Voices of the Wetlands v. State Water Resources Control Board (S160211, Filed 8/15/11)

In 1999, Duke Energy pursued addition of two new 530-megawatt gas-fired generators to the thermal power plant it owned near Monterey. It obtained certification from the California Energy Commission (CEC) that the modification was in accordance with all applicable laws. Duke Energy also obtained a permit from the Central Coast Regional Water Quality Control Board to discharge water used to generate power. The Regional Water Board, acting as the designee of the U.S. Environmental Protection Agency (EPA), issued the permit under the California Porter-Cologne Water Quality Control Act.

Project opponents appealed the Regional Water Board's decision to the State Water Resources Control Board, then, after losing that appeal, sued the State Water Board in the trial court challenging the discharge permit. The CEC intervened in the lawsuit, arguing that the “one stop” permitting scheme in the Warren-Alquist Act, which regulates permitting of large thermal power plants, precluded the lawsuit. The Warren-Alquist Act empowers the CEC to certify that a qualifying power plant will be in conformity with applicable local, regional, state and federal laws. This certification is in lieu of any permit required by any state, local or regional agency, or federal agency to the extent permitted by federal law. The Act further provides that judicial review of a CEC certification and of matters that could have been decided in the CEC certification process lies exclusively in the California Supreme Court. The CEC argued that under the Warren-Alquist Act, the trial and appellate courts had no jurisdiction to consider a challenge to the permit issued by the Regional Water Board because the matter could have been decided by the CEC. 

The California Supreme Court disagreed. It noted that even though the Regional Water Board was acting under the authority of a state statute – the Porter-Cologne Act – the Regional Water Board was as a matter of law issuing a federal Clean Water Act (CWA) permit. The Regional Water Board had the authority to issue this CWA permit because the EPA had found that the Porter-Cologne Act meets federal minimum standards for issuance of that permit. Accordingly, the EPA had delegated its authority to issue CWA permits required for thermal power plants to California's regional water quality control boards. No provision of the Warren-Alquist Act displaced those provisions of the Porter-Cologne Act or the EPA's delegation of authority. As a result, even though the intent of the Warren-Alquist Act was to provide a single forum for the permitting of qualifying power plants, the Regional Water Board still had jurisdiction over the CWA permit, and the superior court still had jurisdiction over the Regional Water Board’s decision. 

The California Supreme Court also reviewed the substance of the Regional Water Board’s decision and upheld it. Pursuant to the CWA, the Regional Water Board found that the proposed plant design reflected the “best technology available” for minimizing adverse impacts. In making this finding and in the absence of implementing regulations from the EPA, the Regional Water Board utilized a cost-benefit analysis, finding that the costs of alternatives to the proposed design were “wholly disproportionate” to the environmental benefit they would provide and therefore unnecessary. The plaintiffs challenged the Regional Water Board’s use of the wholly disproportionate cost-benefit standard on the grounds that such a standard was forbidden under the CWA. The California Supreme Court disagreed, looking to a U.S. Supreme Court decision upholding regulations that the EPA had issued after the Regional Water Board's action in this case, which contained a comparable cost-benefit analysis.

The California Supreme Court’s decision counsels careful review of state law requirements for power plant proponents. Unless the California Legislature and the EPA step in to delegate authority to the CEC, the decision means that many power plant proponents will need to continue seeking CWA permits outside the CEC's one-stop permitting scheme.

© 2011 Perkins Coie LLP