Smith Trager LLP | Environmental & Construction Law in California - Legal Updates

Coalition of plastic bag manufacturers, distributors, and suppliers, filed for a writ of mandate to compel a city to conduct an Environmental Impact Report (“EIR”) under CEQA prior to the issuing of an ordinance that would ban plastic bag distribution at certain retail outlets within the city. The trial court vacated the ordinance and disallowed reenactment until an EIR was conducted by the city. The trial court reasoned that substantial evidence supported a fair argument that the ordinance may cause increased use of paper bags, which may have a significant negative impact on the environment.

The Court of Appeals affirmed the trial court’s decision. The court noted that CEQA is to be given broad interpretation in favor of environmental protection and a low threshold exists for requiring an EIR. The court stated that an EIR will be required whenever it can be fairly argued on the basis of substantial evidence, that a project may have a significant environmental impact. The court further stated that evidence to the contrary is not sufficient to support a decision to dispense with the preparation of an EIR. The court found substantial evidence supporting a fair argument that the plastic ban distribution ban may have a significant environmental effect. Various reports submitted by the coalition stated that the ban of plastic bags increases the use of paper bags and that the production of paper bags has a greater environmental impact than the production of plastic bags. Accordingly, the court found that the city abused its discretion when it issued a Negative Declaration stating that no EIR was required. <Back to Top>

Communities for a Better Environment v. SCAQMD, 48 Cal.4th 310 (2010) California Supreme Court

The baseline for determining the significant environmental impacts should be based on the existing physical conditions rather than the maximum levels allowable under the refinery’s existing permit.

Environmental group, labor organizations, and local residents challenged the South Coast Air Quality Management District’s (the “District”) failure to prepare an Environmental Impact Report (“EIR”) when approving a refinery’s permit to add a new refining process to the facility, which required the installation of new equipment and the modification and significantly increased operation of other equipment. The Superior Court held that no EIR was needed and petitioners appealed.

The Court of Appeals reversed, stating that the District was incorrect in determining that an EIR was not required, since the increase of nitrogen oxide (NOx) resulting from the project was allowable under the refinery’s current permits and that these levels were an appropriate baseline to determine if the project would produce a significant environment impact, thus requiring an EIR. The court stated that the baseline levels should rest upon “realized physical conditions on the ground” and not “merely hypothetical conditions.” The court reasoned that the increased use of existing equipment should have been evaluated as part of the project, not as part of the baseline, and if this had been done, the evidence of significant impact would be sufficient to require an EIR.

The California Supreme Court affirmed. The Court held that the baseline for determining significant environmental impacts should be based on the existing physical conditions rather than the maximum levels allowable under the refinery’s existing permit. The court further held that the refinery had no vested right in the maximum allowable limits in their current permits. The court noted that the record supported a fair argument that the project would have significant adverse effects, and the District itself stated that NOx levels would increase when the project was implemented. <Back to Top>

Communities for a Better Environment v. City of Richmond, 184 Cal.App.4th 70 (2010) California Court of Appeal, First District

In first published decision regarding the adequacy of greenhouse gas analysis and mitigation in an Environmental Impact Report (“EIR”), the court concluded that the EIR was inadequate, because it deferred mitigation for impacts associated with greenhouse gas emissions.

Environmental groups sought writ of mandate and injunctive relief concerning a city’s approval

of an EIR related to a construction project designed to upgrade manufacturing facilities at an oil refinery. The Superior Court granted the writ, holding that the EIR violated CEQA based on its failure to provide an adequate project description, its failure to define mitigation measures for greenhouse gas (“GHG”) emissions, and its failure to consider the whole project.

The Court of Appeals issued the first published decision regarding the adequacy of greenhouse gas analysis and mitigation in an EIR, affirming in part and reversing in part. The court held that the scope of the final EIR was unclear and, as such, the agency’s ultimate decision of whether to approve the project was null. The court also found that the city was incorrect in allowing a plan for GHG mitigation to be formulated and approved one year after the permit had been implemented. Instead, permit approval should have been deferred until proposed mitigation measures were fully developed, defined, and made available to the public and interested agencies. <Back to Top>

Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”)

City of Colton v. American Promotional Events, Inc., 2010 WL 2991399; 10 Cal. Daily Op. Serv. 9774, 2010; Daily Journal D.A.R. 12,038 U.S. Court of Appeals, Ninth Circuit

In matter of first impression, CERCLA declaratory relief as to future response costs is unavailable absent recoverable past costs.

