III. Procedural Summary
A. Events Before This Proceeding
Until recently, Commission staff regularly approved advice letter filings authorizing Valencia to extend its service area boundaries to encompass new developments upon confirming the adequacy of Valencia's water supply and facilities to meet anticipated demand for service.
Broader issues regarding such authorizations were brought to the Commission's attention by a complaint filed in September 1998 by the Angeles Chapter of the Sierra Club (Sierra Club), which alleged that Valencia and other water retailers had overpumped the Alluvial Aquifer; consequently, the complaint challenged the adequacy of available water supplies to meet the future demand represented by proposed housing developments for which preliminary plans showed Valencia as the likely provider of water services. Sierra Club sought an order from the Commission determining that Valencia had reached the limit of its capacity to supply new customers without harm to current customers. The Commission dismissed the complaint, stating that it would "adjudicate Valencia's capacity to serve additional customers in the proceedings where Valencia seeks authorization to serve those customers." (Sierra Club v. Valencia Water Company, Decision (D.) 99-04-061, Conclusion of Law 4.)
Meanwhile, in March and April 1999, Valencia had filed ALs 84 and 85, seeking authority to expand its service area to serve an additional 3,400 homes. Sierra Club protested these advice filings, alleging insufficient supply due to overpumping of groundwater, inadequate SWP supply, and a lack of storage or means of conveyance for imported water. By Resolution W-4154, adopted August 5, 1999, the Commission found, based on staff review, that Valencia's water supply was adequate to serve the additional service territory requested in ALs 84 and 85, and so approved the advice letters. However, the Commission also adopted the staff recommendation that Valencia be ordered to prepare an updated WMP to enable the Commission and all interested parties to evaluate the effects of further expansion of its service area on its water supply.1
B. This Proceeding
On December 17, 1999, Valencia responded to Resolution W-4154 by filing its application seeking approval of an updated WMP. Protests to the application were filed by Sierra Club, Santa Clarita Organization for Planning the Environment (SCOPE), Friends of the Santa Clarita River (Friends of the River), County of Ventura (Ventura), and the Ratepayer Representation Branch of the Commission's Water Division staff (Water Division).2 A prehearing conference (PHC) was held on February 8, 2000, before Commissioner Josiah Neeper and Administrative Law Judge (ALJ) Bertram Patrick, in Los Angeles, and a Scoping Memo and Ruling of Assigned Commissioner was issued February 18. The Scoping Memo noted agreement among the parties that the issues in this proceeding should include (1) whether Valencia's current and planned water supplies are sufficient to meet future customer needs; and (2) whether the Commission should approve Valencia's updated WMP.
The Scoping Memo noted Sierra Club's and Ventura's (jointly referred to as Protestants) contentions that the proceeding also should consider the total future demand for water in the Santa Clarita Valley and the impact of Valencia's proposed water use on downstream water users. After referencing and quoting at length the Commission's observations in D.99-04-061 about its limited role and authority in water supply planning matters, the Assigned Commissioner concluded that it was "not appropriate to expand the scope of this proceeding to include modeling of basin wide surface/groundwater flows and a comprehensive analysis of water to the entire region water supply, as requested by Ventura," and so ruled that the scope of the proceeding would be limited to the two issues set forth above, and that the reliability of SWP supplies and the availability of groundwater supplies is relevant only to the extent that these affect the supply to Valencia's present and future customers. (Scoping Memo, pp. 5-6.)
On March 20, 2000, Valencia filed AL 88, seeking authority to expand its service area to include portions of two land developments, known as North Valencia Annexation-2 (North Valencia 2) and Mountain View, both generally abutting the northerly boundaries of Valencia's existing service area and together comprising 1,898 dwelling units on 484 acres of mixed use development. On September 19, 2000, Valencia filed AL 90, requesting permission to extend service to two additional land developments, West Creek and Tesoro del Valle, north and west of the North Valencia 2 area and together presenting the potential for adding 4,122 dwelling units into Valencia's service area.
In accordance with the established schedule, the parties proceeded to serve prepared direct and rebuttal testimony in April and May, 2000. Six days of evidentiary hearings were held in Los Angeles during late May and early June, 2000. The schedule for submission of briefs was suspended, however, due to Ventura's motion on May 22, the first day of hearing, asking the Commission to determine that this proceeding involves a "project" under the terms of the CEQA, Public Resources Code § 21000 et seq., and relevant regulations. Sierra Club filed a similar motion on May 30.
