Marina Coast Water Dist. v. County of Monterey (2023) · DecisionDepot

Marina Coast Water Dist. v. County of Monterey

Name: California Superior Court Tentative Rulings
Creator: DecisionDepot
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California Court of Appeal Oct 4, 2023 No. H049146Published

Filed 9/8/23; Modified and Certified for Partial Pub. 10/4/23 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

MARINA COAST WATER DISTRICT, H049146 & H049170 (Monterey County Plaintiff and Appellant, Super. Ct. No. 19CV003305)

COUNTY OF MONTEREY et al.,

Defendants and Appellants;

CALIFORNIA-AMERICAN WATER COMPANY,

Real Party in Interest and Appellant.

California-American Water Company (Cal-Am), an investor-owned utility that supplies water to much of the Monterey Peninsula, seeks to implement its Monterey Peninsula Water Supply Project (Water Supply Project) to comply with a state order to cease its decades-long overuse of other water sources. Crucial to the Water Supply Project are (1) construction of the desalination plant here at issue in unincorporated Monterey County and (2) the drilling of wells in coastal land administered by the City of Marina (the City) to supply the plant. We are called to review the approval of

construction of the desalination plant by the County of Monterey through its Board of Supervisors (collectively, the County). The Water Supply Project is intended to increase the region’s supply of potable water by using the wells to draw unusable seawater and brackish water1 from coastal aquifers in the Salinas Valley Groundwater Basin (Salinas Basin),2 and routing it by pipeline to the plant, where it will be desalinated. As a hydrological matter, whether the Water Supply Project will serve its purpose depends on the nature of the water the planned intake wells draw from the “capture zone”—the volume of aquifer that contributes the water extracted by the wells—and, by extension, on the replenishment, or recharge, of the capture zone predominantly by ocean water and not fresh water from inland portions of the Salinas Basin. As a legal matter, realization of the multijurisdictional Water Supply Project depends on the approval of its many component parts by dozens of governmental agencies. Acting as a lead agency under the California Environmental Quality Act (CEQA; see Pub. Resources Code, § 21050),3 the California Public Utilities Commission (CPUC) undertook environmental review of Cal-Am’s proposal for the Water Supply Project. The CPUC ultimately certified a final EIR and granted Cal-Am a Certificate of Public Convenience and Necessity authorizing commencement of a scaled-down version of Cal-

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Am’s proposal, subject to Cal-Am’s obtaining necessary approvals from various responsible agencies. Among the various responsible agencies having jurisdiction over local components of the Water Supply Project, the City denied Cal-Am coastal development permitting to install the intake wells. While Cal-Am’s appeal from the City’s denial was pending before the California Coastal Commission, the County approved Cal-Am’s application for a permit (the Permit) to construct the desalination plant and associated facilities in an unincorporated part of Monterey county. Marina Coast Water District (MCWD) challenged the County’s approval of the Permit by filing a petition for writ of mandate and a complaint for declaratory relief. MCWD argued, among other things, that the County: (1) violated CEQA by (a) failing to prepare a subsequent or supplemental EIR; and (b) adopting a statement of overriding considerations that was unsupported by substantial evidence in the record; and (2) violated its own general plan by approving a project that lacked a long-term sustainable water supply and adequate water supply system. The trial court granted MCWD’s writ petition in part and denied it in part. The court ruled that the County was not required to prepare a subsequent or supplemental EIR and did not violate its own general plan, but unlawfully relied on the water-related benefits of the desalination plant in its statement of overriding considerations without addressing the uncertainty as to the water supply introduced by the City’s denial of the coastal development permit. The court issued a peremptory writ of mandate setting aside the County’s approval of the Permit and entered judgment on April 29, 2021. The County and Cal-Am timely appealed and MCWD cross-appealed. On the County and Cal-Am’s appeal, we conclude that the County’s statement of overriding considerations was supported by substantial evidence and any remaining deficiency in the statement as an informational document was not prejudicial. On

that was formed in 1960 and serves the City and the community at the former Fort Ord Army Base. By 1995, Cal-Am relied on the Carmel River system to meet its water demand, including surface water diversions from the San Clemente and Los Padres Reservoirs and wells pumping the Carmel Valley Alluvial Aquifer; the wells alone accounted for 70 percent of Cal-Am’s supply. Also in 1995, the State Water Resources Control Board (Water Board) concluded that although Cal-Am had been diverting an average of over 14,000 acre-feet per year (afy) from the Carmel River system, it had a legal right to only 3,376 afy. The Water Board ordered Cal-Am to replace its unlawful diversions of more than 10,000 afy per year by obtaining additional rights to Carmel River water, tapping other sources of water, or other actions, such as conservation. Cal-Am’s overuse of Carmel River water further subjected it to federal prosecution under the Endangered Species Act for unlawful takings of threatened species inhabiting the river. Cal-Am’s other principal source of supply is the Seaside Basin. But in 2006, the Monterey County Superior Court issued a decision adjudicating the water rights of the various parties who draw groundwater from the Seaside Basin to protect the basin from long-term damage associated with overdraft, including seawater intrusion. To that end, the court identified the natural safe yield for the basin and each of the basin’s subareas, allocated water rights among the parties that would diminish incrementally over time until total withdrawals ceased exceeding the natural safe yield, and required replenishment of withdrawals in excess of the natural safe yield. The court order limits Cal-Am’s eventual allocation of water from the Seaside Basin to 1,474 afy and requires Cal-Am to replenish prior excess withdrawals at a rate of 700 afy over 25 years. In 2009, the Water Board issued a cease and desist order in which it ordered Cal- Am to terminate all unauthorized diversions from the Carmel River no later than December 31, 2016. In 2016, the Water Board extended the deadline for Cal-Am to terminate all unauthorized diversions to December 31, 2021. The 2016 revised cease and 6