City of Colton (“City”) sued numerous entities that had engaged in industrial activities in a groundwater basin, seeking to recover response costs and contribution under CERCLA for perchlorate contamination, and asserting a claim for declaratory relief as to liability for future costs under the Declaratory Judgment Act. The District Court granted the defendants’ motion for summary judgment, and the City appealed.

The Ninth Circuit affirmed the lower court’s decision. The court agreed that the City’s past response costs were not recoverable, because the City had not complied with the National Contingency Plan (“NCP”) in incurring those costs. The court rejected the Respondent’s arguments that the City’s declaratory judgment claim was not ripe, because no recoverable costs had been incurred. Similarly, the court rejected appellants’ argument that the appeal was moot, despite the fact that the City had re-filed a similar claim in the lower court, because the appellate court decision could affect the parties’ ability to assert statute of limitations arguments in the more recent lower court action. The court also rejected appellants’ argument that the rejection of the City’s CERCLA claim deprived the district court of subject matter jurisdiction over the pendant declaratory relief cause of action. However, as a matter of first impression, the court held that CERCLA declaratory relief as to future response costs is unavailable absent recoverable past costs. In so finding, the court noted that CERCLA’s statutory language provides for a declaratory judgment on present liability (i.e., defendants’ liability costs that have already been incurred), which is binding on future cost recovery actions. The court further reasoned that CERCLA's goal is not simply to encourage private response, but rather to “make the party seeking response costs choose a cost-effective course of action to protect public health and the environment and to achieve “a CERCLA-quality cleanup.” As such, the court stated, “providing declaratory relief based on mere assurances of future compliance with the NCP would create little incentive for parties to ensure that their initial cleanup efforts are on the right track.” The court further stated that awarding declaratory relief before a plaintiff has incurred any recoverable costs would require courts to make complicated determinations as to which defendants are responsible for what proportion of the release, without any assurance that the plaintiff would ever meet its burden of proving in an adversary proceeding that its expenses were necessary and incurred in a manner consistent with the national contingency plan. <Back to Top>

DTSC v. Hearthside Residential Corp., 613 F.3d 910 (9th Cir. 2010) U.S. Court of Appeals, Ninth Circuit

Property owner at time cleanup costs are incurred is “current owner” for purposes of liability under CERCLA.

Defendant developer bought undeveloped tract of wetlands adjacent to residential parcels, knowing that the property was contaminated with polychlorinated biphenyls, or PCBs, and later entered into a consent order with the State of California Department of Toxic Substance Control (“DTSC”) to remediate the PCB contamination. The DTSC determined that the adjacent residential site was also contaminated with PCBs and considered Defendant responsible for investigating and remediating the residential site. Developer disagreed that it bore responsibility for the residential site and limited its cleanup to the wetlands property and subsequently sold the wetlands property. The DTSC later filed a complaint against defendant developer seeking reimbursement for the residential site cleanup on the basis that Defendant was the “owner” of the contamination source at the time of the cleanup, and thus was responsible for the remediation costs under CERCLA. Defendant disputed liability, arguing that “owner” status was determined at the time the recovery suit was filed - not at the time cleanup costs were incurred. The district court granted partial summary judgment in favor of the DTSC on the limited issue of whether Defendant was an “owner and operator” of the property.

On appeal, the Ninth Circuit noted that there was no controlling or persuasive precedent that answers the precise question and that the definition of “owner and operator” in the text of CERCLA is silent on the date from which ownership is measured. After reviewing the various arguments, the court found that the view that ownership is measured at the time of cleanup best aligns with CERCLA's purpose and structure for the following reasons: (1) this view is most consistent with CERCLA’s statute of limitations, because otherwise an owner could sell a recently cleaned piece of property to an innocent owner one day before the statute of limitations runs, with the result that the new owner would bear full cleanup liability under CERCLA if a recovery action was later timely filed. (2) CERCLA's purpose of encouraging the timely cleanup of hazardous waste sites is best served by this view, because a landowner seeking to avoid liability by transferring the property before a lawsuit is filed has every incentive to delay completing the cleanup process until it has found a buyer, and the recovery suit is likely to be filed once cleanup is complete and the total cost is known. (3) CERLCA’s purpose of encouraging early settlement between potentially responsible parties and environmental regulators is better served by this view, because measuring ownership from the date that the recovery lawsuit is filed requires that a recovery lawsuit be filed. (4) CERCLA seeks to include property owners in the technical consulting process, and this policy is best served by a rule that sets current ownership at the time cleanup occurs. <Back to Top>

U.S. v. Aerojet General Corp., 606 F.3d 1142 (9th Cir. 2010) U.S. Court of Appeals, Ninth Circuit

Under CERCLA, a non-settling potentially responsible party (PRP) may intervene as of right in litigation to oppose a consent decree incorporating a settlement that, if approved, would bar contribution from the settling PRP.

