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Voices of the Wetlands v. State Water Resources

August 15, 2011


Court: Superior County: Monterey Judge: Robert A. O'Farrell Ct.App. 6 H028021 Super. Ct. No. M54889

The opinion of the court was delivered by: Baxter, J.

Monterey County

Voices of the Wetlands, an environmental organization, filed this administrative mandamus action in the Monterey County Superior Court to challenge the issuance, by the California Regional Water Quality Control Board, Central Coast Region (Regional Water Board), of a federally required permit authorizing the Moss Landing Powerplant (MLPP) to draw cooling water from the adjacent Moss Landing Harbor and Elkhorn Slough.*fn1 The case, now more than a decade old, presents issues concerning the technological and environmental standards, and the procedures for administrative and judicial review, that apply when a thermal powerplant, while pursuing the issuance or renewal of a cooling water intake permit from a regional water board, also seeks necessary approval from another state agency, the State Energy Resources Conservation and Development Commission (Energy Commission), of a plan to add additional generating units to the plant, with related modifications to the cooling intake system.

Against a complex procedural backdrop, we will reach the following conclusions:

First, the superior court had jurisdiction to entertain the administrative mandamus petition here under review. We thus reject the contention of defendants and the real party in interest that, because the substantive issues plaintiff seeks to raise on review of the Regional Water Board's decision to renew the plant's cooling water intake permit were also involved in the Energy Commission's approval of the plant expansion, statutes applicable to the latter process placed exclusive review jurisdiction in this court.

Second, the trial court did not err when, after concluding that the original record before the Regional Water Board did not support the board's finding on a single issue crucial to issuance of the cooling water intake permit, the court deferred a final judgment, ordered an interlocutory remand to the board for further "comprehensive" examination of that issue, then denied mandamus after determining that the additional evidence and analysis considered by the board on remand supported the board's reaffirmed finding.

Third, recent United States Supreme Court authority confirms that, when applying federal Clean Water Act (CWA) standards for the issuance of this permit, the Regional Water Board properly utilized cost-benefit analysis, and in particular a "wholly disproportionate" cost-benefit standard, to conclude that the MLPP's existing cooling water intake design, as upgraded to accommodate the plant expansion, "reflect[ed] the best technology available for minimizing adverse environmental impact." (CWA, § 316(b); 33 U.S.C. § 1326(b) (hereafter CWA section 316(b)), italics added.)

We decline to address several other issues discussed by the parties. For instance, plaintiff insists the Regional Water Board violated CWA section 316(b) by approving compensatory mitigation measures -- a habitat restoration program funded by the MLPP's owner -- as a means of satisfying the requirement to use the best technology available (BTA). The legal issue whether section 316(b) allows such an approach is certainly significant (see Riverkeeper, Inc. v. U.S. E.P.A. (2d Cir. 2007) 475 F.3d 83, 110 (Riverkeeper II); Riverkeeper, Inc. v. U.S. E.P.A. (2d Cir. 2004) 358 F.3d 174, 189-191 (Riverkeeper I)), and it has not been finally resolved.

However, the trial court found, as a matter of fact, that the Regional Water Board had not directly linked the habitat restoration program to its BTA determination. The Court of Appeal concluded that the trial court's no-linkage finding had substantial evidentiary support. Here, as in the Court of Appeal, defendants and real party decline to pursue the legal issue, urging only that the trial court's factual finding should not be disturbed. As so framed, the issue presented is case and fact specific, and involves no significant question of national or statewide importance. Accordingly, we exercise our discretion not to consider it. (See Cal. Rules of Court, rule 8.516(b)(3).) By so proceeding, we expressly do not decide whether compensatory mitigation and habitat restoration measures can be a component of BTA, and we leave that issue for another day.

Finally, in its briefs on the merits, plaintiff advances issues it did not raise in its petition for review. Plaintiff now insists the evidence in the administrative record does not support the Regional Water Board's finding that the costs of alternative cooling technologies would be "wholly disproportionate" to their environmental benefits. Plaintiff also urges that even if the board properly considered compensatory restoration measures as a means of satisfying BTA, the record does not support its determination that the habitat restoration project it approved was sufficient to offset the environmental damage caused by the MLPP's cooling system.

