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.

Tuesday, December 9, 2014

US EPA Appears to Put TSCA Fracking Rule On Ice

A November 2014 report on anticipated regulatory actions by the US Environmental Protection Agency (“EPA”) indicates that development of a potential rule requiring manufacturers and processors of fracking chemicals to report chemical data, including health and safety studies, is a low priority and is unlikely to be pursued by EPA in the short-term.

In 2011, a coalition of environmental groups petitioned EPA to promulgate a rule specific to fracking chemicals and mixtures used in oil and gas exploration and production. The petition asked the agency to regulate fracking chemicals pursuant to its authority under the Toxic Substances Control Act (“TSCA”).

More specifically, the petition asked EPA to adopt a rule:
  • Requiring, pursuant to Section 4 of TSCA, that manufacturers and distributors of fracking chemicals conduct toxicity testing and make those testing results available to the public; and
  • Imposing, pursuant to Section 8 of TSCA, recordkeeping and reporting requirements for fracking chemicals used in oil and gas exploration and production.
Shortly after receiving the petition, EPA concluded that the petitioners failed to “set forth sufficient facts” to support the request for a rule pursuant to Section 4 of TSCA. EPA further explained the basis for rejecting the request for a Section 4 rulemaking in a July 11, 2013, Federal Register notice (78 FR 41,768). In the same notice, EPA announced its intent to proceed with the publication of an Advance Notice of Proposed Rulemaking (“ANPR”) as a first step in evaluating the petitioners’ request that EPA adopt recordkeeping and reporting requirements for fracking chemicals pursuant to EPA’s authority provided by Section 8 of TSCA.

EPA published its ANPR addressing the potential regulation of fracking chemicals in May 2014 (79 FR 28,664). According to EPA, the purpose of the ANPR was to “initiat[e] a public participation process to seek comment on the information that should be reported or disclosed for hydraulic fracturing chemical substances and mixtures and the mechanism for obtaining this information.” The public comment period for the ANPR was extended by EPA and closed in September of this year. Nearly 2,500 public comments on the ANPR were received by EPA and have been placed into the administrative record.

If EPA chooses to proceed with a rulemaking, the Agency’s next steps would entail: (i) reviewing the ANPR public comments; (ii) developing a specific proposed rule to address fracking chemicals pursuant to EPA’s authority under Section 8 of TSCA; and (iii) publishing the proposed rule in the Federal Register for public comment.

On November 21, 2014, EPA published its semi-annual Regulatory Plan, which highlights priority areas for regulatory development. The TSCA rulemaking for fracking chemicals was not included as a priority in the Regulatory Plan. EPA’s summary of the status of a potential rulemaking, instead, provides the following information:
  • EPA placed the potential rulemaking into its “long-term action” category. In submitting regulatory plans, agencies generally categorize actions into one of five stages: pre-rule, proposed rule, final rule, completed action, or long-term action. It is generally accepted that EPA lists rules in the long-term action category when it does not expect to take any significant steps to advance a potential rule over the next twelve months, and thus considers the rule to be a lower priority in the short-term.
  • EPA indicates that the “Next Action [is] Undetermined” for the potential rulemaking, states that no legal deadlines apply to a potential rulemaking, and provides no specific date for future agency action on a potential rule.
  • EPA classifies a potential rulemaking as “Other Significant,” which applies to those regulations that are considered by EPA to have a “substantial impact on the public interest,” but are not “Economically Significant,” i.e., do not have an annual effect of at least $100 million.
It appears unlikely, therefore, that EPA will publish a proposed rule to impose recordkeeping and reporting requirements for fracking on the oil and gas industry anytime in 2015. In the meantime, a number of states -- including, recently, California and Colorado -- have adopted recordkeeping, reporting, and/or public disclosures requirements related to fracking operations. For the time being, therefore, it appears that States, and not EPA, will take the lead in regulating chemical usage related to fracking operations.

