Ninth Circuit Rejects Constitutional Challenge to California’s Low Carbon Fuel Standard

On September 18, the Ninth Circuit handed a major victory to the California’s program to control greenhouse gas emissions from transportation fuels, turning aside constitutional challenges to the program brought by ethanol and petroleum industry interests in Rocky Mountain Farmers Union v. Corey (No. 12-15131).

The case arose from rulings in two separate actions in the Eastern District of California involving California’s “Low Carbon Fuel Standard.” The Low Carbon Fuel Standard is intended to reduce greenhouse gas emissions attributable to the sale of transportation fuel in California by 10 percent by 2020.  To achieve this goal, the California Air Resources Board (CARB) set “carbon intensity” standards for different fuel feedstocks, which distinguished on a geographic basis among different ethanol sources and different categories of crude oil.  The district court found that the application of Low Carbon Fuel Standards to out-of-state ethanol and crude oil production violated the Dormant Commerce Clause of the U.S. Constitution by (1) facially discriminating against out-of-state ethanol, (2) impermissibly engaging in the extraterritorial regulation of ethanol produced outside of California, and (3) having the purpose and effect of discriminating against out-of-state crude oil production.

By a 2-1 vote, the Ninth Circuit reversed all three of these rulings.  In a strongly worded opinion, Judge Gould recognized California’s authority to “create a market that recognizes the harmful costs of products with high carbon intensity,” observing that “[t]he Commerce Clause does not protect Plaintiffs’ ability to make others pay for the hidden harms of their products merely because those products are shipped across state lines.”

The panel remanded to the district court with instructions to determine whether the Low Carbon Fuel Standard’s ethanol provisions have the purpose and effect of discriminating against interstate commerce, and if not, to apply the balancing test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).  The panel also instructed the district court to apply the Pike balancing test to the standard’s crude oil provisions.

The panel affirmed the district court’s holding that the provision of the federal Clean Air Act saving California’s motor vehicle emissions standards from preemption (Section 211(c)(4)(b)) does not authorize the Low Carbon Fuel Standard under the Commerce Clause.

--Chris Jensen and Morgan Gilhuly

For more information, please contact Chris Jensen, cdj@bcltlaw.com, (415) 228-5411, or Morgan Gilhuly, rmg@bcltlaw.com, (415) 228-5460.

Third Circuit Holds That Settlement With a State Agency Is Sufficient to Give Rise to CERCLA 113(f)(3)(B) Contribution Claim

Since the Supreme Court’s decisions in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004) and United States v. Atlantic Research Corp., 551 U.S. 128 (2007), there has been continuing uncertainty about whether a CERCLA potentially responsible party (“PRP”) can bring a cause of action for contribution against other PRPs under CERCLA §113(f) where the PRP has settled with a state agency under state law, but has not resolved its liability with the U.S. EPA or a state agency via an “administrative or judicially approved settlement” under CERCLA. 

This issue, which Cooper Industries and Atlantic Research left undecided, is of importance to any PRP that has resolved its liability under state environmental laws without settling CERCLA claims and then seeks contribution for response costs.

In Trinity Industries, Inc. v. Chicago Bridge & Iron Co., 2013 WL 4418534 (3d Cir. Aug. 20, 2013), the Third Circuit  allowed such a contribution action to proceed, holding that CERCLA Section 113(f)(3)(B) “requires only the existence of a settlement resolving liability to the United States or a state ‘for some or all of a response action’” to support a PRP’s contribution claim.  Id. at *3-5.  The Third Circuit’s decision provides further insight into this important issue, but signals a circuit split that may require further clarification from the Supreme Court.

Trinity Industries, Inc. and Trinity Industries Railcar Corporation (“Trinity”) entered into a consent order with the Commonwealth of Pennsylvania naming Trinity as a “responsible person” for the release of hazardous substances at a site that it owned and had for some period used for manufacturing railcars.  The consent order required Trinity to undertake remediation of the site under the supervision of the Pennsylvania Department of Environmental Protection.  The consent order was entered under state environmental laws and did not explicitly resolve Trinity’s liability under CERCLA.  Trinity subsequently filed a contribution claim under CERCLA § 113(f)(3)(B) against a former owner of the site for a share of the remediation costs.

