Tuesday, November 11, 2014

Utah Federal Judge: ESA Rule Is Unconstitutional

In a ruling that, if upheld and followed, would significantly limit the reach of federal environmental regulation, a Utah federal judge determined that regulation of a purely intrastate species listed as threatened under the Endangered Species Act is unconstitutional because it is beyond the scope of the Commerce Clause and the Necessary and Proper Clause. People for the Ethical Treatment of Property Owners v. U.S. Fish & Wildlife Serv., No. 2:13-cv-00278-DB (D. Utah Nov. 4, 2014) (“PETPO”).

Under section 4(d) of the Endangered Species Act (“ESA”), the government may add certain protections for threatened species, essentially providing the same protections afforded to endangered species under the Act. At issue in the PETPO case was whether the U.S. Fish & Wildlife Service may implement section 4(d) protections for the Utah prairie dog, which is listed as threatened under the ESA but is found solely within Utah’s borders.

No Substantial Effect on Interstate Commerce

The government conceded that the Utah prairie dog is a purely intrastate species, residing only in Utah, but nonetheless pointed to a long line of circuit court decisions that upheld regulation of intrastate species on Commerce Clause grounds. In those cases, the courts looked to the effect of the species in question on interstate commerce.

The court in PETPO broke rank, holding that it is the regulated activity—in this case the take of the species—that must be the touchstone for the interstate commerce effects. On that basis, the court ruled that the “substantial effects” test should not focus on the section 4(d) special rule’s effect on interstate commerce, but on the effect on interstate commerce caused by take of the Utah prairie dog. PETPO, at *16.

In reaching his conclusion, Judge Dee Benson determined that the species’ biological value was “inconsequential” to this determination. Id. at *11. Although conceding that the Utah prairie dog may have an effect on the ecosystem, Judge Benson, quoting Judge David Sentelle of the Court of Appeals for the District of Columbia Circuit, noted that the Commerce Clause “empowers Congress ‘to regulate commerce’ not ecosystems.” Id. at *12 (quoting National Ass’n of Home Builders v. Babbitt, 327 U.S. App. D.C. 248, 272 (D.C. Cir. 1997) (Sentelle, J., dissenting)).

The Court went on, stating that any purported commercial value of the Utah prairie dog is “too attenuated to support the premise that take of the prairie dog would have a substantial effect on interstate commerce.” Id. Similarly, the court concluded that related scientific research was also too attenuated to establish a “substantial relation between the take of the Utah prairie dog and interstate commerce.” Id.

Not Necessary and Proper to Achieve Congress’ Goal

The court also rejected the government’s argument that the Necessary and Proper Clause authorizes rule 4(d) because the rule is essential to the economic scheme created by the ESA. The court acknowledged that the ESA regulates economic activity, but held that rule 4(d) “is not necessary to the statute’s economic scheme.” PETPO, at *15. The court reasoned that “takes of Utah prairie dogs on non-federal land—even to the point of extinction—would not substantially affect the national market for any commodity regulated by the ESA.” PETPO, at *14. The court dismissed out of hand any substantial effects on national markets based on the fact that other interstate species, such as bobcats, golden eagles, and hawks, prey on the prairie dog.

Further, the court rejected the government’s argument that the take of all intrastate non-commercial species could be aggregated to satisfy the Necessary and Proper Clause, finding that aggregate take of different species did not apply to its consideration of the constitutionality of a special rule affecting only one species. On these bases, the court ruled that striking down the special rule would not undercut the ESA’s comprehensive regulatory system and was therefore not justified by the Necessary and Proper Clause.

Ruling Poised for Appeal

Given the litany of federal appeals court cases holding that regulation of purely intrastate species is within Congress’ constitutional authority, and in view of some of the reasoning put forth by the court and the potentially far-reaching implications of the decision, it would appear likely that the government will choose to appeal. See San Luis & Delta-Mendota Water Authority v. Salazar, 638 F.3d 1163 (9th Cir. 2011) (applying ESA to Delta smelt living only in California); Alabama-Tombigbee Rivers Coalition v. Kempthorne, 477 F.3d 1250 (11th Cir. 2007) (Alabama sturgeon living only in Alabama); Rancho Viejo, LLC v. Norton, 323 F.3d 1062, 1069 (D.C. Cir. 2003) (arroyo toad living only in California); GDF Realty Investments, Ltd. v. Norton, 326 F.3d 622 (5th Cir. 2003) (six species of subterranean, cave-dwelling invertebrate spiders and beetles living only in Texas); Gibbs v. Babbitt, 214 F.3d 483 (4th Cir. 2000) (red wolf living only in North Carolina); Nat’l Ass’n of Home Builders v. Babbitt, 130 F.3d 1041 (D.C. Cir. 1997) (Delhi Sands flower-loving fly living only in California).  

