Southern California Environmental Law Update

This is the first in a series of posts to provide the latest on environmental and legal developments affecting oil and gas operations and development and other industries in Los Angeles and adjacent counties, as well as the southern San Joaquin Valley. In this post, we’ll provide an update on legislation proposed in 2019 that affects industry in southern California, implementation of significant legislation previously adopted, and initiatives in Los Angeles to limit oil and gas operations.

AB 617 Implementation

The stated goal of AB 617 (Garcia, 2017) is to protect communities with disproportionate levels of air emissions and provide stricter penalties for certain infractions by regulated entities. In line with AB 617, the California Air Resources Board (CARB) is implementing the Community Air Protection Program and finalized its first annual selection of communities for participation in the Program in September 2018. Air districts are now identifying candidate communities to be considered for the second year of the Community Air Protection Program. CARB isn’t likely to vote on the selections until later in 2019.

In the first round of community selection, South Coast Air Quality Management District (South Coast Air District) chose (1) Wilmington/West Long Beach/Carson; (2) San Bernardino/Muscoy; and (3) Boyle Heights/East Los Angeles/West Commerce. On September 6, 2019, South Coast Air District’s Governing Board approved Community Emission Reduction Programs for these areas. Most of the plans set goals for action, and enhanced enforcement, rulemaking and incentive grants will follow. The plan for San Bernardino/Muscoy focuses on truck, rail bus traffic, warehouses (as an indirect source), concrete and asphalt batch plants, and rock and aggregate plants. The plan for Boyle Heights/East Los Angeles/West Commerce focuses on neighborhood and freeway truck and bus traffic, railyards, metal processing facilities, rendering facilities, auto body shops, and general industrial facilities, along with reducing exposure at schools, childcare facilities, community centers, libraries, and public housing projects. Continue Reading

California Court of Appeal Rejects “Substantial Factor” Test for Regional Board to Issue a Cleanup and Abatement Order to a Responsible Person

After years of investigation, the San Diego Regional Water Quality Control Board (“Regional Board”) issued a cleanup and abatement order (“CAO”) to San Diego Gas & Electric Company (“SDG&E”) after finding that SDG&E caused or permitted waste to be discharged into the San Diego Bay, and thereby created, or threatened to create, pollution and nuisance conditions.  SDG&E contested its designation as a “responsible person” under California Water Code section 13304 and petitioned for a writ of mandate to have the CAO vacated, arguing that the nuisance element of section 13304 must be construed in light of common law nuisance principles, and that the Regional Board had not demonstrated by substantial evidence that SDG&E’s actions were a substantial factor in creating, or threatening to create, a condition of pollution or nuisance.  In furtherance of this argument, SDG&E relied on two cases, City of Modesto Redevelopment Agency v. Superior Court (2004) 119 Cal.App.4th 28 (Modesto I) and City of Modesto v. Dow Chemical Co. (2018) 19 Cal.App.5th 130 (Modesto II), stating that the Modesto cases required application of the “substantial factor” causation test to determine whether SDG&E created or threatened to create a condition of pollution or nuisance.  The Superior Court of San Diego County denied the writ, and SDG&E appealed.

In June, the California Court of Appeal, Fourth Appellate District upheld the trial court’s denial and held that SDG&E was properly designated as a “responsible person” under section 13304.  The appellate court distinguished the Modesto cases cited by SDG&E, stating that the fact that discharged solvents constituted a nuisance was never in dispute in the Modesto cases.  Instead, the Modesto cases  focused on “the issue of causation in the context of whether defendants who had no physical control over the discharged waste…could be found a ‘cause’ of the discharge based on the equipment they designed or instructions they gave.”  (SDG&E v. San Diego Regional Water Quality Control Board, D073968, p. 20.)   The court held that the nuisance creation element of section 13304 does not require application of the common law substantial factor test for causation, and that a Regional Board is not required to find that a person was a substantial factor in creating a nuisance prior to issuing a CAO to that person.  Section 13304 requires that a Regional Board establish a causal or connecting link between a person and an actual or threatened discharge of waste into state waters and that the discharge of waste created, or threatened to create, a condition of pollution or nuisance before issuing a CAO.  Because substantial evidence supported the Regional Board’s finding that waste discharged by, and directly attributed to SDG&E, created, or threatened to create, a condition of pollution or nuisance, the Regional Board’s CAO issued to SDG&E was valid.

