Thursday, August 27, 2015

Federal Judge Puts Freeze on EPA’s Clean Water Act Rulemaking: Preliminary Injunction Halts Implementation of 'Waters of U.S.' Rule

In May of this year the U.S. Environmental Protection Agency (“EPA”) and the U.S. Army Corps of Engineers (“Corps”) issued the much-anticipated Waters of the United States rule (the “Rule”). The Rule redefines and expands federal jurisdiction over waters of the United States under the federal Clean Water Act.

The intent of the Rule, according to the United States, is to provide greater clarity over the jurisdictional reach of the Clean Water Act following a string of Supreme Court decisions limiting the reach of federal jurisdiction. See, e.g., Solid Waste Agency of Northern Cook County (SWANCC) v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001) and Rapanos v. United States, 547 U.S. 715 (2006). According to agriculture and industry groups, the Rule is an unprecedented expansion of federal authority that vastly increases the jurisdictional reach of the Clean Water Act, will have a widespread negative economic impact, and profoundly infringes on private property rights.

The Rule has been opposed in Congress and, via a July 28 letter, by officials in 31 states that have asked EPA and the Corps to delay implementation of the Rule. A number of states and business groups have already filed challenges to the rulemaking in federal district courts. For example, on July 10, 2015, the U.S. Chamber of Commerce, along with the National Federation of Independent Business, Portland Cement Association, State Chamber of Oklahoma and Tulsa Regional Chamber, filed a lawsuit challenging the rule in Oklahoma federal court. See Chamber of Commerce et al. v. EPA, Case No. 4:15-cv-00386 (D.Okla. July 10, 2015).

On August 10, 2015, North Dakota and 12 other states -- Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, South Dakota, and Wyoming -- sought a preliminary injunction from the District of North Dakota to prevent implementation of the Rule. North Dakota, et al. v. United States Environmental Protection Agency, et al., Case No. 3:15-cv-00059 (D. N.D. June 29, 2015). The plaintiffs argued that a preliminary injunction was needed to maintain the status quo while the Rule’s legal failings were addressed by the federal courts.

On Thursday, August 27, Judge Ralph Erickson issued the requested preliminary injunction in an 18-page order that can be read here. In issuing the preliminary injunction, Judge Erickson found it more likely than not that the EPA and the Corps had overstepped their authority in promulgating the Rule and had failed to comply with aspects of the Administrative Procedure Act. In balancing the potential harm of issuing a preliminary injunction, the Court concluded:
On balance, the harms favor the [plaintiff] States. The risk of irreparable harm to the States is both imminent and likely. More importantly delaying the Rule will cause the Agencies no appreciable harm. Delaying implementation to allow a full and final resolution on the merits is in the best interests of the public.
Order at 15.

This preliminary injunction is sure to be appealed by the United States and signals the first of many legal salvos over the legitimacy of the Rule.

-- Tom Boer

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

Friday, August 21, 2015

CEQA Alert: Extensive Proposed Revisions to CEQA Guidelines Released for Public Comment

On August 11, 2015, the Governor’s Office of Planning and Research (“OPR”) released a preliminary discussion draft of comprehensive revisions to the CEQA Guidelines (“Discussion Draft”).   

Revisions to the CEQA Guidelines are usually piecemeal, and made in response to either specific legislation amending the CEQA statute or court decisions interpreting CEQA. However, in 2013, OPR broadly solicited suggestions from stakeholders as to what changes to the CEQA Guidelines should be made. The Discussion Draft resulted from this process.

The Discussion Draft proposes revisions to 25 aspects of CEQA, broken down into three categories:  “Efficiency Improvements” (seven revisions), “Substance Improvements” (two revisions), and “Technical Improvements” (16 revisions). However, the fact that only two of the proposed revisions fall under the heading of “Substance Improvements” is somewhat misleading, as virtually all of the “Efficiency Improvements” would also substantively alter the Guidelines, with ramifications for both the environmental review process and post-review CEQA litigation. These substantive changes address a number of areas, including:
  • adoption and application of thresholds of significance;
  • determinations as to whether an activity is within the scope of a program EIR;
  • the contents of Guidelines Appendix G (Initial Study Environmental Checklist);
  • the consequences of a court decision finding a violation of CEQA;
  • analysis of energy impacts;
  • analysis of water supply impacts;
  • selection of the baseline conditions for impacts analysis;
  • deferral of mitigation; and
  • response to comments on a draft EIR.
While some of the proposed revisions merely attempt to harmonize the Guidelines with recent case law and legislative acts, other revisions go well beyond such considerations and will likely be controversial. Moreover, OPR has posed a number of questions for stakeholders in the Discussion Draft, which could lead to additional proposed revisions.

