COURT CLOUDS WATER FLOW DEALS TO SUPPLY NEWHALL RANCH IN DOUBT.

Byline: Kathleen Sweeney Staff Writer

SANTA CLARITA - The Newhall Ranch project suffered another blow this week when the state Supreme Court upheld a lower court ruling ordering further environmental studies before new water allocations can be approved.

The 22,000-home development planned west of Santa Clarita relies on an additional water entitlement sought by the Castaic Lake Water Agency. That contract may be invalidated as a result of Wednesday's high court action.

Justices let stand an appellate court ruling that invalidated the California Department of Water Resources' Environmental Impact Report. The report is necessary to show the impacts on the environment when more water is moved from Northern to Southern California.

The EIR was used to approve the 1995 Monterey Agreement, which allowed water wholesalers such as the CLWA to buy additional entitlements from the State Water Project.

Wednesday's action prohibits the department from approving any new water transfers and could possibly affect the validity of ones already approved, such as 41,000 acre-feet purchased by the CLWA.

``We are pretty thrilled,'' said Antonio Rossmann, an attorney representing the Planning and Conservation League, which had sued to invalidate the Monterey agreement.

Locally, the CLWA purchased 41,000 acre-feet of water from Kern County water districts to help support future development. Of that water, 10,000 acre-feet was slated for the Newhall Ranch project.

CLWA General Manager Robert Sagehorn said that this decision casts a shadow over plans to store water, and if the department doesn't honor its contract, it would invalidate deals that already have been made.

Sagehorn said the agency is confident its contract with the state will be honored. CLWA also has made other investments that will assure future water supply to the Santa Clarita Valley, he said.

``We believe that there was adequate authority within the original contract for the department to implement the water transfers we have relied on,'' Sagehorn said. ``We see no impact to the programs of the CLWA.''

The agency used the figures in its recent Urban Water Management Report, which will be submitted to the state by the end of the year, saying there will be plenty of water to supply the massive Newhall Ranch project and other developments.

Lynne Plambeck, first vice president of the Santa Clarita Organization for Planning the Environment, said the agency shouldn't count on that water supply. Now, not only does CLWA need to worry about the EIR ruling but whether there will be a validation proceeding of existing contracts.

``They shouldn't have made these contracts . . . pending litigation,'' she said. ``This is what we've been saying to the county and city for several years. This water transfer is in jeopardy.''

The 1995 Monterey Agreement is between the Department of Water Resources and various State Water Project contractors. It allows more flexible operation of state water facilities, permanent transfers of entitlements between contractors, and the transfer of land to certain contractors in exchange for permanent retirement of 45,000 acre-feet of state water.

The Department of Water Resources was charged with completing the environmental report, but instead the Central Coast Water Authority in Santa Barbara finished it.

The Planning and Conservation League filed a lawsuit, claiming the report was inadequate because it didn't add that there was an inability to supply 4.2 million acre-feet to state contractors, and that each contractor's entitlement would be proportionally reduced to match the available water supply.

The group also said the Department of Water Resources should have completed the environmental report.