On April 6, the California Court of Appeal for the Third District issued its long-awaited decision in the consolidated lawsuits challenging the greenhouse gas (“GHG”) emission allowance auctions, which are a key component of the California Air Resources Board’s (“CARB”) Cap-and-Trade Program. The court held that CARB has the authority to establish the auctions and that they do not constitute an illegal tax. The second holding is key and breaks new legal ground; it also was made over a strong dissent. As the court put it, “the hallmarks of a tax are: 1) that it is compulsory; and 2) that the payor receives nothing of particular value for payment of the tax.” (Op. at 5.) The auction system is not a tax because 1) “the purchase of allowances is a voluntary decision driven by business judgments as to whether it is more beneficial to the company to make the purchase than to reduce emissions,” and 2) “the allowances are valuable, tradable commodities, conferring on the holder the privilege to pollute.” (Id.) This is a major victory for the Program and the State’s efforts to address climate change by reducing GHG emissions. However, there is a question whether the decision will stand. There was a strong dissent, and the decision is sure to be appealed to the California Supreme Court. Meanwhile, the Legislature is currently at work on crafting legislation aimed at determining how the existing ambitious emission reduction mandates will be met. The court’s decision will factor into those critical legislative deliberations, which will resume later this month after the spring recess. Continue Reading
NINTH CIRCUIT FINDS “THREATENED” DESIGNATION FOR BEARDED SEALS PROPER BASED ON NEW LONG-TERM PROJECTIONS
Alaska Oil and Gas Ass’n et al. v. Pritzker et al., 840 F.3d 671, 2016 U.S. App. LEXIS 19084 (9th Cir. 2016). Plaintiffs Alaska Oil and Gas Association, the state of Alaska, and North Slope Borough (collectively, Plaintiffs) challenged the National Marine Fisheries Service’s (the Service) determination that a subspecies of Pacific bearded seal, known as the “Beringia distinct population segment” (Beringia DPS), is threatened and entitled to protection under the Endangered Species Act (the Act). The state of Alaska also claimed the Service failed to adequately respond to its public comments, as required by the Act’s state cooperation provisions. The Ninth Circuit rejected Plaintiffs’ claims, finding that the Service’s decision to list the Beringia DPS as threatened was not arbitrary, capricious, or otherwise in contravention of the applicable law, and that the Service complied with its obligations to respond to the state of Alaska’s public comments.
DISTRICT COURT FINDS CLEAN WATER ACT LAWSUIT MAY PROCEED FOR DISCHARGES TO WATERWAYS FROM PASSING RAIL CARS
Sierra Club et al. v. BNSF Railway Co., 2016 U.S. Dist. LEXIS 147786 (W.D. Wash. Oct. 25, 2016). Environmental advocacy organizations (collectively, Plaintiffs) brought a Clean Water Act citizen suit against BNSF Railway Co. (BNSF) seeking relief for BNSF’s alleged unpermitted discharge of coal pollutants from its railcars into protected waterways. Plaintiffs alleged that “each time a BNSF train carrying coal travels through the state of Washington it discharges coal pollutants ‘through holes in the bottoms and sides of the rail cars and by spillage or ejection from the open tops of the rail cars and trains.’” Id. at *3–4. Both sides sought summary judgment, which the court denied. Id. at *2. The court rejected BNSF’s argument that Plaintiffs lacked standing, and determined that there were disputed issues of fact as to whether BNSF had committed Clean Water Act violations.
CALIFORNIA COURT OF APPEAL HOLDS ORDINANCE REGULATING MARIJUANA DISPENSARIES NOT SUBJECT TO ENVIRONMENTAL QUALITY ACT REVIEW
Union of Medical Marijuana Patients, Inc. v. City of San Diego, 4 Cal. App. 4th 103 (2016). The Union of Medical Marijuana Patients, Inc. (UMMP) brought a petition for writ of mandate against the City of San Diego (City), claiming the City failed to comply with the California Environmental Quality Act (CEQA) when it enacted an Ordinance (No. O20356) regulating the establishment and location of medical marijuana cooperatives within the City. UMMP argued that the Ordinance was a project under CEQA as a matter of law, and that the City failed to consider the reasonably foreseeable environmental impacts of the Ordinance prior to its adoption. The court of appeal rejected UMMP’s arguments, finding that the Ordinance was not a project under CEQA and that the alleged environmental impacts were not reasonably foreseeable.
Under current California law, commercial real property owners are required to state in every lease agreement whether the property leased has undergone inspection by a Certified Access Specialist (“CASp”) and, if so, whether the property has or has not been determined to meet all applicable construction-related accessibility standards. [California Civil Code Section 1938]. Effective immediately, additional commercial lease accessibility disclosures are required.
