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California Air Resources Board Conducts Auction for Cap-And-Trade Program

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On November 14, 2012, the California Air Resources Board will conduct its first quarterly auction for greenhouse gas allowances under the cap-and-trade program, which is identified in the Assembly Bill 32 Scoping Plan as one of the strategies California will employ to reduce the greenhouse gas emissions that cause climate change.

In 2006, the Legislature passed and Governor Schwarzenegger signed AB 32, the Global Warming Solutions Act of 2006, which requires California to reduce greenhouse gas emissions to 1990 levels by 2020. In complying with AB 32, CARB prepared a Scoping Plan identifying a cap-and-trade program as one of the strategies California will use to reduce the GHG emissions that cause climate change. The cap-and-trade program places a limit on the GHG emissions allowed from pollution producers like refineries and cement manufacturers, and directs all entities subject to the cap (covered entities) to surrender “compliance instruments” equivalent to their GHG emissions to CARB. Compliance instruments include both allowances, which are allocated by CARB or obtained from auctions or secondary markets, and offset credits, which represent GHG emissions reductions achieved in sectors that are not subject to the cap.

This year, the cap-and-trade program covers about 350 industrial businesses operating a total of 600 facilities throughout the state. They include cement plants, steel mills, food processors, electric utilities, and refineries. Starting in 2015, the program will also cover distributors of natural gas and other fuels. For the first two years of the cap-and-trade program, covered entities will receive 90 percent of their allowances for free, with the free amount and the cap declining over time. Covered entities must either cut their GHG production to that level or buy credits to make up the difference. Companies that have more credits than they need can sell them at the auction, and CARB will sell additional credits as well. The proceeds from CARB’s sale of allowances sold at auction will be deposited in CARB’s Air Pollution Control Fund, awaiting appropriation by the Legislature.

The November 14, 2012, auction is the first, major step for CARB in implementing the cap-and-trade program. Though there remains strong opposition to the program from those businesses required to participate in it, CARB’s completion of this first auction signifies its commitment and readiness to enforce compliance with the cap-and-trade program when it comes online in January 2013.

Second District Court of Appeal Holds That Placing a Measure on the Ballot to Establish a Competitive Bidding Process for a City’s Future Waste Disposal Contracts Does Not Constitute a “Project” Under CEQA.

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On October 23, 2012, the Second District Court of Appeal issued its decision in Chung v. City of Monterey Park (2012))       Cal.App.4th     (Case No. B233859).  The court held that a city council’s approval of a ballot measure seeking voter approval of a competitive bidding process for residential trash service was not a “project” within the meaning of the CEQA.

Factual and Procedural Background

The Monterey Park City Council voted to place Measure BB on the March 8, 2011 municipal ballot without performing any type of environmental review under CEQA.  No initial study was prepared, and there was no Notice of Exemption.  Measure BB requires that the City seek competitive bids for trash service when the City’s current contract expires in 2017, and thereafter requires that the City competitively bid for trash service every five years.  Opponents of Measure BB argued that the measure was a “project” under CEQA and that environmental review was required before the measure could be placed on the ballot.  Measure BB, among other things, would require the City Council to award the residential solid waste franchise to a single franchisee, but the City Council would also have the discretion to award the commercial solid waste franchise to up to three franchisees.  Therefore, Measure BB raised concerns about air quality, noise pollution and road damage that would likely result from an increase in the size of the solid waste contractor fleet serving the City. On March 8, 2011, City voters approved Measure BB, with over 71 percent voting in favor of establishing a competitive bidding process. 

Wing Chung, a city resident, filed a petition for writ of mandate, alleging that Measure BB was a “project” subject to CEQA, and that the City violated CEQA by failing to make any decision as to whether Measure BB would have a significant impact upon the environment, failing to consider any alternatives or mitigation measures, and failing to conduct the requisite informed decision-making under CEQA. 

The trial court disagreed and determined that Measure BB was not a “project” within the meaning of CEQA and therefore the measure did not require environmental review before being placed on the ballot.  

Court of Appeal’s Decision

The Court of Appeal began its analysis by navigating through the statutory definition of a “project” and the extensive case law on the subject. Citing CEQA Guidelines section 15378, subdivision (b)(4), the court noted that the definition of a  “project” does not include the “creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.” The court determined that placing the ballot measure on the ballot fit within that definition. The ballot measure merely established a competitive bidding process for future waste services contracts, and the new manner of awarding such contracts is a fiscal activity that does not involve a commitment to a specific project. As such, the measure is not a project within the meaning of CEQA.

