Tuesday, March 3, 2015

California’s Fracking Preemption Battle Moves Forward in San Benito County

Oil company Citadel Exploration, Inc. has reportedly filed a lawsuit against San Benito County, arguing that the County’s voter-sponsored ban on various types of well stimulation—often referred to generally as hydraulic fracturing or “fracking”—is preempted by state law.

Measure J, which was approved by San Benito County voters in November of last year, purports to create a county-wide ban on hydraulic fracturing and other types of secondary and tertiary oil recovery methods. Citadel had reportedly planned to develop up to 1,000 wells in San Benito County that would have employed cyclic steaming, one of the practices subject to the ban.

This fight has been a long time coming. As grass-roots efforts to ban fracking have increased over the last few years, industry representatives have consistently maintained that (1) regulation of “down-hole” activities is explicitly under the jurisdiction of the Department of Oil, Gas, and Geothermal Resources (DOGGR), and therefore cannot be regulated at the local level; and (2) local bans on fracking are preempted by the comprehensive state regulatory scheme prescribed by SB 4, passed in 2013. To that end, Citadel’s complaint against the County reportedly contends that “regulation of down-hole operations is exclusively a State function and that the defendant lacks the power and authority to regulate down-hole operations.”

In November, Citadel filed a $1.2 billion administrative claim against the County, a prerequisite to filing a lawsuit, covered here. Previous coverage of SB 4 is available here and here.

--Kathryn Oehlschlager

For more information, contact Kathryn Oehlschlager at klo@bcltlaw.com or (415) 228-5458.

CEQA Alert: California Supreme Court Issues Long-Awaited Guidance on the “Unusual Circumstances” Exception to CEQA’s Categorical Exemptions

In its March 2 decision in Berkeley Hillside Preservation v. City of Berkeley (SC Case No. S201116), the California Supreme Court provides critical guidance to CEQA lead agencies and practitioners regarding the proper application of the so-called “unusual circumstances” exception to CEQA’s categorical exemptions. This issue had previously generated a large number of Court of Appeal decisions over the course of several decades, resulting in a conflicting and confusing body of law. The Supreme Court’s decision finally puts the issue to rest.

The case involved a challenge to the City of Berkeley’s approval of a permit application to build a 6,478-square-foot house and 3,394-square-foot, 10-car garage. In approving the application, the City relied on two of CEQA’s categorical exemptions: (1) A “Class 3” Categorical Exemption, which includes “construction and location of limited numbers of new, small facilities or structures,” including “[o]ne single-family residence, or a second dwelling unit in a residential zone” (14 Cal. Code Regs. § 15303); and (2) “Class 32” which “consists of projects characterized as in-fill development” meeting certain requirements specified in the Guidelines (14 Cal. Code Regs. § 15332). The City also determined that the “unusual circumstances exception” in CEQA Guidelines Section 15300.2(c) did not apply. That exception provides that “[a] categorical exemption shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.”

The Court of Appeal for the First Appellate District disagreed and invalidated the City’s approval. In making this ruling, the Court held that the fact that a proposed activity may have a significant effect on the environment is, in and of itself, an “unusual circumstance” within the meaning of Section 15300.2(c), such that the lead agency may not rely on a categorical exemption for that activity. The Court of Appeal further determined that the standard of review applicable to the determination of whether the “unusual circumstances exception” applies is whether the record contains substantial evidence of a fair argument that the proposed project may have a significant impact on the environment.

The California Supreme Court disagreed with the Court of Appeal on both counts. The Court held that a potentially significant effect is not enough on its own to trigger the “unusual circumstances exception”:
In listing a class of projects as exempt, the Secretary has determined that the environmental changes typically associated with projects in that class are not significant effects within the meaning of CEQA, even though an argument might be made that they are potentially significant. The plain language of Guidelines section 15300.2, subdivision (c), requires that a potentially significant effect must be “due to unusual circumstances” for the exception to apply. The requirement of unusual circumstances recognizes and gives effect to the Secretary’s general finding that projects in the exempt class typically do not have significant impacts.
Furthermore, the Court held that a party challenging a lead agency’s determination that a categorical exemption applies bears the burden of producing evidence supporting the applicability of the “unusual circumstances exception.” Although the Court notes that “to establish the unusual circumstances exception, it is not enough for a challenger merely to provide substantial evidence that the project may have a significant effect on the environment,” it also concludes that “evidence that the project will have a significant effect does tend to prove that some circumstance of the project is unusual” (emphasis in original).