1. CPUC’s Consideration of Issues Related to Source Water A primary CPUC focus was determining whether, by withdrawing water from coastal aquifers in the Salinas Basin, the Water Supply Project would exacerbate seawater intrusion in the Salinas Basin and harm other users, particularly MCWD. Aside from the matter’s intrinsic importance, the CPUC was following an advisory Water Board legal opinion, provided at the CPUC’s request, that Cal-Am’s legal right to withdraw groundwater from the basin was contingent upon Cal-Am demonstrating that the project “will not harm or cause injury to other basin users.” Based on water quality testing and modeling, the CPUC determined that the wells “would initially extract the ambient brackish groundwater” in the capture zone—the result of “decades of . . . seawater intrusion” in the affected aquifers. Based on the proposed location of the wells, the configuration of the capture zone, and measurement and modeling of the groundwater gradient, the CPUC determined that “over time, the source water supplied by [the] capture zone would be replaced by seawater.” The Water Board opined that although Cal-Am did not need to establish a water right to extract the seawater element of the brackish groundwater, Cal-Am needed to establish an appropriative right to the portion of the feedwater that originated from the Salinas Basin by showing that its extraction would not harm existing basin users. The CPUC was satisfied that the project would not harm existing basin users because the brackish feedwater was neither used nor useful in its existing state, the project would not draw freshwater on its own, and Cal-Am would “return” to the Salinas Basin desalinated water in an amount equal to the volume of freshwater included in withdrawn brackish water. Pursuant to a settlement agreement with the Monterey County Water Resources Board, this “would be accomplished by supplying return water to the Castroville Community Services District for municipal water supply (in lieu of groundwater pumping from the Salinas Valley Groundwater Basin) and also to the Castroville Seawater Intrusion Project. The return water component of the project would ensure that 10

existed in at least part of the relevant area and alternatively argued that such data was immaterial because it followed “a record wet year” whereas long-term data indicated ongoing seawater intrusion. HWG opined that even in a flat gradient scenario an “extremely high percentage of water entering [Water Supply Project] wells still originates from the ocean” because the ocean is “a massive recharge boundary.” Separately, in the preliminary analysis of the AEM study, Knight concluded that there was a “ ‘sizable isolated lens of freshwater’ in the Dune Sand and 180-FTE Aquifer[s]” such that “the presumption of saltwater intrusion in this area appears incorrect.” But the CPUC questioned the utility of AEM data and, in any event, opined that pockets of inland groundwater were of “minor consequence” because the AEM survey results showed a “band of highly brackish to saline groundwater along the coast where the [MPWSP] slant wells would be extracting water” and less-intruded inland water “would not be drawn into and would not become source water for” the slant wells. In approving the Water Supply Project, the CPUC responded to the final AEM study and other comments on the final EIR. The CPUC concluded that “[t]he ocean is a constant-head recharge boundary; in other words, the ocean is an area from where the aquifers are consistently replenished. Most of the water drawn into the slant wells would come from the ocean. The comments on the Final EIR/EIS assert that if the current inland groundwater gradient were reduced (got flatter) or reversed (started flowing toward the ocean) in the future, the project would begin to draw fresh water from areas inland of the coast. However, the analyses presented in the comments misrepresent the conditions because they disregard or understate the presence and influence of the ocean, a substantial recharge boundary, and overestimate the extent that groundwater would be captured from inland sources.” Even assuming a reversed gradient, the CPUC stated that “the volume of inland water arriving at the slant wells would be far less and take more time than it would for the higher volume of seawater to reach the slant wells” such that “[m]ost of the water entering the slant wells would still come from the ocean.” 12