These issues are case and fact specific, did not factor into our decision to grant review, and do not currently appear to be matters of significant national or statewide interest. Again, therefore, we decline to address them.

Accordingly, we will affirm the judgment of the Court of Appeal.


The MLPP, in operation under various owners for nearly 60 years, sits at the mouth of Elkhorn Slough, an ecologically rich tidal estuary that drains into Monterey Bay between the cities of Santa Cruz and Monterey. As a thermal powerplant, the MLPP uses superheated steam to generate electricity. The plant's cooling system appropriates water from Moss Landing Harbor, and water from the adjacent slough is also drawn into the system. The MLPP has traditionally employed a once-through cooling system, in which water continuously passes from the source through the plant, then back into the source at a warmer temperature. The thermal effects of the cooling system aside, the intake current kills some aquatic and marine life by trapping larger organisms against the intake screens (impingement) and by sucking smaller organisms through the screens into the plant (entrainment).*fn2

Under the CWA, the MLPP must have a National Pollutant Discharge Elimination System (NPDES) permit in order to draw cooling water from the harbor and slough. The discharge of a "pollutant" from a "point source" into navigable waters may only occur under the terms and conditions of such a permit, which must be renewed at least every five years. (33 U.S.C. §§ 1311, 1342(a), (b).) In California, NPDES permits, which must comply with all minimum federal clean water requirements, are issued under an EPA-approved state water quality control program administered, pursuant to the Porter-Cologne Water Quality Control Act (Porter-Cologne Act; Wat. Code, § 13000 et seq.), by the State Water Board and the nine regional water boards. (Id., §§ 13372, 13377; see 33 U.S.C., § 1342(b); 40 C.F.R. §§ 123.21-123.25 (2011); 39 Fed.Reg. 26061 (Jul. 16, 1974); 54 Fed.Reg. 40664-40665 (Oct. 31, 1989).)

In 1999, Duke applied to the Energy Commission for approval of Duke's plan to modernize the MLPP by adding two new 530-megawatt gas-fired generators. These new units would supplement the two 750-megawatt generators, units 6 and 7, already in operation, and would replace units 1 through 5, older generators that were no longer being used. Pursuant to the Warren-Alquist State Energy Resources Conservation and Development Act (Warren-Alquist Act; Pub. Resources Code, § 25000 et seq.), the siting, construction, or modification of a thermal powerplant with a generating capacity in excess of 50 megawatts must be certified by the Energy Commission. (Id., §§ 25110, 25120, 25500.) As set forth in greater detail below, the commission's certification must be consistent with all applicable federal laws (id., §§ 25514, subd. (a)(2), 25525), and is "in lieu of any permit, certificate, or similar document required by any state, local or regional agency, or federal agency to the extent permitted by federal law" (id., § 25500).

Concurrently with its Energy Commission application, Duke applied to the Regional Water Board for renewal of its NPDES permit -- which was due to expire in any event -- and to include therein terms and conditions consistent with operation of the new generators. In both applications, Duke proposed various modifications to the design and operation of the existing once-through cooling system, both to accommodate the new generators, and to minimize aquatic and marine mortality resulting from cooling water intake operations.*fn3 However, the proposal did not contemplate conversion of the plant to either a closed-cycle or a dry-cooling system (see fn. 2, ante).

In order to renew the plant's NPDES permit, the Regional Water Board was required, among other things, to determine, under section 316(b) of the CWA, that "the location, design, construction, and capacity of [the MLPP's] cooling water intake structures reflect[ed] the best technology available for minimizing adverse environmental impact [i.e., BTA]." (33 U.S.C. § 1326(b); see id., §§ 1316(b)(1)(A), 1342(b)(1)(A).) In the year 2000, when the MLPP's Energy Commission and Regional Water Board applications were pending, there were no federal regulations in place directing permitting agencies how to apply the BTA standard. When lacking regulatory guidance for applying the CWA's NPDES permit standards, including section 316(b)'s BTA standard for cooling water intake structures, agencies were expected to exercise their "best professional judgment" on a case-by-case basis. (See, e.g., Entergy Corp. v. Riverkeeper, Inc. (2009) 556 U.S. 208, ___ [129 S.Ct. 1498, 1503] (Entergy Corp.); National Resources Defense Council v. U.S. E.P.A. (9th Cir. 1988) 863 F.2d 1420, 1425.)