According to the Supreme Court, an “unusual circumstance,” within the meaning of Section 15300.2(c), may be established “without evidence of an environmental effect, by showing that the project has some feature that distinguishes it from others in the exempt class, such as its size or location. In such a case, to render the exception applicable, the party need only show a reasonable possibility of a significant effect due to that unusual circumstance.” Alternatively, an “unusual circumstance” may be established “with evidence that the project will have a significant environmental effect. That evidence, if convincing, necessarily also establishes ‘a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.’”

With respect to the standard of review, the Court held that Public Resources Code Section 21168.5 applies, such that reversal of the City’s permitting action is appropriate only if (a) the City, in finding the proposed project categorically exempt, did not proceed in a manner required by law, or (b) substantial evidence fails to support that finding. Specifically, the Court adopted the following bifurcated approach to the standard of review:
The determination as to whether there are “unusual circumstances” [ ] is reviewed under section 21168.5’s substantial evidence prong. However, an agency’s finding as to whether unusual circumstances give rise to “a reasonable possibility that the activity will have a significant effect on the environment” [ ] is reviewed to determine whether the agency, in applying the fair argument standard, “proceeded in [the] manner required by law.”

Accordingly, when there are “unusual circumstances,” it is appropriate for agencies to apply the fair argument standard in determining whether “there is a reasonable possibility of a significant effect on the environment due to unusual circumstances.” (Guidelines, §15300.2, subd. (c).)  As to this question, the reviewing court’s function “is to determine whether substantial evidence support[s] the agency’s conclusion as to whether the prescribed ‘fair argument’ could be made.”
The Court remanded to the Court of Appeal to apply the principles summarized above and provided the following additional guidance:  (1) a lead agency has the discretion to consider conditions in the vicinity or particular neighborhood of the proposed project when evaluating whether environmental effects are “unusual or typical”; and (2) a finding of environmental impacts must be based on the proposed project as actually approved and not based on unapproved activities that opponents assert will be necessary because the project, as proposed, cannot be built.

Justice Chin wrote the majority opinion, in which Justices Cantil-Sakauye, Corrigan, Baxter (retired, sitting by assignment), and Boren (sitting by assignment) concurred. Justice Liu penned a concurring opinion, joined by Justice Werdegar, that essentially rejected the majority’s view regarding the proper application of the “unusual circumstances exception.”

-- Don Sobelman and Nicole Martin

For more information, contact Don Sobelman at des@bcltlaw.com or (415) 228-5456, or Nicole Martin at nmm@bcltlaw.com, or (415) 228-5435.

Monday, March 2, 2015

CEQA Update: Three New Court of Appeal Decisions Issued; Key Supreme Court Rulings Expected (and the Sacramento Kings are on a Roll)

2015 is shaping up to be another active year for CEQA judicial review. After taking an extended holiday break, the Courts of Appeal have recently published three decisions, two of which reinforce existing case law on how to set the baseline for CEQA impacts analysis, and a third which clears the way for a new Sacramento Kings arena. In addition, the California Supreme Court is expected to issue rulings in several key CEQA cases.

Center for Biological Diversity v. Department of Fish and Wildlife (February 10, 2015, 3d DCA Case Nos. C072486, C072790, and C073011) involved three challenges to the California Department of Fish and Wildlife’s (Department) adoption of a program EIR for its fish hatchery and stocking enterprise, which has been in operation since the late 1800s. Two of the challenges focused on alleged CEQA violations. The program EIR evaluated three alternatives: (1) continue the existing enterprise without change (“no project alternative”); (2) continue the enterprise with mitigation measures (the “preferred alternative”); and (3) operate the enterprise with certain limitations. The EIR used the then existing, ongoing operations (specifically, those between 2004 and 2008) as the environmental baseline for its environmental impacts analysis. The Department ultimately selected the second alternative, certified the EIR, and adopted a statement of overriding considerations.

The Court of Appeal rejected all of petitioners’ CEQA claims. It held that the EIR contained a sufficient level of analysis for a program EIR and did not impermissibly defer formulation of mitigation measures. The Court also held that the Department’s baseline was correct because, under CEQA, the baseline for a continuing project is the current environmental condition including the project, even if the project has not undergone prior environmental review and even if the current condition includes unauthorized and even environmentally harmful conditions. For this reason, the EIR also appropriately identified the continuation of the ongoing operation as the “no project alternative.” (Note that although the court found no CEQA violations, it ruled that the Department did violate the Administrative Procedure Act (APA) because certain mitigation actually constituted “underground regulation” adopted without complying with the APA’s notice and hearing requirements.)

