SOUTHERN CALIFORNIA ENVIRONMENTAL UPDATE – NEW AIR QUALITY AND OIL & GAS REGULATORY DEVELOPMENTS

This is a continuing series of posts on the latest 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 provide an update on regulatory developments at the California Air Resources Board, the California Geologic Energy Management Division, the U.S. Environmental Protection Agency and the South Coast Air Quality Management District.

STATE AGENCIES

California Air Resources Board (CARB)

CARB’s ongoing regulatory actions affect industry generally and are focused more heavily on the oil and gas industry. Actions potentially affecting all industries include the AB 617 program, termed by CARB as the Community Air Protection Program, CRT, an evolving regulation requiring substantially increased reporting of both criteria and toxic air emissions and the Low Carbon Fuel Standard, calculating carbon intensity based on Stanford’s OPGEE model.

AB 617, CARB’s Community Air Protection Program (CAPP): CARB’s CAPP action under AB 617, implements Assembly Member Cristina Garcia’s 2017 bill, requiring CARB to identify annually communities that they find impacted by disproportionate air emissions. These communities then assemble Community Steering Committees, and the local air districts must work with these Committees to develop Community Emission Reduction Plans (CERPs). For more background on AB 617 implementation by CARB and the local air district, see Stoel’s California Environmental blogs for October 4, 2019 and May 11, 2018. Continue Reading

State Water Board Staff Releases Staff Preliminary Draft Statewide Construction Stormwater General Permit and Announces Virtual Workshops

By Melissa Foster, Mike Mills, Elizabeth Ewens and Lauren Neuhaus on December 1, 2020 Posted in Clean Water Act, NPDES, Water

On November 30, 2020, State Water Resources Control Board (State Water Board) staff released a preliminary staff draft of the Statewide Construction Stormwater General Permit (Preliminary Draft General Permit). In conjunction with its release of the Preliminary Draft General Permit, State Water Board staff also announced that they will hold two public workshops regarding the preliminary staff draft. According to the Public Notice, the workshops are intended to: (1) provide stakeholders and interested parties information regarding the preliminary draft General Permit, and (2) allow stakeholders and interested parties to provide feedback to staff.

The Preliminary Draft General Permit includes:

New requirements to implement existing Total Maximum Daily Loads;
New regulation of passive treatment technology uses and discharges from dewatering activities;
Updated criteria for Notices of Non-Applicability;
Efficiency to the existing Notice of Termination process;
Requirements to implement the California Ocean Plan, the Inland Surface Waters Plan, and statewide Trash provisions;
Updated requirements for demolition activities;
Updated water quality sampling requirements per the federal Sufficiently Sensitive Test Methods Rule; and
Updated monitoring and reporting requirements.

Update: State Water Board Issues Revised Notice for Board Meeting Regarding Winery General Order

By Melissa Foster, Janelle Krattiger, Mike Mills and Lauren Neuhaus on November 12, 2020 Posted in Agribusiness, Water

In July, we blogged about the State Water Resources Control Board’s (“State Water Board’) release of proposed General Waste Discharge Requirements for Winery Process Water Treatment Systems (see: July 15, 2020 blog post on proposed General Order and July 20, 2020 blog post on noticed stakeholder meetings). The State Water Board recently issued a revised notice that changes the dates of its Board meeting and when responses to public comments will be available.

Pursuant to the State Water Board’s revised notice, the Board adoption hearing for the proposed General Order and draft California Environmental Quality Act Initial Study, Mitigated Negative Declaration (“MND”) has been rescheduled from November 17, 2020 to December 15, 2020. The meeting will begin at 9:00am Pacific Standard Time. Revisions in response to public comments made on the proposed General Order and MND will be available on the Winery Order website on or before December 1, 2020.

Due to COVID-19, the State Water Board presently intends to hold its Board meeting solely through remote presence. Further information regarding the meeting will be posted on the State Water Board Calendar page as the meeting date gets closer.

If you have questions regarding water resources or the potential effect of State Water Board actions on your facility, or other environmental, compliance, reporting, or permitting requirements, please contact our California water quality attorneys.

Force Majeure Probably Doesn’t Permit Smoke Taint Rejection

By Todd Friedman and Guy Thompson on September 2, 2020 Posted in Environmental Contamination, Wine

A force majeure clause in a contract permits the suspension, or in some cases, the termination, of performance by a party to the contract upon the occurrence of a force majeure event. Traditionally, a force majeure event is a matter outside of the control of the obligated party that makes it impossible or impracticable for that party to perform one or more of its obligations under the contract. For example, depending on the specific language of the force majeure provision, a labor strike might excuse a party from performing its obligation to manufacture and deliver goods purchased by a buyer.

