorporate the Subject
Property. As mentioned, SGMA requires a GSP to include a map delineating the
boundaries of the groundwater sustainability agency (Wat. Code, § 10727.2, subd. (a)(4))
and a local agency’s notification of intent to become a groundwater sustainability agency
to identify said agency’s “service area boundaries” (id., § 10723.8, subd. (a); see ante,
fn. 16), but it does not prescribe a procedure for adjusting those boundaries.17 The entity

       17 Appellants refer to Water Code section 10726.2, subdivision (a), which
provides:
       “A groundwater sustainability agency may . . . . [¶] . . . [a]cquire by grant,
       purchase, lease, gift, devise, contract, construction, or otherwise, and hold, use,

                                             29.
vested with the power to permit such adjustments—as Buena Vista apparently recognized
by filing its applications—is the regional local agency formation commission. (See ante,
at pp. 4–5 & fn. 3.) By obtaining an annexation and a sphere-of-influence amendment,
Buena Vista GSA would strengthen its own claim of SGMA jurisdiction over the Subject
Property as well as subvert the jurisdictional claims of other groundwater sustainability
agencies, namely Kern Groundwater Authority. Given the qualms expressed by Kern
Groundwater Authority regarding the Palms Groundwater Recovery Project (see ante, at
p. 11), Buena Vista would justifiably want its own groundwater sustainability agency to
be at the helm.18

       enjoy, sell, let, and dispose of, real and personal property of every kind, including
       lands, water rights, structures, buildings, rights-of-way, easements, and privileges,
       and construct, maintain, alter, and operate any and all works or improvements,
       within or outside the agency, necessary or proper to carry out any of the purposes
       of this part.”
However, in light of the express language of Water Code section 10726.8, subdivision
(b), Water Code section 10726.2, subdivision (a) cannot be interpreted to permit
groundwater sustainability agencies to impose regulatory requirements—via a GSP or
otherwise—on activities outside their boundaries.
        Appellants also refer to Water Code section 43500, subdivision (a) (added by
Stats. 1951, ch. 391, § 1; amended by Stats. 1963, ch. 239, § 1), under which a water
storage district may acquire “[p]roperty either within or without the boundaries of the
district for the construction, maintenance, improvement, or operation of works or the
carrying out of the project in this State or in any other state or foreign nation.” This
provision, which was enacted over half a century before SGMA (Wat. Code, § 10720 et
seq., added by Stats. 2014, ch. 346, § 3) and does not pertain to groundwater
sustainability agencies, has no relevance in the instant case.
       18 Appellants contend Kern Groundwater Authority’s joint powers agreement—to
which Buena Vista claims to have been a party and from which it later withdrew at some
point before submitting its annexation/sphere-of-influence amendment applications to
Kern LAFCO—would have constrained Kern Groundwater Authority’s dominion over
the Subject Property. First, appellants cite provisions that explicitly apply to “Members.”
These provisions are inapplicable because Buena Vista is not a member.
        Second, appellants assert the joint powers agreement does not permit Kern
Groundwater Authority to “interfere with the groundwater rights or lawful pumping
activities of any non-member who owns land in the [Kern Groundwater Authority]

                                            30.
       Kern LAFCO’s approvals were “a step in a series of activities” that “may
culminate in a project which will change and affect the environment.” (People ex rel.
Younger v. Local Agency Formation Com., supra, 81 Cal.App.3d at p. 479.) Therefore,
we conclude Kern LAFCO’s approvals and the Palm Groundwater Recovery Project
constituted the whole of the action.

              ii. As a matter of law, the whole of the action was not exempt from
                  CEQA review.
       In concluding Buena Vista’s requested annexation and sphere-of-influence
amendment were exempt from CEQA review, Kern LAFCO invoked Guidelines sections
15060, subdivision (c)(2) and 15061, subdivision (b)(3).
       Under Guidelines section 15060, subdivision (c)(2), “[a]n activity is not subject to
CEQA if: [¶] . . . [¶] . . . [t]he activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment . . . .” (See ante, fn. 10.)

planning area.” Subdivision (f) of “Section 6.02 – Admission, Withdrawal and
Termination of Members” reads in part:
       “Upon withdrawal or termination as a Member, the provisions of Section
       2.04(b) shall remain applicable to any such withdrawing or terminated
       Member.”
In turn, subdivision (b)(i) of “Section 2.04 Powers” and subdivision (l) of “Article I:
Definitions” reads in part:
       “[Kern Groundwater] Authority shall not . . . undertake any activities
       within any Member’s boundaries, or within a Management Area managed
       in whole or in part by such Member, unless the Member formally and
       expressly requests, consents to and agrees, in writing, to the activity
       proposed . . . .”
       “ ‘Management Area’ shall mean the area within the boundaries of a
       Member or group of Members to be managed by that Member or group of
       Members under any GSP adopted by [Kern Groundwater] Authority.”
In order for section 2.04, subdivision (b)(i) of the joint powers agreement to apply
with respect to the Subject Property, however, said property must be within Buena
Vista’s “boundaries” or “Management Area.” In other words, Buena Vista would
need to annex the Subject Property and amend its sphere of influence.