The Environmental Protection Agency (“EPA”) sued a group of potentially responsible parties (“PRPs”) for response costs incurred for addressing contaminated groundwater reservoir. The EPA lodged a proposed consent decree, incorporating settlement agreements providing that settling PRPs would pay $8.1 million for cleanup costs and would be protected from contribution claims by non-settling PRPs under CERCLA. The District Court denied intervention by non-settling PRPs and entered the consent decree. The non-settling PRPs appealed.

The Ninth Circuit overturned the lower court’s decision, holding that non-settling PRPs have the right to intervene to oppose consent decree that could bar contribution rights. In so holding, the court noted that this question has split the federal courts and that applicants seeking to intervene as of right must meet a four-part test: (1) the motion must be timely; (2) the applicant must claim a “significantly protectable” interest relating to the property or transaction which is the subject of the action; (3) the applicant must be so situated that the disposition of the action may, as a practical matter impair or impede its ability to protect that interest; and (4) the applicant's interest must be inadequately represented by the parties to the action. Here, there was no question that the motion was timely. In finding that the non-settling PRPs had a “significantly protectable interest” to support intervention, the court noted that the consent decree could cut off contribution rights and leave non-settling PRPs potentially liable for the entire remaining cleanup costs. The court further found that the non-settling potentially PRPs’ ability to protect their interests in contribution rights and a substantively fair consent decree would be impaired or impeded by disposition of EPA’s suit, since the consent decree would cut off the non-settling PRPs' contribution rights. The court also found that the notice and comment procedures were not a sufficient method of protecting the non-settling parties’ interests. In analyzing whether the PRP’s interests would be adequately represented by the parties to the action, the court relied on a three factor test, including: (1) whether the interest of a present party is such that it will undoubtedly make all of a proposed intervenor's arguments, (2) whether the present party is capable and willing to make such arguments, and (3) whether a proposed intervenor would offer any necessary elements to the proceeding that other parties would neglect. In applying these factors, the court found that the non-settling PRPs’ interests in contribution rights and a substantively fair consent decree would not be adequately represented by existing parties to the EPA suit, since the settling PRPs' interests were directly opposed to the non-settling PRPs' interests in limiting their share of liability and barring contribution, and EPA's interest in securing approval of decree was directly opposed to non-settling PRPs' interest in challenging decree. <Back to Top>

CLEAN AIR ACT

American Trucking Associations, Inc. v. E.P.A., 600 F.3d 624 (D.C. 2010) U.S. Court of Appeals, District of Columbia

EPA’s approval of California’s emission limits for in-use non-road engines is consistent with the Clean Air Act

Trucking association challenged the U.S. Environmental Protection Agency’s (“EPA”) approval of California’s 2004 plan to reduce diesel particulate matter emissions from in-use non-road engines as being arbitrary and capricious. California’s plan called an 85% reduction of emissions from transportation refrigeration units (“TRUs”) by 2020.

The Court of Appeals held that EPA’s approval of California’s emission standards was appropriate. The court noted that, under Section 7543(e) (2) of the Clean Air Act, Congress gave California the sole authority to regulate in-use non-road engines. The Court further noted that EPA must approve the proposed standard if it is at least as protective of public health and welfare as federal standards, is necessary to meet compelling and extraordinary conditions in the state and does not prevent other states from deciding to “adopt and enforce” the California rule. The court relied heavily on EPA’s finding of serious air pollution problems in California, which has some of the worst air pollution in the nation. The court rejected the trucking associations’ assertion that the California rule would impose a de facto national standard since so many trucks pass through California and would be subject to the rule. The court noted that the standards specifically stated that they would not affect vehicles operating outside of the state and allowed for other states to determine whether to adopt the rule. <Back to Top>

MacClarence v. EPA, 596 F.3d 1123 (9th Cir. 2010) U.S. Court of Appeals, Ninth Circuit

As matter of first impression, Environmental Protection Agency (“EPA”) administrator reasonably construed Clean Air Act (“CAA”) provision mandating EPA to object to a permit for pollutant-emitting facilities as requiring the party seeking objection to provide specific information supporting the basis for the objection.