A typical force majeure provision from a grape purchase agreement is set forth below:

Force Majeure. Neither Seller nor Buyer shall be liable to the other party, nor be deemed to have defaulted under or breached this Agreement, for any failure or delay in performing any term of this Agreement, when and to the extent such failure or delay results from acts beyond the affected party’s reasonable control, including, without limitation: (a) acts of God; (b) flood, fire, earthquake or explosion; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot, or other civil unrest; (d) epidemic or pandemic; (e) actions, embargoes or blockades; (f) action by any governmental authority; (g) national or regional emergency; (h) strikes, labor stoppages, or slowdowns or other industrial disturbances; and (i) shortage of adequate power or transportation facilities.

Here, upon a force majeure event, if either Seller or Buyer is unable to perform its obligations under the grape purchase agreement because of an event beyond its reasonable control, that party can claim force majeure and will be excused from performance during the continuance of the force majeure event. So, for instance, if the Seller’s crop is affected by floods that it could not have reasonably foreseen and it can only deliver 50% of its promised crop to its Buyer, it would have a reasonable defense against its obligation to deliver the entirety of the crop.

Okay, the Buyer says, I see “fire” listed above, so does the force majeure provision permit me to avoid purchasing grapes that may be tainted by smoke? Probably not. To understand why, it’s important to understand the Buyer’s obligations under a grape purchase agreement. Those obligations are actually fairly limited. First, and most obviously, the Buyer is obligated to pay for the grapes, and second, the Buyer is obligated to physically accept delivery of the grapes. A buyer may have other obligations as well, depending on the specific language in the agreement, such as directing the timing of harvest, providing bins, and providing wine samples.

Which of the Buyer’s obligations listed above is the Buyer unable to perform because of fire? If active fires exist in the Buyer’s immediate vicinity so that it is temporarily impossible or impracticable to operate, the Buyer may be able to invoke force majeure to delay accepting grapes until it is safe to reopen. But what about a winery in an area generally affected by smoke that is able to remain open, and that has a concern about the quality of the grapes it is receiving? That Buyer is still able to perform: it can pay for the grapes as long as banks remain able to process transactions, and it can accept the grapes as long as it is safe to remain open. Of course, a Buyer may not want to accept potentially smoke tainted grapes, but that does not mean that it is impossible or impracticable for it to do so. Typical force majeure clauses address when a party can’t perform its obligations, not when it might not want to perform its obligations.

Often, grape purchase contracts also include specific quality warranties, including MOG, mold, rot, brix, and perhaps smoke-related metrics, which a Seller is obligated to meet, and which can serve as a basis for rejection by the Buyer if not satisfied. Whether or not those kinds of quality-related warranties can be used as the basis for the Buyer to reject potentially smoke tainted grapes depends on the specifics of the provision and the facts at hand. But we believe, based on the language commonly used in grape purchase agreements, that Buyers wondering whether they have the right to reject potentially smoke tainted fruit would be better served looking to their quality warranties rather than to their force majeure provision.

CDFW Proposes New Regulations for Oil Spill Management Team Certification with a September 14 Comment Deadline

By Mike Mills and Sarah Taylor on August 3, 2020 Posted in Energy, Environmental Contamination, Oil and Gas, Regulations, Water

Last week, the California Department of Fish and Wildlife (“CDFW”) Office of Spill Prevention and Response (“OSPR”) issued notice that it proposes to add ten new regulations (sections 830.1 through 830.11 to Title 14 of the California Code of Regulations) to implement statutory changes resulting from Assembly Bill (“AB”) 1197. AB 1197 establishes criteria and a process for the certification of oil spill management teams. Continue Reading

California Wineries Take Note, Part Two: State Water Board Notices Stakeholder Meeting Regarding Winery General Order Fees

By Melissa Foster, Mike Mills, Elizabeth Ewens and Lauren Neuhaus on July 20, 2020 Posted in Agribusiness, Clean Water Act, NPDES, Water, Wine

As a follow-up to our July 15, 2020 blog post regarding the State Water Resources Control Board’s (State Water Board) release of proposed General Waste Discharge Requirements for Winery Process Water Treatment Systems (proposed General Order), today the State Water Board issued a public notice regarding the first stakeholder meeting to discuss fees associated with the proposed General Order.

The stakeholder meeting is scheduled to occur remotely via webcast on Thursday, August 6, 2020 from 1:30-3:30 PM. According to the notice, the meeting agenda will be available approximately one week prior to the meeting. If you wish to ask questions or provide comments during the workshop, please complete the instructions outlined in the public notice prior to 5:00 PM on August 5, 2020.