Although EPA has put the brakes on proposing a TSCA rule applicable to fracking chemicals, EPA will continue to evaluate fracking. The Agency, for example, is proceeding with a comprehensive study originally announced in March 2010 that is intended to “better understand any potential impacts of hydraulic fracturing for oil and gas on drinking water resources.”  According to EPA, “work is underway” to prepare a draft report for public comment and peer review. Further information on the status of that study, which was requested by Congress via a fiscal year 2010 Appropriations Committee Conference Report, is available by clicking here.
 
--Tom Boer

For more information, contact Tom Boer at jtb@bcltlaw.com, or (415) 228-5413.

Thursday, December 4, 2014

DTSC’s Lien Procedure Found to Violate Due Process

In Van Horn v. Department of Toxic Substances Control (“DTSC”), a California Court of Appeal found that DTSC’s procedure for imposing liens on property under the California “Superfund” law violates due process of law. Specifically, the court noted that DTSC’s procedure fails to allow an affected landowner to dispute the amount of a lien, the extent of property burdened by the lien, and the characterization of the landowner as a responsible party.

Applying a seminal decision on due process hearing requirements, Mathews v. Eldridge, 424 U.S. 319 (1976), the court ruled that plaintiff Marilyn Van Horn (“Plaintiff’) could state a cause of action for violation of due process, and reversed in part the lower court’s decision to sustain DTSC’s demurrer without leave to amend.

Section 25365.6 of the Carpenter-Presley-Tanner Hazardous Substance Account Act (“HSAA”) permits DTSC to impose liens on real property owned by responsible parties for costs incurred by DTSC in connection with environmental removal and remedial actions. The HSAA, however, requires that DTSC follow adequate due process when imposing such liens. To effectuate section 25365.6 of the HSAA, DTSC established a “Lien Placement Policy and Procedure” (“Lien Policy”) which authorizes lien placement if a hearing officer determines that the lien is consistent with five statutory elements. These five statutory elements examine whether:
  • the property owner was sent notice of liability by mail;
  • the property is owned by a person who is liable to DTSC for costs related to the property;
  • the property was subject to or affected by a removal or remedial action;
  • DTSC has incurred costs with respect to an action under the HSAA or CERCLA; and
  • the record contains any other information which is sufficient to show that the lien notice should not be filed.
Plaintiff owned a multi-parcel 64-acre property, which included an 11-acre portion containing arsenopyrite mine tailings. In 1998, DTSC constructed a fence around the property and posted a lien for $245,306.64. In 2007, DTSC made an “imminent or substantial endangerment assessment” concerning the property. After twice inspecting the property, DTSC advised Plaintiff in 2011 that it intended to increase its lien from $245,306.64 to $833,368.19 and notified Plaintiff of her right to a hearing.
 
Plaintiff requested a hearing on the following issues: (1) the propriety of the lien increase; (2) the amount of the lien increase; (3) the properties to be covered by the proposed lien; and (4) the information obtained by DTSC justifying the work it performed. In response, the hearing officer found that the lien increase was consistent with the five elements set forth in the Lien Policy, but indicated that the hearing was not intended to, and did not, take into account issues raised by Plaintiff outside of the five elements.
 
In holding that the implementation of the Lien Policy violated due process, the court applied the threefold due process inquiry set forth in Mathews v. Eldridge. That inquiry requires a court to balance: (1) the private interest affected by an official action; (2) the risk of an erroneous deprivation and the probable value of additional safeguards; and (3) the government’s interest.
 
In applying Mathews, the court found private property interests were significantly affected by DTSC’s Lien Policy, noting potential clouding of title, impaired alienability of property, tainted credit ratings, and financing problems. The court also found a high risk of erroneous deprivation, and significant value of additional safeguards. In analyzing the government’s interest, the court found that providing the impacted landowner a meaningful opportunity to dispute the lien was not unduly burdensome in either fiscal or administrative terms.
 
Based on the Mathews inquiry, the court concluded that DTSC’s procedure violated due process by failing to allow the affected landowner to dispute: (1) the amount of the lien or the lien increase; (2) the extent of the property burdened by the lien or the lien increase; and (3) the characterization of the landowner as a responsible party rather than an innocent landowner. As a result, the court reversed the judgment of dismissal and directed the trial court to issue a writ of mandate requiring DTSC to remove the lien increase, and/or hold a hearing at which Plaintiff would be allowed to challenge the amount of the lien increase and the properties subjected to the lien.
 
