Second District Court of Appeal Upholds Application of Existing Facilities Exemption for Power Plant Lease Extension
The case World Business Academy v. California State Lands Commission (2018, Case No. B284300) involves PG&E’s Diablo Canyon nuclear power plant in San Luis Obispo County, and a dispute regarding the State Lands Commission’s decision to approve a lease extension via a CEQA categorical exemption.
The Diablo Canyon nuclear plant as been operating since 1985 and relies on a once-through ocean water cooling system to operate. The water intake and discharge structures for the power plant are located in submerged and tidal lands within the jurisdiction of SLC. Two long-term leases with the SLC authorized PG&E to build and operate the water intake and discharge structures, but those leases expire in 2018 and 2019. PG&E applied for a lease extension through 2025, when PG&E intends to close the power plant. The SLC concluded that PG&E’s application for the lease replacement fell within CEQA’s existing facilities (Class 1) categorical exemption. Petitioner World Business Academy filed suit, arguing that the lease extension was not properly exempted, or if it was, the unusual circumstances exception applied. The trial court rejected the writ petition, and the Second District Court of Appeal affirmed.
The Appellate Court dismissed arguments that the existing facilities exemption does not include power generation facilities generally, and that projects involving nuclear power plants can never be exempt from CEQA. The court also concluded that CEQA’s unusual circumstances exception did not apply to invalidate the exemption in this case. However, the SLC did not make specific findings that there were no applicable unusual circumstances. Thus, the appellate court reached its determination only after concluding that no fair argument indicated that the project would result in significant impacts due to unusual circumstances. Specifically, the appellate court upheld the SLC measure of the potential impacts of the lease extension against a baseline which included the power plant in its current operational condition. Thus, the lease extension would not result in significant impacts, when compared against baseline conditions.
This case reiterates the usefulness of categorical exemptions, while providing some procedural pointers. Most importantly, categorical exemption decisions should include an explicit finding that the project does not involve any unusual circumstances. Otherwise, the lead agency may forfeit the first prong of the unusual circumstances test, which affords a deferential substantial evidence standard of review.