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.

UPDATE - March 13, 2015: On December 29 and December 30, 2014, two petitions for reconsideration of the STB’s December 12, 2014 decision were submitted to the STB - one by a California resident and the other by a group that included Kern and King Counties, the City of Shafter, and several organizations. The STB has not yet ruled on those petitions.

On February 9, 2015, two separate petitions for review of the STB’s December 12, 2014 decision were filed in the Ninth Circuit and D.C. Circuit Courts of Appeal. The D.C. Circuit challenge was filed by the California nonprofit corporation, Dignity Health, one of the parties that filed the December 29, 2014 petition for reconsideration with the STB. The Ninth Circuit challenge was filed by a subset of the other parties to the December 29, 2014 petition for review, including Kings County, Kern County, and several nonprofit corporations. The STB filed motions to dismiss for lack of jurisdiction in both of the federal court actions in early March. The STB argued that the federal courts lack jurisdiction because the STB’s decision is not a final order as it has not yet ruled on the petitions for reconsideration filed at the administrative level.
 

--Don Sobelman and Nicole Martin

 

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.

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.

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.

 

--Stephen C. Lewis and Sherry E. Jackman

 

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.

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.

UPDATE - March 13, 2015: On March 11, 2015, the California Supreme Court granted the petition for review filed by the San Diego Association of Governments and the San Diego Association of Governments Board of Directors in Cleveland National Forest Foundation v. San Diego Association of Governments. The issue to be briefed and argued is limited to the following question: Must the environmental impact report for a regional transportation plan include an analysis of the plan's consistency with the greenhouse gas emission reduction goals reflected in Executive Order No. S-3-05 to comply with the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.)?

A petition for review in Sierra Club v. County of San Diego is pending, with the time allotted for the Supreme Court to grant or deny review extended until April 3, 2015.

--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.

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.

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.

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

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.

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.

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.

 

UPDATE: On December 10, 2014, the California Supreme Court granted the petition for review filed by plaintiffs and appellants Friends of Eel River and Californians for Alternatives to Toxics. 

--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.

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.

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.

Historic Bills Designed To Sustainably Manage California’s Groundwater Head To Governor

Last Friday, the California Legislature passed three bills that provide for the regulation of groundwater for the first time in the state’s history. Once signed by Gov. Jerry Brown, the bills—currently known as AB 1739 (Dickinson), SB 1168 (Pavley), and SB 1319 (Pavley)—will collectively constitute the Sustainable Groundwater Management Act (the “Act”). The Act will establish as state policy that California’s groundwater resources are to be “managed sustainably for long-term reliability and multiple economic, social and environmental benefits for current and future beneficial uses.” To effectuate this policy, the Act creates a framework for sustainable groundwater management that will be implemented at the local or regional level, but provides the state authority to act as a backstop.

Under the Act, the Department of Water Resources (the “Department”) must categorize each groundwater basin as high-, medium-, low- or very low-priority by January 1, 2015. According to the Department’s website, there are currently 431 groundwater basins delineated within California. By June 1, 2016, the Department must adopt regulations for identifying the components of groundwater sustainability plans and for evaluating those plans and their implementation.

Local and regional agencies with authority over “high-priority” or “medium-priority” basins will be required to develop and implement groundwater sustainability plans, or, in the alternative, demonstrate existing sustainable management pursuant to an adjudicated action. High- or medium-priority basins that are “subject to critical conditions of overdraft” must be managed under groundwater sustainability plans by January 1, 2020, with all remaining high- or medium-priority basins subject to sustainability plans by January 1, 2022. If a local or regional agency fails to adopt an adequate groundwater sustainability plan for a specified basin, the California State Water Resources Control Board will have the authority to develop an interim plan until the local or regional agency is prepared to assume management of the basin.

Among other provisions, the Act will also authorize groundwater sustainability agencies to impose fees to fund costs of their sustainability programs; require registration of groundwater extraction facilities and regulate extractions therefrom; and obtain inspection warrants and conduct inspections of facilities to determine compliance with a management plan.

