Comments on Draft Decision

The draft decision of the Administrative Law Judge (ALJ) in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7 of the Commission's Rules of Practice and Procedure. Opening comments on the draft decision were filed by Valencia and Sierra Club on August 10, 2006. Reply comments were filed by Valencia on August 15, 2006.

Sierra Club repeats the same arguments it made previously, which were addressed in the draft decision. None of Sierra Club's arguments have merit. Rather than summarily dismiss Sierra Club's arguments, we will go over the issues one more time, with the latest update.

The issue at hand is whether to remove a stay from a decision (D.01-11-048) the Commission adopted nearly five years ago, based on the completion of additional CEQA review by the lead agency and that lead agency's reinstatement of approvals for the West Creek project for which the Commission's decision authorized Valencia to provide public utility water service. All substantive issues to which Sierra Club alludes have been fully addressed in prior Commission decisions or in the additional CEQA review recently certified by the lead agency.

A. There Has Been No Significant Change of Circumstances Since Recertification of the West Creek EIR

Sierra Club asserts that further environmental impact review pursuant to the CEQA is required because "circumstances have substantially changed" since the EIR for the West Creek project was recertified by the County of Los Angeles in July 2005. Sierra Club refers to the perchlorate containment program.

Valencia responds, that it is no surprise that "ground monitoring" of the Whittaker-Bermite site has revealed very high levels of perchlorate. That site, formerly used for the manufacture of rocket fuel, has been identified for many years as the probable source of perchlorate contamination in the Santa Clarita area. Valencia points out that the fact of contamination on the Whittaker-Bermite site is not a significant change of circumstances, and that is discussed in D.01-11-048.

Further, Valencia responds that the detection of perchlorate in a new well operated by Newhall County Water District is not "a further indication of the continued spread of the ammonium perchlorate pollution in a westerly direction. As indicated by the news article Sierra Club attached as Exhibit 1 to its comments, this perchlorate detection was at a "minimal" level ("from undetectable to up to 1.9 parts per billion"), well below the state-recommended "safe drinking water" limit of 6 parts per billion, in a Saugus Aquifer well within 1,000 feet of another Saugus well that has been capped due to perchlorate contamination since 1998. Valencia contends that contrary to Sierra Club's assertions, such a "minimal" detection does not indicate anything about the spread of perchlorate and is not a significant change of circumstances. Accordingly, we reject Sierra Club's argument. The events to which Sierra Club refer do not constitute significant changes in the context of the water supply analysis in the West Creek EIR.

B. Sierra Club Misstates the Facts Regarding CLWA's Containment Program

Sierra Club asserts that the draft decision "is factually incorrect" in its description of the perchlorate containment program that CLWA now has in progress. Valencia responds that contrary to Sierra Club's claim that "CLWA does not have a containment program in progress" and has no funding available for clean-up or treatment facilities, CLWA's containment program is well under way and ample funding is in escrow.

According to Valencia, CLWA developed an Interim Remedial Action Plan to address groundwater contamination by perchlorate in conformance with Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and that action plan was approved by the California Department of Toxic Substances Control in January 2006. CLWA also completed CEQA review of its remedial action plan in the same time frame, and neither the action plan nor the CEQA review has been subject to any judicial challenge. The final design for treatment facilities is nearly complete; the groundbreaking ceremony is set to occur in August 2006; the construction work is scheduled to be put out for bid in the fall of 2006, with construction to be completed and operation to commence in 2007. Funding to cover all remedial work has been secured by a settlement between Whittaker-Bermite and its insurance carriers, with many millions of dollars currently held in escrow. A settlement of claims by CLWA and other water purveyors is pending, and is expected to result in the assignment of the escrowed funds for implementation of CLWA's Interim Remedial Action Plan.

Valencia states that in short, the draft decision would be correct in stating that CLWA has a perchlorate containment program in progress and is in the process of implementing wellhead treatment at two Saugus Formation wells. With the minor changes of wording suggested in its opening comments, Valencia submits that the draft decision will accurately describe the current status of perchlorate remediation efforts of concern to Valencia and its customers.

In summary, we find no merit in Sierra Club's argument regarding the lack of progress in CLWA's perchlorate containment program. We will make the wording changes to the draft decision as suggested by Valencia to reflect the status update.

C. Sierra Club's Challenges to Various Elements of the Water Supply Analysis in the West Creek EIR Are Irrelevant to the Commission's Obligation as a Responsible Agency to Presume the EIR Adequate for Current Planning Purposes

Sierra Club repeats its argument that Valencia is improperly relying on several sources of water supply, including CLWA's acquisition of a 41,000 AFY entitlement to State Water Project (SWP) supply, the use of "polluted water" from the Saugus Aquifer, and the projection of recycled water supply in excess of the amount currently available. Sierra Club alleges that, "as a matter of law," Valencia may not rely on these water sources in its water supply planning.

Valencia responds that the problem with Sierra Club's continual renewal of its challenges to Valencia's consideration of particular water supply sources is that the claims are taken out of context. The Water Code provisions on which Sierra Club appears to rely apply to the consideration of water supply for land use projects, not to the long-range water supply projections entailed in a Water Management Program. The particular land use project at issue in the present case is the West Creek project, for which Los Angeles County has certified an EIR in July 2005. Commission staff has reviewed that EIR and that review is reflected in the draft decision.

We note that Sierra Club made similar claims in its response to Valencia's motion, filed last August. At that time, Sierra Club tried to make an issue out of CLWA's alleged failure to abide by the "Monterey Settlement Agreement" in its acquisition of a 41,000 AFY entitlement to SWP supply. The draft decision notes that regardless of litigation with respect to the revised EIR that CLWA completed and certified with respect to its acquisition of additional SWP supply, the EIR for that supply must be presumed adequate for current planning processes, citing the CEQA Guidelines, 14 Cal. Code Regs., § 15231. On this basis, the draft decision rejects Sierra Club's claim that CLWA's 41,000 entitlement cannot be taken into account for planning purposes simply because litigation is pending on CLWA's EIR. We agree with that conclusion.

D. There Was No Procedural Impropriety in the Commission Employing Its Expert Environmental Review Staff to Review the Recertified West Creek EIR

Sierra Club claims it was "procedurally incorrect" for the Commission to have its Energy Division staff review the supplemental West Creek EIR materials and assess their adequacy in addressing potential impacts. We remind Sierra Club that the issue before the Commission is the adequacy of the CEQA analysis done by Los Angeles County on the recertification of the West Creek EIR. Sierra Club apparently is unaware of the long experience of the Environmental Review Branch of the Energy Division in addressing CEQA compliance issues relating to all classes of public utilities subject to the Commission's jurisdiction.

Review of the recertification of the West Creek EIR was done by the Commission's CEQA staff. The CEQA staff is located in the Energy Division as a purely administrative means of co-locating all of the Commission's CEQA technical experts, who work across all industries regulated by the Commission. The Commission derives a number of benefits from the efficiencies and cross-expertise associated with this institutional arrangement. Indeed, having the same technical staff work on all CEQA compliance issues across industries serves to ensure consistency in the Commission's application of CEQA across those industries. Sierra Club's allegation of improper procedure is without merit.

E. Any Stay of Trial Court Proceedings Has No Bearing on the Commission's Obligation to Presume the West Creek EIR Adequate for Current Planning Purposes

Sierra Club relies on Code of Civil Procedure (CCP) § 916, which addresses trial court proceedings subject to appeal, to assert that the Commission should not apply the recertified West Creek EIR until the Court of Appeal has ruled on the pending appeal of its sufficiency. This claim is without merit. The CEQA Guidelines, not the CCP, govern the Commission's conduct in this context. As discussed in the draft decision, the CEQA Guidelines direct the Commission to presume a certified EIR adequate for current planning processes, even if subject to a pending appeal. (See, CEQA Guidelines, 14 Cal. Code Regs., § 15231.)

In summary, we will adopt the draft decision with a few language changes to reflect the current status of the perchlorate containment program.