However, and notwithstanding the array of appellate rulings to the contrary, it is noteworthy that the district court’s reasoning in PETPO is not dissimilar to the view that then-Judge John Roberts, when serving on the D.C. Circuit, articulated in his dissent of a denial of rehearing en banc in Rancho Viejo, LLC v. Norton, 323 F.3d 1062, 1071-73 (D.C. Cir.2003). In that dissent, then-Judge Roberts stated that “[t]he panel’s opinion in effect asks whether the challenged regulation substantially affects interstate commerce, rather than whether the regulated activity does so. Thus, the panel sustains the application of the [Endangered Species] Act in this case because Rancho Viejo’s commercial development constitutes interstate commerce and the regulation impinges on that development, not because the incidental taking of arroyo toads can be said to be interstate commerce.” Id. (emphasis in original).

Whether Judge Benson’s reasoning may have some traction with the Tenth Circuit or the U.S. Supreme Court remains to be seen.

-- Josh Bloom and Dave Metres

For more information, contact Josh Bloom at (415) 228-5406, jab@bcltlaw.com, or Dave Metres at (415) 228-5488, dmm@bcltlaw.com.

Tuesday, October 21, 2014

Environmental Groups Seek to Derail Bakersfield Crude-by-Rail Project

A coalition of environmental groups has filed a lawsuit challenging Kern County’s approval of the first substantial oil-by-rail expansion project at a California refinery, alleging that the comprehensive Environmental Impact Report (EIR) prepared for the project is inadequate under the California Environmental Quality Act (CEQA). This appears to be the next front in the ongoing battle over crude-by-rail, as refineries across California seek to expand rail transportation in order to improve access to new crude oil sources in the United States and Canada.

In addition to allowing rail delivery of oil at Alon USA Energy’s Bakersfield refinery, the project will expand capacity and allow upgrades to several units at the refinery to enable processing of light crude, including output from Texas and North Dakota's Bakken shale, as well as equipment to offload undiluted Canadian bitumen. The facility has been shuttered since 2008.

The Kern County Board of Supervisors approved the project at a September 9 hearing over the objections of environmental groups and some members of the community, who—despite the County’s preparation of thousands of pages of environmental documentation—claimed the CEQA analysis for the project was inadequate. While project opponents raised concerns about the safety of transporting oil by rail and potential air impacts of the project, other residents, unions, and economic development leaders support the project and expressed their satisfaction with planned safety measures.

In their suit challenging the project, a coalition of environmental groups, including the Sierra Club, the Center for Biological Diversity, and the Association of Irritated Residents, claim that the EIR for the project failed to adequately analyze and mitigate the project’s adverse environmental impacts. Specifically, they allege that the EIR employed an improper baseline, failed to sufficiently describe the proposed project, and failed to fully analyze and mitigate a wide variety of impacts associated with oil storage and processing.

The challenge to the Alon project follows an April 2014 lawsuit, also relying on CEQA, where environmental groups sought to block the shipment of oil by rail to a Kinder Morgan facility in Richmond, California. That lawsuit was later dismissed as untimely.

The challenge to the Alon project, Association of Irritated Residents et al. v. Kern County Board of Supervisors, is pending in Kern County Superior Court (Case No. S-1500-CV-283166).

--Kathryn Oehlschlager and Chris Jensen

For more information, contact Kathryn Oehlschlager at (415) 228-5458 or klo@bcltlaw.com, or Chris Jensen at (415) 228-5411 or cdj@bcltlaw.com

Friday, October 10, 2014

Proposition 65 Warning Requirement for DINP Set to Take Effect in December

Beginning December 20, 2014, companies with ten or more employees that manufacture, distribute or sell products in California containing Diisononyl phthalate (DINP) will be required to provide “clear and reasonable” warnings under the State’s Safe Drinking Water and Toxic Enforcement Act of 1986, commonly referred to as “Proposition 65.”

California’s Office of Environmental Health Hazard Assessment (OEHHA) added DINP to the Proposition 65 list of chemicals on December 20, 2013 as a chemical “known to the State to cause cancer.” Once a chemical is listed as a carcinogen under Proposition 65, companies have 12 months to stop selling products containing that chemical in California without a warning, unless they can prove exposure to the chemical is at a level that presents “no significant risk.” 