The appellate court opinion can be found here.

California Landlords May Need to Take Additional Steps by July 2019 to Comply with Prop 65

INTRODUCTION

California apartment and other residential rental property landlords and their agents (e.g., property managers) with more than 10 employees need to comply with the State’s Safe Drinking Water and Toxic Enforcement Act (“Prop 65”).

Today, many landlords comply with Prop 65 by posting signs in building common areas that meet specific size, placement, and content requirements, warning of exposure to certain Prop 65-listed chemicals.

As of July 1, 2019, however, landlords may be required to provide new warnings to their tenants to comply with Prop 65.  This is because OEHHA, the California agency in charge of implementing Prop 65, recently came up with new “safe harbor” requirements.[1]

THE NEW REQUIREMENTS

OEHHA’s new requirements are that warnings be conveyed annually in:  (1) a letter addressed to all known adult tenants and delivered to the rental property, (2) an email to all email addresses the landlord uses to communicate with tenants, or (3) a lease (but warnings in a lease only cover adult tenants that either sign or are named in the lease).

OEHHA also requires that warnings have specific content, including:

  • the symbol 
  • the word “WARNING” in all capital letters and bold print
  • this text:

    [Name of one or more exposure sources(s)[[2]]] on this property can expose you to [name of one or more chemicals[[3]]] which is [are] known to the State of California to cause [“cancer,” “birth defects or other reproductive harm,” or “cancer and birth defects or other reproductive harm”]. Talk to your landlord or the building owner about how and when you could be exposed to this chemical in your building. For additional information go to www.P65Warnings.ca.gov/apartments.

All of the text must be in English as well as any other language the landlord uses in the lease, the rental agreement, or any other disclosures or required notices.

OEHHA’s new requirements also specifically remind landlords that they may need to separately comply with the Prop 65 regulations governing enclosed parking facilities and designated smoking areas.

AN EXAMPLE

An example of a Prop 65-compliant warning is:

 WARNING:  Fireplaces or unvented gas space heaters on this property can expose you to carbon monoxide, which is known to the State of California to cause birth defects or other reproductive harm.  Talk to your landlord or the building manager about how and when you could be exposed to this chemical in your building.  For more information, go to www.P65Warnings.ca.gov/apartments.

QUESTIONS?

OEHHA’s final adopted regulatory text for residential rental property exposure warnings can be found here.

For more information, contact Melissa A. Jones or Bao M. Vu of Stoel Rives LLP.

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[1]  The so-called “safe harbor” warning language is deemed compliant with Prop 65’s requirements.  Prop 65’s regulations specifically allow any other warning that provides a “clear and reasonable warning” prior to exposing an individual to certain chemicals in California.  But with the more specific, detailed regulations discussed in this alert that specifically apply to residential rental properties, other more general, posted warnings might not be enough under Prop 65.

[2]  OEHHA has provided the following examples of potential “exposure source(s)” for residential rental properties:  “fireplaces or unvented gas space heaters,” “paint chips and dust from lead-containing paint,” “use of lead-containing plumbing materials,” “imported vinyl miniblinds manufactured prior to 1997,” “building materials containing urea-formaldehyde resins,” and “asbestos-containing materials, including some ceiling coatings on this property . . . if disturbed.”

[3]  Common Prop 65-listed chemicals found in apartments and other residential rental properties include:  asbestos, carbon monoxide, formaldehyde, carbon monoxide, and lead.

Be Careful of What You Wish For – Environmental Groups Complain about the Environmental Study of Hydraulic Fracturing That They Sued BLM to do

On April 29, 2019, the U.S. Department of Interior, Bureau of Land Management (BLM) released a Draft Supplement Environmental Impact Statement (Draft SEIS) analyzing potential impacts of hydraulic fracturing for future oil & gas development within the 400,000 acre Bakersfield Field Office Planning Area. That planning area includes Fresno, Kern, Kings, Madera, San Luis Obispo, Santa Barbara, Tulare and Venture counties.