The Preliminary Draft is available here. Comments on the Draft Guidelines must be submitted to OPR by October 12, 2015.

For more information, contact Don Sobelman at (415) 228-5456 or des@bcltlaw.com, or Kathryn Oehlschlager at (415) 228-5458 or klo@bcltlaw.com.

Tuesday, August 4, 2015

CEQA Alert: CA Supreme Court Clarifies Duties of State Agencies in Funding Off-Site Mitigation

On August 3, the California Supreme Court released its second CEQA decision of 2015, addressing a key issue for state agencies undertaking projects that require off-site environmental mitigation. In City of San Diego v. Board of Trustees of the California State University (SC Case No. S199557) (“City of San Diego”), the Court clarified that a state agency may not reject as infeasible off-site mitigation via fair-share payment solely due to the lack of appropriations earmarked for that purpose by the State Legislature. In doing so, it affirmed the Court of Appeal’s decision directing the Board of Trustees of the California State University (“CSU Board”) to vacate its certification of an EIR for a major expansion of the San Diego State University (“SDSU”).

In 2007, the CSU Board prepared an environmental impact report and campus master plan revision (“EIR”) proposing several major construction projects on the SDSU campus (“the project”). The EIR identified significant cumulative traffic impacts at several off-campus locations in San Diego, and it estimated the project’s average “fair share” contribution to mitigate the increased congestion at 12 percent. However, the CSU Board stated that it could not commit to paying that fair share, because it was not certain whether the California Legislature would appropriate funding specifically for that purpose. For this reason, the CSU Board found that mitigation of the traffic impacts via fair-share payment was infeasible, and that the traffic impacts were therefore significant and unavoidable. The CSU Board certified the EIR based on a statement of overriding considerations.

In a unanimous opinion penned by Justice Werdegar, the Supreme Court revisited the Court’s decision in another case involving the CSU Board’s approval of a campus expansion project, City of Marina v. Board of Trustees of California State University (2006) 39 Cal.4th 341 (“Marina”). In Marina, which was also authored by Justice Werdegar, the Court held that the CSU Board’s duty to mitigate impacts extended beyond the boundaries of the campus, and that if it could not adequately mitigate those impacts by performing acts on the campus, “then to pay a third party . . . to perform the necessary acts off campus may well represent a feasible alternative.” However, the Court also noted that “[ ] a state agency’s power to mitigate its project’s effects through voluntary mitigation payments is ultimately subject to legislative control; if the Legislature does not appropriate the money, the power does not exist.” 

In the instant case, the CSU Board relied on the italicized language above in determining that the uncertainty of earmarked appropriations by the Legislature rendered mitigation by fair-share payment infeasible. The Supreme Court held that, in doing so, the CSU Board had erroneously interpreted Marina, for a number of reasons:

  1. The italicized language is “dictum” that appeared in a paragraph in the decision that “imagines possible limitations on our holding that the Board shared with other agencies the responsibility to mitigate the off-site environmental effects of its project.”
  2. The Marina dictum “is simply an overstatement,” as a public agency “has access to all of its discretionary powers and not just the power to spend appropriations.” Moreover, in the case of CSU, the agency has some discretion over use of general support appropriations for capital projects and has access to non-state funds.
  3. Neither CEQA nor any other decision interpreting the statute suggests that mitigation costs for a project funded by the Legislature cannot be included in the project’s budget and paid for with funds appropriated for the project.
  4. No provision of CEQA “conditions the duty of a state agency to mitigate its projects’ environmental effects on the Legislature’s grant of an earmarked appropriation.” Moreover, the Legislature has expressly subjected the CSU Board’s decisions on campus master plans to CEQA, including the requirement for mitigation of environmental impacts.
  5. CEQA draws no distinction between on-site and off-site environmental impacts. Public agencies are required to mitigate or avoid significant effects of a project on the “environment,” which is defined as “the physical conditions which exist within the area which will be affected by a proposed project.” If on-site mitigation measures can be funded through the project budget without an earmarked appropriation (as the CSU Board had determined in the EIR), “then so too can off-site mitigation measures.”
In addition, the Court noted that “unreasonable consequences” would follow from the CSU Board’s interpretation of Marina, and CEQA’s “fundamental statutory directive” would be impaired. Finally, the Court rejected three new arguments presented by the CSU Board, finding that Education Code sections 67504 and 66202.5 and Government Code section 13332.15 did not support the Board’s determination.