The court placed emphasis on distinguishing the seminal case Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116, where the City of West Hollywood conditionally agreed to allow a private developer to redevelop property for senior housing predicated on future compliance with CEQA. There, the fatal flaw in the City of West Hollywood’s decision was that the city had “committed itself to a definite course of action regarding the project before fully evaluating its environmental effects.” (Id. at p. 142.) The court explained that this case was different because the City has not committed itself to any particular course of action. Measure BB does not require the City to select more than one service provider and does not preclude the City from providing solid waste services by itself. 

In addition, the court noted that Measure BB requires the City Council to hold one or more public hearings before deciding whether to grant one or more solid waste franchises.  Thus, at the time Chung filed the lawsuit it was unknowable which companies would bid on the contract, what additional trucks would be required (if any), or what significant impacts the City’s choice of service provider(s) may have in 2017.  The court held that, at this juncture, environmental review of Measure BB would be meaningless because there is simply not enough specific information about the various courses of action available to the City to warrant review at this time.

Third District Court of Appeal Holds that Stormwater Discharge from a Construction Site into Ephemeral Ditches which are Tributaries to Waters of the United States is a Violation of the Clean Water Act.

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On October 24, 2012, the Third District Court of Appeal upheld the trial court’s ruling in Albert Garland v. Central Valley Regional Water Quality Control Board (2012) __Cal.App.4th__ (Case No. C067130). The case involves the question of whether the discharge of stormwater with sediment from a residential construction into adjacent ephemeral drainages encompassing swales, ditches, and culverts that eventually connected to waters of the United States was sufficient to trigger Clean Water Act violations under the federal Clean Water Act.

The trial court denied a petition for writ of administrative mandate challenging a $250,000 administrative civil liability (ACL) order issued against petitioner by the Central Valley Regional Water Quality Control Board (Board) for permit violations of the Clean Water Act (Act). The court affirmed the judgment, holding that the order was authorized even under the view in Rapanos v. United States (2006) 547 U.S. 715 that most narrowly reads the Act’s jurisdiction. In issuing the ACL order against petitioner, the Board found that the ephemeral drainages, into which petitioner discharged the construction site stormwater runoff, were tributaries to downstream navigable waters.

The discharge in question encompassed 641,000 gallons of sediment-laden stormwater flowing off the sides of a residential subdivision construction site being developed by Garland. The Board showed that a $250,000 ACL order could have been based on as little as 25,000 gallons of polluted discharge under Water Code, section 13385. The stormwater flowed into ephemeral drainages adjacent to the construction site, which are tributaries of the Feather River and the Thermalito Afterbay.

The board argued that regardless of whether the ephemeral drainages at issue constituted waters of the United States, Garland should remain liable for discharging pollutants into waters of the United Stated under the alternative rationale for the ACL order that the discharge traveled through point sources to waters of the United States. The District Court of Appeal concluded that the Board acted properly in issuing the ACL order against Garland on that basis.

Third District Court of Appeal Holds That Minor Deficiencies and Inaccuracies in an EIR for a Cogeneration Power Plant Project Did Not Result in Any Prejudicial Defects in the CEQA Review Process

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On October 18, 2012, the Third District Court of Appeal ordered publication of its decision in Mount Shasta Bioregional Ecology Center v. County of Siskiyou (2012) __ Cal.App.4th __ (Case No. C064930). The appellate court affirmed the trial court’s judgment denying the petition for writ of mandate and found the majority of the petitioners’ arguments were simply a difference of opinion with the lead agency. Although the EIR for the cogeneration power plant project contained small discrepancies relating to the project’s air quality impacts and water usage, the court held these inaccuracies did not prejudice the environmental review process. 

In 2006, Roseburg Forest Products Co. proposed expanding its existing wood veneer manufacturing facility to accommodate a biomass-fueled cogeneration power plant that would generate electricity for resale. The project involved installing new equipment on one acre of the 300-acre Roseburg facility near the town of Weed, as well as trucking in additional fuel for the cogeneration system. On December 6, 2006, the Siskiyou County Planning Commission determined that the project fit within a categorical exemption under CEQA and approved a conditional use permit for the project. After this decision was appealed, Roseburg withdrew its initial application and submitted a new application. On June 29, 2007, Siskiyou County issued a Notice of Preparation for an EIR for the project, and released a draft EIR in April 2008. On September 30, 2008, the Planning Commission approved the project and certified a final EIR. Mount Shasta Bioregional Ecology Center and Weed Concerned Citizens filed a petition for writ of mandate against the county and board of supervisors, alleging various CEQA violations. The trial court denied the petition. 