The implications of this groundbreaking legislation, which Gov. Brown is expected to sign into law, will be far-reaching for California’s groundwater users.

- Estie Kus, Samir Abdelnour, Dave Metres

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.

Ninth Circuit Rejects Environmental Groups’ RCRA Claims Against Railyard Operators

The Ninth Circuit has affirmed the dismissal of claims by environmental groups attempting to characterize air emissions from California railyards as “disposal” of waste under the Resource Conservation and Recovery Act (RCRA). 

In 2011, a coalition of environmental groups led by the NRDC filed a complaint in federal district court in Los Angeles alleging that particulate emissions associated with diesel locomotives at railyards in San Bernardino and Riverside Counties violated RCRA because those emissions constitute “disposal” of waste, and are therefore subject to the statute, which governs the disposal of solid and hazardous waste. The district court dismissed the plaintiffs’ complaint, concluding that the Clean Air Act, and not RCRA, applies to the emissions from the railyards.

The Ninth Circuit affirmed the district court’s dismissal in an opinion dated August 20, 2014. The court’s opinion cited the plain meaning of the RCRA statute—which excludes “emitting” from its definition of “disposal”—as well as the statute’s legislative history, which the court characterized as demonstrating an intent “to reduce the volume of waste that ends up in our nation's landfills.”

In reaching this conclusion, the court rejected the plaintiffs’ invitation to fill a “gap” in the statutory scheme for regulating air emissions from railyards, concluding that the particular emissions alleged to originate from the railyards are “indirect sources” of air pollutants that “fall entirely outside the ambit of federal regulation.”  The court did, however, note that diesel locomotives are regulated under EPA regulations implementing the 1990 amendments to the Clean Air Act, and that states may regulate indirect sources such as railyards through provisions of State Implementation Plans (SIPs) adopted under the Clean Air Act. 

The Ninth Circuit’s decision, Center for Community Action and Environmental Justice et al. v. BNSF Railway Co. et al., Case No. 12-56086, is available here.

-- Chris Jensen

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

CEQA Alert: The End of Level of Service (“LOS”) Analysis? OPR Proposes New Guidelines for Evaluating Transportation Impacts

On August 6, 2014, the Governor’s Office of Planning and Research (OPR) released its preliminary recommendations for changing how transportation impacts are analyzed under CEQA: Updating Transportation Impacts Analysis in the CEQA Guidelines, Preliminary Discussion Draft of Updates to the CEQA Guidelines Implementing Senate Bill 743 (Steinberg, 2013).

Currently, the most common metric used in evaluating a project’s transportation impacts is “level of service” (LOS), which measures the delay that vehicles experience at intersections and on roadway segments. According to OPR, focusing on a project’s impact on LOS provides an incomplete assessment of potential impacts and often results in unintended consequences, including the imposition of mitigation measures – such as increased roadway capacity – that may actually exacerbate poor traffic conditions over the long term. The LOS metric can also create additional hurdles for infill development projects, because adding vehicles to an already congested urban environment increases the likelihood of a finding that the project’s impacts are potentially significant, thereby triggering the need for an environmental impact report (EIR). 

SB 743, signed into law on September 27, 2013 and codified at Public Resources Code Section 21099, created a process for revising the CEQA Guidelines for transportation impact analysis. SB 743 requires OPR to establish new criteria for determining the significance of transportation impacts of projects located within “transit priority areas,” which are areas located within one-half mile of an existing or proposed major transit stop. The criteria must “promote the reduction of greenhouse gas emissions, the development of multimodal transportation networks, and a diversity of land uses.” Following adoption of the new criteria, automobile delay, as described solely by LOS or similar measures of vehicular capacity or traffic congestion, will not be considered a significant impact under CEQA for such projects, except in locations specifically identified in the Guidelines. Although this mandate focuses on projects in “transit priority areas,” SB 743 provides that OPR may adopt guidelines establishing alternative metrics for evaluating transportation impacts outside of transit priority areas as well. As discussed below, OPR has proposed to do just that. 