Overall, the City of San Diego decision provides welcome clarity on an important and recurring issue of CEQA interpretation that the Court itself had created with the Marina decision.

-- Don Sobelman

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

Monday, July 6, 2015

State Water Board Extends Storm Water Permit Deadline to Aug. 14

On Wednesday, July 1, the California State Water Resources Control Board (SWRCB) announced it would extend the deadline for enrolling under the new Industrial General Permit (IGP) for Storm Water Discharges (Permit No. 2014-0057-DWQ) until close of business on Friday, August 14, 2015. The SWRCB also pushed back the deadline for submittal of 2014-15 annual storm water reports under the now-expired 1997 IGP (Permit No. 97-03-DWQ) to August 14.

The SWRCB blamed “ongoing technical difficulties” associated with users attempting to submit annual reports and permit registration documents to its online database, known as SMARTS (Storm Water Multiple Application and Report Tracking System).

Despite the failure of SMARTS to accommodate the large number of users seeking to comply with the new IGP, the SWRCB nevertheless indicated that “[w]hile technical issues are being resolved, the General Permit is in effect.” Draft Order 2015-XXXX-EXEC Amending Order 2014-0057-DWQ (Hearing date August 4, 2015). Thus, entities subject to the new IGP will need to ensure they are in compliance with the substantive requirements of the 2014 permit and maintain all necessary documents, while they wait to access SMARTS for registration.

Barg Coffin attorneys have previously analyzed the key changes and requirements of the new IGP here, here, and here.

--Don Sobelman and Dave Metres

For more information, contact Don Sobelman at (415) 228-5456 or des@bcltlaw.com, or Dave Metres as (415) 228-5488 or dmm@bcltlaw.com.

Tuesday, June 30, 2015

Supreme Court Overturns EPA Limits on Power Plants

On June 29, the United States Supreme Court nixed the United States Environmental Protection Agency’s 2012 Mercury and Air Toxics Standard, limiting emissions of mercury and other pollutants from power plants. The challengers argued that the $9.6 billion cost of complying with the standard outweighed the benefit of its application, and that EPA impermissibly failed to consider cost in deciding whether to regulate toxic emissions from power plants.

The Supreme Court held that EPA abused its discretion by ignoring cost, even under the deferential standard established in Chevron USA Inc. v. Natural Resources Defense Council, Inc. The Court held that in directing EPA to regulate power plants if it “finds such regulation is appropriate and necessary,” Section 112 of the Clean Air Act requires “at least some attention to cost.” Writing for the majority, Justice Scalia said, “One would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”

EPA argued that it is not required to consider cost in the initial decision regarding whether to regulate power plants because it can consider cost when deciding on the extent of regulation. The Court rejected this argument, finding that “[c]ost may become relevant again at a later stage of the regulatory process, but that possibility does not establish its irrelevance at this stage.” The majority found that cost must be considered, but went on to say that it is within the agency’s discretion to consider how to evaluate costs, and even what constitutes a “cost.” The Court stated that cost “includes more than the expense of complying with regulations; any disadvantage could be termed a cost.”

--Kathryn Oehlschlager

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

Monday, June 29, 2015

Irrigation District Sues, Says State Board Lacks Jurisdiction to Curtail Senior Water Rights

On June 26, the Byron-Bethany Irrigation District (BBID) filed a petition for writ of mandate in Contra Costa County Superior Court requesting that the Court set aside the State Water Resources Control Board’s June 12, 2015 “notice of curtailment,” requiring hundreds of senior water rights-holders to cease diverting water from the Sacramento-San Joaquin Delta.

The BBID website states that BBID is “ a multi-county special district serving parts of Alameda, Contra Costa, and San Joaquin Counties. The District serves a total area of 47 miles and 30,000 acres.” BBID’s service area includes the community of Mountain House, which relies exclusively on BBID for its water supply.

The Petition alleges that the State Board lacks jurisdiction to curtail pre-1914 water rights, that the curtailment notice violates the California Constitution with regard to beneficial use of water, and that BBID was denied constitutional due process. 

“Enough is enough,” said BBID Board President Russell Kagehiro in the District’s press release. He went on to refer to the State Board’s action as “irresponsible and unnecessary.”

Meanwhile, also on June 26, the State Board issued a second curtailment notice to senior rights-holders, including the City and County of San Francisco.