Persuaded by arguments of both Trinity and the United States, which filed an amicus brief in support of Trinity’s position, the court of appeals agreed that the statutory language of CERCLA § 113(f)(3)(B) does not require resolution of CERCLA liability in order to pursue a Section 113(f)(3)(B) contribution claim.  Rather, it only requires the existence of a settlement resolving liability to the United States or a state “for some or all of a response action.”  “Section 113(f)(3)(B) does not state that the ‘response action’ in question must have been initiated pursuant to CERCLA – a requirement that might easily have been written into the provision.”  Trinity Industries, 2013 WL 4418534 at *4.  The court also noted that because remediation standards established under state law were considered “applicable, relevant and appropriate” to satisfy requirements under CERCLA and that compliance with those state remediation standards relieved a party from CERCLA liability, the consent order at issue had eliminated the risk of future CERCLA enforcement actions by the government.  Id. at *5.

The Third Circuit’s decision in Trinity Industries conflicts with the Second Circuit’s holding that CERCLA § 113(f)(3)(B) only allows for contribution claims where a PRP’s liability under CERCLA has been resolved.  See, e.g., Consol. Edison Co. of N.Y., Inc. v. UGI Utils., Inc., 423 F.3d 90, 95 (2d Cir. 2005); W.R. Grace & Co. v. Zotos Int’l, Inc., 559 F.3d 85, 91 (2d Cir. 2009).  In declining to follow the Second Circuit, the Trinity Industries court notes that the Second Circuit’s Consolidated Edison decision relied on the legislative history of CERCLA § 113(f)(1) rather than Section 113(f)(3)(B).  The Third Circuit’s decision instead relied on the plain language of Section 113(f)(3)(B), and relevant legislative history, as well as Third Circuit precedent that declined to impose a requirement that a government agency specifically invoke CERCLA in its oversight activities as a condition precedent to bringing a CERCLA cost recovery action.  Trinity Indus., 2013 WL 4418534 at *4-5 (citing United States v. Rohm & Haas Co., 2 F.3d 1265 (3d Cir. 1993)). 

-- Tom Boer and Nicole Martin

For more information, please contact Tom Boer at (415) 228-5413, jtb@bcltlaw.com, or Nicole Martin at (415) 228-5435, nmm@bcltlaw.com.

California Issues Draft MCL for Hexavalent Chromium

On Thursday, August 22, 2013, the California Department of Public Health (CDPH) published notice of a draft Maximum Contaminant Level (MCL) of 10 ppb (µg/L) for hexavalent chromium.  The MCL proposal is higher than the 0.02 ppb public health goal adopted by OEHHA in 2011, but is significantly below the existing California MCL, in existence since the 1970s, of 50 ppb for total chromium and the current federal MCL for total chromium of 100 ppb.  CDPH will seek public comment on the draft hexavalent chromium MCL between August 23 and October 11, 2013.  CDPH will also hold public hearings in Sacramento and in Los Angeles on October 11, 2013, to receive comments on the proposed regulations. 

The publication of the draft hexavalent chromium MCL follows an order commanding issuance of a hexavalent chromium proposed MCL by the Alameda Superior Court in the NRDC litigation discussed in Rick Coffin’s August 30, 2012 post.  See Natural Res. Def. Council v. Cal. Dep’t of Public Health, No. RG12-643520 (Alameda Sup. Ct. July 26, 2013).  The court’s order also requires a further hearing in October 2013 to determine if the court will set a deadline for issuance of the final hexavalent chromium MCL.  Id.

Barg Coffin will continue to monitor California’s efforts to develop a drinking water standard for hexavalent chromium as well as the status of the NRDC lawsuit.

--David Metres

For more information, please contact Rick Coffin at (415) 228-5420, rcc@bcltlaw.com, Tom Boer at (415) 228-5413, jtb@bcltlaw.com, or David Metres at (415) 228-5488, dmm@bcltlaw.com.

