In an opinion filed November 26, and ordered published on December 23, 2019, the Third District Court of Appeal partially reversed a judgment rejecting a labor union’s CEQA challenges to the EIS/EIR for a geothermal power plant project on federal land in Mono County.  Russel Covington, et al v. Great Basin Unified Air Pollution Control District, et al. (Orin 50 LLC, et al, Real Parties in Interest) (2019) ____ Cal.App.5th ____.

The opinion held the EIR was deficient due to its conclusory responses to comments proposing specific mitigation measures to address an identified significant impact – fugitive emissions of Reactive Organic Gas (ROG) exceeding the threshold of significance – and because its rejection of those proposed measures was not supported by any substantial evidence or reasoned explanation showing they were infeasible.  The Court also held that petitioners/appellants had adequately exhausted their administrative remedies; that the lead agency air district’s permit to operate condition quantitatively limiting maximum allowed fugitive emissions was a sufficient substitute for “substantial evidence” that total emissions would not exceed the permitted amount; and that the air district issuing the permit to operate, rather than the county, properly acted as the CEQA lead agency under all the circumstances.

The Project And The Key ROG Fugitive Emissions Issue

Real Parties (Ormat) propose a geothermal energy power plant to be located on national forest land adjacent to an existing geothermal complex comprised of three other plants within the Mono-Long Valley Known Geothermal Resource Area.  A joint EIS/EIR (EIR) was prepared by federal lead agency Bureau of Land Management (BLM), the United States Forest Service (USFS), and state lead agency Great Basin Unified Air Pollution Control District (Air District).

The project seeks to produce energy from renewable resources to support California’s goals of reducing GHG emissions and fossil fuel dependency.  It would use heat exchangers to extract heat from water pumped from a geothermal reservoir, and use the heat to vaporize a motive fluid called normal pentane (n-pentane) into a gas, which would run through a closed-loop system and turn the electricity-generating turbine.  N-pentane is not toxic, but is a ROG and ozone precursor.  And while the n-pentane would be contained in a closed-loop system, expected leakage from the system’s valves, seals and connections would nonetheless result in “fugitive emissions.” The central CEQA issues in the appeal revolved around such emissions.

The Air District adopted a threshold of significance for the project’s ROG emissions of 55 pounds per day, but the EIR calculated project n-pentane fugitive emissions of 410 pounds per day even after mitigation – a significant impact the EIR found to be unavoidable even after adoption of all feasible mitigation measures, including a leak detection and repair program (LDAR) and undefined “state of the art equipment and best available technology.”  Petitioners Laborers’ International Union of North America Local Union No. 783 (LIUNA) and certain of its individual members sued under CEQA to invalidate the EIR and set aside the project approval.  The trial court rejected petitioners’ challenges to the Final EIR, and they appealed.

The Court of Appeal’s Opinion

Key holdings and takeaways from the Third District’s opinion include:

  • Exhaustion: The Court rejected the Air District’s and Ormat’s argument that petitioners failed to exhaust administrative remedies and were required to challenge the permit conditions through an administrative hearing process pursuant to Health & Safety Code § 42302.1.  The Court recognized exhaustion as a jurisdictional requirement in CEQA actions, and held that it is governed by Public Resources Code § 21177, which requires that:  (1) the alleged grounds for CEQA non-compliance be presented by any person during the public comment period or prior to the close of the public hearing; and (2) the CEQA plaintiff must have objected to project approval during the same period.  In quickly disposing of the issue, the Court held exhaustion requirements were met because “[e]ven though petitioners themselves did not raise all of the issues they now assert during the administrative proceeding, all of the issues were raised [by someone], and the party raising an issue during the administrative process need not be the same party to raise the issue in court.” (Citing California Clean Energy Committee v. City of Woodland (2014) 225 Cal.App.4th 171, 191.)  The Court’s brief analysis did not discuss possible distinctions between general common law exhaustion requirements and CEQA’s unique statutory standing requirements; nor (apparently) was any argument raised regarding whether the labor union petitioners’ pursuit of the CEQA action here raised any cognizable standing, extortion, or abuse of process issues.  (For some thoughts on how CEQA lawsuits brought by labor unions seeking to leverage project labor agreements implicate standing issues and constitute an abuse of process calling for intelligent legislative and/or judicial CEQA reform, see “Standing Against Environmental Injustice: Some Thoughts On Facing The Need For CEQA Litigation Reform” by Arthur F. Coon, posted on July 18, 2017.)
  • Substantial Evidence of Fugitive Emissions Impact: Rejecting petitioners’ argument that the EIR was defective because substantial evidence did not support its conclusion that project n-pentane emissions will actually be limited to and not exceed 410 pounds per day, the Court held the absence of such evidence in the record was immaterial because under the facts here the permit to operate’s condition limiting emissions to that amount served as a sufficient substitute.  Per the Court: “If there are adequate measures in place for detecting and reporting emissions and for enforcing the emissions limits, it is immaterial how the emissions are calculated because they will be within permitted limits.”  After a detailed review of the Air District’s adopted mitigation measures requiring preparation and implementation of an emissions management plan, and use of a portable volatile organic compound leak detector, the Court concluded they ensured adequate fugitive emissions detection and reporting.  It further concluded there were adequate measures in place to enforce the limits – i.e., enforceable permit conditions requiring compliance with specified performance standards – and courts “have held in similar situations that compliance with performance standards is a substitute for substantial evidence to support a finding of mitigation.”  (Citing Oakland Heritage Alliance v. City of Oakland (2011) 195 Cal.App.4th 884, 903-904, 906; Laurel Heights Improvement Assn. v. Regents of University of California (1988) 47 Cal.3d 376, 413, 418; Sacramento Old City Assn. v. City Council (1991) 229 Cal.App.3d 1011, 1029; Sierra Club v. County of Fresno (2018) 6 Cal.5th 502, 525-526.)
  • Need For Additional Mitigation Measures: Comments on the DEIR identified with specificity additional mitigation, equipment and technology – i.e., a stronger LDAR program and “low-leak” or “leakless” technology found feasible for petroleum refineries and chemical manufacturing facilities – that could further mitigate the ROG emissions impact the EIR had found to be significant and unavoidable.  However, the Air District approved the project without adopting these measures or sufficiently demonstrating their infeasibility.  The Court held that violated CEQA, which forbids approval of a project for which an EIR identifies one or more significant environmental impacts unless the agency finds as to each identified significant effect that the mitigation measures or alternatives are infeasible, and further makes a statement of overriding considerations.  Here, the Court held that no substantial evidence supported the Air District’s finding – which was contrary to petitioners’ expert’s opinion – that the stricter LDAR program was infeasible for the project, and the Court further held the Final EIR’s  conclusory responses to the comments also made no attempt to explain why it was not feasible.  The same was true of the EIR’s treatment of petitioners’ very specifically articulated proposals of leakless and low-leak technology and equipment, which included bellows and diaphragm valves, graphite-packed control valves and hermetically-sealed valves and flanges, and sealless pumps such as diaphragm pumps, canned motor pumps, and magnetic drive pumps.  Petitioners’ expert claimed such technology, which their evidence indicated was already used in refineries and chemical facilities, would be “equally feasible” in a  geothermal plant.  The FEIR’s conclusory and rather opaque response to comments on the issue was held inadequate because it “made no attempt to explain whether such methods would be used, and if not whether such methods were infeasible.”  Further, the trial court’s findings on these issues did not avail the Air District or Ormat because that court had applied the wrong standard in finding petitioners had not submitted substantial evidence that the stronger LDAR program and leakless or low-leak technology were feasible in a geothermal plant; rather, the Court of Appeal held the proper question was whether the Air District had presented substantial evidence that they were infeasible for this project.  In sum, the Court held the EIR failed to give good faith, reasoned responses to petitioners’ comments suggesting mitigation measures that were not facially infeasible to address an identified significant impact, and failed to contain sufficient facts and analysis regarding such proposed measures to enable intelligent decisionmaking.
  • Proper Lead Agency: Finally, the Court rejected petitioners’ argument that the entire CEQA process was “tainted” and the EIR invalid because Mono County, not the Air District, should have acted as the lead agency.  While CEQA Guidelines § 15051 provides that “the lead agency shall be the public agency with the greatest responsibility for supervising or approving the project as a whole” and that this will “normally” be the public agency with general governmental powers, rather than a single or limited purpose agency or district, this stated “preference for an agency with general governmental powers … does not apply if another agency has greater responsibility for supervising or approving the project as a whole.”  Here, the project is located almost exclusively on federal land within the surface and subsurface jurisdiction of federal agencies (USFS and BLM) that initially believed the Air District was the only nonfederal agency with any permit authority.  While it later became clear that Mono County would be required to approve a conditional use permit for a small portion of the project – 1,500 feet of pipeline on Ormat’s private property – the Air District still had greater responsibility for supervising or approving the project as a whole and “was [thus] a proper lead agency under the circumstances.”

Conclusion and Implications

The biggest practical lesson from this case for lead agencies and CEQA consultants and practitioners involved in preparation of an EIR is a fundamental one:  Take very seriously detailed comments on the Draft EIR proposing specific, additional, “facially feasible” mitigation measures to address an identified impact of the project that has not been mitigated to insignificance by the adopted mitigation measures – particularly where (as in this case) those comments are supported by strong expert and other evidence showing the proposed measures are feasible and have actually been employed in other arguably analogous contexts.  It is a fundamental precept of CEQA that responses to comments raising significant environmental issues must evince good faith and reasoned analysis, and contain detail commensurate with that in the comment.  (Pub. Resources Code, § 21091(d)(1), (2); CEQA Guidelines, § 15088(c); Los Angeles Unified School Dist. v. City of Los Angeles (1997) 58 Cal.App.4th 1019, 1029 [EIR “must respond to specific suggestions for mitigating a significant environmental impact unless the suggested mitigation is facially infeasible”].)  The case’s other somewhat interesting holding is that binding and enforceable permit conditions limiting the extent of a project impact through a quantified, objective “performance standard” may, under appropriate circumstances, serve as a substitute for substantial evidence in the record analyzing and calculating the actual extent of the impact.

 

Questions? Please contact Arthur F. Coon of Miller Starr Regalia. Miller Starr Regalia has had a well-established reputation as a leading real estate law firm for more than fifty years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. The firm has expertise in all real property matters, including full-service litigation and dispute resolution services, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, title insurance, environmental law and land use. For more information, visit www.msrlegal.com.