Voters this week approved Measure JJJ, otherwise known as the Build Better L.A. initiative (the “Initiative”), which establishes new labor and affordable-housing requirements for developers in Los Angeles seeking discretionary approvals for residential projects. The Initiative was promoted by the L.A. County Federation of Labor, which cited the City’s inability to meet the increasing need for affordable housing as motivation for the Initiative.
NINTH CIRCUIT ISSUES MAJOR CERCLA DECISION FINDING THAT ARRANGER LIABILITY CANNOT BE BASED ON CONTAMINATION DEPOSITED ON A SITE BY THE WIND
Pakootas v. Teck Cominco Metals, No. 15-35228, 2016 U.S. App. LEXIS 13662 (9th Cir. July 27, 2016). The Ninth Circuit issued an important Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) decision that will likely have broad impact in limiting the scope of arranger liability. The Confederated Tribes of the Colville Reservation and the state of Washington (collectively, plaintiffs) brought suit against Teck Cominco Metals, Ltd. (Teck), a smelter located ten miles north of the U.S.-Canada border and alleged to have contaminated a site on the upper Columbia River. Under plaintiffs’ theory, the smelter contaminated the Columbia River site by emitting hazardous substances, including lead, cadmium, and mercury, into the air, which were then carried by air currents to the contaminated site. A three-judge panel was asked to determine if a smelter that releases hazardous substances through a smokestack can be held liable for cleanup costs and natural resources damages under CERCLA, 42 U.S.C. § 9607(a) (3), where the released substances contaminate land or water located downwind. All parties agreed that “the answer turns on whether the smelter owner-operator can be said to have arranged for the ‘disposal’ of those hazardous substances within the meaning of CERCLA.” Id. at *4. The Ninth Circuit concluded that CERCLA liability could not be based on the gradual spread of contaminants via aerial deposition without human intervention—i.e., a defendant could not be said to have arranged for the “disposal” of hazardous substances under CERCLA that were emitted to the air and then contaminated land or water located downwind. Id.
NINTH CIRCUIT ISSUES PRECEDENTIAL OPINION RESTRICTING THE NAVY’S PEACETIME USE OF SONAR
Natural Resources Defense Counsel, Inc., et al. v. Pritzker, et al., No. 14-16375, 2016 U.S. App. LEXIS 13021 (9th Cir. July 15, 2016). In a significant decision, the Ninth Circuit invalidated the National Marine Fisheries Service’s (Fisheries Service) 2012 final agency decision (Final Rule) permitting the Navy’s peacetime use of Surveillance Towed Array Sensor System Low Frequency Active sonar (LFA sonar). At certain frequencies, LFA sonar can harm marine mammals and/or cause short-term disruption or abandonment of natural behavior patterns. Plaintiffs, environmental advocates including the Natural Resources Defense Council, the Humane Society of the United States, and Jean-Michel Cousteau, among others, brought suit against the Fisheries Service, the Department of Commerce, the Navy, and the National Oceanic and Atmospheric Administration (collectively, defendants) on the grounds that the Final Rule did not comply with the Marine Mammal Protection Act (the Act) because it failed to include mitigation measures that would have the least practicable adverse impact on marine mammals. The district court granted summary judgment to defendants. On appeal, the Ninth Circuit reversed, holding that the Final Rule was required to include mitigation measures that “‘effect the least practicable adverse impact on’ marine mammal species, stock, and habitat, as is specifically required by the [Act]” and that the Fisheries Service failed to demonstrate that the selected mitigation measures met this standard. Id. at *44–45.
CALIFORNIA SUPREME COURT AFFIRMS PUBLIC ENTITIES’ RIGHT TO CONDUCT ENVIRONMENTAL TESTING ON PRIVATE PROPERTY BUT REVISES STATUTE TO ALLOW JURY TRIAL ON DAMAGES
Property Reserve, Inc. v. Superior Court; Nichols v. Superior Court; and Department of Water Resources Cases, 1 Cal. 5th 151 (2016). The California Supreme Court clarified that public entities have the right to conduct environmental studies and geological testing on private property in order to determine the suitability of such property for government projects, including to assess the potential effects of proposed projects on biological, environmental, geological, and archeological resources as required by state and federal environmental laws, including the California Environmental Quality Act, the National Environmental Policy Act, the California Endangered Species Act, the Federal Endangered Species Act, the Federal Clean Water Act, and the California Porter-Cologne Water Quality Act. However, the court exercised its authority to reform—rather than invalidate—the relevant statutes to provide property owners the opportunity for a jury trial on damages caused by such activities.