OPR’s Preliminary Discussion Draft responds to SB 743 by proposing a new Guidelines section, Section 15064.3, focused on evaluating the significance of transportation impacts and developing alternatives and mitigation measures related to those impacts. The proposed Section 15064.3 identifies “vehicle miles traveled” – the distance of automobile travel associated with a project – as the principal metric for evaluating a project’s transportation impacts, and it explicitly states that a project’s effect on automobile delay will no longer constitute a significant environmental impact under CEQA. It also provides additional guidance with respect to evaluating transportation impacts associated with various types of land use and transportation projects. Finally, it identifies several factors that a lead agency may consider in evaluating transportation-related impacts on local safety, including those relating to bicyclists and pedestrians, queuing on freeway off-ramps, speed differentials between adjacent travel lanes, and increased motor vehicle speeds.

OPR proposes a phased approach to the implementation of the new Guidelines. Once filed with the Secretary of State, the proposed changes would immediately apply (prospectively) to the analysis of projects located within one-half mile of major transit stops or high-quality transit corridors.  For other areas, a lead agency may choose to be governed by the new provisions if it updates its CEQA procedures to conform to the provisions of the new Section 15064.3. After January 1, 2016, the new section would apply statewide.

Comments and suggestions on the draft are due to OPR by November 21, 2014 at 5:00 p.m. OPR expects that the preliminary discussion draft will “undergo significant revisions in response to public input.” The preliminary discussion draft and instructions for submitting comments and suggestions are 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.

CEQA Alert: California Supreme Court Holds No CEQA Review is Required for Adoption of Voter-Sponsored Initiatives

On August 7, the California Supreme Court filled the last gap in the interpretation of CEQA in the context of land use initiatives. Previously, the courts had determined that (1) CEQA compliance is required for land use initiatives proposed by a city council, prior to placing the initiative on the ballot, but (2) CEQA compliance is not required for land use initiatives proposed by voters and adopted at an election.

In Tuolumne Jobs & Small Business Alliance v. Superior Court of Tuolumne County, et al., the Court addressed a final permutation: must a city council comply with CEQA before adopting a voter-sponsored land use initiative? The answer is “no.”

At the heart of the dispute was the proposed expansion of a Wal-Mart store in the City of Sonora into a “Supercenter.” The City initially prepared and circulated for public review a draft environmental impact report (EIR) for the proposed expansion project pursuant to CEQA. Prior to the City Council’s vote on the EIR, it was served with a notice of intent to circulate a petition called the “Wal-Mart Initiative,” proposing an ordinance adopting a specific plan for the expansion, aimed at streamlining project approvals. Over 20% of the City’s registered voters signed the petition. The City Council then postponed the vote on the EIR and ordered preparation of a report, pursuant to California Elections Code § 9212, to evaluate the initiative’s consistency with previous planning commission approvals for the proposed expansion. After considering the report, the City Council adopted the ordinance.

The Tuolumne Jobs & Small Business Alliance challenged the City’s adoption of the ordinance for failure to conduct environmental review pursuant to CEQA. On demurrer by the City, Wal-Mart, and the initiative’s proponent, the trial court dismissed petitioner’s claims without leave to amend. However, the court of appeal ruled that CEQA review must be completed whenever a city council chooses to adopt a land use ordinance proposed by voter initiative, rather than submit it to a special election. The Supreme Court disagreed and reversed.

The Court based its decision on an interpretation of the Election Code that took into account the need for judicial deference to the constitutional power of initiative that is reserved to the people of California. When a local legislative body receives a municipal ordinance initiative that has been signed by at least 15% of the city’s registered voters, such as the Wal-Mart Initiative, it must do one of the following: (a) adopt the ordinance, without alteration, within 10 days after the certification of the petition is presented to the legislative body; (b) immediately order a special election where the ordinance, without alteration, will be presented to the voters of the city; or (c) order a report pursuant to Section 9212, which may consider the proposed ordinance’s effects on land use, infrastructure, and “[a]ny other matters the legislative body requests.” Within 10 days of receiving the report, which must be produced within 30 days of certification of the petition, the legislative body must either adopt the ordinance or order a special election pursuant to subsection (b). Cal. Elec. Code §§ 9212, 9214.