The Need for a Supplemental EIS

The Draft SEIS is the latest development in BLM’s ongoing management of oil and gas resources and supplements BLM’s 2012 Final EIS, associated with BLM’s 2014 Resources Management Plan (RMP). The 2014 RMP was challenged by the Center for Biological Diversity and Los Padres ForestWatch (Civ. No. 2:15-cv-04378-MWF/JEM). In 2016, the U.S. District Court for the Central District of California issued a summary judgment ruling that BLM had failed to take the required “hard look” at hydraulic fracturing. In 2017, the parties reached a settlement agreement that kept in place the 2014 RMP and required BLM to prepare a SEIS to analyze the environmental consequences of hydraulic fracturing.

BLM issued the requisite Notice of Intent (NOI) to prepare that Draft SEIS in August 2018. That same NOI also contemplated a possible amendment to the 2014 RMP. However, in the Draft SEIS determined that the environmental impacts of integrating hydraulic fracturing into future BLM leasing and development decision did not conflict with the earlier RMP and amendment was unnecessary. Continue Reading

Exclusive Jurisdiction by the California Supreme Court Over Judicial Review of Thermal Power Plant Licenses Held Unconstitutional

The Alameda Superior Court recently declared portions of the Warren-Alquist Act unconstitutional in Communities for a Better Environment v. Energy Resources Conservation and Development Commission (CBE v. Energy Commission).  The Court found that California Public Resources Code section 25531(a) and a portion of section 25531(b) ― provisions of the Warren-Alquist Act concerning judicial review ― void and enforceable.  The Warren-Alquist Act governs the Energy Commission and grants the Commission exclusive jurisdiction over the permitting of all thermal power plants in California that are 50 megawatts (MW) or larger.

Plaintiffs Communities for a Better Environment and Center for Biological Diversity originally filed their complaint in 2013, alleging that section 25531(a) violates article VI, section 10 of the California Constitution by restricting the judicial forums available to citizens to challenge Energy Commission decisions to the California Supreme Court.  Plaintiffs also challenged the constitutionality of section 25531(b), arguing that it restricts a court’s ability to review the facts of such challenges, in violation of the separation of powers.  Our past blog posts, available here and here, detail the allegations in the underlying complaint, as well as the Court of Appeal decision declaring plaintiffs’ allegations ripe for review, reversing and remanding the case back to the Superior Court.

The decision hinges on the unique interplay between the authority of the California Public Utilities Commission (CPUC) and the Energy Commission, and provisions of the California Constitution that previously allowed for exclusive jurisdiction of review of CPUC decisions by the California Supreme Court.  Before energy deregulation in 2001, thermal power plant developers had to obtain a certificate of public convenience and necessity from the California Public Utilities Commission (CPUC) as well as an Energy Commission license for a thermal power plant 50 MW or greater, with judicial review of both the license and certificate proceeding directly to the California Supreme Court.  Article XII of the California Constitution gives the Legislature authority to establish the manner and scope of judicial review of CPUC decisions, unlimited by other provisions of the Constitution, including Article VI, section 10, which gives superior courts original jurisdiction in all cases except those specifically reserved to the California Court of Appeal or California Supreme Court in section 10.

With energy deregulation in California, certificates of public convenience and necessity were no longer required for privately-developed power plants, and the Warren-Alquist Act was revised accordingly to remove the link between Energy Commission licenses and CPUC certificates.  The provisions granting the California Supreme Court exclusive judicial review of Energy Commission licenses remained the same, however.  By this time, the Legislature had also shifted review of CPUC decisions from the California Supreme Court to the California Court of Appeal.  The Alameda Superior Court concluded here that the only nexus allowing for direct challenge of Energy Commission decisions to the California Supreme Court was this defunct link to California Supreme Court jurisdiction over CPUC decisions.  Thus, California Supreme Court precedent dating to 1985 that had previously upheld California Public Resources Code section 25531(a) against a similar constitutional challenge was outdated, and overturned here.

The Supreme Court has routinely declined to hear appeals of Energy Commission decisions on power plants.  This decision by the Alameda Superior Court means that Public Resources Code section 25903 now governs judicial challenges to power plant approvals from the Energy Commission and sets judicial review in superior court.

