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State, Environmentalists Both Lose Appeals Of Power Plant Decision

In an extremely long and complex opinion, the Sixth District Court of Appeal has upheld water discharge permits for Duke Energy's Moss Landing power plant.

Environmentalists have been on the offensive ever since Duke applied for permits to rebuild and expand the natural gas-fired power plant in 1999. The concern arises because the power plant draws water from, and discharges water to, the Elkhorn Slough area, which is one of the largest intact coastal wetlands in California and of importance to hundreds of bird species, as well as rare plants and other animals.

A primary point of contention regarded Duke's plan for "once-through" cooling, in which the power plant draws in water from the estuary for cooling and then discharges the water at a higher temperature into the sea. Environmentalists argued for a closed cooling system in which the same water is recycled through the plant for cooling a concept that Duke fought because of cost.

The California Energy Commission approved the project in October 2000, and the following month the Central Coast Regional Water Quality Control Board approved the project's National Pollutant Discharge Elimination System (NPDES) permit. When the State Water Resources Control Board rejected environmentalists' appeal of the discharge permit, the group Voices of the Wetlands sued the water boards. A Monterey County Superior Court Judge in March 2003 remanded the permit to the regional board because the court found there was insufficient evidence that the board relied on BTA (best technology available) for one aspect of the cooling system.

The regional board reconsidered the matter and concluded that its decision was in fact supported by substantial evidence. Voices, the water boards and Duke returned to the trial court, which in July 2004 upheld the regional board's action.

Both sides appealed. The environmental group challenged numerous aspects of the discharge permit and the procedure behind it, while the water boards and Duke challenged the court's ability to even hear the case, and the lower court's remand of the discharge permit to the regional board. In a 98-page opinion, the Sixth District rejected all appeals.

From a land use perspective, the court's ruling on the appeals from the water boards and Duke may be most important.

The water boards and Duke argued that the trial court lacked jurisdiction to hear the lawsuit because state law provides that proceedings of the Energy Commission are appealable only to the state Supreme Court. But the court determined that power plant certification and the NPDES permit were separate issues, and the latter could not be decided by the Energy Commission. In fact, the Commission had deferred to the regional water board. Thus, environmentalists could seek review of the plant certification by the state Supreme Court while also challenging the discharge permit in Superior Court, the Sixth District ruled.

As to the trial court's remand of the permit to the regional board, the water boards and Duke argued the remand was improper because there was substantial evidence to support the initial decision. The appellate court, however, said that California Environmental Quality Act principles applied and the board "was required to meaningfully analyze the alternatives itself." The administrative record showed that the board members during their initial consideration failed to adequately analyze BTA alternatives, the court found.

The Sixth District rejected Voices' contention that the trial court should have invalidated the permit and returned the entire matter to the regional board, and Voices' argument that the regional board should not have considered new evidence during the remand hearing. The court also rejected the argument that the regional board improperly weighed the costs and benefits of a once-through cooling system.

Voices has asked the state Supreme Court to review the Sixth District's decision.

The Case:
Voices of the Wetlands v. California State Water Resources Control Board, No. H028021, 07 C.D.O.S. 14339, 2007 DJDAR 18432. Filed December 14, 2007. Modified January 10, 2008 at 2008 DJDAR 385.

The Lawyers:
For Voices: Deborah Sivas, Stanford Law School Environmental Law Clinic, (650) 723-0325.
For the Water Resources Control Board: Anita Ruud, attorney general's office, (415) 703-5533.
For Duke Energy: Sarah G. Flanagan, Pillsbury, Winthrop, Shaw, Pittman, (415) 983-1000.

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