Citizen petitioned for review Environmental Protection Agency Administrator's order denying his request that EPA object to issuance of Clean Air Act permit for pollutant-emitting activities at an oil and gas processing facility. Petitioner argued that the permit did not comply with the CAA, because the Alaska Department of Environmental Conservation had not properly “aggregated” stationary sources of air pollution within the 300 square mile oil field when preparing the permit for one of six production facilities. Under the Clean Air Act, the EPA Administrator must object to a permit if a petitioner “demonstrates” that the permit does not comply with the CAA. The Administrator found that the citizen petitioner did not demonstrate non-compliance with the CAA, since he failed to provide specific information to support his claim that the operations should be aggregated.

The Ninth Circuit affirmed EPA’s issuance of the permit, stating that the agency’s interpretation is valid so long as it is based on a permissible construction of the CAA or is reasonable based on the “degree of the agency’s care, its consistency, formality, and relative expertness, and…the persuasiveness of the agency position.” <Back to Top>

ENDANGERED SPECIES ACT

Arizona Cattle Growers’ Association v. Salazar, 600 F.3d 1160 (9th Cir. 2010) U.S. Court of Appeals, Ninth Circuit

It was not arbitrary and capricious for the U.S. Fish and Wildlife Service to designate “occupied critical habitat “to include land where a protected species is likely to be present in addition to land where the protected species is known to reside.”

Ranchers filed suit against U.S. Fish and Wildlife Services’ (“USFWS”), challenging the amount of land designated as “occupied critical habitat” for a threatened owl species, as well as USFWS’ approach in assessing the economic impact of the critical habitat designation.

The District Court found that it was not arbitrary and capricious for FWS to designate “occupied critical habitat” as not only land where owls are known to reside, but also where they are likely to be present. The court also found that it was appropriate for USFWS to determine the economic impacts of critical habitat designation based solely on the economic burdens incurred as a result of the critical habitat designation, rather than the economic burdens imposed when a species is first listed under the Endangered Species Act (“ESA”).

The Ninth Circuit affirmed the District Court’s decision. The court noted that the purpose of the ESA is the conservation of a species, not merely the ensuring of its survival. The court further stated that USFWS’ wide interpretation of “occupied critical habitat” promotes the ESA’s conservation goals and is consistent with the ESA’s policy of “institutionalized caution.” In affirming the lower court’s analysis of economic burdens imposed by the critical habitat designation, the court found that it is illogical and inappropriate to consider economic burdens relating from the listing of a specific where those burdens will exist regardless of whether critical habitat is designated. <Back to Top>

CLEAN WATER ACT / NATIONAL ENVIRONMENTAL POLICY ACT

Natural Resources Defense Council v. U.S. Army Corps of Engineers, 2010 WL 1416681 (2010) U.S. District Court, Northern District of Ohio

Under section 404 of the Clean Water Act, the U.S. Army Corps of Engineers appropriately limited its permit review regarding construction of a coal-to-liquid fuel plan to the filling of wetlands and streams, since the Corps did not have sufficient control over the construction and operation of project to trigger full environmental review.

Environmental groups sought to invalidate a permit issued by the U.S. Army Corps of Engineers (“the Corps”) under section 404 of the Clean Water Act. The permit allowed the builder of a coal-to-liquid fuel plant to fill in wetlands and streams. The Corps determined that the filling of the wetlands and streams would not have a significant effect on human health or the environment and issued a finding of “no significant impact.”

The District Court held that the Army Corps complied with the National Environmental Policy Act NEPA and the Clean Water Act in its issuance of the permit. The court found that the Corps properly limited its review of the permit to the filling of the wetlands and streams, since the Corps did not have sufficient control and responsibility over the entire completed project to trigger a complete environmental review. The District Court stated that the Corps’ determination of “no significant impact” was appropriate, because the permit was specifically being requested for filling of the wetlands and streams, rather than construction and operation of the plant. <Back to Top>

PORTER-COLOGNE WATER QUALITY CONTROL ACT

Karuk Tribe of Northern California v. California Water Quality Control Board, 183 Cal.App.4th 330 (2010) California Court of Appeal, First District

State’s laws are preempted by federal laws pertaining to the regulating of hydropower plants.

Indian tribe and non-profit corporations petitioned for writ of mandate challenging failure of California Regional Water Quality Control Board, North Coast Region (“NCRWQCB”), to enforce California law governing waste discharge against hydroelectric dam-reservoirs.

