Thomas Law Blog

CEQA Updates

Keeping You Up-to-Date on the California Environmental Quality Act

Second Appellate District Upholds PG&E Lease Extension as Categorically Exempt from CEQA, Finds Unusual Circumstance Exception Inapplicable to Extension of Nuclear Power Plant Lease


In World Business Academy v. California State Lands Commission (2018) 24 Cal.App.5th 476, the Second Appellate District determined that renewing a lease for an existing power plant constituted a categorically exempt “existing structure” project under CEQA and the record did not support an “unusual circumstances” exception to the exemption.

Diablo Canyon Power Plant is a nuclear power plant that has been in operation since 1985 but is set to close by 2025. Owned and operated by PG&E in San Luis Obispo County, the plant’s cooling system draws in seawater as well as incidental aquatic plants and animals from state-owned tidal and submerged lands then expels heated water back into the sea. The leases for the water intake and discharge systems were to expire in 2018 and 2019.

PG&E submitted a single lease renewal application to the California State Lands Commission (Commission) to replace the expiring leases (Project). A staff report confirmed the Project would not require additional environmental review under the existing facilities exemption (CEQA Guidelines, § 15301) unless it was found to be an unusual circumstance meriting exception (CEQA Guidelines, § 15300.2(c)). After weighing the potential seismic and environmental impacts, the Commission found that the Project would not have a new 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.

World Business Academy filed suit alleging that the Commission’s actions violated CEQA where the lease approval would irreparably injure and deplete the marine ecosystem surrounding the plant. The trial court held the lease replacement fell squarely within the existing facilities exemption to CEQA and the unusual circumstances exception did not apply. World Business Academy timely appealed.

The Appellate Court affirmed the Commission’s lease approval under the existing facilities exemption.

The Court determined the Project was exempt from CEQA review as an existing facility, per CEQA Guidelines section 15301. Appellants argued that unlike other existing utility structures, nuclear power plant projects 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 electric power” reasonably included a power plant.

The Court rejected a related argument that the Commission lacked the authority to consider nuclear power plants under the exemption due to their operational environmental impacts. The Court found that minor alterations to, continued operation of, and leasing pre-CEQA facilities resulting in negligible or no expansion of use are unlikely to cause a new, 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 and not expand its operations.

The Court then looked at the unusual circumstances exception to the exemption under CEQA Guidelines section 15300.2(c). The Court found that the Commission incorrectly applied the Berkeley Hillside two-pronged test (described above in Don’t Cell Our Parks) but this was not fatal to the Commission’s determination.

Turning to the substance of the unusual circumstance analysis, the Court found that the Project was not an unusual circumstance based on its size and location. The Commission acted properly by considering the existing baseline for the Project and World Business Academy failed to point to specific evidence supporting the claim that impacts to aquatic life would be significantly increased past the existing operational level of the plant or certain risks – seismic activity, terrorist threats, “embrittleing” and others—would now occur. World Business Academy’s claim that the plant constituted a significant environmental effect because it was the last one of its kind in the state was irrelevant. The Court dismissed this and dismissed World Business Academy’s ad hominem attack against PG&E which alleged criminal conduct outside of the established record.

Accordingly, the Court affirmed the judgement of the trial court.

Key Point:

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.

Tags: , , ,



dateJune 13th, 2018byby


Comments are closed.