The Court considered it “well established” that CEQA compliance is not required when a local initiative is submitted to voters pursuant to Section 9214(b). Tuolumne Jobs extends the rule to voter initiatives directly adopted by the local legislative body under Section 9214(a). The Court recognized that, as a matter of statutory interpretation, requiring CEQA review prior to direct adoption would be inconsistent with, and would effectively nullify, the mandatory deadlines provided by the applicable Election Code provisions, and there was no evidence that the Legislature intended CEQA to supersede these provisions.

Moreover, even if CEQA review could theoretically be completed within these deadlines, the legislative body would be powerless to reject, or require alterations to, a proposed project, given the constraints of Section 9214. According to the Court, requiring CEQA review prior to the direct adoption of voter initiatives would run counter to legislative intent. Finally, the Court held that public policy did not dictate a different outcome.

A link to the decision can be found here.

By 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.

Fracking Contractor Sentenced to 28 Months in Prison for Clean Water Act Violation

A federal court in Ohio has handed down a 28-month prison sentence and imposed a $25,000 fine for dumping fracking waste in violation of the Clean Water Act.

 

The defendant, Benjamin Lupo, is the former owner of Hardrock Excavating, a Youngstown, Ohio oil and gas services contractor. Lupo had previously pled guilty  to one count of making an unpermitted discharge of fracking waste. In pleading guilty, Lupo admitted to ordering an employee to discharge wastewater to a tributary of the Mahoning River more than 30 times over a three-month period from a Hardrock Excavating facility. The discharge caused waste liquid that included a mixture of brine and oil-based drilling mud to enter the tributary and the Mahoning River.

 

The releases were discovered after the Ohio Department of Natural Resources received an anonymous tip in January 2013 reporting illegal after-hours discharges coming from the Hardrock Excavating facility. State inspectors went to the facility and discovered a hose releasing liquid into the storm drain. A sample of the discharge subsequently collected by the state contained benzene, toluene, and other pollutants, officials said.

 

The employee, Michael Guesman, pled guilty in August 2013, admitting to running a hose from a 20,000 gallon storage tank filled with fracking wastewater to a nearby storm drain and draining the contents of the tank into the drain in August 2013. Guesman received three years of probation at his sentencing in March 2014.

 

The aggressive prosecution of Lupo highlights the need for robust environmental compliance programs in the oil and gas industry. A comprehensive and consistently implemented compliance program is the best insurance against the fines, negative publicity, and in some instances, time in custody that well operators and consultants face following a conviction of an environmental crime. This is particularly true for fracking operations, given the intense public scrutiny—and the possibility of significant prison terms—that fracking operators currently face.

 

--Davina Pujari and Chris Jensen

 

For more information, contact Davina Pujari at (415) 228-5459 or dxp@bcltlaw.com, or Chris Jensen at (415) 228-5411 or cdj@bcltlaw.com.

 

CEQA Alert: Court of Appeal Blunts Latest CEQA Attack on California’s High-Speed Train System

On July 24, 2014, California’s Third Appellate District affirmed a trial court’s ruling that the California High-Speed Rail Authority’s (Authority’s) revised final program environmental impact report/environmental impact statement (PEIR/EIS) for the proposed California high-speed train (HST) system generally complied with CEQA, with the exception of a flawed traffic impact analysis.

The appellate decision arose from two separate challenges below. The “Atherton I” petitioners had secured a partial victory in their challenge to the Authority’s revised final PEIR, which was the product of a successful challenge to the “original” final PEIR: the trial court ruled that the revised final PEIR failed to adequately address the traffic impacts of narrowing and moving Monterey Highway to accommodate the Pacheco Pass alignment for the HST.
 

However, the trial court rejected the Atherton I petitioners’ other CEQA challenges, holding that it was proper for the Authority to defer analysis of certain vertical profile alignment impacts—relating to the elevation of track above ground level—until a later project-specific EIR. The court also held that petitioners’ challenge to information contained in the project description that was based on an allegedly flawed revenue and ridership model reflected a “classic disagreement among experts that often occurs in the CEQA context” and did not provide a basis for invalidating the PEIR.