interrupted for five years or more, or that “operation of the desalination plant [might] become permanently infeasible due to a lack of water supply source,” the County imposed Condition 22, which in the event of such contingencies would require Cal-Am to seek approval from the County to either continue leaving the site idle or else restore, reuse or otherwise develop the site. II. DISCUSSION A. CEQA MCWD contends that the County violated CEQA in determining both that further environmental review was unnecessary and that overriding benefits supported the project. We reject both contentions. 1. The County’s Findings The County found that no supplemental or subsequent EIR was needed to approve the Permit for the desalination plant because there were no “substantial changes to the project” or “the circumstances under which the project is undertaken” that involve “new significant environmental effects or a substantial increase in the severity of the previously identified effects” and “[n]o new information of substantial importance ha[d] been presented, which was not known and could not have been known with reasonable diligence at the time the previous EIR was certified as complete, that show[ed] . . . that ‘the project will have one or more significant effects not discussed in the previous EIR;’ that significant effects examined in the EIR ‘will be substantially more severe than previously shown…’; that ‘mitigation measures or alternatives previously found not to be feasible would in fact be feasible and would substantially reduce one or more significant effects of the project, but the project proponents decline to adopt the mitigation measure or alternative’; or that ‘mitigation measures or alternatives which are considerably different from those analyzed in the previous EIR would substantially reduce one or more significant effects of the project, but the project proponents decline to adopt the mitigation measure or alternative.’ ” While these findings are alternatively based in part 16

substantial evidence and is therefore improper.’ ” (Citizens’ Committee to Complete the Refuge v. City of Newark (2021) 74 Cal.App.5th 460, 470.) b. Water Source At the time the County entered its discretionary approval, the City had denied permits for the slant wells and Cal-Am was seeking review by the California Coastal Commission. As such, MCWD contends that there had been “a substantial change with respect to the circumstances under which the desalination plant [was] being undertaken.” MCWD asserts that, as a consequence of the City’s denial, “Cal-Am had no water supply to desalinate” and “the desalination plant would need an entirely different water source.” Thus, MCWD contends that the County needed to either prepare an EIR “analyzing . . . water sources and the potential environmental impacts those sources could cause” or “condition[] its approval on Cal-Am obtaining permits for the slant wells.” The City’s denial of permitting, as a practical matter, changed neither the plan for the Water Supply Project nor the circumstances under which the project was being undertaken. Just as when the CPUC issued its approval, the slant wells continued to require approval by a responsible agency other than the County. The change represented by the City’s denial of permitting was that Cal-Am, through its appeal, was now asking the California Coastal Commission to provide that which the City had denied. The final EIR recognized that the California Coastal Commission “retains jurisdiction over appeals” where the City “has jurisdiction through a Local Coastal Program.” Because the Coastal Commission reviews local agency determinations under a de novo standard (see § 30621), neither the fact of the City’s denial nor any factual findings the City made in reaching its decision materially altered the uncertainty as to whether the wells would ultimately be approved. MCWD has not articulated any way in which the City’s denial of permitting necessitates further environmental analysis because, when the County rendered its decision, it was premature to say that the desalination plant would need a different water 20

the Water Supply Project stall or fail. Instead, if triggered, it provides a mechanism by which the County is empowered to compel further action, including restoration of the site to status quo ante, or to permit the site to remain idle for some further period. Considering the plain terms of Condition 22, we further reject MCWD’s contention that Laurel Heights Improvement Assn. v. Regents of the University of California (1988) 47 Cal.3d 376, 396 (Laurel Heights) requires further environmental review. “[A]n EIR must include an analysis of the environmental effects of future expansion or other action if: (1) it is a reasonably foreseeable consequence of the initial project; and (2) the future expansion or action will be significant in that it will likely change the scope or nature of the initial project or its environmental effects. Absent these two circumstances, the future expansion need not be considered in the EIR for the proposed project. Of course, if the future action is not considered at that time, it will have to be considered in a subsequent EIR before the future action can be approved under CEQA.” (Laurel Heights, supra, 47 Cal.3d at p. 396.) In Laurel Heights, the EIR “defined the project as ‘mov[ing] the School of Pharmacy basic science research units from the UCSF Parnassus campus to Laurel Heights.’ ” (Id. at p. 393.) But, at the time, only 100,000 square feet of the 354,000-square-foot building was available to UCSF, and the EIR did “not discuss the additional environmental effects, if any, that will result from UCSF’s use of the remaining 254,000 square feet when it becomes available.” (Ibid.) UCSF “admitted that they intended to use the entire facility” and there was “telling evidence that the University, by the time it prepared the EIR, had either made decisions or formulated reasonably definite proposals as to future uses of the building. At a minimum, it is clear that the future expansion and the general types of future activity at the facility are reasonably foreseeable.” (Id. at p. 397; see also id. at p. 398 [“there is credible and substantial evidence that UCSF’s plans are reasonably foreseeable”].) In that context, “the EIR was inadequate because it fail[ed] to discuss the anticipated future uses of the Laurel Heights facility and the environmental effects of those uses.” (Id. at 22