Oil & Gas Related Bills Introduced in the 2019-2020 Legislative Session

The 2019-2020 California Legislative Session has officially reached its first deadline. February 22, 2019 marked the deadline by which bills could be introduced for the first half of the Session. Lawmakers will begin Spring Recess April 12 and reconvene April 22. The last day for bills to be passed out of the house of origin is May 31, 2019.

Below is a list of some of the key bills Stoel Rives’ Oil & Gas Team will be monitoring throughout the Legislative Session.

AB 255 (Limòn, D) and SB 834 (Jackson, D): State lands: leasing: oil and gas.

Status: Introduced January 23, 2019; referred to Committee on Natural Resources February 7, 2019.

The Lempert-Keene-Seastrand Oil Spill Prevention and Response Act authorizes the administrator for oil spill response to offer grants to a local government with jurisdiction over or directly adjacent to waters of the state to provide oil spill response equipment to be deployed by a certified local spill response manager, as provided. This bill would provide that Native American tribes and other public entities are also eligible to receive those grants.

AB 353 (Muratsuchi, D): Oil and gas: Definitions: additive.

Status: Introduced February 4, 2019; awaiting referral.

Under current law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. Current law defines various terms for those purposes, including “additive.” This bill would make a non-substantive change to that definition. Continue Reading

2018 IGP Amendments – Everything You Need to Know

On November 6, 2018, the State Water Resources Control Board adopted an amendment to the National Pollutant Discharge Elimination System General Permit for Storm Water Discharges Associated with Industrial Activities (General Permit). The General Permit Amendment addresses the implementation of previously-adopted Total Maximum Daily Loads (TMDLs), the new federal Sufficiently Sensitive Methods Rule, and statewide Compliance Options. These changes take effect on July 1, 2020. Continue Reading

Sixth Circuit Limits Scope of CWA, Breaking with Fourth and Ninth Circuits

On September 24, 2018, in two separate decisions, the Sixth Circuit Court of Appeals found that coal ash wastewater that enters groundwater and eventually travels to navigable waters through the groundwater is not regulated under the Clean Water Act (“CWA,” or the “Act”).  In these decisions, the Sixth Circuit expressly disagrees with recent holdings from the Fourth and Ninth Circuits, paving the way for potential Supreme Court review.

The CWA requires a permit for discharge of pollutants into navigable waters.  33 U.S.C. §§ 1251 et seq.  At issue in both Sixth Circuit cases is whether the CWA extends to regulate indirect discharge into a navigable water, through groundwater.  Rejecting the “hydrological connection” theory, the Sixth Circuit found that groundwater is not subject to regulation under the CWA because it is not a point source.  Therefore, the discharge of pollutants into groundwater, and subsequent travel to a navigable water, also does not fall within the scope of the CWA.

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Court Finds that Privately-Owned Industrial Stormwater Discharges Require Clean Water Act Permits

Environmental groups have obtained a favorable Clean Water Act (“CWA”) ruling from the U.S. District Court for the Central District of California, which can be viewed as an expansion of jurisdiction for stormwater permitting for industrial sources.  In the Order, issued on August 9, 2018, Judge Stephen V. Wilson held that if the U.S. Environmental Protection Agency (“EPA”) determines that stormwater discharges “cause or contribute to violations of water quality standards,” then regulators must limit such stormwater discharges under the mandates of the CWA.  EPA is required to regulate stormwater discharges through the National Pollution Discharge Elimination System (“NPDES”) permitting scheme, and does not have discretion to address the pollution through other methods.

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DOGGR Issues Revised Regulations for UIC and Idle Wells

 On July 27, 2018 the California Division of Oil, Gas, and Geothermal Resources (“DOGGR”) issued two notices of proposed rulemaking action applicable to oil and gas operations in the state.  DOGGR released updated underground injection control (“UIC”) regulations, as well as proposed regulations for idle well testing and management.

UIC Regulations

DOGGR supervises the drilling, operation, maintenance, and plugging and abandonment of onshore and offshore oil, gas, and geothermal wells.  Wells that inject fluid for the purposes of enhancing oil or gas recovery, re-pressuring oil or gas reservoirs, or disposing of wastewater and other byproducts associated with oil and gas production – referred to as injection wells or UIC wells – fall within DOGGR’s regulatory scope.

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