 

With respect to the challenge brought by the “Atherton II” petitioners, the trial court found that the Authority’s alternatives analysis complied with CEQA and there was no abuse of discretion in its failure to consider alternatives submitted by petitioners’ expert consultant.

 

Due to the deficiencies in the traffic analysis with respect to the Monterey Highway impacts, the trial court denied the Authority’s motion for discharge of the writ in the underlying challenge to the original PEIR and issued a supplemental peremptory writ ordering the Authority to rescind and set aside the resolution certifying the revised final PEIR. The Atherton I and Atherton II petitioners then collectively appealed in light of their partial victory below.

 

On appeal, petitioners alleged that the Authority’s revised final PEIR violated CEQA because:

1. it provided an inadequate analysis of the “vertical profile options for alignment” along portions of the San Francisco Peninsula;
2. it used a flawed revenue and ridership model that improperly skewed the results in favor of the Pacheco Pass alternative for connecting the Central Valley to the San Francisco Bay Area, rather than the Altamont Pass alternative further to the north; and 
3. the range of alternatives analyzed was inadequate. 

As a preliminary matter, the court of appeal rejected the Authority’s argument that CEQA was preempted in this case by the Interstate Commerce Commission Termination Act (ICCTA).  The court held that application of the “market participation doctrine,” which generally distinguishes between a state’s role as regulator versus its role as a market participant, defeated the preemption claim.

 

On the merits of the CEQA claims, the court of appeal upheld the Authority’s use of a program EIR, deferring site-specific analysis of the vertical alignment of the HSP in the Belmont-San Carlos-Redwood City portion of the project area to a later project-level EIR. The fact that the project-specific analysis of an aerial viaduct for that portion of the route was proceeding concurrently with revisions to the PEIR did not necessitate inclusion of that project-specific discussion in the programmatic document. 

 

With respect to the allegedly flawed revenue and ridership model, the court held that the challenge amounted to a classic CEQA “battle of the experts” and, because substantial evidence supported the methodology of the Authority’s consultant, the PEIR could not be found deficient on that basis.

Finally, the court held that the Authority analyzed an adequate range of alternatives and was not required to evaluate additional alternatives proposed by petitioners, based on one of the following findings:

1. the claim was barred by collateral estoppel;
2. the alternative was substantially similar to one of those evaluated in the revised final PEIR;
3. the alternative would continue to be studied at the project level; or
4. the Authority’s infeasibility findings were supported by substantial evidence.

This will probably not be the last of the CEQA challenges facing the HST. A petition for review by the Supreme Court is likely. Also, because the court of appeal affirmed the trial court’s issuance of a supplemental peremptory writ and ordered the Authority to set aside its approval of the revised final PEIR to correct deficient traffic analyses, additional challenges may follow issuance of a (further) revised final PEIR with respect to that issue. Finally, any project-level EIRs prepared for the HST may also face CEQA challenges.

 

--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.

State Water Board Approves Emergency Regulations Regarding Curtailment Orders

On July 2, the State Water Resources Control Board (“Water Board”) approved emergency regulations authorizing it to issue immediately enforceable curtailment orders to holders of surface water rights in California. 

The new regulation authorizes the Water Board, upon determining that “flows are sufficient to support some but not all diversions,” to issue curtailment orders to post-1914 appropriative (a.k.a., “junior”) water right holders in order of water right priority, beginning with the most junior water user.

The Water Board may also issue curtailment orders to senior--i.e., riparian and pre-1914 appropriative--water right holders if it receives: (i) a complaint alleging that a senior holder is interfering with a water right, or (ii) information that a senior holder is unlawfully diverting stored water.

Because curtailment orders issued under the emergency regulation are immediately enforceable, water right holders who violate an order are subject to penalties that begin to accrue from the date of violation. By contrast, prior to adoption of the regulation, the Water Board could only issue notices of curtailment, which were not themselves enforceable, but rather required case-by-case investigations of alleged violations followed by commencement of administrative proceedings against the violator before an enforcement order could issue.   