CREED-21 v. City of San Diego (filed January 29, 2015, Certified for Publication February 18, 2015, 4th DCA Case No. D064186) addressed another CEQA baseline issue. The case involved an emergency storm drainage repair project on a steep hillside in La Jolla and the subsequent revegetation of the site. The City completed the emergency repair pursuant to CEQA’s statutory exemption for “emergency repairs to publicly or privately owned service facilities necessary to maintain service essential to the public health, safety or welfare” (Pub. Res. Code Section 15269(b)). The emergency permit issued by the City included a condition that, within 60 days, the City’s engineering department would apply for a regular coastal permit for the already completed emergency work. Consistent with this permit condition, and following completion of the emergency repair work, the City filed an application for a coastal development permit and site development permit, which included a revegetation/restoration planting plan for the site. The City described the “project” as including the already completed emergency repair work along with the proposed revegetation plan. The City issued a Notice of Exemption for this “project” pursuant to CEQA Guidelines Section 15061(b)(3) for activities “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment”-- the so-called “common sense” CEQA exemption.

The Court of Appeal agreed with the City’s conclusion that the proper environmental baseline for review of the revegetation project consisted of the site conditions as they existed following completion of the emergency storm repair work, not before. The court concluded that the emergency repair work “was, in effect, an intervening and superseding event that changed the physical environment without any requirement for CEQA review of that work for a significant effect on the environment.” Therefore -- and apparently notwithstanding  the City’s description of the “project” in its Notice of Exemption -- “after the 2010 emergency work was completed, the only activity to be performed, or the ‘project’ for purposes of CEQA, was the implementation of the revegetation plan. Therefore, the CEQA baseline for the revegetation project must be set after the 2010 emergency work was completed and any qualification for a CEQA exemption and/or significant environmental effect of that project must be considered based on the postemergency work physical environmental of the site.” The court also concluded that substantial evidence supported the City’s determination that the “common sense” exemption applied to the revegetation project because the plan “indisputably would improve the site’s physical conditions compared to its 2011 physical conditions” and therefore, “would not result in any adverse change in its physical conditions.”

Finally, in Saltonstall et al. v. City of Sacramento (February 18, 2015, 3d DCA Case No. C077772), the proposed Sacramento Kings basketball arena cleared another hurdle when the Third Appellate District upheld the EIR for the new downtown entertainment and sports center. The court rejected all of appellants’ CEQA claims, including claims that the EIR failed to (1) consider remodeling the existing Sleep Train Arena as a feasible alternative to building the new arena, (2) adequately evaluate the effects of the project on interstate traffic on Interstate Highway 5 (I-5), and (3) account for safety issues associated with large crowds expected to congregate outside the arena during events. Of greatest note, the court rejected the claim that the City improperly “approved” the project prior to completing its CEQA review when it took certain preliminary steps, including exercising its eminent domain power to acquire property for the arena and entering into a preliminary, nonbinding term sheet allowing negotiation with a private investor group, which provided that the City retained the discretion to mitigate adverse environmental effects and reject the project entirely.

These three decisions will likely be followed by a significant number of other Court of Appeal decisions this year. In addition, we expect the California Supreme Court to issue decisions in several key cases, including the following:
  • In Friends of Eel River v. North Coast Railroad Authority (Northwestern Pacific Railroad Company) (SC Case No. S222472), the Court will consider whether the Interstate Commerce Commission Termination Act (ICCTA) preempts CEQA in the context of a state agency’s actions with respect to a state-owned and funded rail line, and whether the ICCTA preempts a state agency’s voluntary commitment to comply with CEQA as a condition of receiving state funds related to such a project.
  • Berkeley Hillside Preservation v. City of Berkeley (SC Case No. S201116) will consider the proper procedure and standard of review applicable to the “unusual circumstances exception" to CEQA’s categorical exemptions, found in 14 CCR § 15300.2(c).
  • In Center for Biological Diversity v. Department of Fish & Wildlife (SC Case No. S217763), the Court will consider issues relating to the California Endangered Species Act in the context of CEQA, whether judicial review is limited to the claims presented to an agency prior to the close of the comment period for a draft EIR, and the proper baseline for evaluation of impacts relating to a project’s greenhouse gas emissions.
  • Friends of the College of San Mateo Gardens v. San Mateo County Community College Dist. (SC Case No. S214061) will address the standard of review applicable to a lead agency’s decision to prepare a subsequent EIR, Negative Declaration, or addendum.
  • The Court’s long-awaited decision in California Building Industry Assn. v. Bay Area Air Quality Management Dist. (SC Case No. S213478) will address under what circumstances CEQA requires an analysis of how existing environmental conditions will impact future residents or users of a proposed project.
  • Finally, City of San Diego v. Trustees of the California State University (SC Case No. S199557) will address requirements relating to certain types of “fair-share” payments proposed by a state agency as mitigation for off-site impacts.  
All in all, it should be a very interesting year.