***
 
Interestingly, the court noted that a similar lien provision in CERCLA was found unconstitutional in Reardon v. United States, 947 F.2d 1509, 1518 (1st Cir. 1991). Thus, this case, like Reardon, reflects the willingness of courts to reject  hearing procedures established by environmental regulatory agencies that do not adequately protect the private property rights of owners.
 
 
For more information, contact Stephen C. Lewis at (415) 228-5480 or scl@bcltlaw.com, or Sherry E. Jackman at (415) 228-5412, or sej@bcltlaw.com.

Monday, December 1, 2014

CEQA Alert: Court of Appeal Rules Against San Diego Agencies in Two Separate CEQA Challenges Involving Greenhouse Gas Emissions Reduction Planning Documents

Two recent decisions by California’s Fourth Appellate District highlight the CEQA compliance challenges facing local governments charged with implementing state and local greenhouse gas (GHG) emissions reduction mandates.

Cleveland National Forest Foundation et al. v. San Diego Association of Governments et al.  (November 24, 2014, 4th DCA Case No. D063288) involved a challenge to the program Environmental Impact Report (EIR) prepared by the San Diego Association of Governments (SANDAG) for its 2050 Regional Transportation Plan/Sustainable Communities Strategy (RTP/SCS). The Sustainable Communities and Climate Protection Act of 2008 (SB 375) requires Metropolitan Planning Organizations such as SANDAG to prepare “sustainable communities strategies” as part of their transportation plans, outlining how the region will meet GHG emissions reduction targets established by the California Air Resources Board. SANDAG’s RTP/SCS was the first sustainable communities strategy adopted in the state pursuant to SB 375.

Two of the three justices on the appellate panel concluded that the EIR for the RTP/SCS was deficient in every way alleged by the petitioners challenging the document – including with respect to a number of issues that the trial court did not even address. Most importantly, the justices held that the EIR’s failure to analyze the inconsistency between the RTP/SCS and Executive Order S-3-05 – the precursor to the California Global Warming Solutions Act of 2006 (AB 32) and SB 375 – rendered the EIR inadequate as an informational document under CEQA. Specifically, although Executive Order S-3-05 called for a continuing decrease in the state’s greenhouse gas emissions after 2020, the RTP/SCS acknowledges that implementation of the plan would result in increased regional emissions after 2020.

SANDAG argued that the EIR’s greenhouse gas emissions analysis complied with CEQA because the agency utilized the significance thresholds specified in CEQA Guidelines section 15064.4(b) to evaluate those impacts. Section 15064.4(b) provides: “A lead agency should consider the following factors, among others, when assessing the significance of impacts from greenhouse gas emissions on the environment: (1) The extent to which the project may increase or reduce greenhouse gas emissions as compared to the existing environmental setting; (2) Whether the project emissions exceed a threshold of significance that the lead agency determines applies to the project [; and] (3) The extent to which the project complies with regulations or requirements adopted to implement a statewide, regional, or local plan for the reduction or mitigation of greenhouse gas emissions. Such requirements must be adopted by the relevant public agency through a public review process and must reduce or mitigate the project’s incremental contribution of greenhouse gas emissions. If there is substantial evidence that the possible effects of a particular project are still cumulatively considerable notwithstanding compliance with the adopted regulations or requirements, an EIR must be prepared for the project.”

According to the Court, although a lead agency generally has discretion to select which significance thresholds it will utilize to evaluate impacts under CEQA, its reliance on the significance thresholds specifically identified in Section 15064.4(b) for GHG emissions impact analysis may not be enough. In this case, the Court determined that SANDAG was obligated to consider the consistency of the RTP/SCS with Executive Order S-3-05 as part of its impact analysis, despite the absence of any such requirement in the Guidelines. “Consequently, the use of the Guideline’s thresholds does not necessarily equate to compliance with CEQA, particularly where, as here, the failure to consider the transportation plan’s consistency with the state climate policy of ongoing emissions reductions reflected in the Executive Order frustrates the state climate policy and renders the EIR fundamentally misleading.”

