In Marina Coast Water Dist. v. County of Monterey (2023) 96 Cal.App.5th 46, the Sixth District Court of Appeal reversed the trial court’s ruling, rejecting Marina Coast Water District’s (“MCWD”) challenge to the sufficiency of the environmental review process for the Monterey Peninsula Water Supply Project (“Project”). The court held that Monterey County’s (“County”) statement of overriding considerations was supported by substantial evidence, and that any remaining deficiencies in the environmental review were not prejudicial.

Background

California-American Water Company (“Cal-Am”) is an investor-owned utility responsible for supplying water across the Monterey Peninsula since 1966. Cal-Am has exceeded its water allocations to meet demand on the Monterey Peninsula for decades. In 2009, the State ordered Cal-Am to cease all unauthorized diversions and find alternative means of meeting demand.

In 2012, Cal-Am began pursuing the Project, to supplement its water supply and meet demand. The Project’s main components are: (1) constructing a desalination plant and related facilities in unincorporated Monterey County; (2) drilling wells in the City of Marina’s (“City”) coastal zone to access coastal aquifers; and (3) transporting the seawater to the plant via pipeline.

The California Public Utilities Commission (“CPUC”), acting as lead agency under CEQA, undertook the environmental review (“EIR”) process for the Project. CPUC finalized the EIR in 2018, approving a scaled-down version of the Project, which included a supplemental water purchase agreement between Cal-Am and Pure Water Monterey Groundwater Replenishment Project (“Pure Water Monterey”). However, Cal-Am still needed approval from responsible agencies to construct the plant and drill the wells.

The City denied Cal-Am a permit for the wells. Cal-Am appealed to the California Coastal Commission (“CCC”). While the appeal was pending, the County approved a permit to construct the plant and relevant facilities. MCWD appealed to the County’s Board of Supervisors, saying more environmental review was needed to assess: (1) the Project’s impact on the Salinas Basin, and (2) the feasibility of expanding Pure Water Monterey as an alternative to the desalination plant (CPUC had deemed this alternative infeasible in the EIR). The County denied the appeal and approved the permit, subject to conditions, including a condition anticipating the possibility of construction delays or interruptions lasting five or more years, or the plant becoming infeasible to operate permanently due to lack of a water supply source (“Condition 22”). In such an event, Cal-Am would have to seek County approval before leaving the site idle or engaging in other remediation or development measures.

MCWD challenged the County’s approval of the plant permit, arguing the County violated CEQA by: (1) failing to prepare a subsequent or supplemental EIR and (2) adopting a statement of overriding considerations unsupported by substantial evidence.

The trial court granted MCWD’s writ petition in part and denied it in part; ruling that no supplemental environmental review was needed, but that it was unlawful to rely on the water-related benefits in the statement of overriding considerations because the County failed to account for the uncertainty resulting from the City of Marina denying the permit for the wells.

The County appealed and MCWD cross-appealed. As this case was ongoing, the CCC conditionally granted Cal-Am’s permit, a result which MCWD has challenged in separate ongoing litigation.

Court of Appeal

On appeal, the court first held that MCWD’s claims did not constitute the sort of new information that would necessitate supplemental or subsequent environmental review. MCWD had argued additional environmental review was needed for:

1. New water sources, because the City’s denial of the well permit meant the Project had no water source anymore. The court disagreed, because the CCC had authority to grant Cal-Am’s appeal. Consequently, the wells were still a viable water supply source.
2. Triggering Condition 22, because it required “future action.” The court disagreed, noting Condition 22 simply acknowledged some uncertainty; it was not reasonably foreseeable it would be triggered.
3. The groundwater gradient, because new data presented by MCWD, regulatory developments, and a study discounted by CPUC in the EIR, showed the wells could contain more freshwater than anticipated due to a shifting gradient. The court ruled that deferential review meant their decision turns on whether substantial evidence supports the County’s findings, not MCWD’s concerns, and that competing data wasn’t enough to find the EIR insufficient as a matter of law.
4. Expanding Pure Water Monterey, because the EIR contained an inaccurate estimate of future demand. The court disagreed, citing a less than two percent difference between the estimate and reality.
5. New data revealing substantial groundwater storage potential, because Cal-Am could simply expand Pure Water Monterey and utilize storage to meet their water demand. The court disagreed, finding the possibility of new capacity was not novel, even if the quantity of the potential itself was substantial.

MCWD also challenged the statement of overriding considerations, claiming it was not supported by substantial evidence. MCWD argued the City’s denial of the well permit meant the County needed to evaluate water-related benefits as if the Project had no water source. The court disagreed, saying it was proper for the County to evaluate the Project’s benefits as a whole, rather than evaluating all its components separately.

Finally, MCWD contended that the County misled the public by failing to discuss adequately the possibility of having to find a new water source. The court disagreed, saying the County’s statement of overriding considerations was a “good faith effort to inform the public,” and even if the County had violated CEQA by doing this, it created no prejudice.

Key Takeaways

• The statement of overriding considerations should consider the project as a whole, even when the approval process for a core component is incomplete.

• Obstacles in the approval process, acknowledgements of uncertainty, and new competing data, all do not rise to the level of the sort of new information necessitating additional environmental review.