p. 399.) UCSF was required to “provide sufficient meaningful information regarding the types of activity and environmental effects that are reasonably foreseeable when the remainder of the Laurel Heights facility is used by UCSF.” (Ibid.; see also Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116, 121-122, 134 [“City of West Hollywood’s conditional agreement to sell land for private development, coupled with financial support, public statements, and other actions by its officials committing the city to the development, was, for CEQA purposes, an approval of the project that was required . . . to have been preceded by preparation of an EIR”]; Tuolumne County Citizens for Responsible Growth, Inc. v. City of Sonora (2007) 155 Cal.App.4th 1214, 1231 [road realignment and construction of home improvement center were a single project because opening the home improvement center was conditioned on completion of the road realignment].) Here, in contrast, the project proponents intend for the Water Supply Project to be completed, such that Condition 22 is never triggered. Unlike MCWD’s authority, this is not a case where the project proponent intends to pursue a larger project—that is, a project that requires Condition 22 to be completed—but failed to analyze the environmental impacts of that piece of the project. The California Supreme Court declined to extend Laurel Heights “to situations where project opponents claim, not that the proposed project will lead to additional development, but that the proposed project cannot be carried out as approved and will require additional work that may or will have a significant environmental effect. The latter situation, unlike the former, presents little risk of either bureaucratic and financial impediments to proper environmental review or piecemeal review of a project with the potential for significant cumulative effects. . . . [I]f a proposed project cannot be built as approved, then the project’s proponents will have to seek approval of any additional activities and, at that time, will have to address the potential environmental effects of those additional activities.” (Berkeley Hillside Preservation v. City of Berkeley (2015) 60 23

Salinas Basin pursuant to the Sustainable Groundwater Management Act (Water Code, § 10720 et seq.) indicated that the gradient within the Salinas Basin would shift seaward during the useful life of the Water Supply Project; and (3) the AEM study discounted by the CPUC should either have been given more weight or be reconsidered in conjunction with the new information. HWG submitted a response memo to the County that addressed hydraulic gradients, the Salinas Basin Groundwater Sustainability Plan, and the AEM study results. As to the hydraulic gradients, HWG opined that the recent localized gradient reversal was the anomalous result of an abnormally wet rainfall year, which did not modify the long- term trend of seawater intrusion in the aquifers from a prevailing landward gradient. Regardless, HWG stated that the Water Supply Project would improve groundwater quality relative to historical trends by capturing ocean water, even if there was a seaward gradient. The County found, among other things, that (1) “[t]he new [monitoring well data made available after the CPUC’s decision] . . . that [MCWD] cites is . . . not significantly different from monitoring data available prior to the CPUC decision and [does] not constitute new information requiring supplemental environmental review”; (2) the steps taken to implement the Sustainable Groundwater Management Act were “not new information that trigger[] supplemental environmental review”; and (3) the new information regarding the AEM study was “not new information requiring supplemental environmental review.” On appeal, MCWD maintains that between the time CPUC finalized the EIR and the County entered its discretionary approval, new information “establish[ed] a reversal of the groundwater gradient” such that “the MPWSP will capture more freshwater than previously assumed”—i.e., that it will have new or substantially more significant environmental effects. Specifically, MCWD challenges the County’s findings that: (1) the new Cal-Am monitoring well data made available after the CPUC’s September 25

groundwater system must achieve equilibrium” and “landward gradients must be reversed” to achieve “sustainable management criteria” outlined in a chapter of a draft groundwater sustainability plan for the Salinas Valley Groundwater Basin released after the CPUC rendered its decision. At that time, approximately eight basin-wide projects and five alternative projects had “been prioritized and [we]re being further evaluated.” EKI opined that groundwater equilibrium and landward gradients were “totally inconsistent with groundwater conditions evaluated” in the final EIR, “which assume[d] that landward gradients will persist into the future.” The assumption implicit in EKI’s opinion, however, is that a groundwater sustainability plan, once adopted, will sufficiently reverse the landward gradient that the volume of fresh water will force the seawater intrusion front to retreat beyond the capture zone of the intake wells. MCWD has not established that the County was compelled to accept the validity of this assumption on this record. The new information revealed by the interim steps toward a groundwater sustainability plan is limited. The CPUC was well aware that the Sustainable Groundwater Management Act would require action to prevent seawater intrusion and protect groundwater levels when it certified the final EIR and approved the project. But, in responding to the contention that the Sustainable Groundwater Management Act indicated that future groundwater projects could flatten or reverse the inland groundwater gradient, the CPUC found that it “would realistically require decades of groundwater management to flatten or reverse the inland groundwater gradient, much less reverse it, and expectations that groundwater projects would be successful in affecting the inland gradient within the life of the MPWSP would be overly optimistic. There are no reasonably foreseeable cumulative projects proposed to reduce or reverse the current landward gradients in the Dune Sands and 180-Foot aquifers at this time, and while projects under the [Sustainable Groundwater Management Act] may improve the sustainability of the [Salinas Basin] . . . such actions or projects are too speculative to 28