The Ninth Circuit this week upheld a National Marine Fisheries Service decision to list the Pacific bearded seal as threatened under the Endangered Species Act based primarily on threats from climate change, reversing a district court decision that invalidated the NMFS rulemaking. The court’s opinion in Alaska Oil & Gas Ass’n v. Pritzker, No. 14-35806, was consistent with a 2013 D.C. Circuit opinion that upheld listing the polar bear as threatened based on climate change projections, and with a Ninth Circuit opinion earlier this year that upheld the U.S. Fish and Wildlife Service’s reliance on climate change models as the “best available science” for designating polar bear critical habitat. But this week’s opinion was noteworthy because the NMFS listing of the bearded seal relied on very long-term (through 2100) climate change predictions to determine that the species is likely to become endangered, while the polar bear listing only evaluated a 45-year “foreseeable future” period.
COLORADO CITY FRACKING BANS PREEMPTED BY STATE LAW
City of Longmont v. Colo. Oil and Gas Ass’n, 369 P.3d 573 (Colo. 2016), 2016 Colo. LEXIS 442; City of Fort Collins v. Colo. Oil and Gas Ass’n, 369 P.3d 586 (Colo. 2016), 2016 Colo. LEXIS 443. In two concurrent opinions, the Colorado Supreme Court invalidated the two cities’ bans on fracking and the storage of fracking wastes within the cities’ limits. The City of Longmont completely banned the fracking process within the city’s limits; whereas, the City of Fort Collins enacted a five-year moratorium on the fracking process. The Colorado Supreme Court held that both bans conflicted with state law in their operational effect and, thus, were preempted by state law.
OREGON’S TEMPORARY BAN ON INSTREAM MOTORIZED MINING EQUIPMENT NOT PREEMPTED BY FEDERAL LAW
Joshua Caleb Bohmker, et al. v. State of Oregon, et al., 2016 U.S. Dist. LEXIS 39163 (D. Or. March 25, 2016). The United States District Court for the District of Oregon upheld a state law placing a temporary ban on the use of motorized equipment for mining in Oregon riverbeds and banks. The ban was in response to the “significant risks” motorized mining posed to Oregon’s natural resources and the cumulative environmental impacts of motorized mining. The moratorium applied only to the use of motorized mining equipment, and did not ban mining altogether. The court found that SB 838 is a valid regulation and not preempted by federal law.
SOPHISTICATED INTERMEDIARY DOCTRINE FOR PRODUCTS LIABILITY CLAIMS NOW THE LAW IN CALIFORNIA
Webb v. Special Electric Co., Inc., 2016 Cal. LEXIS 3591 (May 23, 2016). The California Supreme Court adopted the “sophisticated intermediary doctrine” in regard to product liability claims, holding that a supplier can discharge its duty to warn only if it (1) provides adequate warnings or sells to a sophisticated buyer; and (2) reasonably relies on the buyer to warn end users of the harm.
In a recent trial in Los Angeles Superior Court in the matter AFS Enterprises, LLC, v. Reckitt Benckiser, PLC, Los Angeles Superior Court Case No. BC539678, the plaintiff brought a single claim under Proposition 65 (Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code sections 25249.1 et seq.) against the makers of Brasso, a brass polish, arguing that the manufacturer was obligated to provide a Proposition 65 warning for the product. Proposition 65 requires manufacturers and retailers to provide warnings for products sold to California consumers if the products expose consumers to certain chemicals including lead. Here, the plaintiff’s argument was unique. Although Brasso itself does not contain lead, the plaintiff argued that a warning was nevertheless required because the polish, when used on certain brass surfaces, releases lead. The manufacturer argued that it should be exempt from the warning requirement because the amount of lead customers are exposed to when using the polish does not exceed the “Maximum Allowable Dose Level.” The court, after weighing testimony of the various experts at trial, issued a Statement of Decision on May 12, 2016 wherein the court ultimately agreed that the manufacturer is not required to provide a Proposition 65 warning.
President Obama just signed a bill amending the Toxic Substances Control Act (“TSCA”), changing the way the EPA regulates chemicals. For the last 25 years, the EPA has regarded TSCA’s principal control provision as unworkable and refused to rely on it after an adverse ruling in response to the EPA’s effort to regulate asbestos. The amended TSCA makes it easier for the EPA to test, evaluate, and regulate chemicals. Furthermore, the EPA will now be required to review the safety of every chemical in commerce. In a nutshell, the new law makes the following changes:
On June 17, 2017, the State Water Resources Control Board (State Board) published proposed amendments to the Ocean Plan and the water quality control plan for Inland Surface Waters and Enclosed Bays and Estuaries and Ocean Waters of California to adopt procedures for discharges of dredged or fill material to waters of the state that are not protected by the federal Clean Water Act (CWA). In addition to the proposed amendments, the State Board also published a detailed staff report and a separate comparison of the new “State Supplemental Dredged or Fill Guidelines” to the CWA’s Section 404(b)(1) Guidelines, which requires sequencing of impacts to avoid, minimize, and mitigate impacts to waters. Two workshops and a public hearing are scheduled in June and July, with the public comment period ending on August 4, 2016. The proposal is tentatively scheduled to be considered by the State Board in the fall of 2016.