After a thorough discussion of the standard of review, the Court of Appeal addressed the alternatives analysis of the EIR. The court found that the EIR was adequate even though it only considered the “No Project” alternative in detail because the county had dismissed three other alternatives as not potentially feasible during the scoping phase. The court rejected the petitioners’ challenge to the alternatives analysis because they failed to show that there was no substantial evidence to support the county’s rejection of the three alternatives during the scoping phase. 

Next, the court considered the plaintiffs’ arguments regarding the project’s air quality impacts. The court found that a comment letter cited by the plaintiffs was not properly part of the record because the letter was submitted the day before the hearing on the plaintiffs’ appeal of the Planning Commission’s decision and not five days before as required by county hearing rules. Nonetheless, the court addressed the merits of the plaintiffs’ challenge and concluded that a small discrepancy of 7 percent between actual and approximate emissions of steam production from the facility did not result in prejudicial error. 

The court then turned to the project’s noise impacts. The court dismissed each of the plaintiffs’ assertions, noting the plaintiffs appeared confused about the difference between average sound level readings for 15-minute periods at various times during the day (Leq) and average sound levels for a 24-hour period (Ldn). The court found, among other things, that substantial evidence in the record supported the finding that mitigation measures could reduce noise impacts to less than significant levels, the discussion of noise from the turbine generator was adequate, and there was substantial evidence in the record that the project’s predicted noise increase of less than 1.1 dB was not cumulatively considerable. 

Finally, the court addressed the petitioners’ challenge to the EIR’s discussion of the project’s impacts to water. The court found that defendants could not cite anything in the record to support the EIR’s assertion that the project’s water usage would be 120,000 gpd when a Roseburg consultant’s conflicting estimate was around 230,400 gpd. Despite acknowledging that the draft EIR might have understated the overall water usage, the court held it was not a prejudicial abuse of discretion because the petitioners did not cite evidence the higher level of water usage would have a significant environmental impact. The court also found the argument that the EIR’s project description was inaccurate because it failed to discuss blow down water was “simply a difference of opinion” with the county over the EIR’s conclusion that there will be no water discharges.  (Elizabeth Sarine)

Third District Court of Appeal Holds That an Agreement to Provide Water to a Casino Triggered the Unusual Circumstances Exception to the Small Projects Categorical Exemption and Finds Evidence the Project May Exacerbate the Environmental Consequences of a Drought

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On October 4, 2012, the Third District Court of Appeal in Voices for Rural Living v. El Dorado Irrigation District (2012) ___ Cal.App.4th ___ (Case No. C064280), affirmed the trial court’s judgment voiding the El Dorado Irrigation District’s approval of an agreement to provide water to a casino on tribal land. The appellate court held the irrigation district’s approval of the agreement did not qualify for the small projects categorical exemption because the project triggered the unusual circumstances exception, and the record contained evidence upon which a fair argument could be made that the project could have significant environmental impacts during a drought. The appellate court reversed the judgment in part and directed the trial court to order the irrigation district to conduct further California Environmental Quality Act (CEQA) proceedings because the trial court should not have mandated the irrigation district to prepare an environmental impact report (EIR). 

In 1987, the Shingle Springs Band of Miwok Indians and the El Dorado Irrigation District entered an annexation agreement to bring 160 acres of tribal land into the district’s service area. In 1989, the El Dorado County Local Agency Formation Commission (LAFCO) conditioned its approval of the annexation by restricting the land to residential uses and authorizing the district to supply only enough water for 40 residential lots or less. Subsequently, the tribe proposed building a casino and hotel on the annexed land. After deciding that the LAFCO conditions were invalid, the irrigation district approved an agreement on May 28, 2008, to provide the tribe with more water than LAFCO had authorized. The district then issued a notice of exemption stating the project was categorically exempt under the class 3 exemption for new construction or conversion of small structures. Voices for Rural Living challenged the approval of the agreement and alleged violations of CEQA and the LAFCO Act. The trial court granted the petition for writ of mandate and ordered the district to set aside its approval and to prepare an EIR. The tribe and Voices for Rural Living appealed the trial court’s judgment, raising different arguments. 

The appellate court first reviewed the irrigation district’s determination that the project did not trigger the unusual circumstances exception to the class 3 categorical exemption. As a preliminary matter, the court applied the de novo standard of review and concluded the project did present unusual circumstances because providing water to a casino and hotel greatly differed from providing water to a single family residence, the type of project typically covered by the class 3 categorical exemption. 