Thus, 1,430 afy of the 1,680 afy estimated increase in demand was contingent on the generation of an increased water supply that would flow from the Water Supply Project. The responses to the final EIR included a variety of estimates of future demand, ranging from Coalition of Peninsula Businesses’ 15,000 afy recommended estimate to MCWD’s low-end estimate of 9,675 afy—with Cal-Am’s estimate falling at 14,355 afy. In approving the Water Supply Project, the CPUC adopted an estimate of 14,000 afy— 355 afy lower than Cal-Am’s final estimate, which was “reasonable” in the CPUC’s view. MCWD argues that the County needed to revisit the CPUC’s conclusion regarding demand because “Cal-Am’s . . . demand figures generated after the CPUC certified the EIR showed that demand within Cal-Am’s service area remained flat and had not increased as a result of the recovered economy as the EIR previously assumed.” At the outset, MCWD does not point to Cal-Am’s actual demand figures in the record, but instead points to its own assertions in the record about Cal-Am’s demand figures and to oral comments made by Public Water Now and the Monterey Peninsula Water Management District before the County. Even assuming Cal-Am’s actual demand remained flat during the unspecified time period for which new data may be available, we are unable to conclude such data would require reconsideration of the CPUC demand estimate. The marginal increase in demand projected from economic recovery alone—independent of the Water Supply Project— accounted for only 250 afy—less than 2 percent—of a 14,275 afy estimate in the final EIR. The CPUC did not take Cal-Am’s estimate as “perfect,” merely “reasonable,” and the CPUC accordingly estimated future demand at 14,000 afy. The fact that the relatively small projected increase in demand had not materialized in what appears to be a relatively limited time period is not the sort of new information of substantial importance that requires the question of Cal-Am’s future system demand to be reopened. (See generally Save Livermore, supra, 87 Cal.App.5th at p. 1133.) 32

ii. The County’s Feasibility Determination The progress toward Pure Water Monterey expansion that occurred between the CPUC’s evaluation and the County’s discretionary permitting decision as a responsible agency did not preclude the County’s determination that the projected expansion continued to fall short of a feasible alternative to the desalination project. “ ‘The lead agency is responsible for selecting a range of potential alternatives for examination and must publicly disclose its reasoning for selecting those alternatives.’ (Guidelines, § 15126.6, subd. (a).)’ ” (Tiburon Open Space Committee v. County of Marin (2022) 78 Cal.App.5th 700, 741 (Tiburon).) “ ‘Like mitigation measures, potentially feasible alternatives “are suggestions which may or may not be adopted by the decisionmakers.” ’ ” (Native Plant, supra, 177 Cal.App.4th at p. 999.) “A ‘feasible’ alternative is one that could accomplish ‘most of the basic objectives of the project but would avoid or substantially lessen any of the significant effects.’ (Guidelines, § 15126.6, subd. (a).)” (Tiburon, supra, 78 Cal.App.5th at p. 741.) To be “[f]easible,” the alternative must be “capable of being accomplished in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, social, and technological factors.” (Guidelines, § 15364; see also Citizens of Goleta Valley v. Board of Supervisors (1990) 52 Cal.3d 553, 566 (Goleta Valley).) Although a responsible agency “ ‘relies on the lead agency’s environmental document[,] . . . [t]he responsible agency must . . . issue its own findings regarding the feasibility of . . . project alternatives that can substantially lessen or avoid significant environmental effects.’ ” (Riverwatch v. Olivenhain Municipal Water Dist. (2009) 170 Cal.App.4th 1186, 1201 (Riverwatch).) “ ‘[B]efore reaching a decision on the project, the decision-making body of the responsible agency must consider the environmental effects of the project as shown in the EIR . . . and feasible . . . alternatives within the agency’s powers. [Citation.] If the responsible agency finds that any alternatives . . . within its powers are feasible and would substantially lessen or avoid a significant effect 33

of the project, the responsible agency may not approve the project as proposed, but must adopt the feasible . . . alternatives.’ ” (Id. at p. 1202; see also Guidelines, § 15096, subd. (g)(2).) In March 2019, after the CPUC approved the Water Supply Project pursuant to its analysis of the information then available about Pure Water Monterey expansion, Monterey One Water’s General Manager asked the board of Monterey One Water to authorize $1 million to “continue and substantially complete the environmental and permitting work” for expansion. The stated reason for this was to ensure that Pure Water Monterey expansion could meet the December 31, 2021 cease and desist order deadline. If expansion was abandoned, Monterey One Water’s contribution would be reimbursed by Monterey Peninsula Water. The board approved the expenditure, and in April 2019, Monterey One Water “st[ood] ready to provide a viable water supply” by undertaking the necessary work to move the project forward. As of July 2019, when the County made its decision, Monterey One Water’s General Manager anticipated that the draft supplemental EIR for Pure Water Monterey expansion would be published October 2019 with a final EIR targeted for February 2020. Representatives for both Monterey One Water and Monterey Peninsula Water described Pure Water Monterey expansion as a backup to the Water Supply Project. In its permitting proceedings, the County separately considered both expansion of Pure Water Monterey (from 5 mgd to 7.6 mgd) and a further reduction in the desalination plant’s size as project alternatives. As to the Pure Water Monterey expansion, the County found that the alternative was not “legally feasible at this time” because Monterey One Water had not yet approved the expansion, the results of ongoing evaluation and supplemental environmental review related to project expansion were unknown, and the project would require permits from agencies other than the County. Moreover, the