Please refer to the public notice for additional details.

California Wineries Take Note: State Water Board Releases Draft General Order for Winery Process Water for Public Comment

By Melissa Foster, Mike Mills, Elizabeth Ewens and Lauren Neuhaus on July 15, 2020 Posted in Agribusiness, Clean Water Act, NPDES, Water, Wine

On July 3, 2020, the State Water Resources Control Board (State Water Board) released proposed General Waste Discharge Requirements for Winery Process Water Treatment Systems (proposed General Order) along with the draft California Environmental Quality Act (CEQA) Initial Study and Mitigated Declaration for public comment. The proposed General Order will apply statewide, and includes requirements to ensure winery operations will not adversely impact water quality. The State Water Board also noticed a July 22, 2020 public workshop and future proposed adoption of the proposed General Order. The July 22, 2020 public workshop will begin at 9:30 a.m. via remote attendance only. Although a quorum of the State Water Board will be present at the public workshop, no final action will be taken at the workshop. Continue Reading

CDFW Moves Notifications for Lake and Streambed Alteration Standard Agreements Online

By Mike Mills and Sarah Taylor on July 8, 2020 Posted in Regulations, Water

Last month, the California Department of Fish and Wildlife (“CDFW”) issued notice that it will begin accepting electronic notifications for all Lake and Streambed Alteration Standard Agreements (Cal. Fish & Game Code § 1600 et seq.) effective August 1, 2020. This move to online applications is part of a broader effort by CDFW to go paperless.

CDFW will accept notifications for Standard Agreements through its new online Environmental Permit Information Management System (“EPIMS”). CDFW will continue to accept paper notifications through August 2020, but all applications received on or after September 1, 2020 will be processed via EPIMS. CDFW believes that using EPIMS will streamline the permitting process and make it more efficient by providing access anywhere internet is available, for submittal of supplemental information, calculation of permit fees, electronic signatures, automated email alerts and reminders, and applicant tracking of permit progress.

CDFW will continue to accept paper notifications for other agreement types, such as Master, Gravel/Sand/Rock Extraction, Routine Maintenance, and Timber Harvesting) until further notice.

How California’s Oil Industry May Help Preserve Agriculture in California’s Southern San Joaquin Valley – Recycled, Oil Field Produced Water Found Safe for Crop Irrigation

By Mike Mills and Sarah Taylor on May 28, 2020 Posted in Agribusiness, Energy, Oil and Gas, Water

A study conducted by researchers at Duke University and RTI International found that reusing oil field produced water that has been mixed with surface water to irrigate crops in Kern County’s Cawelo Water District does not pose any major health risks. To cope with droughts and water shortages, some farmers in the Cawelo district have used diluted produced water to irrigate their crops for over two decades. Though the diluted produced water does contain slightly elevated levels of salts and boron as compared to the local groundwater, those levels are below applicable state standards for drinking and irrigation water. Avner Vengosh, professor of water quality and geochemistry at Duke’s Nicholas School of the Environment, stated that the study “did not find any major water quality issues, nor metals and radioactivity accumulation in soil and crops that might cause health concerns.”

California’s own groundwater regulatory agency is on the brink of coming to the same conclusion. For nearly five years, the Central Valley Regional Water Quality Control Board (“Regional Board”) has been conducting its own investigation into the safety of using produced water to irrigate crops. As part of this effort, the Regional Board assembled a Food Safety Expert Panel, which commissioned various, wide-ranging studies. Regional Board Chair Karl Longley stated that the findings from these studies showed no red flags in crops grown with the recycled produced water. Regional Board staff is currently preparing a white paper summarizing the Food Safety Expert Panel’s findings and recommendations. We are monitoring the Regional Board’s work and will report on its conclusions in future posts.

Supreme Court Holds Clean Water Act Permit Required for Some Discharges to Groundwater

By Mike Mills, Sarah Taylor and Michael Campbell on April 27, 2020 Posted in Clean Water Act, Environmental Contamination

Last Thursday, the U.S. Supreme Court held that the Clean Water Act (“CWA”) requires a permit to discharge pollutants that reach “navigable waters” through groundwater, but only if the discharge is the “functional equivalent of a direct discharge” to the navigable water.¹ In reaching this decision, the Court took the middle ground. It rejected both the Ninth Circuit’s interpretation that the CWA requires a source to obtain a permit whenever pollutants found in a navigable water are “fairly traceable” to that source, and arguments by Environmental Protection Agency (“EPA”) and others that a permit is never required for discharges of pollutants that reach a navigable water through groundwater. Continue Reading