California Supreme Court Rules Interlocutory Remand a Valid Remedy in Writ Petitions

By Katherine J. Hart

The recent case of Voices of the Wetlands v. State Water Resources Control Board (2011) 52 Cal.4th 499, involves the issuance of an NPDES permit by the Central Coast Regional Water Quality Control Board (“Regional Board”) authorizing the Moss Landing Power Plant (then owned by Duke Energy, now owned by Dynegy) to draw cooling water from Moss Landing Harbor and Elkhorn Slough. Plaintiff Voices of the Wetlands challenged the permit raising a number of legal issues, but only the following three issues were addressed by the California Supreme Court:

(1)   Did the superior court have jurisdiction to consider the administrative mandamus petition at issue?

(2)   Did the trial court improperly order an interlocutory remand after finding insufficient evidence to support the Regional Board’s best technology available (BTA) finding?

(3)   Does section 316(b) of the Clean Water Act (CWA) permit a cost-benefit analysis in determining best technology available?

The court left unresolved the issue of whether compensatory mitigation and habitat restoration measures can be a component of BTA.

Background Facts

In 1999, Duke Energy applied to the Regional Board for renewal of its NPDES permit for the Moss Landing Power Plant (MLPP). Duke proposed modifications to the current plant design and operation of the once-through cooling system to accommodate two new generators and to reduce aquatic mortality.

Section 316(b) of the Clean Water Act requires that “the location, design, construction and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact.” However, at the time, there were no regulations in place that provided guidance on how to apply the BTA standard. Instead, BTA was to be determined on a case-by-case basis and in accordance with best professional judgment.

In October 2000, the Regional Board issued a revised NPDES permit to authorize the discharge of industrial process wastewater, uncontaminated cooling water and storm water from the Moss Landing Power Plant. Conditions of the renewed permit included a mandate to use BTA to mitigate adverse environmental impacts caused by the cooling water intake system, as well as a $7,000,000 fund to conduct habitat enhancement. Plaintiff appealed the permit to the State Water Resources Control Board (State Board). The State Board denied the appeal. Plaintiff then filed its petition for administrative mandamus on the grounds the Regional Board failed to comply with section 316(b) of the CWA, among others.

The trial court ordered an interlocutory remand to the Regional Board to analyze the cost of implementing various alternatives for achieving BTA, then comparing the costs to the resulting the environmental benefits. The court’s interlocutory remand order specified that the plant’s operations were not to be interrupted.

Pursuant to the trial court’s order, the Regional Board held a hearing on the remanded issues and determined that there was evidence to support a finding that the cost-benefit analysis weighed against a dry cooling system. Plaintiff attempted to appeal the Regional Board’s decision on remand, but the State Board denied the appeal as failing to raise substantial issues appropriate for review. The trial court then issued a statement of decision resolving the post-remand issues, ruling in favor of the Regional Board and Duke Energy.

Jurisdiction

As a defense, Dynegy argued that the superior court lacked subject matter jurisdiction because the BTA determination was subsumed in the California Energy Commission’s ("CEC") plant certification pursuant to the Warren-Alquist Act, which constrains judicial review of a power plant certification decision by the CEC to the California Supreme Court.

In rejecting Dynegy’s argument, the court noted that decisions and orders of the regional boards are reviewable by administrative appeal to the State Water Board, and then by petition in the superior court. It further found that since the Regional Board has the exclusive authority to issue NPDES permits, the CEC could not have overruled or countermanded the Regional Board decision regarding the NPDES permit. Thus, Plaintiff did not raise an issue that could have been determined in a CEC proceeding, and therefore, the judicial review provisions of Warren-Alquist Act did not apply.

Interlocutory Remand

Perhaps more significantly, the court also found the trial court’s order for interlocutory remand was not in error.

Plaintiff claimed that because the trial court found insufficient evidence to support the Regional Board’s finding No. 48 regarding best technology available, the court was required to issue a final judgment directing the Regional Board to set aside the WDRs and NPDES permit – instead of ordering an interlocutory remand to allow the Regional Board to hold an additional hearing on the issue.

The court reasoned that Section 1094.5, subdivisions (e) and (f) do not preclude the use of prejudgment limited remand procedures such as the interlocutory remand employed in this case. Specifically, “the statute does not preclude the agency from accepting and considering additional evidence to fill the gap the court has identified.” The court indicated that Plaintiff’s concerns regarding fairness and proper agency decision-making did not justify any absolute prohibition against interlocutory remands, but emphasized that agency reconsideration must always comport with due process. Significantly, the court went on to disapprove the court of appeal decisions in Resources Defense Fund v. Local Agency Formation Commission (1987) 191 Cal.App.3d 886 and Sierra Club v. Contra Costa County (1992)10Cal.App.4th 1212, to the extent those decisions conflict with the holding in this case. Such disapproval is significant because both of the above-mentioned cases are CEQA cases.

Practical Effects of the Court’s Ruling

The court’s ruling is a significant win for administrative agencies like the water boards because it is a case of first impression which confirms administrative agencies have the ability to address missing pieces of analyses in their records instead of having to restart the administrative process. Additionally, because the court disapproved two CEQA cases which had previously prohibited interlocutory remands in CEQA cases, it is also a substantial win for local and government agencies processing projects and environmental review of those projects. With this ruling, agencies now have the ability to address missing pieces of analyses in their records instead of having to restart the environmental review process on a certain issue. Certainly, from this perspective, the case holding ensures administrative efficiency.

For those challenging permits and/or projects and environmental review of those projects, this case might be considered a setback because it allows agencies (and thereby applicants) to add evidence to the record that was challenged. Still, as the analysis of this case suggests, the agencies cannot deprive an applicant or the public of due process requirements.

This opinion makes perfect sense. It combines efficiency with fairness. If only more court opinions were so practical.

Katherine J. Hart is an attorney at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, or the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

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