The Superior Court issued an alternative writ of mandate directing the NCRWQCB to revisit the issue and then affirmed the NCRWQCB’s decision that its authority to issue waste discharge requirements under the Porter-Cologne Act was preempted by the Federal Power Act (“FPA”), since the Project is federal in nature and is managed by the Federal Energy Regulatory Commission (“FERC”). However, the court awarded attorneys fees to plaintiffs, payable half by Board and half by dam owner, under the Private Attorney General Act. All parties appealed.

The Court of Appeal affirmed the lower court’s decision that the FPA preempts the Porter-Cologne Act as applied to federally licensed hydropower projects. The court noted that the state has the ability to provide FERC with recommendations during a licensing process, but that is the extent of the state’s authority. However, the court reversed the lower court’s reward of attorneys fees, finding that the plaintiffs were not “successful,” did not enforce important rights affecting public interest and did not confer “significant benefit” as required for private attorney general fees. <Back to Top>

EMINENT DOMAIN

Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, 130 S.Ct. 2592 (2010) U.S. Supreme Court

Court did not engage in an unconstitutional taking of coastal property owners' rights to future natural growth and contact with the water, by upholding State's decision to restore eroded beach by filling in submerged land.

Beachfront property owners unsuccessfully challenged the decision of the Florida Department of Environmental Protection (FDEP) granting a permit to restore eroded beach. The property owners then formed a nonprofit corporation and brought an action in Florida state court to challenge the project. The Florida District Court of Appeal reversed and remanded the agency's decision. The appellate court held that there was an unconstitutional taking of the property owners’ rights to receive sand fills to their property and to have contact between their properties and the water. The District Court of Appeals certified the question of whether the renourishment projects would constitute an unconstitutional taking without just compensation to the Florida Supreme Court. Answering the question in the negative, the Florida Supreme Court quashed the remand and denied rehearing. The property owners challenged the decision of the Florida Supreme Court as a judicial taking in violation of the 5th and 14th Amendments of the U.S. Constitution.

The U.S. Supreme Court unanimously upheld the decision by the Florida Supreme Court that the state’s ownership of the newly created land on the shoreline was not a taking. In interpreting Florida law, the Court found that the property owners did not have a right to the filled-in land, that the state has the right to fill in its seabed, and that any previously submerged land exposed by a sudden event, even if caused by the state, belongs to the state. However, this was a plurality decision (meaning there was no majority opinion). Several of the justices subscribed to the view that a judicial taking occurs when a previously established right is eliminated by a court. The remaining justices declined to address the broader question of whether a judicial decision can ever constitute a taking. <Back to Top>

OTHER CHALLENGES TO AGENCY ACTION

Alliance for the Wild Rockies v. Cottrell, 613 F.3d 960 (9th Cir. 2010) U.S. Court of Appeals, Ninth Circuit

A sliding-scale approach is appropriate when determining whether to grant a preliminary injunction.

Nonprofit group filed for a preliminary injunction against the U.S. Forest Service based on the Forest Service’s Emergency Situation Determination (“ESD”) allowing for the immediate sale of timber in 27,000 acres of previously burned areas.

The District Court denied the preliminary injunction in accordance with the four elements that a plaintiff seeking preliminary injunction must meet according to Winter v. Natural Resources Defense Council, 129 S.Ct. 365 (2008). These elements include likelihood of success on the merits, irreparable harm in the absence of preliminary relief, a balance of equities in plaintiff’s favor, and a showing that the injunction is in the public interest.

The Ninth Circuit reversed the lower court’s decision and granted the preliminary injunction. The court’s analysis centered on whether the Winter elements needed to be applied equally, or whether the court could apply a sliding scale analysis allowing a stronger showing on one element to offset a weaker showing on another. The Ninth Circuit determined that a sliding scale analysis does survive Winter and the court applied a “serious questions” sliding scale test, where a preliminary injunction will be granted if the likelihood of the success on the merits is such that serious questions going to the merits were raised and the balance of hardships tips sharply in the plaintiff’s favor. The other Winter factors (irreparable harm and service to the public interest) must also be met. Concerning the likelihood on the success of the merits, the Ninth Circuit held that serious questions on the merits were raised, since the Forest Service considered the effects on the local economy when making its emergency decision regarding the timber sales, which was not legally permissible when considering the issuance of an ESD. In balancing the hardships, the court found that the members of the nonprofit group would suffer greater harm concerning lost work and recreational opportunities in the affected forest areas. The nonprofit group also lost its right to seek an administrative remedy once the Forest Service issued its ESD. The court noted that the Forest Service only stood to lose between $16,000 and $70,000 if the timber sale was not implemented and therefore found the balance of equities sharply in favor of the nonprofit group. <Back to Top>