Proposition 65’s citizen suit provision authorizes any California citizen or private organization to issue a notice of violation to an entity that manufactures, distributes or sells a product containing the listed chemical in California, beginning 12 months after the listing date. The notice of violation triggers a 60-day period, during which the State Attorney General or any district attorney may bring an enforcement action. If no public prosecution is commenced during the 60-day window, the private enforcer that issued the notice of violation may file a complaint in state court to enforce the law.

A related chemical, Di(2-ethylhexyl)phthalate (DEHP), has been listed under Proposition 65 for many years and has generated hundreds of 60-day notices and lawsuits brought by citizen enforcers. As such, it can be expected that DINP’s listing will encourage a new wave of citizen enforcement actions against companies doing business in California.

DINP is used as a general purpose plasticizer and can be found in a wide range of products. Its use in California in toys and children’s articles has been restricted since 2009.

-- Samir Abdelnour

Barg Coffin has an extensive Proposition 65 practice. If you would like more information about Proposition 65, please contact Josh Bloom (jab@bcltlaw.com) or Samir Abdelnour (sja@bcltlaw.com), at (415) 228-5400.

Tuesday, October 7, 2014

EPA Announces Final Rule Eliminating ASTM Phase I ESA Standard E1527-05 from CERCLA “All Appropriate Inquiries Rule”

On October 6, 2014, the EPA announced a final rule amending the “All Appropriate Inquiries Rule” [40 CFR Part 312] (“AAI Rule”) for conducting environmental site investigations of potentially contaminated property.

The final rule removes reference to the ASTM International 2005 standard – ASTM E1527-05 – as an acceptable standard for undertaking “all appropriate inquiries” necessary to qualify for certain liability protections under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), including the bona fide prospective purchaser defense and innocent landowner defense. In June of this year, EPA had announced its intention to eliminate the reference to the 2005 standard, which was replaced in 2013 by an updated standard, ASTM 1527-13, that contains new requirements.

The purpose of the final rule is to “reduce any confusion associated with the regulatory reference to a historical standard that is no longer recognized by its originating organization [ASTM International] as meeting its standards for good customary business practice.”

EPA also believes that its final rule will promote the use of the updated 2013 ASTM standard. As EPA notes, most environmental professionals are likely already using the updated standard, described as “a currently recognized industry consensus-based standard to conduct all appropriate inquiries as provided under CERCLA.”

The effective date for the new rule is October 6, 2015, “to provide parties with an adequate opportunity to complete AAI investigations that may be ongoing [under the 2005 standard] and to become familiar with the updated industry standard (ASTM E1527-13).”

For more information on the AAI Rule and the updated ASTM 1527-13 standard, see our prior blog post.

-- 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, October 6, 2014

CEQA Alert: CEQA Does Not Apply to Approval of Proposed Railroad Operations – Express Preemption by ICCTA

California’s First Appellate District has held that federal law preempts CEQA’s application to the approval of proposed railroad operations. Although this was an issue of first impression for a California appellate court, the decision adopts the reasoning of a uniform line of decisions by federal courts and the Surface Transportation Board (STB) holding that the Interstate Commerce Commission Termination Act (ICCTA) broadly preempts state statutes requiring environmental review as a condition of railroad operations.
The decision in Friends of Eel River v. North Coast Railroad Authority et al. (September 29, 2014; 1st DCA Case No. A139222) arose from two separate actions challenging the reopening of rail service from Willits, in Mendocino County, to Lombard, in Napa County. The government agency charged with maintaining rail service on that line, the North Coast Railroad Authority (NCRA), initially prepared and certified an EIR, but later – following a legal challenge – passed a resolution rescinding certification of the EIR. NCRA explained that it had “mistakenly, but in good faith, believe[d] that it needed to complete” an EIR for resumed rail operations, but had since determined that the ICCTA expressly preempted application of CEQA to the project.
The Court of Appeal focused on the “expansive language” of ICCTA’s “broadly worded express preemption provision,” which gives the STB exclusive jurisdiction over transportation by rail carriers and the construction, acquisition, and operation of railroad tracks and facilities, even if located entirely in one state. The court found “persuasive and fully applicable to the case before us” a uniform line of federal court and STB cases concluding that state statutes requiring environmental review as a condition to railroad operations are preempted by the ICCTA.   
Although petitioners pursued several lines of attack to defeat the preemption argument, the court rejected all of them. Most importantly, the court ruled that the market participation doctrine – which precludes preemption where the state acts in a “proprietary” role as a market participant, rather than as a regulator – did not apply. According to the court, “[t]he aspect of CEQA that allows a citizen’s group to challenge the adequacy of an EIR when CEQA compliance is required is clearly regulatory in nature, as a lawsuit against a governmental entity cannot be viewed as part of its proprietary action, even if the lawsuit challenges that proprietary action.” The court acknowledged that the Third Appellate District reached a contrary conclusion concerning the market participation doctrine in another recent CEQA decision, but disagreed with that court’s analysis of the issue.
The court also rejected petitioners’ other arguments, holding that: 
  1. An agreement between NCRA and Caltrans that governed the process for obtaining state funding and included an environmental review provision did not obligate NCRA to complete an EIR.  Moreover, as non-parties to that agreement, petitioners had no standing to assert such a claim. 
  2. NCRA’s agreement to comply with CEQA with respect to certain work – which was contained in a consent decree reached in separate litigation – did not confer a contractual obligation on NCRA to prepare an EIR for the reopening of the rail line. And even if it did, petitioners, as nonparties to that consent decree, lacked standing to sue.
  3. Petitioners’ Tenth Amendment, judicial estoppel, and collateral estoppel arguments were without merit.
The decision is available here.