Court of Appeal Finds City’s “Meaningless” Discussion of Greenhouse Gas Emissions Does Not Comply with CEQA

In Friends of Oroville v. City of Oroville (No. C079448) (Aug. 19, 2013), the Third District Court of Appeal reaffirmed the importance of conducting a meaningful review of greenhouse gas emissions as part of the CEQA process. 

The case arose from the City of Oroville’s approval of the relocation and expansion of a Wal-Mart “Supercenter.”  A  community group challenged the City’s decision to approve the project, arguing that the City failed to conduct an adequate review of the project’s impact on greenhouse gas emissions (as well as challenging the project on other grounds not addressed in the published part of the court’s opinion).  The court agreed, concluding that the City used the wrong threshold for determining whether the project’s greenhouse gas emissions were a significant environmental impact under CEQA and also finding the City’s analysis of mitigation measures for greenhouse gas measures to be inadequate.

With respect to the significance threshold, the court found that the City erred in comparing the project’s estimated greenhouse gas emissions to total greenhouse gas emissions statewide.  While the EIR noted that the project’s emissions would be equal to only 0.03 percent of California’s total greenhouse gas emissions in 2004, the court called this comparison “meaningless,” observing that “[o]f course, one store’s GHG emissions will pale in comparison to those of the world’s eighth largest economy.”  (Slip Op. at 18.)  Instead of this meaningless comparison, the court found that the relevant question was “whether the Project’s GHG emissions should be considered significant in light of the threshold-of-significance standard of Assembly Bill 32 [AB 32], which seeks to cut about 30 percent from business-as-usual emission levels projected for 2020, or about 10 percent from 2010 levels.”  (Id. at 18-19.) 

The court also took issue with the City’s failure to properly analyze the effects of the project’s greenhouse gas mitigation measures to determine if they would meet AB 32’s emissions reduction target.  In the absence of any attempt to calculate or even “qualitatively ascertain” the effect of the project’s mitigation measures on greenhouse gas emissions, the court found the EIR’s conclusions regarding the effectiveness of mitigation measures “speculative and contradictory” and insufficient to support the City’s finding that the project would have a less than significant impact on greenhouse gas emissions after mitigation.  (Id. at 19-21.)

The court’s ruling follows Citizens for Responsible Equitable Environmental Development v. City of Chula Vista (2011) 197 Cal.App.4th 237, which approved of the use of a CEQA significance threshold based on a comparison of  AB 32’s greenhouse gas reduction targets to “business-as-usual” emissions levels.  The court’s ruling also provides further evidence that California courts will require cities and counties to perform a reasonably robust analysis of greenhouse gas emissions as part of the CEQA process.

--Chris Jensen and Morgan Gilhuly

For more information, please contact Chris Jensen, cdj@bcltlaw.com, (415) 228-5411, or Morgan Gilhuly, rmg@bcltlaw.com, (415) 228-5460.

New Draft Storm Water Permitting Requirements Issued

California water regulators recently published a new draft of permitting requirements applicable to many businesses – including many businesses never before subject to water quality regulation.  After 16 years of settled practice, businesses will face a significant change to storm water regulation in California if the draft requirements become the law.

On July 19, 2013, the California State Water Resources Control Board (“State Board”) issued a draft general NPDES permit that regulates storm water discharges associated with industrial activity.  This “Industrial General Permit” would require industrial facilities to comply with a set of new requirements. 

The new Industrial General Permit would impose mandatory best management practices (“BMPs”), require increased sampling and monitoring, and mandate technical reports and action plans if monitoring shows that storm water discharges exceed certain pollutant concentrations.  In addition, “light industry” facilities, previously exempt upon a simple self-certification, would now have to file an annual, public report and could be subjected to inspections by water regulators.

As under the current Industrial General Permit, facilities that fail to comply with Permit requirements would be subject to civil penalties of up to $37,500 per day per violation under the federal Clean Water Act.  Accordingly, all businesses and industrial facilities would be well advised to develop a sophisticated understanding of these new requirements.