When the CPUC rejected Pure Water Monterey expansion as a feasible alternative to the Water Supply Project, the components of the expansion had been identified and preliminary design work had already begun. Much remained, however, including design, environmental review, and permitting. The new information available to the County consisted of further preparatory steps in Monterey One Water’s exploration of Pure Water Monterey expansion. The April 2019 authorization of funding for environmental work and further design analysis was, as Monterey One Water’s General Manager explained to its board of directors in the March 2019 report, “to have a ready-to-go alternative in place if the desalination facility is stalled,” as “[t]he potential expansion of [Pure Water Monterey] is the only backup water supply to the Cal[-]Am desalination plant that could meet the Cease and Desist Order . . . deadline of December 31, 2021.” In an April 2019 letter explaining the significance of its authorization to the CPUC, Monterey One Water explained that it authorized the expenditure to head off criticism that there was “ ‘insufficient information’ ” supporting expansion of Pure Water Monterey by taking “another concrete step towards gaining necessary certainty” and positioning “PWM expansion, if it becomes necessary, to complete bid documents within another six months and to construct within a year.” In the letter, Monterey One Water acknowledged that expansion could “be deemed unnecessary or infeasible,” but explained that “the expenditure of these funds will enable PWM expansion ‘to be ready to go in the event the desalination plant becomes stalled’ such that the future ‘go/no go’ decision would involve completion of design, permitting, amendment of the WPA, and construction.’ ” In July 2019, when the County rendered its decision, the environmental review process remained incomplete. Thus, when the County acted, expansion of Pure Water Monterey had been presented as a potential alternative (as to which planning and review were incomplete) in the event of delay or abandonment of the desalination project as a whole, with no commitment to act if the desalination plant were approved even at reduced size. 37

in that it “revealed that the [Seaside] Basin has lost 43,500 acre-feet of groundwater storage over the last 30 years” of overdraft, providing “significant opportunities for storage and banking of groundwater . . . which could provide an alternative water supply that was not considered in” the CPUC’s EIR. MCWD posits that “Cal-Am could meet its water supply needs without desalination through the [Pure Water Monterey] Expansion in conjunction with banking excess supply” in the basin. MCWD’s argument presumes excess supply from a future expansion of Pure Water Monterey. But as we have concluded, the County was entitled to discount the prospective expansion as both speculative and inadequate to meet, let alone exceed, annual demand. Accepting the proposition that the quantification of available storage capacity may technically be novel, the fact of excess capacity is not: the existence of storage capacity from decades of overdraft merely confirms the historical inadequacy of existing supply; it adds nothing to the County’s evaluation of the desalination plant as a new source of potable water. 4. Statement of Overriding Considerations “Before approving a project with significant unavoidable environmental impacts, a public entity must make an express written determination that the project’s benefits outweigh any potential environmental harm.” (Native Plant, supra, 177 Cal.App.4th at p. 983; see also City of Marina v. Board of Trustees of the California State University (2006) 39 Cal.4th 341, 350; Sierra Club v. County of Fresno (2018) 6 Cal.5th 502, 524- 525.) This “statement of overriding considerations” “ ‘is intended to demonstrate the balance struck by the body weighing the “benefits of the proposed project against its unavoidable environmental risks.” ’ ” (Native Plant, supra, 177 Cal.App.4th at p. 983.) It “ ‘focuses on the larger, more general reasons for approving the project.’ ” (Ibid.) In its statement of overriding considerations, the County identified six benefits of the “proposed project.” Five of these were water-related: (1) Cal-Am would cease its illegal diversions from the Carmel River and meet its obligations under existing cease 39

conditionally approved permitting for the water intakes—without resolving the substantive issues raised by the appeal. c. Water-Related Benefits The parties dispute whether the County was permitted to consider water-related benefits in deciding whether the benefits of the project outweighed its environmental impact. MCWD contends that because the City had denied permitting for the slant wells, the County was limited to considering the benefits of the project without a water source. We disagree with MCWD’s interpretation of the statute. CEQA provides that “no public agency shall approve or carry out a project for which an environmental impact report has been certified which identifies one or more significant effects on the environment that would occur if the project is approved or carried out unless,” as relevant here, “[w]ith respect to significant effects” as to which “mitigation measures or alternatives” are “infeasible,” “the public agency finds that specific overriding economic, legal, social, technological, or other benefits of the project outweigh the significant effects on the environment.” (§ 21081; see also Guidelines, §§ 15043, 15093, 15096(h).) “ ‘[P]roject’ ” is a defined term, meaning “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. [¶] (b) An activity undertaken by a person which is supported, in whole or in part, through contracts, grants, subsidies, loans, or other forms of assistance from one or more public agencies. [¶] (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.” (§ 21065; see also Guidelines, §§ 15002(d), 15378.) As a matter of statutory interpretation, the question posed here is whether the term “project,” as used in subdivision (b) of section 21081 in relation to the benefits to be considered, is properly interpreted to apply to the entire “project for which an 43

