The Second Appellate District, in World Business Academy v. California State Lands Commission (2018) 24 Cal. App. 5th 476, determined that extending a power plant’s lease constituted a categorically exempt project under CEQA and the record was not sufficient to support an “unusual circumstances” exception to the exemption.
Diablo Canyon Power Plant is a nuclear power plant set to close in 2024 and 2025 owned and operated by PG&E in San Luis Obispo County. The plant’s cooling system draws in seawater plus incidental aquatic plants and animals from state-owned tidal and submerged lands then expels heated water back into the sea. The leases for this system were to expire in 2018 and 2019, five years before the plant closes.
PG&E submitted a single lease renewal application to the California State Lands Commission (Commission) to replace the expiring leases. A staff report confirmed the project would not require additional environmental review under the existing facility exemption unless it was found to be an unusual circumstance, an exception to exemption. After weighing the potential seismic and environmental impacts, Commission found that the state-land lease renewal would not have a significant effect on the environment due to unusual circumstances, moved to support the staff report, and issued a notice of exemption for the lease renewal.
Plaintiffs, World Business Academy, filed suit in Los Angeles County Superior Court alleging Commission’s actions violated CEQA and the public trust doctrine where the lease approval would irreparably injure and deplete the marine ecosystem surrounding the plant. The trial court held the lease replacement was within the existing facilities exemption to CEQA and the unusual circumstances exception did not apply.
Reviewing de novo, the Second District Court of Appeal agreed with the trial court, affirming Commission’s lease approval under the existing facility exemption. Further, there was no merit to arguments for an unusual circumstance exception to the CEQA exemption nor was there a violation of the public trust doctrine.
The Court determined the power plant was exempt from CEQA review as an existing facility. Appellants argued unlike other existing utility structures, nuclear power plants cannot be categorically exempt from CEQA because of the significant environmental impacts they have by their de facto operation. Further, the legislative history of the exemption indicated the meaning of “provide electric power” implicated structures which disseminate power, not power generating facilities themselves. The Court disagreed, under the plain meaning of the statute “provide” reasonably included a power plant.
The Court rejected a related argument that Commission lacked the authority to include nuclear power plants under the exemption due to their operational environmental impacts. The Court found minor alterations to, continued operation of, and leasing pre-CEQA facilities resulting in negligible or no expansion of use are unlikely to cause a significant adverse change in environmental conditions. Further, the class of projects at issue in the existing facilities exemption are not only nuclear power plants—rather, the exemption is applied to existing facilities of all types. The Court concluded that the Commission’s evaluation of the lease extension, while brief, was sufficient to demonstrate that the lease extension would maintain the status quo at the existing facility, not expand its operations.
The Court then looked to the unusual circumstances exception. Although Commission applied a procedurally lacking standard in showing that the project did not meet the exception, this was not fatal to their determination. Commission relied on a fair argument standard to assess if there was a reasonable possibility of a significant environmental effect of extending the lease, without first concluding that the project presented an unusual circumstance. The Court relied on North Coast Rivers Alliance v. Westlands Water District (2014) 227 Cal. App. 4th 832, to find even if the lease approval presented an unusual circumstance, Commission properly applied the fair argument standard in considering the possible effect on the environment.
Turning to the substantive portion of the unusual circumstance analysis, the Court found the project did not have a potentially significant environmental effect based on its size and location. Commission acted properly by considering the baseline for the site its pre-CEQA operational levels. Appellants failed to point to specific evidence supporting the claim that aquatic life would be significantly decreased past the initial operational level of the plant or certain risks – seismic activity, terrorist threats, “embrittleing” and others—would occur. Appellants’ claim that the plant constituted a significant environmental effect because it was the last one of its kind in the state was irrelevant, and dismissed appellant’s ad hominem attack against PG&E which alleged criminal conduct outside of the included record.
Finally, the Court held Commission’s staff report explicitly analyzed the public trust doctrine and the plant’s shutdown in 2024 and 2025 would adequately regulate the impacts to marine life associated with the cooling system. The Court concluded the Commission’s factual inquiry was sufficient, and that appellant’s contentions that the doctrine required factual evaluation vis-a-vie a CEQA analysis lacked merit.
Accordingly, the Court affirmed the judgement of the trial court.
The existing facilities exemption allows pre-CEQA power plants (regardless of power source) undergoing non-significant changes to avoid additional environmental review. The proper baseline to determine if a change is significant is not established by present-day or forecasted analysis, rather, by the environmental impact the facility had when it began operations.