Administrative Appeal Does Not Toll CEQA’s Statute of Limitations Where the Administrative Appeal Process Does Not Cover CEQA Issues

In American Chemistry Council v. Department of Toxic Substances Control (Nov. 18, 2022) 86Cal.App.5th 146, the Department of Toxic Substances Control (DTSC) adopted a regulation listing spray polyurethane foam systems as a priority product of concern under California’s “Green Chemistry” law and the Safer Consumer Products regulations. The Fifth District Court of Appeal held that petitioners’ CEQA challenge to the listing decision was untimely. The court also held that the listing decision complied with the Administrative Procedure Act (APA) and was within the scope of DTSC’s authority.

Background

Spray foam systems are a popular type of spray-applied insulation. Since 2014, DTSC has identified spray foam systems as a potential priority product under its Safer Consumer Products program and the Green Chemical law. After preparing several technical studies, in March 2018, DTSC submitted a final regulatory package for the listing regulation to the Office of Administrative Law. At that time, DTSC also issued a notice of exemption under CEQA for the listing regulation. The Office of Administrative Law approved the listing on April 26, 2018.

On May 30, 2018, petitioner American Chemistry Council submitted an informal dispute resolution request to have the department withdraw the listing. This dispute resolution process was authorized by the Safer Consumer Products regulations. DTSC ultimately rejected the request and associated administrative appeal on February 25, 2019.

On August 9, 2019, the American Chemistry Council and General Coatings Manufacturing Corporation filed a petition for writ of mandate and complaint challenging the listing regulation under the APA and CEQA. The trial court rejected petitioners’ APA claims, but found that the department had violated CEQA. Both sides appealed.

The Court of Appeal’s Decision

DTSC argued that petitioners’ CEQA claim was time-barred under CEQA’s 180-day statute of limitations because petitioners did not file their lawsuit until more than a year after DTSC made its listing decision. Petitioners claimed that DTSC’s listing decision was not final until the informal dispute resolution and appeal process was complete, so the statute of limitations did not begin to run until that time. The Court of Appeal agreed with DTSC, holding petitioners’ CEQA claim was time-barred.

The Court of Appeal first explained that the Safer Consumer Products’ regulatory structure for administrative appeals does not cover CEQA issues. The court observed that the dispute resolution and appeal process set forth in the Safer Consumer Products regulations is limited to a subset of disputes arising out of those same regulations. Nothing in the dispute resolution regulations suggests that CEQA issues may be resolved as part of that process. Accordingly, petitioners were under no duty to exhaust their administrative remedies under CEQA through that dispute resolution process.

Petitioners argued that, even if they were not required to exhaust their administrative remedies on their CEQA claims through the Safer Consumer Product’s dispute resolution process, the statute of limitations under CEQA did not begin to run until the administrative appeal process was completed because there was no final agency action until that process was resolved. The court rejected this argument, explaining that CEQA’s limitations period begins to run on the date the project is approved by the public agency. That period is not retriggered on each subsequent date that the public agency takes some action toward implementing the project, such as DTSC’s decision to deny the administrative appeal.

Here, by the time the Office of Administrative Law approved and filed the regulatory packet on April 26, 2018, DTSC had publicly voiced its intent to list spray foam systems as a priority product, taken and responded to public comments on that decision, issued a notice of exemption under CEQA, and released a final statement of reasons for the action. At that point, DTSC had made a firm commitment to the listing. Thus, the court determined, the statute of limitations on the CEQA claim began to run no later than April 26, 2018, when the Office of Administrative Law approved the listing. Because petitioners did not file their lawsuit within 180 days of that date, the CEQA claim was time-barred.

The court also held that DTSC did not exceed its authority under the Green Chemistry law or violate the APA in listing spray foam systems as a priority product. Contrary to petitioners’ arguments, DTSC was not required to establish a set exposure level for the chemical in question because the Green Chemistry law focuses on potential for exposure, not the extent of exposure. Further, the record supported DTSC’s conclusion that even a miniscule exposure could harm certain individuals. Additionally, DTSC substantially complied with applicable requirements governing the listing’s economic-impact analysis. And DTSC had a rational basis for rejecting voluntary alternatives to the listing decision.

–Laura Harris