In D.00-10-049, the Commission ruled on Sierra Club's and Ventura's motions relating to CEQA. The Commission confirmed its past conclusions that the Commission's role in water use decisions is significantly more limited than that of other state and local agencies, "with a focus upon ensuring that each jurisdictional water utility provides its customers with `just and reasonable service, ...and facilities as are necessary to promote the safety, health, comfort, and convenience of its patrons, employees, and the public.'" (D.00-10-049, mimeo., at 8.)
The Commission recounted the course of events leading to Valencia's filing of the present application, noting that the filing of an updated WMP apart from a general rate case "is unusual, but was adopted to provide a forum to review the issues raised earlier by Sierra Club." (Id. at 7.) The Commission also discussed the pending ALs 88 and 90, noting that "while they have not been formally consolidated with the WMP, and remain separate filings, they are related, and both ALs 88 and 90 are dependent upon the WMP." (Id. at 8.) Specifically, "the Commission's stated intent is that approval of advice letters such as AL 88 and AL 90 can only occur after Commission approval of Valencia's WMP." (Id.)
On the question whether Valencia's application for approval of the WMP constitutes a "project" under CEQA, the Commission concluded that "CEQA is applicable to the present WMP together with ALs 88 and 90." (Id. at 22, 24 (Conclusion of Law 1).) Noting that local agencies had prepared EIRs for each of the development projects to which ALs 88 and 90 relate, the Commission saw no reason to duplicate CEQA reviews already conducted by other agencies. Accordingly, the Commission ordered Valencia to file a Proponent's Environmental Assessment (PEA) addressing "the service area expansions proposed in ALs 88 and 90 and reflected in the WMP," while also submitting copies of any EIRs relating to the ALs, along with evidence of any final local agency actions relating to those EIRs. (Id., Ordering Paragraph 1.)
On November 13, 2000, Valencia made the required submissions, formally filing its PEA. On the same day, following the guidance of Commission staff, Valencia also filed a Motion for Review and Approval of Tariff Changes Proposed by ALs 88 and 90, asking that the Commission consider granting approval of the ALs in this proceeding, concurrently with its action on the WMP.
On November 18, 2000, a PHC was held to discuss the scope of CEQA review and to establish procedures for that and related purposes. In PHC statements and a reply to Valencia's motion, Sierra Club and Ventura contended that environmental review of the WMP should not be limited to the incremental increases in demand associated with ALs 88 and 90, and that the WMP must be approved before the Commission can address the advice letters. Valencia responded that both CEQA and D.00-10-049 mandate that ALs 88 and 90 be considered concurrently with the WMP, because D.00-10-049 essentially held that the WMP and the advice letters are part of the same project and, for CEQA purposes, all elements of a project must be considered together.
In a ruling issued December 21, 2000, the Assigned Commissioner confirmed the Commission's intent "to consider Advice Letters 88 and 90 in conjunction with the WMP." Noting that a WMP, in isolation, is simply a planning document that does not typically provide a water utility any entitlement for future expansion of its service area, the Assigned Commissioner recalled the discussion in D.00-10-049 explaining the facts that made this case "somewhat unique." After extensively quoting from that decision, the Assigned Commissioner concluded that all responsible interests would be served by having the Commission "conduct its CEQA review and its substantive consideration of both the WMP and ALs 88 and 90 through a concurrent process, culminating in a single Commission decision addressing the relevant issues ... within the 18-month time frame mandated by statute." The Assigned Commissioner specifically ruled that the "project" for CEQA review purposes was the WMP "in conjunction with ALs 88 and 90," and instructed the ALJ to proceed with review of the PEA consistent with D.00-10-049.
On May 11, 2001, the ALJ issued a ruling noting that Commission staff had reviewed the documents filed by Valencia comprising its PEA and that staff found the PEA to be complete for CEQA review purposes for each of the development projects that Valencia now seeks Commission authority to serve. The ALJ set further days of hearing on the advice letters and also to allow updating of the record related to the WMP, if necessary.
Pursuant to the ALJ's ruling, the parties served further prepared testimony and held two more days of evidentiary hearing in Los Angeles on June 12-13, 2001. Opening and reply briefs were filed by Sierra Club, Valencia, and Ventura, and this proceeding was submitted for decision on August 27, 2001.
1 Sierra Club's request for rehearing of Resolution W-4154 was denied in D.99-11-032.
2 Because Sierra Club, SCOPE, and Friends of the River were jointly represented by counsel and have taken common positions throughout the course of this proceeding, they are referenced jointly as "Sierra Club."