environmental impact report has been certified” or only the narrower component within the jurisdiction of one of many responsible agencies. (See § 21081.) In that vein, we observe that the Guidelines use a different definition of “ ‘[p]roject’ ” to expressly refer to “the whole of an action”—“the activity which is being approved and which may be subject to several discretionary approvals by governmental agencies”—not “each separate government approval.” (Guidelines, § 15378(a), (c).) We read “project” as used in section 21081 in the same sense that it is defined in the Guidelines. That is, the benefits that a public agency may consider in deciding whether to approve a part of a larger project as a responsible agency include the benefits of the project as a whole. In so doing, we reject the contention that a responsible agency can only consider the benefits inuring to it from its portion of the project, assuming the balance of the project is not completed. There is nothing in the plain language of the statute to suggest that such a blinkered analysis of a project’s benefits is required. A contrary interpretation would lead to the absurd result that multijurisdictional projects such as this one—where the constituent parts must be built in separate jurisdictions to secure the intended benefit—will be stymied by the multiplicity of responsible agencies, each one prevented from acting until the others had. Mutually beneficial projects would be made impossible by the mere fact that it crossed jurisdictional borders. Indeed, MCWD shrinks from advocating a bright-line rule that the only cognizable benefits, from the perspective of the responsible agency, are those that arise exclusively from the portion of the project overseen by the responsible agency. That is, MCWD argues that a case-specific factor—the City’s denial of the slant wells—supports the conclusion that the County was constrained to relying on the benefits of only the desalination plant. We are not persuaded that the City’s nonfinal denial of permitting prohibited the County from considering the benefits the Water Supply Project would provide, if complete. 44

As MCWD acknowledges, the California Coastal Commission is the agency with ultimate authority to decide whether the slant wells and associated coastal infrastructure will be permitted. And, unlike our deferential review of agency action under CEQA, the Coastal Commission’s review is de novo. (See § 30621.) Consequently, the future of the Water Supply Project was no more doubtful when Cal-Am sought the County’s approval than when it obtained the CPUC’s approval—there was a proposed water source and Cal- Am was pursuing the permitting necessary to gain physical access to that water source. This project, as it was presented to the County, is no different from any other in which permitting will be required from multiple jurisdictions. As explained by the CPUC, Cal-Am had a pathway to bring the project to fruition, but it had many steps ahead of it—both in terms of securing permitting from multiple agencies and establishing a right to the water it intended to pump. We express no opinion on the relative weight an agency should give the benefits of a completed project in this context—it is for public agencies to weigh the costs, benefits, and risks associated with their action and for the public to hold those agencies accountable. We hold only that the County was permitted to consider the water-related benefits that would be generated by the project as a whole, even though the County was responsible for only a portion of the project that would not, by itself, produce water. Accordingly, the County did not violate CEQA by considering the benefits of the completed project—that is, a desalination plant with a water source— in its analysis. Given this legal conclusion, MCWD’s substantial evidence challenge to the statement of overriding considerations fails. MCWD does not contend that the record lacks substantial evidence to support the conclusion that the Water Supply Project as a whole would produce the identified water-related benefits. 5. Whether the County was Required to Discuss other Permitting Processes Even if the County was allowed to consider water-related benefits, MCWD contends that the County misled the public by failing to adequately discuss the need for a 45

statement of overriding considerations including water-related benefits. A pre-hearing Board Report included a summary of MCWD’s appellate contentions and staff responses thereto. The report acknowledged both that the County was asked to permit only the desalination plant, not the slant wells, and that the City had by that time denied permitting for the slant wells. At the public hearing, MCWD stressed that “[t]he project’s coastal development permit was denied by the City of Marina” and argued that it was therefore “completely speculative to believe that this project has any water whatsoever.” To the same effect, a member of the public who self-identified as a “Cal-Am ratepayer from Monterey” argued that the board “could be voting for us ratepayers to pay for a desal plant that has no water source or one that has never been tried and may not work or will damage the Marina aquifer. No matter the results, Cal-Am makes a huge profit, and we, the ratepayers, get . . . increase[d] . . . rates.” In response to board questioning at the same hearing, Cal-Am stated that “[t]he Coastal Commission is currently considering the appeal of the slant well . . . denials” having recently concluded that “they . . . have jurisdiction to consider the appeal.” Further, Cal-Am argued that desalination plant permitting needed to go forward without delay to meet the deadline set forth in the extant cease and desist order because the desalination plant was the project component that would take the longest to construct. The supervisors were well aware of MCWD’s concerns. For example, Supervisor Mary L. Adams, one of the two supervisors who voted against granting the Permit, made an unsuccessful motion to continue the matter until after the Coastal Commission made a “final decision” on whether a coastal development permit would be granted. While she had “no reservation that desal is going to be needed for our future,” she also expressed concern that “Cal-Am ratepayers [would be] saddled with the cost of building a desal plant that isn’t going to be able to treat water because the source water isn’t secured.” Each of the three Supervisors who voted to grant the Permit explained at the public 48