The Energy Commission and Regional Water Board proceedings went forward concurrently, and were coordinated to a significant degree. As noted by the Court of Appeal, " 'the [Energy] Commission and the [Regional Water Board] formed a Technical Working Group (TWG) made up of representatives from various regulatory agencies, the scientific community, and Duke . . . . The TWG worked to design biological resource studies and then validate the results of those studies.' "

On October 25, 2000, after full agency review and opportunity for public comment, the Energy Commission approved the application for certification and authorized construction of the MLPP modernization project. Under the federal-compliance provisions of the Warren-Alquist Act, the commission addressed the BTA issue. In this regard, the commission determined that design alternatives to Duke's proposed modifications of the MLPP's cooling intake system either would not significantly reduce environmental damage to the source of cooling water, or were economically infeasible, and that the proposed modifications represented the most effective economically feasible alternative considered. The commission thus concluded that this proposal represented BTA for purposes of section 316(b) of the CWA, though it "recommend[ed]" that, prior to each five-year renewal of the NPDES permit, the Regional Water Board require the plant's owner to provide an analysis of "alternatives and modifications to the cooling water intake system 1.) which are feasible under [the California Environmental Quality Act] and 2.) [which] could significantly reduce entrainment impacts to marine organisms."

As a separate condition of certification, the Energy Commission specified that the MLPP's owner would provide $7 million to fund an Elkhorn Slough watershed acquisition and enhancement project. The commission concluded that compliance with "existing and new permits, including the . . . NPDES . . . permit[,] will result in no significant water quality degradation." Finally, the commission entered a formal finding that the conditions of certification, if implemented, would "ensure that the project will be designed, sited, and operated in conformity with applicable local, regional, state, and federal laws, ordinances, regulations, and standards, including applicable public health and safety standards, and air and water quality standards."

On October 27, 2000, after similar full procedures, the Regional Water Board issued its revised Waste Discharge Requirements Order No. 00-041 (Order No. 00-041), which included NPDES permit No. CA0006254, applicable to the MLPP. The stated purpose of the order was to permit, pursuant to conditions and limitations specified in the order, the "discharge of industrial process wastewater, uncontaminated cooling water and storm water from the [MLPP]."

In finding No. 48 of its order, the Regional Water Board addressed CWA section 316(b)'s BTA mandate, as required for issuance of the permit. The order recited that the powerplant "must use BTA to minimize adverse environmental impacts caused by the cooling water intake system. If the cost of implementing any alternative for achieving BTA is wholly disproportionate to the environmental benefits to be achieved, the Board may consider alternative methods to mitigate these adverse environmental impacts. In this case the costs of alternatives to minimize entrainment impacts are wholly disproportionate to the environmental benefits. However, Duke Energy will upgrade the existing intake structure for the new units to minimize the impacts due to impingement of larger fish on the traveling screens, and will fund a mitigation package to directly enhance and protect habitat resources in the Elkhorn Slough watershed. . . ." (Italics added.)

In finding No. 49, the Regional Water Board set forth the required cooling system modifications and the environmental results to be expected therefrom. Subsequent findings detailed the features of the habitat enhancement program to be funded by a $7 million deposit from the powerplant's owner.

No person or entity sought administrative or judicial relief to stop or stay construction or operation of the plant additions and modifications under the terms and conditions of the Energy Commission's certification order, nor was any other form of judicial review of the commission's order pursued. The project to install the two new generating units at the MLPP, with attendant modifications to the cooling intake system, has since been constructed, and has been in operation since 2002.

Meanwhile, plaintiff did file with the State Water Board an administrative appeal of the Regional Water Board's Order No. 00-041. On June 21, 2001, the State Water Board rejected the appeal.

