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.