The Court also held that the EIR was deficient because it omitted discussion of feasible mitigation measures that could substantially lessen the RTP/SCS’s significant GHG impacts, and because it did not include any alternative that could significantly reduce total vehicle miles traveled.

Justice Benke penned a strong dissent, which asserts that the decision reflects an improper intrusion into the discretion of lead agencies trying to implement the requirements of SB 375: “This insinuation of judicial power into the environmental planning process and usurping of legislative prerogative is breathtaking.” 

If this decision stands, lead agencies across the state will face significant uncertainty as to the proper analysis of GHG emissions under CEQA – which is exactly the uncertainty that Guidelines section 15064.4 was intended to resolve.

A second case, Sierra Club v. County of San Diego (Filed October 29, 2014; Certified for Publication November 25, 2014; 4th DCA Case No. D064243), arose from the County’s attempt to implement a mitigation measure adopted as part of its 2011 general plan update. The program EIR adopted for that update included “Climate Change Mitigation Measure CC-1.2,” which required the County to prepare a “climate action plan” (CAP) that would include detailed GHG emissions reduction targets and deadlines and “comprehensive and enforceable GHG emissions reductions measures that [would] achieve” specified GHG reductions by 2020. In 2012, the County adopted a CAP along with guidelines for determining the significance of GHG emissions (“CAP and Thresholds” project). The County prepared an addendum to the program EIR regarding the CAP and Thresholds project and then adopted the project with no further environmental review. The Sierra Club filed suit, alleging that the CAP did not meet the requirements of Mitigation Measure CC-1.2 and that an EIR should have been prepared for the CAP and Thresholds project.

The Court of Appeal held that the County violated CEQA when it approved the CAP and Thresholds project because: (i) the CAP failed to comply with the requirements of Mitigation Measure CC-1-2, as it did not include enforceable GHG emissions reductions requirements and contained no detailed deadlines for reducing GHG emissions; (ii) the County failed to make requisite findings regarding the environmental  impacts of the CAP and Thresholds project and made the erroneous assumption that the project was the same as the project analyzed in the 2011 program EIR; (iii) the County failed to incorporate mitigation measures in the CAP, which is a plan-level document under CEQA that requires such measures; and (iv) substantial evidence supported a fair argument that the County should have prepared an EIR for the CAP and Thresholds project.

These two appellate decisions illustrate how attempts by local government to address GHG emissions in the CEQA context face significant hurdles, as the legal framework continues to evolve.

--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, November 24, 2014

Fracking Preemption Fight to Play Out in San Benito County

It appears that San Benito County will be the venue for the much-anticipated legal battle over whether local jurisdictions in California can ban hydraulic fracturing. In early November, San Benito County passed a voter-sponsored initiative banning fracking and related practices on a county-wide basis. Mendocino County also passed a ban, while a similar ordinance in Santa Barbara was soundly defeated.
 
On November 24, Citadel Exploration filed an administrative claim against the County seeking $1.2 billion in alleged damages caused by the ban, apparently based on the estimated 20-40 million barrels of oil Citadel says it could have extracted in the area over the next several decades. The claim is a prerequisite to a lawsuit against the County. County Supervisors have scheduled a press conference for Tuesday morning, November 25 at 9:30 a.m. to address the claim.

Whether local jurisdictions can ban fracking outright is not a simple question. It’s clear that the State Department of Oil, Gas, and Geothermal Resources (DOGGR) has exclusive authority to regulate subsurface activities relating to oil and gas extraction, and DOGGR takes the position that this authority extends to ancillary extraction activities on the surface.

Consistent with DOGGR’s position, the oil industry is expected to argue that: (1) a County-wide ban is not a proper exercise of police power, and (2) local fracking bans are preempted by the state’s passage of Senate Bill 4 and its comprehensive state regulatory scheme governing all aspects of hydraulic fracturing.

--Kathryn Oehlschlager

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