In CEQA Case Challenging Approval of Clean Geothermal Energy Facility, Third District Provides Reminder that Agencies Must Provide Reasoned Analysis for Rejecting Mitigation Measures

Environmental/Land Use Alert (January 29, 2020)

The Third District Court of Appeal partially reversed a judgment rejecting labor union petitioners’ CEQA challenges to a combined Environmental Impact Statement (EIS)/Environmental Impact Report (EIR) for a Mono County geothermal power plant. 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 ____ (Opinion filed November 26, 2019, ordered published December 23, 2019).

The Court of Appeal held the EIR was deficient for failing to explain why specific mitigation measures identified to reduce a significant impact related to fugitive emissions of Reactive Organic Gas (ROG) were not feasible. The Great Basin Unified Air Pollution Control District’s (District) responses to comments failed to provide the “good faith, reasoned analysis” required to support rejection of the “facially feasible” stricter leak detection and repair (LDAR) program and low-leak or leakless technology suggested in comments on the draft EIR.

The Court of Appeal rejected the union’s other claim. The Court held that binding permit conditions were in place for detecting, reporting, and enforcing normal pentane (n-pentane) emissions limits, such that the permit limits provided sufficient evidence of the project’s emissions estimates. In addition, according to the opinion, petitioners adequately exhausted administrative remedies under CEQA, and the District properly acted as the CEQA lead agency for the project.

The Project and Procedural History

Real Parties, Ormat, propose development of a geothermal energy facility on national forest land in Mono County. The purpose of the project is to “produce commercially viable electricity from clean and renewable resources” and thereby reduce California’s greenhouse gas emissions and dependency on fossil fuels. A joint EIS/EIR was prepared by the Bureau of Land Management, the U.S. Forest Service, and the District, which was identified as the lead agency under CEQA.

The project would work by extracting heat from a deep geothermal reservoir using heat exchangers. The heat would be used to vaporize a motive fluid, called n-pentane, in a closed loop system. The gas generated through vaporization would turn a turbine, generating electricity.

Despite being a closed-loop system, leakage of n-pentane is expected from the valves, connections, seals, and tubes in the closed system. This leakage is referred to as “fugitive emissions.” N-pentane is a ROG and an ozone precursor. The District found fugitive emissions of n-pentane would be limited to 410 pounds per day; that impacts from emissions would be significant; and that all feasible mitigation was adopted to reduce such impacts.

Laborers’ International Union of North America Local Union No. 783 (LIUNA) and its individual members sued under CEQA, seeking to invalidate the EIR and set aside project approval. The trial court denied the petition. Petitioners appealed.

Opinion

Exhaustion of Administrative Remedies

On review, the Court of Appeal first rejected the District and Ormat’s exhaustion of administrative remedies defense. District and Ormat argued petitioners’ claims were barred because petitioners failed to administratively appeal the District’s decision under the available process established by the Health and Safety Code section 42302.1 and the District’s rules. Rejecting this argument, the Court reasoned that exhaustion is a jurisdictional prerequisite in a CEQA action, and that the CEQA exhaustion requirements are set forth in Public Resources Code section 21177. (Citing, Bakersfield Citizens for Local Control v. City of Bakersfield (2004) 124 Cal.App.4th 1184, 1199.) Petitioners met each of the requirements of Section 21177.

The Court’s analysis conspicuously omits discussion of the common law exhaustion doctrine, i.e., that a petitioner must seek a final administrative determination based on the procedures applicable to the public agency in question prior to seeking judicial review. (See, e.g., Tahoe Vista Concerned Citizens v. County of Placer (2000) 81 Cal.App.4th 577, 588-595 [“‘The exhaustion doctrine … operates as a defense to litigation commenced by persons who have been aggrieved by action taken in an administrative proceeding … but who have failed to “exhaust” the remedy available to them in the course of the proceeding itself.’”]) The opinion provides little insight as to why this argument fell on deaf ears.

Sufficient Evidence of Fugitive Emissions Impact

The Court of Appeal next affirmed the trial court’s finding that substantial evidence supported the EIR’s conclusion that project n-pentane emissions would not exceed 410 pounds per day. In the EIR, the District had estimated total n-pentane emissions at 410 pounds per day, but had redacted the underlying schematics, informational table, and geothermal flow rates as proprietary data not subject to disclosure or incorporation in the EIR. (Pub. Resources Code § 21160, Gov’t Code § 6254.7 (e) [exempting geological and geophysical data, plant production data, and similar information relating to utility systems development].) Petitioners argued the record “contains no facts to justify the number” or support the conclusion that the Project’s n-pentane emissions would be limited to 410 pounds per day.

The Court of Appeal found that, “Ormat was not required to present evidence to support its emissions estimate” because regardless of how fugitive emissions were calculated, binding permit conditions would limit the project’s daily emissions to 410 pounds. It reasoned, “[i]f 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.”

The bulk of authority indicates any vigilant agency would be remiss to short-change a factually supported analysis of anticipated, pre-mitigation environmental impacts. (See Cleveland National Forest Foundation v. San Diego Assn. of Governments (2017) 3 Cal.5th 497, 514 [“An adequate description of adverse environmental effects is necessary to inform the critical discussion of mitigation measures and project alternatives at the core of the EIR.”]) However, the Court’s opinion provides the possibility that, in appropriate circumstances, an objective performance standard may suffice to evidence the extent of an impact.

Additional Mitigation Measures

Reversing the trial court, the Court held the EIR was defective because the District failed to adequately analyze and explain its rejection of facially feasible mitigation measures detailed in comments on the draft EIR. Comments on the draft EIR identified as potential mitigation for identified significant and unavoidable impacts to ROG: (a) a stricter LDAR program, and (b) low-leak or leakless technology. The District declined to adopt the stricter LDAR program, which was proposed by an air quality expert and based on USEPA standards applicable to petroleum refineries and chemical manufacturing facilities “equally feasible” in a geothermal plant. The Court held the District’s conclusory response failed to explain why a stricter LDAR program was infeasible, particularly where such a program required no additional equipment but only stricter triggers and deadlines for repairs.

The Court also found the District failed to provide a good faith, reasoned response to comments indicating why the suggested low-leak or leakless technology was infeasible. The District failed to “present sufficient facts” and “made no attempt to explain” its reasoning in rejecting the very specific, available, and additional mitigation measures proposed in draft EIR comments.

Notably, the Court tailored its remedy for these CEQA violations. The Court ordered that a new judgment be entered granting the mandamus petition with respect to the determination mitigation measures were infeasible. On remand, the District is to be ordered to “provide a reasoned analysis supported by factual information in response to the mitigation measures proposed by the petitioners.”

Lead Agency

Finally, the Court rejected petitioners’ argument the EIR was invalid because Mono County, not the District, should have acted as the CEQA lead agency. The CEQA Guidelines provide that lead agency is the public agency with the “greatest responsibility for supervising or approving the project,” which is normally the public agency with general governmental powers rather than a limited purpose agency or district. However, here it was initially believed the District was the only non-federal agency with permit authority. While it was later discovered that Mono County would be required to provide a conditional use permit for 1,500 feet of pipeline to cross private (non-federal) property, the District retained greater responsibility for supervising or approving the project. The District was therefore the proper lead agency under the circumstances.

[This case alert does not constitute legal advice and no attorney-client relationship is created by viewing or responding to this alert.  Legal counsel should be sought for answers to specific legal questions.]