-- Don Sobelman and Nicole Martin

For more information, contact Don Sobelman at (415) 228-5456 or des@bcltlaw.com, or Nicole Martin at (415) 228-5435 or nmm@bcltlaw.com.

Thursday, February 26, 2015

Court Upholds CARB Regulations Implementing Cap and Trade Program to Reduce Greenhouse Gas Emissions

On February 23, 2015, the California Court of Appeal affirmed a trial court decision upholding regulations adopted by the California Air Resources Board (“CARB”) under the California Global Warming Solutions Act of 2006 (“the Act”) implementing CARB’s “Cap-and-Trade” program for reducing greenhouse gas (“GHG”) emissions. The Court rejected challenges to the regulations brought by the environmental organization Our Children’s Earth Foundation (“OCEF”), which argued that the regulations improperly allowed GHG emission offset credits for emission reductions that would otherwise occur, and deferred to CARB’s exercise of its statutory authority.

Our Children’s Earth Foundation v. California Air Resources Board (Feb. 25, 2015, 1st DCA Case No. A138830).

The Act requires that CARB regulations adopting market-based compliance mechanisms, such as the Cap-and-Trade program, ensure that a GHG “reduction is in addition to any greenhouse gas emission reduction otherwise required by law or regulation, and any other greenhouse gas emission reduction that otherwise would occur.” Cal. Health & Safety Code  § 38562(d)(2) (emphasis added). OCEF argued that CARB violated this “additionality” requirement by failing to ensure that GHG reductions credited under the Cap-and-Trade program are in addition to any GHG emission reduction that is otherwise required or that would otherwise occur.

The Cap-and-Trade program imposes a “cap” on the aggregate GHG emissions that covered entities may emit during an annual compliance period. CARB enforces the cap, which is lowered over time, by issuing a limited number of compliance instruments referred to as “allowances,” the total value of which is equal to the cap. A covered entity can also use offsets to meet a percentage of its compliance obligation. An offset is a voluntary GHG emission reduction from a source that is not directly covered by the program which is used by a covered entity to comply with the GHG emission cap.

One of the eligibility requirements imposed by the regulations is that a qualifying offset credit must result from the use of an adopted “compliance offset protocol.” The function of an offset protocol is to establish procedures and requirements to qualify and quantify GHG destruction, ongoing GHG reduction, or GHG removal enhancements achieved by an offset protocol. The regulations also include a procedure for early action projects to qualify for offset credits.

OCEF sought to invalidate CARB’s compliance offset protocols and early action offset credit program for allegedly violating the Act’s additionality requirement. OCEF argued that the compliance offset protocols are defective because they are based on a performance standard that: (1) includes activities which would otherwise occur; and (2) incorporates a “profitability” factor which improperly assumes that a project activity satisfies the additionality requirement if it would be profitable only with the financial incentive of the offset payment. OCEF challenged the early action offset credit provision because it allegedly allows offsets to be generated from entire classes of projects even though projects within those classes are already being undertaken and would be undertaken without the incentive provided by the offset payments.

The Court found that the fundamental problem with OCEF’s position was that it refused to account for the fact that it is virtually impossible to know with certainty what GHG emission reduction otherwise would have occurred in most cases, and that the practical effect of accepting OCEF’s unworkable statutory interpretation would be to preclude CARB from implementing many, if not all, market-based compliance mechanisms. The Court held that CARB did not exceed its power, but rather, in exercising the authority delegated to it by the Legislature, established rules and protocols that give sufficient meaning to the concept of additionality so that this requirement is capable of enforcement.