On July 26, 2001, plaintiff filed the instant petition for administrative mandamus (Code Civ. Proc., § 1094.5 (section 1094.5)) in the Monterey County Superior Court (No. M54889). The petition claimed that the Regional Water Board had failed to comply with the CWA, in that the October 2000 NPDES permit issued to Duke did not satisfy the BTA requirement of section 316(b) of that statute. The prayer for relief asked that Order No. 00-041, issuing the permit, be set aside. However, plaintiff did not seek injunctive or other relief to halt, delay, or suspend the operative effect of the 2000 NPDES permit while the mandamus challenge was pending.*fn4

Defendants and real parties demurred to the petition, asserting, among other things, lack of subject matter jurisdiction, in that the claims for relief concerned matters determined by the Energy Commission, whose decisions the Warren-Alquist Act insulates from review by the superior court. The commission, as amicus curiae, filed a supporting memorandum. The trial court overruled the demurrers. Duke sought a writ of mandate in the Court of Appeal, Sixth Appellate District, to challenge this decision. (Duke Energy Moss Landing v. Super. Ct., May 3, 2002, H024416.) The Court of Appeal summarily denied mandate.

The superior court then considered plaintiff's claims on the merits. On October 1, 2002, after a hearing, the court issued its intended decision. In this tentative ruling, the court rejected finding No. 48 of the Regional Water Board's Order No. 00-041 -- the board's determination that the MLPP's cooling water system satisfied BTA -- concluding that this finding was not supported by the weight of the evidence. The intended decision proposed to order issuance of a peremptory writ of mandate, directing the board "to conduct a thorough and comprehensive analysis of [BTA] applicable to the [MLPP]." However, the intended decision specified that "[n]othing in this decision compels an interruption in the ongoing plant operation during the . . . board's review of this matter."

On October 29, 2002, after receiving initial objections from real parties, the court designated the intended decision as the statement of decision and ordered plaintiff to prepare a proposed judgment for review and signature. Plaintiff submitted a proposed judgment granting a peremptory writ of mandate and setting aside the challenged NPDES permit.

Defendants and real parties objected that a judgment setting aside the permit would conflict with the intended decision's proviso that no interruption in current plant operations was being ordered, and would require the Regional Water Board to start the NPDES permit process over from "square one." These parties submitted an alternative proposed judgment that granted the peremptory writ and remanded to the board "for further proceedings in [the board's] discretion that are consistent with this Judgment and the Statement of Decision," again specifying that nothing in the judgment compelled an interruption in ongoing plant operations pending the board's review.

Ultimately, on March 7, 2003, the court issued an order which (1) stated that finding No. 48 was not supported by the weight of the evidence, (2) remanded Order No. 00-041 to the Regional Water Board "to conduct a thorough and comprehensive analysis with respect to Finding No. 48," and (3) directed the board to advise the court when it had completed its proceedings on remand "so that the [c]court may schedule a status conference." Plaintiff's petition for mandate in the Court of Appeal, seeking to set aside the March 7, 2003, order (Voices of the Wetlands v. Super. Ct., Apr. 18, 2003, H025844) was summarily denied.

On remand, the Regional Water Board issued a notice soliciting written testimony, evidence, and argument from the parties -- including, for this purpose, both plaintiff and the Energy Commission -- as to (1) what alternatives to once-through cooling were effective to reduce entrainment, (2) the costs, feasibility, and environmental benefits of such alternatives, and (3) whether the costs of any such alternatives were wholly disproportionate to their environmental benefits. The parties, and the board's staff, thereafter submitted voluminous materials in conformity with the notice.

On May 15, 2003, the Regional Water Board held a public hearing on the issues specified in the remand order. Plaintiff participated in the hearing. The parties had the opportunity to summarize their evidence, cross-examine witnesses, and present closing arguments. Members of the public in attendance were also allowed to comment. The board members' discussion indicated a majority view that closed-cycle cooling, despite its ability to reduce entrainment, would actually have adverse effects on air and water quality and would reduce plant efficiency, and that more expensive cooling alternatives were not justified by their environmental benefits, given the overall good health of the adjacent marine habitat after 50 years of plant operations. These considerations, the board majority concluded, supported the original determination that the costs of alternatives to the MLPP's once-through cooling system were wholly disproportionate to the corresponding environmental benefits. By a four-to-one vote, the board approved a motion declaring that, for the reasons specified in the foregoing discussion, "Finding [No.] 48 in NPDES order 00041 is supported by the weight of the evidence."

