This is the second update on environmental regulatory and legal developments in Los Angeles and adjacent counties, as well as the Southern San Joaquin Valley. We welcome your comments and feedback.

South Coast Air Quality Management District:

*Continued Report on New Management: Wayne Nastri, once an SCAQMD Governing Board Member, former USEPA Region IX Regional Administrator and recently an environmental consultant, was appointed acting Executive Director (ED) for the AQMD earlier this year. Some describe him as “a breath of fresh air at the District.” The Governing Board is conducting a nationwide search for a permanent ED, yet has extended Mr. Nastri’s initial 6-month term until February 2017. Mr. Nastri has made a number of staffing changes: Jill Whynot was promoted to Chief Operating Officer, working out of the Executive Office (# 2 position); Laki Tisopulos replaced Mohsen Nazemi as Deputy Executive Officer (DEO) for Engineering and Compliance; Susan Nakamura replaced Jill Whynot as acting assistant DEO for Planning and Rules.

*Efforts to improve permit processing: Seven thousand, or about one year’s worth of permit applications to the District remain pending. ED Nastri “resurrected” the Permit Streamlining Task Force and asked the Governing Board to either hire temporary permit engineers or outsource permit processing to consultants. Mr. Nastri also proposed a move to e-permitting – for filing, granting and tracking of applications. The District holds applicants’ payments until permits are granted, so faster permitting, long sought by the regulated community, would also enhance District finances.

*Configuration of the Governing Board:   For now at least, the District Governing Board retains its 7 to 5 Republican majority. Senate President pro tem De Leon’s SB1387, which was an attempt to add three environmental activists to the Governing Board, failed 30-35 in the State Assembly late Tuesday evening, August 30.

*Communities for a Better Environment, et al. v. SCAQMD, Los Angeles County Superior Court Case No. Bs161399 (filed March 9, 2016). CBE and the Center for Biological Diversity (CBD) challenge SCAQMD Governing Board’s 12/4/15 adoption of RECLAIM amendments (12 ton NOx shave instead of 14 tons). The hearing on the Writ of Mandate is set for March 8, 2017 in Department 96. (See our California Environmental Blogs from August 8 and August 22 of this year for reports on another activist lawsuit by the CBD.)

*Rule 219 (Equipment Not Requiring a Permit) & Rule 222 (Filing Requirements for Equip. Not Requiring a Permit) While the California Air Resources Board (CARB) Methane Rule is not scheduled for adoption until Spring 2017, District Staff are moving toward amending its Rules in December 2016 to be consistent with the not-yet-adopted Methane Rule. We expect the amendments will limit exemptions, as well as increase and modify reporting requirements for oil and gas wells, potentially beyond what the CARB Rule will require. Susan Nakamura and Eugene Kang are assigned to rule development.

* Proposed Rule 1148.3 (Requirements for Oil and Gas Wells and Commercial Suppliers) is set for Governing Board consideration in February 2017 and is expected to establish best management practices during specific well stimulation activities. Rule 1148.2, last amended September 2015, is listed for Governing Board consideration of further amendments in March 2017.

*SCAQMD’s 2016 Air Quality Management Plan (AQMP): Under this plan, the District commits every 4 years to reducing certain tons of emissions per day for individual business sectors. After approval by the CARB and the US EPA, these commitments become binding on those business sectors. A key issue, “fair share,” is the continued tightening of regulation on stationary industrial sources which make up a small and shrinking portion of the South Coast emissions inventory compared to transportation or “mobile sources.”  Over the years, stationary businesses have been squeezed again and again. Increased emphasis on the mobile sources regulated by the CARB and the US EPA, over which SCAQMD has little or no control, is encouraging. The AQMP is behind schedule and is not set for a Governing Board vote until December 2016. Regulators are relying heavily on financial incentives to achieve reductions under the AQMP. Proposed amounts for a regional transportation plan are high: District— a billion; CARB—10 billion; SCAG— 0.5 trillion. Questions remain as to where this money will come from. If it is not forthcoming, will the businesses and other entities required to reduce emissions under the incentive programs be left holding the bag? The LA City Council recently passed a resolution opposing the proposed incentive program.

Los Angeles City Council and County Board of Supervisors:

*Clean Up Green Up: The LA City Council adopted the “CUGU” ordinance April 12, 2016. It imposes stringent requirements on siting or expanding businesses in Boyle Heights, Wilmington and Pacoima. The Council may impose CUGU on other LA neighborhoods and the LA County Board of Supervisors is proposing to extend “CUGU” to the entire county. More information, including the City Attorney’s Memo transmitting the Ordinance can be found at: https://cityclerk.lacity.org/lacityclerkconnect/index.cfm?fa=ccfi.viewrecord&cfnumber=15-1026

*City of LA hydraulic fracturing moratorium: Still pending, but slowed down. Would shut down all oil and gas operations, not just hydraulic fracturing.

*City of LA Petroleum Administrator: Both environmental activists and the industry support appointment of an administrator. The City has begun interviews of candidates.

Water Issues:

*Aquifer Exemptions for the San Joaquin (Central) Valley: Exemptions allowing injection of water produced from oil and gas production are delayed, yet face a February 2017 deadline over which the involved regulators are resolutely firm. Exemptions are required for injection unless the aquifer has over 10,000 parts per million of TDS (total dissolved solids) or the aquifer has already been exempted. The State Water Resources Control Board (SWRCB) and the Division of Oil, Gas and Geothermal Resources have reached an accord on the requirements. The US EPA is now asking for more information, further slowing the process.

*Surface Impoundments for Oil & Gas Production: As referenced in the first Southland Update, both the Central Valley and Los Angeles Regional Water Quality Control Boards issued directives in early 2016 requesting information about “surface impoundments,” including sumps, whether in use or not. After many inspections, no sumps have been found in the LA Region; some are still active in the Central Valley. On August 19, 2016, the Central Valley Regional Board held a public hearing concerning proposed Waste Discharge Requirements General Orders for Oil Field Discharges to Land within the Tulare Lake Basin in the Southern San Joaquin Valley (“Proposed Order”). The Central Valley Regional Board received public comment on the Proposed Order and Staff recommended that the Board not adopt the Proposed Order as written. The Proposed Order would have operated as a de facto ban of the use of sumps for produced water disposal, crippling industry. The Board voted in favor of Staff’s recommendation. Stay tuned for this matter to come before the Board again.

*Industrial General Stormwater Permits: At issue is whether the federal exemption applies for oil and gas facilities that have not had releases of reportable quantities into stormwater. Responses by the LA and Central Valley Water Boards have been uneven. The LA Water Board has been insisting that any release, rather than just a release to stormwater, makes a facility subject to the Permit requirement. Central Valley is honoring the Federal exemption. This issue affects many facilities, and could impose major additional costs on LA oil and gas producers.