Having determined that CARB reasonably interpreted its legislative mandate, the Court declined OCEF’s request to independently evaluate the effectiveness of specific measures incorporated into several of the compliance offset protocols. Noting that CARB engaged in an extensive regulatory process and finding that the voluminous administrative record substantially supported the many policy decisions that CARB had to make in formulating the challenged regulations, the Court held that OCEF had failed to demonstrate that any action CARB took was arbitrary or capricious.
In rejecting OCEF’s argument, the Court’s decision provides businesses participating in California’s Cap-and-Trade program with certainty regarding the validity of GHG offset credits and CARB’s compliance offset protocols.

The Court of Appeal’s decision is available here.

--Marc Zeppetello    

For more information, contact Marc Zeppetello at maz@bcltlaw.com or (415) 228-5496.

Wednesday, January 14, 2015

Supreme Court Denies Review of Ninth Circuit Delta Smelt Decision

On Monday, January 12, 2015, the U.S. Supreme Court denied two petitions seeking review of a Ninth Circuit decision upholding limits on water diversions from the Sacramento-San Joaquin Delta to protect the endangered Delta smelt.

Several petitioners, including Westlands Water District, the Metropolitan Water District of Southern California, and other agricultural interests and water utilities, had sought review of a March 2014 Ninth Circuit decision that upheld the “reasonable and prudent alternatives” devised by the U.S. Fish and Wildlife Service in a 2008 biological opinion. The decision means that March 2014 decision remains intact.

The U.S. Fish and Wildlife Service developed the reasonable and prudent alternatives (“RPAs”) to comply with Endangered Species Act (“ESA”) requirements. The RPAs (1) substantially curtailed Delta water exports to limit entrainment of Delta smelt at the pumping plants, and (2) required releases of reservoir water and reduced export pumping to prevent salinity intrusion into the Delta. The petitioners alleged that these RPAs contained no demonstration that they were “economically and technologically feasible” as required by the ESA, that the RPAs failed to use the best available scientific evidence, and that the RPAs failed to consider effects on third parties.

The denial of review brings an end to this chapter in the ongoing wars over California’s water infrastructure. However, with drought continuing to plague California and reports that the U.S. Bureau of Reclamation has begun a new environmental study for the pumping plants that export Delta water, the controversy over management of California’s water projects does not show any signs of abating.

The petition for State Water Contractors v. Jewell, No. 14-402, is available here, and the petition for Stewart & Jasper Orchards v. Jewell, No. 14-377, is available here.

-- Dave Metres

For more information, contact Dave Metres at (415) 228-5488 or dmm@bcltlaw.com.

Tuesday, January 13, 2015

OEHHA Proposes New Proposition 65 Warning Regulations

On January 12, 2015, California’s Office of Environmental Health Hazard Assessment (OEHHA) published two notices of proposed rulemaking regarding the State’s Proposition 65 warning regulations.

OEHHA proposes to repeal sections 25601 through 25605.2 of the California Code of Regulations (C.C.R.), title 27, and replace them with new regulations governing the content of “safe harbor clear and reasonable” warnings, as well as the responsibility for and methods of providing such warnings, under Proposition 65. Among the changes proposed, the new regulations would require certain chemicals to be specifically identified in the text of a warning. The proposed regulations also include warning requirements specific to certain categories of products or facilities, such as prescription drugs, furniture, and enclosed parking facilities, among others.

OEHHA also proposes to adopt a new regulation authorizing the agency to establish a website “to collect and provide information to the public concerning exposures to listed chemicals for which warnings are being provided.” If adopted, the new website regulation would require a product manufacturer, producer, distributor, or importer, or a particular business subject to Proposition 65 warning requirements, to provide to OEHHA, upon request, specific information regarding any product, listed chemical, potential exposure, and “any other related information that the lead agency deems necessary” for which a warning is provided. However, in its notice, OEHHA expressly states that the proposed website regulation “is not enforceable by private plaintiffs,” in contrast to the warning regulations currently in effect and those being proposed.

OEHHA will conduct public hearings on both the proposed website and warning regulations on March 25, 2015, and will accept written comments regarding the proposed regulatory action until April 8, 2015.

OEHHA’s notices, statements of reasons, and proposed regulatory text are available here and here

We will continue to provide updates on the status of OEHHA’s proposed regulatory action throughout the rulemaking process.