A water right holder who is subject to a curtailment order under the new regulation may petition the Water Board for reconsideration of the order. Within 30 days of receipt of the petition, the Water Board must conduct an initial review to determine if the petition raises “significant factual issues that are likely to merit reconsideration,” and if so, must immediately suspend the curtailment order until the petition is heard. Unless suspended by the Water Board, curtailment orders may remain in effect for up to 270 days.

The adopted emergency regulation will now be submitted to the Office of Administrative Law, and will likely take effect in mid-July. The proposed resolution adopting the regulation, as well as the final revisions to the resolution and regulation language, can be found here.

The Water Board makes information about its drought year water actions available on its website.

--Samir Abdelnour

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

Court of Appeal Upholds State Water Board Regulation Targeting Frost-Prevention Activities of Vineyards in Mendocino and Sonoma Counties

In Light v. State Water Resources Control Board (Opinion filed 6/16/2014), California’s First Appellate District upheld a State Water Resources Control Board (SWRCB) regulation that will potentially limit the amount of water that can be diverted from the Russian River in Mendocino and Sonoma Counties during certain times of the year for frost prevention purposes. The regulation at issue, “Regulation 862,”  applies to “any diversion of water from [a portion of ] the Russian River stream system…for purposes of frost protection from March 15 through May 15.”

As characterized by the Court of Appeal, the purpose of Regulation 862 is to “protect salmonids in the Russian River stream system from stranding mortality due to sudden drops in water level during the later spring and early summer,” which, according to the SWRCB, was primarily attributable to the diversion of water by growers, vineyards in particular, during certain times of the year for use as frost protection. 

Regulation 862 calls for the formation of “water demand management programs” or “WDMPs,” which would be responsible for monitoring water levels in affected watercourses, determining when certain water levels presented a threat to young salmon, and developing “corrective actions” if water levels drop too low. Those diverting water must implement the “corrective actions,” which might include alternative methods for frost protection, construction of offstream storage, and alternative methods of diversion, or cease diverting water altogether.

Two separate petitions for writ of mandate challenging Regulation 862 were filed in Mendocino and Sacramento Counties. Those petitions were consolidated for decision in Mendocino County Superior Court which, in February 2012, issued a stay enjoining the SWRCB from enforcing Regulation 862.

The trial court invalidated Regulation 862 on the basis that:

1. the SWRCB exceeded its authority in adopting a regulation that limited the use of water by riparian users;
2. the regulation violated the “rule of priority” governing the manner in which insufficient water is divided among users (who may possess different types of water rights);
3. the regulation improperly delegated authority to the WDMPs; and
4. the declaration of necessity for adoption of the regulation was not supported by substantial evidence. The trial court also ruled that the SWRCB violated the California Environmental Quality Act (CEQA) by preparing an inadequate Environmental Impact Report (EIR).

The Appellate Court reversed the trial court’s ruling and vacated the preliminary injunction, holding that:

1. the SWRCB does have the authority to enact regulations governing the “unreasonable” use of water;
2. the SWRCB  has the authority to limit the use of water by riparian and pre-1914 appropriative rights users, even though they are not subject to the permitting and licensing authority of the SWRCB;
3. Regulation 862, on its face, did not violate the rule of priority and a determination as to whether specific measures adopted by the WDMP violate the rule of priority and whether such a violation is justified pursuant to the “reasonable and beneficial use” provisions of Article X, Section 2 of the California Constitution, would be premature;
4. Regulation 862 did not constitute an improper delegation of authority to governing bodies of the WDMPs since the SWRCB maintained independent discretion to evaluate and enforce the requirements of the WDMPs; and
5. the SWRCB’s statement of necessity justifying adopting the regulation was supported by substantial evidence. 

In an unpublished portion of the opinion, the Court of Appeal also reversed the trial court CEQA ruling, finding that the EIR prepared to evaluate potential environmental impacts of Regulation 862 satisfied CEQA’s statutory requirements. 

Absent rehearing, the deadline for filing a petition for review of the Court of Appeal’s decision with the California Supreme Court is July 28, 2014.