--Kathryn Oehlschlager

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

Wednesday, May 27, 2015

Clean Water Act: New Rule Significantly Expands Reach of Federal Jurisdiction

On May 27, 2015, the Environmental Protection Agency (“EPA”) and the U.S. Army Corps of Engineers (“Corps”) finalized the long-anticipated Clean Water Rule. The Rule defines the term “waters of the United States” as used by the Clean Water Act, 33 U.S.C. § 1251 et seq. (the “CWA”). The impact of the definition is to prescribe the scope of federal jurisdiction for regulating activity associated with waters of the United States. The Rule will be effective 60 days after publication in the Federal Register. Although the Rule has not yet been published in the Federal Register, an advance draft of the final rule can be accessed here

According to the government, the intent of the Rule is to make the process of identifying “waters” subject to the requirements imposed by the CWA “easier to understand, more predictable, and consistent with the law and peer-reviewed science, while protecting the streams and wetlands that form the foundation of our nation’s water resources.” Clean Water Rule Preamble at 7. As a practical matter, the new Rule substantially extends the extent of claimed federal jurisdiction over water resources nationwide, will result in significant costs for the regulated community, and, as it is applied, will likely be subject to numerous legal challenges.

The extent of federal CWA jurisdiction has been addressed in three seminal Supreme Court cases. In the first, United States v. Riverside Bayview Homes, 474 U.S. 121 (1985), the Supreme Court issued an unanimous opinion deferring to the Corps’ ecological judgment and upholding the inclusion of certain adjacent wetlands in the regulatory definition of “waters of the United States.” In Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001), the Court struck down the government’s overbroad interpretation of the CWA extending jurisdiction over non-navigable intrastate ponds on the basis that the ponds supported migratory bird populations. Finally, in Rapanos v. United States, 547 U.S. 715 (2006), a split court addressed the extent of permissible CWA jurisdiction over waters that are not navigable in a traditional sense. The plurality Rapanos opinion held that federal jurisdiction could only extend over non-navigable waters if they exhibit a relatively permanent flow or, in the case of wetlands, where there is a continuous surface water connection between the wetland and a relatively permanent waterbody. Justice Kennedy’s concurring opinion held that CWA jurisdiction extends to wetlands and non-navigable waterbodies provided that there is a “significant nexus” to a traditional navigable waterway.

In response to the Supreme Court cases addressing CWA jurisdiction,  EPA and the Corps issued guidance in 2003 (post-SWANCC) and 2008 (post-Rapanos) seeking to clarify the extent of federal jurisdiction over waterways and wetlands. According to EPA, this guidance was insufficient, requiring complex and resource intensive “case-specific” jurisdictional determinations that resulted in inconsistent interpretations of CWA jurisdiction and perpetuated ambiguity over the extent of federal authority. Clean Water Rule Preamble at 13. EPA initiated a rulemaking to adopt the Clean Water Rule to define “waters of the United States” in an effort to “make the process of identifying waters protected under the CWA clearer, simpler, and faster.” Id.

Before issuing the current draft Rule, EPA and the Corps published a proposed rule addressing the scope of CWA jurisdiction in April 2014. The government received public comments for 200 days and, according to the government, over 1 million public comments were received. In adopting the final Rule, EPA and the Corps relied substantially upon a report -- Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence -- finalized by EPA’s Office of Research and Development in early 2015. That Report, a copy of which is available here, is based upon the government’s review of more than 1,200 peer-reviewed publications. According to EPA, the Science Advisory Board also reviewed the adequacy of the Report and the technical basis for the rulemaking.