                                               31.
Similarly, under Guidelines section 15061, subdivision (b)(3), known as the
“ ‘commonsense’ exemption” (Muzzy Ranch, supra, 41 Cal.4th at p. 380), “[w]here it can
be seen with certainty that there is no possibility that the activity in question may have a
significant effect on the environment, the activity is not subject to CEQA.” (See ante, at
pp. 19–20.)
       At the time of its decision, Kern LAFCO did not perceive the requested
annexation/sphere-of-influence amendment and the Palms Groundwater Recovery Project
as “a single, coordinated endeavor” (Association for a Cleaner Environment v. Yosemite
Community College Dist., supra, 116 Cal.App.4th at p. 639) and instead focused its
inquiry solely on the former. However, Kern LAFCO’s approvals and the Palm
Groundwater Recovery Project constituted the whole of the action and must be
considered altogether when analyzing the “potential for resulting in either a direct
physical change in the environment, or a reasonably foreseeable indirect physical change
in the environment” (Guidelines, § 15378, subd. (a)). (See Berkeley Keep Jets Over the
Bay Com. v. Board of Port Cmrs. (2001) 91 Cal.App.4th 1344, 1358 [“There is no
dispute that CEQA forbids ‘piecemeal’ review of the significant environmental impacts
of a project.”].)
       Where “we are called upon to construe statutes and regulations on the basis of
undisputed facts,” “[d]e novo review is . . . appropriate.” (In re Groundwater Cases
(2007) 154 Cal.App.4th 659, 674). Here, there is no dispute the Palms Groundwater
Recovery Project is an activity that may cause physical changes in the environment, ergo
the whole of the action may cause physical changes in the environment. (See Myers v.
Board of Supervisors (1976) 58 Cal.App.3d 413, 426–427 [explicit claims of adverse
environmental impacts sufficient to repudiate commonsense exemption “even if
exaggerated or untrue”]; see also California Farm Bureau Federation v. California
Wildlife Conservation Bd. (2006) 143 Cal.App.4th 173, 195 [party challenging
commonsense exemption “need only make a ‘slight’ showing of a reasonable possibility

                                             32.
of a significant environmental impact”].) As a matter of law, neither section 15060,
subdivision (c)(2) nor section 15061, subdivision (b)(3) of the Guidelines was applicable.

             iii. Kern LAFCO’s failure to comply with CEQA was presumptively
                  prejudicial.
       “Noncompliance by a public agency with CEQA’s substantive requirements or
noncompliance with its information disclosure provisions that preclude relevant
information from being presented . . . ‘constitute[s] a prejudicial abuse of discretion . . . ,
regardless of whether a different outcome would have resulted if the public agency had
complied with those provisions.’ ” (City of Hayward v. Trustees of California State
University (2015) 242 Cal.App.4th 833, 839, quoting § 21005, subd. (a).) “In other
words, when an agency fails to proceed as required by CEQA, harmless error analysis is
inapplicable.” (County of Amador v. El Dorado County Water Agency (1999) 76
Cal.App.4th 931, 946.)
       Here, Kern LAFCO did not comply with CEQA or the Guidelines because it
approved Buena Vista’s applications for the annexation and sphere-of-influence
amendment without taking into account the whole of the action, “ma[king] meaningful
assessment of potentially significant environmental impacts impossible.” (Santa Rita
Union School Dist. v. City of Salinas (2023) 94 Cal.App.5th 298, 333.) Its decision
“must be set aside as presumptively prejudicial.” (City of Hayward v. Trustees of
California State University, supra, 242 Cal.App.4th at p. 839.)

                                              33.
                                  DISPOSITION
      The judgment is affirmed. Costs on appeal are awarded to respondents Kern
Water Bank Authority and West Kern Water District.

                                                                DETJEN, Acting P. J.
WE CONCUR:

FRANSON, J.

MEEHAN, J.

                                        34.