the Coastal Commission’s public permitting processes, as MCWD observes was “plea[ded]” at the County’s public hearing. Moreover, the County’s inclusion in the same order of Condition 22—triggered if operation of the desalination plant became “permanently infeasible due to a lack of a water source”—makes plain that the County was aware that a water source was less than certain. Voters dismayed by the County’s approving construction of a potentially infeasible desalination plant will know where accountability lies. MCWD’s reliance on Village Laguna of Laguna Beach, Inc. v. Board of Supervisors (1982) 134 Cal.App.3d 1022 (Village Laguna) is misplaced. There, Orange County approved an amendment to its general plan to build a new city of possibly 60,000 persons, despite significant environmental effects identified in the EIR. (Id. at pp. 1026, 1032.) Orange County’s explanation for its failure to adopt mitigation measures or alternatives was deficient in that it did not disclose why those measures or alternatives were infeasible. (Id. at pp. 1032-1035.) The absence of an “ ‘analytic route the . . . agency traveled from evidence to action’ ” left the court to conclude that “it is almost as if no EIR was prepared at all. . . . [T]here is no evidence that the board ever considered any EIR alternative to the project except the ‘No Development’ alternative.” (Id. at p. 1035.) Here, in contrast, we are presented with a statement of overriding considerations that fulfills its most essential purpose—to apprise the reader of the benefits, supported by substantial evidence, that the public agency believed justified a decision to undertake the project in spite of its acknowledged adverse environmental impacts. (See Cherry Valley, supra, 190 Cal.App.4th at pp. 356-359.) Moreover, nothing in Village Laguna addresses prejudice in the context of a deficiency in a statement of overriding considerations, much less suggests that an agency commits a prejudicial violation of CEQA by failing to acknowledge that a project’s benefits will not be obtained if all of its components are not completed or by failing to address particular stumbling blocks pertaining to the completion of particular components. (See, generally, 50

depends upon consistency with the applicable general plan and its elements.” ’ ” (Orange Citizens for Parks & Recreation v. Superior Court (2016) 2 Cal.5th 141, 153 (Orange).) “ ‘ “An action, program, or project is consistent with the general plan if, considering all its aspects, it will further the objectives of the general plan and not obstruct their attainment.” ’ ” (Ibid.; see also Save Livermore, supra, 87 Cal.App.5th at p. 1124 [“ ‘A given project need not be in perfect conformity with each and every general plan policy.’ ”].) A planning agency’s determination whether a particular development is consistent with its general plan “is fundamentally adjudicatory. In such circumstances, a consistency determination is entitled to deference as an extension of a planning agency’s ‘ “unique competence to interpret [its] policies when applying them in its adjudicatory capacity.” ’ ” (Orange, supra, 2 Cal.5th at p. 155.) Our role is accordingly limited: “We decide merely whether [local] officials ‘considered the applicable policies and the extent to which the proposed project conformed with those policies, whether the city officials made appropriate findings on this issue, and whether those findings are supported by substantial evidence.’ ” (Save Livermore, supra, 87 Cal.App.5th at p. 1124.) “Reviewing courts must defer to a procedurally proper consistency finding unless no reasonable person could have reached the same conclusion.” (Orange, supra, 2 Cal.5th at p. 155 (italics added).) “ ‘The party challenging [an agency’s] determination of general plan consistency has the burden to show why, based on all of the evidence in the record, the determination was unreasonable.’ ” (Clews Land & Livestock, LLC v. City of San Diego (2017) 19 Cal.App.5th 161, 201 (Clews).) 2. The Public Services Element of the County’s General Plan “The Public Services Element addresses critical infrastructure and service issues, including water supply and conservation” and “water quality,” among other things. As explained in the County’s general plan, “[w]ater is necessary for domestic, industrial and agricultural use, recreational uses, as well as sustaining fish and wildlife habitats.” 52

need to process more than 15 mgd (or over 16,000 afy) of groundwater in order to produce 6.4 mgd (or approximately 7,160 afy) of desalinated water. . . . The County’s position that a net loss of 8.7 mgd is ‘minor or insubstantial’ is even more preposterous considering the [Salinas Basin] is already critically overdrafted.” To be sure, the volume of potable water yielded by the desalination process is only a fraction of the intake. But the final EIR reflected that the water to be processed would consist primarily of otherwise unusable seawater. Indeed, the fundamental premise of the project is that the wells will draw predominantly unusable seawater and produce usable water, while also restoring to the Salinas Basin desalinated water commensurate with the volume of usable water drawn into the intake wells. To the extent this use of water—turning seawater intrusion into potable water plus brine to be discharged to the ocean—can be understood to constitute a net use of water, we are unable to find that no reasonable person could have reached the same conclusion as the County. Because substantial evidence supported the County’s determination that the predominant water source would be seawater that had intruded into the aquifers, the County was likewise entitled to conclude that the desalination plant’s net use of water would be minor or insubstantial. 4. Consistency with Other General Plan Policies The County found that the “Project, as conditioned, is consistent with the applicable plans and policies which designate this area as appropriate for development.” In support of that finding, the County stated that “[n]o conflicts were found to exist” between the project and the general plan, among other things. Moreover, the County made specific findings as to several general plan policies, apparently because those policies were raised in the appeals it was addressing. In the present appeal, MCWD’s contention seems to be that the County was required to specifically discuss each general plan policy as to which the CPUC EIR

Marina Coast Water Dist. v. County of Monterey

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

CALIFORNIA-AMERICAN WATER COMPANY,

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APPENDIX 1

APPENDIX 2

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT