Judge rules on $2 million dispute over Orange County sewage plant

A long-simmering, multi-million dollar dispute among coastal Orange County water and sewage districts took a major step toward resolution Wednesday, when a Superior Court judge issued a tentative ruling that Moulton Niguel Water District is obligated to pay outstanding bills to the South Orange County Wastewater Authority.

Moulton Niguel wants to terminate funding obligations for South O.C. Wastewater’s Coastal Treatment Plant because Moulton Niguel has rarely needed that sewage capacity since signing a use-agreement with South O.C. Wastewater in 1999. Instead, Moulton Niguel uses two other South O.C.Wastewater plants and says its customers should not be helping pay for the Coastal Treatment Plant.

In 2016, Moulton Niguel stopped paying capital improvement invoices for the plant although it continued make payments for what South O.C. Wastewater describes as routine housekeeping and maintenance. Unpaid invoices total roughly $2 million, according to South O.C. Wastewater.

Moulton Niguel had offered cover the unpaid invoices if South O.C. Wastewater applied the money to a plan to terminate Moulton Niguel’s Coastal Treatment plant contract. South O.C. Wastewater rejected the conditions that were being attached to the payments and no money changed hands.

Superior Court Judge Randall Stamen ruled that South O.C. Wastewater’s budgets were properly approved despite Moulton Niguel’s objections and that the water district is obliged to pony up.

“MNWD is legally obligated to pay its proportional share of all costs, including capital costs and items, necessary to operate and maintain the Coastal Treatment Plant until February 19, 2030, or until the fifty-year term is rescinded or modified,” Stamen wrote in Wednesday’s ruling.

SOCWA cheers ruling

South O.C.Wastewater and its other partners using the treatment plant applauded the ruling. It will allow necessary repairs to be funded and will spread the costs among all parties to the agreement, they said.

“Today’s decision is a clear win for our residents, the environment, ocean water quality and the sanctity of contracts between partners,” said Michael Dunbar of the Emerald Bay Service District. Other partners for the Coastal Treatment Plant are the city of Laguna Beach and the South Coast Water District. “A contract is a contract and (Moulton Niguel) must now pay its bills.”

Moulton Niguel said it also saw a bright side to the ruling. It noted that no dollar figure for the amount it owed was determined in the ruling, that a dispute over the termination date of the current agreement had been resolved and that the decision is another step toward Moulton Niguel ending its Coastal Treatment Plant obligations.

But while South O.C. Wastewater said it would not challenge the tentative ruling, Moulton Niguel said it was keeping that option open. Moulton Niguel also pointed to a potential second phase of the trial, saying it would decide how much money was owed. South O.C. Wastewater spokesman Steve Greyshock said Moulton Niguel should simply pay its bills, sit down to negotiate divestment from the plant and avoid further legal costs.

An Moulton Niguel statement said the ruling could lead to a more efficient downsizing of the plant, and officials pointed to statements by other partners endorsing such a move. Greyshock acknowledged those partners’ statements and said such a possibility has been open to negotiation for several years.

Moulton Niguel serves 170,000 customers in Laguna Niguel and portions of Aliso Viejo, Dana Point, Laguna Hills, Mission Viejo and San Juan Capistrano.