Wastewater agencies’ feud escalates as Moulton Niguel district countersues over sewage plant costs

The feud between a trio of South Orange County Wastewater Authority member agencies, including the city of Laguna Beach and South Coast Water District, and the Moulton Niguel Water District is growing after Moulton Niguel last week sued the agencies.

In an Aug. 25 complaint filed in Orange County Superior Court, Moulton Niguel alleges the city of Laguna Beach, South Coast Water District and Emerald Bay Service District breached a contract by requiring the agency to pay for infrastructure improvements to a sewage treatment plant in Aliso Canyon that Moulton claims were not legally approved.

Costs would pay for improvements that extend the life of the coastal treatment plant under a current agreement that runs through November 2026 between Moulton, the city, Emerald Bay and South Coast district, which own percentage shares of a plant that treats 6.7 million gallons of raw sewage per day, according to Moulton’s complaint. The quartet is collectively known as Project Committee 15.

Moulton said it does not currently send water to the plant and does not intend to use the plant “at any time in the near future,” the complaint says.

Moulton disputes the costs, claiming they were not unanimously approved by all four project committee agencies as required under section 8.2 of the joint powers agreement governing all 10 South O.C. Wastewater Authority agencies, according to the suit.

Section 8.2 says a project can neither be constructed nor acquired unless all participating agencies approve.

The legal challenge comes on the heels of a lawsuit filed in May by the city of Laguna Beach, South Coast, Emerald Bay Service District and the South O.C. Wastewater Authority, which alleged that Moulton failed to pay $755, 871 in bills for infrastructure projects at the facility dating to July 2016.

That figure had increased to $927,606 as of July 21, according to court records.

Mike Dunbar, general manager of Emerald Bay Service District and chairman of the four-agency committee, said in a phone interview that the costs do not require unanimous approval.

Dunbar referred to section 6.5 of the agreement, which requires a majority of “the directors of participating member agencies” to approve project and operations and maintenance budgets.

“If an agency were to propose a new facility or new building then yes, it would require unanimous consent,” Dunbar said. “What SOCWA has done for capital improvements that either rehabilitate an existing facility or make repairs is require a majority approval of [project committee] members.”

Moulton, which serves customers in Aliso Viejo, Mission Viejo, Laguna Hills, Laguna Niguel and Dana Point, wants to divest itself from the committee since it does not use the plant and does not want its ratepayers to foot bills for a facility they do not and will not use, assistant general manager Matt Collings said.

But without Moulton Niguel’s portion for capital expenses — the agency says it continues to fund operations and maintenance of the plant — several “necessary” projects such as repairing a pipeline that distills solids from the sewage for further treatment have been put on hold, the Daily Pilot reported in May.

In a May 12 letter to the Wastewater Authority, Moulton general manager Joone Lopez offered to pay $755,870 under protest, to be “factored into the negotiated divestment.”

The Wastewater Authority, Laguna Beach, South Coast and Emerald Bay rejected the payment, claiming it dictated conditions about how the money was to be spent and did not address the past due bills, Dunbar said.

Collings said the Wastewater Authority could have “taken the check and utilized it in a way they felt was necessary and there would have been no way to enforce any conditions.”

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Twitter: @AldertonBryce