According to EPA, the new Rule accomplishes the following:
  • Clearly defines and protects tributaries that impact the health of downstream waters.” The Rule concludes that tributaries are “waters of the United States” and extends federal jurisdiction over any “tributary” that shows physical features of flowing water (e.g., a bed, bank, and ordinary high water mark). Clean Water Rule Preamble at 19.
  • Provides certainty in how far safeguards extend to nearby waters.” The Rule provides that CWA jurisdiction extends to “adjacent waters.” Those waters are defined as waters or wetlands that are “bordering, contiguous, or neighboring, including waters separated from other ‘waters of the United States’ by constructed dikes or barriers, natural river berms, beach dunes and the like.” Clean Water Rule Preamble at 20.
  • The term “neighboring,” is defined in the rule to include: (i) waters located in whole or in part within 100 feet of the ordinary high water mark of a traditional navigable water, interstate water, the territorial seas, an impoundment of jurisdictional water, or a tributary…”; (ii) “floodplain waters,” meaning “waters located in whole or in part in the 100-year floodplain and  that are within 1,500 feet of the ordinary high water mark of a traditional navigable water, interstate water, the territorial seas, an impoundment, or a tributary …”; and (iii) waters located in whole or in part within 1,500 feet of the high tide line of a traditional navigable water or the territorial seas and waters located within 1,500 feet of the ordinary high water mark of the Great Lakes. Id.
  • Protects the national’s regional water treasures.” The Rule identifies five types of isolated “waters” that will now be subject to “a case-specific analysis” to determine if a significant nexus exists with a “water of the United States”: (i) Prairie potholes, (ii) Carolina and Delmarva bays, pocosins, western vernal pools in California, and Texas coastal prairie wetlands. The Rule requires that EPA and the Corps analyze such “waters” “‘in combination’ (as a group, rather than individually) in the watershed…” Clean Water Rule Preamble at 22.
  • Focuses on Streams, not ditches.” The Rule exempts certain ditches from CWA jurisdiction. This exclusion extends to ditches with “ephemeral flow that are not a relocated tributary or excavated in a tributary, and ditches with intermittent flow that are not a relocated tributary, or excavated in a tributary, or drain wetlands.” Clean Water Rule Preamble at 25. To the extent that ditches are not exempted by the terms in Rule, they are subject to regulation under the CWA.
EPA has prepared the following chart showing how the new definitions adopted by the Rule will alter the extent of federal jurisdiction over water resources as compared to prior agency interpretations and the terms provided in the proposed rule:

The regulated community, including industry and agricultural associations, have concluded that the Rule will substantially increase the geographic reach of CWA jurisdiction. Illustrations prepared by the Farm Bureau, showing how the new definitions will extend the geographic scope of CWA authority, are available here. For example, many small, isolated geographic areas with wetland characteristics that would have fallen outside CWA jurisdiction under existing Supreme Court precedent and prior agency interpretations will now be regulated or, at a minimum, require a case-by-case evaluation for jurisdiction (e.g., vernal pools, prairie potholes, etc.) that is both time-consuming and expensive.

Although EPA and the Corps argue that the Rule “does not interfere with or change private property rights, or address land use,” as a practical matter the Rule will require many property owners that were not previously regulated by the CWA to engage with the Corps to determine whether there are jurisdictional waters and wetlands on their property and, if so, to pursue permits prior to any development or other activities within the regulated area.

Expected consequences as a result the Rule include:
  • Expanded Jurisdiction and Burden on the Regulated Community. EPA and the Corps, via adoption of the Rule, seek to dramatically expand the geographic reach of federal jurisdiction under the CWA. As a result, many property owners will now be regulated by the CWA for the first time. Prior to development or intrusive activities in potentially regulated areas, those property owners will need to retain consultants to assess the extent of federal jurisdiction, potentially seek an approved jurisdictional determination from the Corps and/or a permit, and either mitigate potential impacts or alter development on, or use of their private property. For some property owners, activity that was previously lawful on their private property will now be subject to CWA jurisdiction. For example, existing mining (e.g., sand, gravel, etc.) in an area with prairie potholes or vernal pools will likely require a jurisdictional evaluation prior to continued operation.
  • Regulatory Confusion. In the short-term, there is likely to be substantial confusion among regulators, as they come up to speed with the requirements in the new Rule, and throughout the regulated community as the new Rule is implemented. This confusion may result in additional enforcement activity. There is also likely to be confusion about whether the new Rule will apply to pending permit applications and existing, unresolved enforcement actions.
  • Slower Permitting. Although EPA and the Corps claim that the Rule will reduce ambiguity, in the short term we expect confusion caused by the new definitions will further slow the permitting process for all. Additionally, because of the substantial increase in the geographic reach of CWA jurisdiction, an increase in permit applications (or requests for approved jurisdictional determinations) will likely tax Corps and EPA resources. Delay in issuing permits and approved jurisdictional determinations will result in substantial transaction costs and other economic damages to the regulated community.
  • Legal Challenges to Scope of the Rule. We expect legal challenges to the Rule, both in connection with the rulemaking itself, and as the Rule is applied on a case-by-case basis. It will likely take years for legal precedent to accumulate to the point where the full extent of CWA jurisdiction claimed by the Rule is clearly specified and understood.
  • Congressional Opposition. Republicans in Congress have already started efforts to overturn the Rule. On May 12, for example, the House, passed legislation (by a vote of 261-155) that would require EPA and the Corps to withdraw the Rule. The Senate is exploring similar legislation. Although the Obama Administration has already stated that President Obama would veto any such legislation, there is likely to be a continuing political show-down over the Rule through the 2016 election and beyond.
-- Tom Boer

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