Then the court applied the fair argument standard to the question of whether there is a reasonable possibility of a significant effect on the environment due to the unusual circumstances, despite acknowledging a split of authority as to whether the less deferential fair argument standard or the more deferential substantial evidence standard should be employed. The court found there was evidence in the record upon which a fair argument could be made that the project may exacerbate the environmental consequences of a drought. The court noted that the irrigation district had failed to consider the effect of climate change on possible shortages during a drought. Additionally, the court found the record lacked sufficient information regarding how the irrigation district would, during a drought, be able to meet its customer demands as well as new in-stream flow requirements, imposed by the Federal Energy Regulatory Commission on a portion of the American River from which the district is entitled to receive water. 

Finally, the court held the irrigation district must comply with the LAFCO conditions because the irrigation district was not vested by the California Constitution or by statute with the authority to determine the validity or constitutionality of LAFCO’s annexation conditions. The court explained that even if the LAFCO conditions were unconstitutional and preempted by federal law, they must be deemed valid and binding until a proper court of law enjoins their enforcement.  (Elizabeth Sarine)

U.S. Fish and Wildlife Service Proposes Rule to Remove Valley Elderberry Longhorn Beetle From List of Endangered and Threatened Wildlife

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On Tuesday, October 2, 2012, the United States Fish and Wildlife Service (FWS) issued a proposed rule in the Federal Register that would remove the Valley Elderberry Longhorn Beetle from the list of species protected by the Endangered Species Act.

The Valley Elderberry Longhorn Beetle is endemic to California’s Central Valley. This subspecies is a wood borer that is dependent on its host plant, the elderberry.  When the beetle was first included on the list in 1980, it was only known to exist at three locations in Merced, Sacramento, and Yolo County. Currently, the beetle is known to exist in over twenty six places, including the San Joaquin and Sacramento Valleys from Shasta to Kern County. The beetle lives in elderberry bushes in riparian forest and in upland vegetation along river corridors in the Central Valley.

In California, over 21,000 acres of land are designated as protected habitat for the Valley Elderberry Longhorn Beetle.

If the proposed rule is made final, it will both remove the beetle from the List of Endangered and Threatened Wildlife, and remove the designation of critical habitat for the subspecies.

The proposed rule has a sixty two day comment period which ends on December 3, 2012. The FWS will conduct a public hearing upon request, although no hearing is currently planned.

The proposed rule can be found in the Federal Register at: https://www.federalregister.gov/articles/2012/10/02/2012-23843/endangered-and-threatened-wildlife-and-plants-removal-of-the-valley-elderberry-longhorn-beetle-from#h-8

 (By Holly Roberson)

San Francisco Plastic Bag Ordinance Upheld by Trial Court

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On September 20, 2012, San Francisco County Superior Court Judge Teri Jackson denied a petition filed by Save the Plastic Bag Coalition.  The petition challenged San Francisco’s “Checkout Bag Ordinance.” Existing law in the City bans single-use non-compostable plastic checkout bags at supermarkets and at chain pharmacies.  The new Checkout Bag Ordinance extends this ban to all retailers. In addition, the new ordinance requires retailers to charge ten cents for each single-use compostable or paper bag. Further, single-use paper bags must have 40 percent minimum recycled content. The ordinance also establishes performance standards for reusable bags and directs San Francisco’s Department of the Environment to conduct education and outreach to store owners and consumers.

 Petitioner Save the Plastic Bag Coalition asserted two grounds for challenging the Checkout Bag Ordinance. Petitioner first argued the City and County’s reliance on a Categorical Exemption under CEQA was unlawful. Petitioner also argued that California’s Retail Food Code preempts the Checkout Bag Ordinance to the extent the ordinance applies to retail food establishments.

 The trial court ruled San Francisco qualified as a “regulatory agency” eligible to invoke CEQA categorical exemptions. The court noted Petitioner failed to provide authority for its assertion that Class 7 and 8 categorical exemptions do not apply to “legislative” activity. The court concluded that, when an ordinance is enacted pursuant to the municipality’s police powers to promote the general welfare, the municipality is acting in its regulatory capacity, within the meaning of CEQA’s Class 7 and 8 categorical exemptions. The court also found the record did not contain a “fair argument” that the ordinance will cause significant environmental harm due to unusual circumstances.