--Nicole Martin

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

EPA Proposes Elimination of ASTM Phase I ESA Standard E1527-05 from CERCLA All Appropriate Inquiries Rule

The EPA has announced a proposal to amend the “All Appropriate Inquiries Rule” for conducting environmental site investigations of potentially contaminated property. The proposed amendment will eliminate ASTM E1527-05 (“Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process”) 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).

The All Appropriate Inquiries Rule, 40 CFR part 312 (“AAI Rule”), outlines environmental investigations and inquiries that prospective property purchasers must undertake to qualify for certain liability protections under CERCLA, including the bona fide prospective purchaser defense, contiguous property owner defense, and innocent landowner defense. The requirements also apply to recipients of certain EPA grant funds. In 2005, the AAI Rule recognized a standard published by ASTM International, ASTM E1527-05, as a standard that satisfies these requirements.

In December 2013, the EPA published a final rule that formally identified the recently published ASTM E1527-13 as another acceptable standard. ASTM E1527-13 updated ASTM E1527-05 by, among other things,

• clarifying and redefining certain key terms, such as “recognized environmental conditions” (or “RECs”), “historical RECs,” and “controlled RECs,” 
• explicitly recognizing that potential vapor migration and releases must be considered, and
• providing additional guidance relating to regulatory agency file and records review.

When EPA formally incorporated the updated ASTM E1527-13 standard into the AAI Rule in December 2013, the agency stated that it “strongly encourages prospective purchasers of real property to use the updated ASTM E1527-13 standard when conducting all appropriate inquiries.” However, EPA chose not to eliminate reference to the 2005 standard altogether, at that time. 

By now removing reference to ASTM E1527-05 from the AAI Rule, EPA hopes to “reduce any confusion associated with the regulatory reference to a historical standard that is no longer recognized by its own promulgating organization as meeting its standards for good customary business practice,” and to “promote the use of the standard currently recognized by ASTM International . . . .”   

EPA is proposing that the effective date for removal of the reference to ASTM E1527-05 be one year following publication of the final rule, “to provide parties with an adequate opportunity to complete AAI investigations that may be ongoing and to become familiar with the updated industry standard (ASTM E1527-13).”

A separate ASTM standard identified in the AAI Rule for “Forestland or Rural Property” (ASTM E2247-08) is unaffected by today’s proposed rule.

 

--Don Sobelman and Nicole Martin

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

State Water Board Commences Curtailment Program in Response to Statewide Drought

In the past month, the State Water Resources Control Board (“Water Board”) has issued three curtailment notices to water rights holders pursuant to the Governor’s January 17, 2014 State of Emergency Proclamation addressing critical drought conditions across the State.

On May 27, the Water Board issued a “Notice of Unavailability of Water and Immediate Curtailment” for all holders of post-1914 appropriative water rights diverting from the Sacramento and San Joaquin River watersheds. The notice orders post-1914 rights holders to “immediately stop diverting” water under their rights, or face potential fines of $1,000 to $10,000 per day. The notice also advises holders of more senior water rights, including riparian rights and pre-1914 appropriative rights, that their water rights may be curtailed “in the near future” if drought conditions persist. The Water Board’s website indicates that curtailment of “junior pre-1914 water rights” (not defined) is projected to occur between June 1 and June 15, with curtailment of additional pre-1914 water rights projected to occur after June 16, on a basin-wide basis for the Sacramento-San Joaquin watershed.

Also on May 27, the Water Board issued a similar, but more limited, notice for the Russian River watershed, which applies only to post-1914 appropriative rights holders with a priority date of February 19, 1954, or later. The May 27 notices follow a May 16 notice of curtailment to “junior priority class” water rights holders diverting from the Scott River watershed.  Like the notice for the Sacramento-San Joaquin watershed, the notices covering the Russian River and Scott River watersheds also contain warnings to senior water rights holders that their diversions may be curtailed if drought conditions continue. However, the Water Board’s website does not contain information at this time projecting the timing of future basin-wide curtailments for the Russian River and Scott River watersheds.

Information about the Water Board’s actions responding to the drought, including information on curtailment of water diversions, is available here.

-- Samir Abdelnour

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