-- Samir Abdelnour

For more information, contact Samir Abdelnour at (415) 228-5443 or sja@bcltlaw.com.

Friday, December 19, 2014

Surface Transportation Board Rules That ICCTA Preempts CEQA Review of California’s High-Speed Train System

On December 12, 2014, the Surface Transportation Board (STB) issued a decision, in response to a petition filed by the California High-Speed Rail Authority (Authority), finding that the Interstate Commerce Commission Termination Act (ICCTA) categorically preempts CEQA with respect to the 114-mile passenger rail line that the Authority is constructing between Fresno and Bakersfield (the “Line”) as part of its High-Speed Train (HST) System. This broadly worded decision should effectively preclude CEQA challenges to all lines that will be constructed as part of the HST System.

By the time the Authority filed its October 9, 2014 petition with the STB, the STB had asserted jurisdiction, completed environmental review under the National Environmental Policy Act, and authorized construction of the Line. The Authority had also voluntarily completed an environmental review of the Line pursuant to CEQA, while reserving its right to argue that CEQA is preempted with regard to the Line. Seven lawsuits were subsequently filed, challenging the adequacy of the Authority’s CEQA review and seeking injunctive relief that would delay, if not prevent altogether, construction of the Line. The Authority’s October 9, 2014 petition focused on the preemptive effect of Section 10501(b) of the ICCTA with respect to the injunctive relief sought in those CEQA lawsuits. Section 10501(b) provides:
The jurisdiction of the [STB] over -
(1) transportation by rail carriers, and the remedies provided in this part with respect to rates, classifications, rules (including car service, interchange, and other operating rules), practices, routes, services, and facilities of such carriers; and
(2) the construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks, or facilities, even if the tracks are located, or intended to be located, entirely in one State,
is exclusive. Except as otherwise provided in this part, the remedies provided under this part [49 U.S.C. § 10101 et seq.] with respect to regulation of rail transportation are exclusive and preempt the remedies provided under Federal or State law.
49 U.S.C. § 10501(b).
Finding it difficult, as a practical matter, to separate the injunctive relief available in a CEQA lawsuit from other relief that could be granted by a state court in such litigation, the STB decided more broadly that CEQA was categorically preempted by Section 10501(b) with respect to the Line. Drawing on principles enunciated in prior STB opinions, as well as federal and state court decisions -- including the First Appellate District’s decision in Friends of the Eel River v. North Coast Rail Authority et al., which is now under review by the California Supreme Court -- the STB determined that CEQA was preempted for three reasons.
  1. “CEQA is a state preclearance requirement that, by its very nature, could be used to deny or significantly delay an entity’s right to construct a line that the [STB] has specifically authorized, thus impinging upon the [STB’s] exclusive jurisdiction over rail transportation.”
  2. “Because environmental review under CEQA attempts to regulate where, how, and under what conditions the Authority may construct the Line, the application of CEQA here would constitute an attempt by a state to regulate a matter directly regulated by the [STB].”
  3. As the Friends of the Eel River court also determined, “the market participation doctrine does not apply in the context of a CEQA enforcement suit for a railroad project under [the STB’s] jurisdiction.” Accordingly, the Third Appellate District, in its recent decision addressing preemption of CEQA with regard to the HST System, Town of Atherton v. California High-Speed Rail Authority, “incorrectly applied [the doctrine] to bar federal preemption of CEQA.”
The STB’s decision will likely be a key focus of the briefing in Friends of the Eel River before the California Supreme Court, which granted review on the following issues: (1) Does the ICCTA preempt the application of CEQA to a state agency’s proprietary acts with respect to a state-owned and funded rail line or is CEQA not preempted in such circumstances under the market participant doctrine?; and (2) Does the ICCTA preempt a state agency’s voluntary commitments to comply with CEQA as a condition of receiving state funds for a state-owned rail line and/or leasing state-owned property? 
If the Supreme Court affirms the Friends of the Eel River decision and applies the broad preemption framework set forth by the STB, CEQA review of major rail projects in California (and the resulting CEQA litigation) will be significantly curtailed, if not eliminated, giving rail operators more freedom to construct new rail lines, rail yards, and other rail facilities in California that serve markets both within the state and across the country.
For more information, contact Don Sobelman at des@bcltlaw.com or (415) 228-5456, or Nicole Maritn at nmm@bcltlaw.com or (415) 228-5435.