--Don Sobelman and Nicole Martin

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

Friday, September 19, 2014

Legislation Update: Governor Signs Groundwater Bills

On September 16, Gov. Jerry Brown signed into law the package of bills regulating groundwater that we recently wrote about here. The Governor’s press release announcing the signing outlines the following deadlines triggered by passage of the law:
  • By 2017, local groundwater management agencies must be identified.
  • By 2020, overdrafted groundwater basins must have sustainability plans.
  • By 2022, other high- and medium-priority basins not currently in overdraft must have sustainability plans.
  • By 2040, all high- and medium-priority groundwater basins must achieve sustainability.
 As we wrote previously, the Department of Water Resources must categorize each groundwater basin in the state as high-, medium-, low- or very low-priority by January 1, 2015.  Also, by June 1, 2016, the Department of Water Resources must adopt regulations for identifying the components of groundwater sustainability plans and for evaluating those plans and their implementation.  The law will take effect in January 2015.
- Samir Abdelnour
For more information, contact Estie Kus at emk@bcltlaw.com or (415) 228-5463; Samir Abdelnour at sja@bcltlaw.com or (415) 228-5443; or Dave Metres at dmm@bcltlaw.com or (415) 228-5488.

Thursday, September 18, 2014

Draft DTSC Work Plan Signals Expansion of California Green Chemistry Initiative

As part of its Safer Consumer Products Regulation (SCPR) under California’s Green Chemistry Initiative, the Department of Toxic Substances Control (DTSC) on September 13, 2014 issued its Draft Priority Product Three-Year Work Plan. Companies that manufacture or sell products within the seven categories identified in the draft Work Plan will need to pay close attention to the pre- and then final rulemaking process.

Under the SCPR, DTSC is required to:
  • identify products that contain one or more of the nearly 1200 “candidate chemicals” that have been identified by DTSC based on the risk that they may present to the environment or human health,
  • prioritize those products for review under an “alternatives analysis” to assess whether there are safer alternatives to the chemicals presently in use, and then
  • consider a number of possible “regulatory responses” based on the results of the alternatives analysis, which at its most extreme includes the possibility of banning the sale of the product in California. 
DTSC’s initial list of proposed “priority products,” which is still in the rule-making process, includes:
  • Spray Polyurethane Foam (SPF) Systems containing unreacted diisocyanates,
  • Children’s Foam Padded Sleeping Products containing Tris(1,3-dichloro-2-propyl) phosphate (TDCPP), and
  • Paint and Varnish Strippers with methylene chloride.
The seven broader categories of products that DTSC will review as part of the three-year Work Plan are:
  • Beauty, Personal Care and Hygiene Products (body wash and soaps, cosmetics, nail and hair care products, lotions, etc.),
  • Building Products—limited to paints, adhesives, sealants, flooring,
  • Household, Office Furniture and Furnishings—limited to those treated with flame retardants and/or stain resistant chemicals,
  • Cleaning Products,
  • Clothing,
  • Fishing and Angling Equipment, and
  • Office Machinery—e.g., printer inks, specialty paper, toner cartridges.
The Work Plan can be downloaded here. DTSC is holding preliminary Work Shops on September 25 in Sacramento, and September 29 in Cypress. Comments on the draft Work Plan are due by October 13, 2014, although DTSC acknowledges that implementation of the SCPR, and in particular selection of priority products, will be a long process, and that significant input from all stakeholders will be critical. 

-- Josh Bloom and Chris Jensen

For more information, please contact Josh Bloom at (415) 228-5406 or jab@bcltlaw.com; Chris Jensen at (415) 228-5411 or cdj@bcltlaw.com; or Samir Abdelnour at (415) 228-5443 or sja@bcltlaw.com.