Plaintiff filed an administrative appeal of the Regional Water Board's decision on remand. The State Water Board summarily denied the appeal on grounds that it failed to "raise substantial issues that are appropriate for review."

On October 15, 2003, plaintiff filed a second superior court mandate petition (Voices of the Wetlands v. Cal. Regional Water Quality Control Bd., Super. Ct. Monterey County, No. M67321), attacking the Regional Water Board's resolution on remand on multiple grounds. On July 21, 2004, acting on the petition at issue here, No. M54889, the court issued a statement of decision resolving the postremand issues the parties had agreed remained open. In pertinent part, the court ruled that (1) the board's limitation on the scope of the remand issues complied with the court's remand order, (2) in deciding whether Finding No. 48 had sufficient support, the court could consider the new evidence developed on remand, (3) plaintiff was correct that mitigation measures could not be considered in determining BTA (citing Riverkeeper I, supra, 358 F.3d 174), but the board had not used the $7 million Elkhorn Slough habitat restoration plan as a "substitute" for selecting BTA, and the board's BTA determination "[did] not rest on that plan as the basis for its [BTA] finding," and (4) the board on remand conducted "a sufficiently comprehensive analysis of the potential technological alternatives" to once-through cooling, "and the record contains a realistic basis for concluding that the existing modified [cooling] system provides [BTA] for the [MLPP]."

On August 17, 2004, the court entered judgment denying a peremptory writ of mandate in No. M54889. On the parties' stipulation, the court thereafter entered an order of dismissal with prejudice in No. M67321.

Plaintiff appealed in No. M54889, urging that the trial court erred in ordering an interlocutory remand, and in denying mandate to overturn the NPDES permit on grounds that the Regional Water Board had improperly determined BTA. Defendants and real parties in interest cross-appealed on the issue whether the superior court had jurisdiction to entertain the mandamus petition.

Meanwhile, in July 2004, the EPA finally promulgated regulations setting BTA standards for the cooling systems of existing powerplants. (69 Fed.Reg. 41576-01 (Jul. 9, 2004); see 40 C.F.R. § 125.90 et seq. (2011) (Phase II regulations).)*fn5 As explained in greater detail below, the Phase II regulations established national performance standards based on the impingement and entrainment mortality rates to be expected from closed-cycle cooling (see fn. 2, ante). However, the regulations allowed existing facilities to meet those standards by alternative cooling system technologies, or, where reliance on such a technology alone was less feasible, less cost effective, or less environmentally desirable, by using restoration measures as a supplementary aid to compliance. A facility could also obtain a site-specific determination of BTA based on performance "as close as practicable" to the national standards, where, in the particular case, the costs of strict compliance would be "significantly greater" than those considered by the EPA director when formulating the regulations (the "cost-cost" alternative), or than the environmental benefits to be expected (the "cost-benefit" alternative). (40 C.F.R. § 125.94 (2011).)

In 2007, while the instant appeal was pending, the United States Court of Appeals for the Second Circuit issued its decision in Riverkeeper II, addressing the Phase II regulations.*fn6 The Riverkeeper II court concluded that these regulations were invalid under section 316(b) of the CWA insofar as they permitted the use of (1) cost-benefit analysis (as opposed to stricter cost-effectiveness analysis)*fn7 and (2) compensatory restoration measures for purposes of determining BTA. (Riverkeeper II, supra, 475 F.3d 83, 98-105, 108-110, 114-115.)

Thereafter, the Court of Appeal for the Sixth Appellate District unanimously affirmed the trial court judgment in this case. The Court of Appeal concluded that (1) the superior court properly entertained the mandamus petition; (2) the court did not err by ordering, in advance of a final judgment, an interlocutory remand to the Regional Water Board; (3) the board properly considered new evidence on remand; (4) section 316(b) of the CWA does not permit the use of compensatory restoration measures as a factor in establishing BTA (citing Riverkeeper II), but substantial evidence in the administrative record supports the trial court's determination that the board did not employ mitigation measures as " 'a substitute for selecting the best technology available' "; (5) the board could properly conclude that BTA did not require the implementation of cooling technologies whose costs were "wholly disproportionate" to their environmental benefits; and (6) the ...

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