 The trial court rejected Petitioner’s preemption argument, finding the California Retail Food Code is clear and precise in defining the regulatory field it reserves for the state—the field of health and sanitation standards. Therefore, the Retail Food Code preempts only local laws establishing health and sanitation standards for retail food establishments. While the Retail Food Code addresses single-use bags to ensure they are safe and clean for transporting food, it does not require retail food establishments to use or provide customers with any single-use bags. Nor does the Code require that single-use bags be made from any particular material. For these reasons, the court found the City and County’s Checkout Bag Ordinance constituted an environmental standard and not a health and safety standard which could be preempted by the Retail Food Code. (John Wheat)

The Governor’s Office of Planning and Research Announces New Guidelines for General Plans

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The Governor’s Office of Planning and Research recently announced that it has committed to updating the General Plan Guidelines in 2013. The general plan guidelines were last updated in 2003. Each county and city in California is required to adopt a general plan which comprehensively addresses long-term planning. The seven required elements of a general plan include conservation, safety, traffic circulation, noise, land use, open space and housing. (Gov. Code Sections 65300 et seq.) The new general plan guidelines will also address new issues such as greenhouse gas emissions reductions, climate change adaptation, renewable energy, infill development, public health, and regional planning.

OPR is also evaluating ways to provide policy guidance online, and exploring the feasibility of creating templates to reduce the time and cost to local governments of updating a general plan.

Public workshops will be open to stakeholders and the general public. To sign up for general plan guideline emails, or for more information about the update process, see: http://www.opr.ca.gov/s_generalplanguidelines.php  (By Holly Roberson)

Fifth Appellate District Court of Appeal Holds that a Notice of Exemption Filed Prior to Project Approval Was Not Properly Filed and Did Not Trigger 35-Day Limitation Period

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Coalition for Clean Air v. City of Visalia (2012) ___ Cal.App.4th ___ (Case No. F062983, Sept. 14, 2012)

Defendant and real party in interest VWR International proposed building a 500,000-to-750,000-square-foot distribution and supply facility on 32 acres of land located in Visalia, California. The proposed site was undeveloped land that had been farmed and was in a planned heavy industrial zone.

 On November 3, 2010, the City filed a notice of exemption (NOE) and stated that the project was exempt from CEQA review as a ministerial action. Fifty-five days later, in December 2010, plaintiffs filed a petition and complaint alleging that the City violated CEQA by failing to conduct any environmental review of the project. Plaintiffs in the litigation alleged that the NOE was filed five days prior to the approval of the project, and therefore, the 35-day statute of limitations ordinarily triggered by the filing of a NOE did not apply.

Plaintiffs argued that a letter from the City’s community development director, dated November 8, 2010, constituted the first approval of the proposed project issued by the City. The letter stated: “The revised site plan was submitted for off-agenda review by the committee on October 14, 2010. The Site plan review number 10-113 is approved as a Revise and Proceed to building permits and off-site civil improvement design drawings.”

 VWR International filed a demurrer to the petition, contending the CEQA claims were barred by the statute of limitations. The trial court concluded that the CEQA cause of action was time-barred and dismissed the petition. Plaintiffs appealed.

The appellate court held that the demurrer should have been ovverruled. The court noted that, for a demurrer based on the statute of limitations to be sustained, the untimeliness of the lawsuit must clearly and affirmatively appear on the face of the complaint and matters judicially noticed. VWR International argued that flaws in the decisionmaking process underlying a facially valid and properly filed NOE do not prevent the NOE from triggering the 35-day limitations period. Plaintiffs argued that an NOE filed prior to project approval is noncompliant with CEQA Guidelines section 15062 and cannot trigger the limitation period. The appellate court agreed with the plaintiffs and found that section 15062 “unambiguously requires notices of exemption to be filed after the project has been approved.” Subdivision (a) of section 15062 states: “The notice shall be filed, if at all, after approval of the project,” and subdivision (b) states: “The notice shall not be filed with the county clerk…until the project has been approved.”

The appellate court applied the standard of review for demurrers, and assumed Plaintiffs’ allegations regarding the timing of the project approval were true. Based on the allegations in the petition, the appellate court found the NOE was not properly filed and therefore did not comply with Guidelines section 15062. The City’s noncompliant NOE did not trigger the 35-day limitations period, and the appellate court remanded the question regarding when the approval of the project occurred back to the trial court. The appellate court noted that the issue of project approval could involve factual disputes based on the definition of “approval” in Guidelines section 15352 and the Supreme Court’s discussion of that definition in Stockton Citizens for Sensible Planning v. City of Stockton (2010) 48 Cal.4th 481.

 The court also determined that Plaintiff’s allegations that no building permits could be issued for the project without a planned development permit identified a ministerial duty that may be enforced pursuant to a writ of mandate and that Plaintiffs had standing to enforce that duty.

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