The State Board is accepting written comments and evidence on the proposed Industrial General Permit until noon on August 29, 2013.  To learn more, the public can attend a web conference workshop on the new permit on August 14, or attend the public hearing on August 21 in Sacramento.  Following the comment period, final adoption of the Industrial General Permit is scheduled for early 2014. 

Additional information is available on the State Board website at http://www.swrcb.ca.gov/water_issues/programs/stormwater/industrial.shtml

--David Metres 

UPDATE, August 19, 2013:  The State Water Resources Control Board has extended the public comment period from August 29, 2013 to 12:00 noon September 12, 2013. 

UPDATE September 12, 2013: The State Board has once again extended the public comment period from September 12 to September 19, 2013.

Attorneys from Barg Coffin Lewis & Trapp, LLP, a nationally-recognized environmental law and litigation firm in San Francisco, will continue to monitor these developments. For more information, please contact Donald Sobelman, des@bcltlaw.com, (415) 228-5456, or David Metres, dmm@bcltlaw.com, (415) 228-5488.

Bill To Amend Proposition 65 Advances

A controversial amendment to Proposition 65, AB 227, has advanced out of the California State Assembly Environmental Safety and Toxic Materials Committee by a 7-0 vote.  That amendment would allow companies alleged to have violated Proposition 65’s warning requirements to avoid liability by correcting the violation within 14 days of receiving a 60-day notice from a private enforcer, and certifying that the corrective actions have been taken an providing a copy of the warnings that have been implemented.

Proposition 65 has long been criticized for its use by private enforcers to exact high attorney fee/cost recovery as part of settlements for marginal cases.  Because the cost of litigation in a Proposition 65 case can run into the high six figures, if not more, many companies simply agree to settle cases for far less, even when their defenses are meritorious, because of the expense.  In most of those settlements, the bulk of the payments go to attorneys’ fees and costs for the plaintiff.  AB 227 is intended to remedy that situation.

The bill has been referred to the Assembly Judiciary Committee, and its chances of ultimately being enacted remains uncertain.  As expected, there is substantial opposition to the amendment, and if it continues to proceed through committee, the debate over the proposed legislation will escalate. 

--Josh Bloom

For more information, contact Josh Bloom, jab@bcltlaw.com, (415) 228-5400

California Green Chemistry Proposed Regulations Revised Yet Again

On January 28, 2013, the California Department of Toxic Substances Control (DTSC) issued further revisions to its proposed Safer Consumer Product Alternatives regulations, more commonly referred to as the "Green Chemistry" regulations.  This is one of a number of revisions DTSC has made to get the Green Chemistry program off the ground. 

Consistent throughout the process, the basic four-step structure of the regulations remains unchanged: 

1. Identification of Chemicals of Concern,
2. Development of a Priority Products list for which Alternatives Analyses must be conducted,
3. Performance of an Alternatives Analysis for each Priority Product by manufacturers, importers, or retailers, and
4. DTSC's "regulatory responses" following the Alternatives Analysis, which, at their most extreme, may result in prohibiting the sale of the product in California.

The 30-day public comment period on this latest revision ends on February 28, 2013.

  

Upcoming:  Josh Bloom, a Barg Coffin partner and Chair of the Bar Association of San Francisco's Environmental Law Section, will be moderating and speaking at the Bar's May 2, 2013 Green Chemistry Program, featuring Debbie Raphael, Director of DTSC.  The program will run from 5:30pm-7:30pm, at One Embarcadero Center, 18th Floor, San Francisco, at the offices of Nixon Peabody.  Further details and registration materials forthcoming, but feel free contact Barg Coffin for more information.

 

--Josh Bloom

 

Barg Coffin has an extensive consumer products practice, including Green Chemistry, Proposition 65, metals in jewelry, and CPSIA laws.  If you would like more information about the proposed Green Chemistry regulations, please contact Josh Bloom jab@bcltlaw.com, (415) 228-5406, or Rick Coffin rcc@bcltlaw.com, (415) 228-5420.  On the web at www.bcltlaw.com