Thomas Law Blog

CEQA Updates

Keeping You Up-to-Date on the California Environmental Quality Act

Posts Tagged ‘administrative procedure act’

CARB Regulatory Advisory “Project Approval” Triggers CEQA Review Despite Agency Certified Regulatory Program, Public Testimony Must Be Adequately Addressed to Meet Cal APA Standards

Wednesday, January 31st, 2018

In John R. Lawson Rock & Oil, Inc. v. State Air Resource Board (2018) 20 Cal. App. 5th 77, the Fifth District Court of Appeal found the California Air Resources Board’s (CARB) issuance of a regulatory advisory was “project approval” triggering CEQA review. Doing so prior to completion of environmental review violated CEQA timing requirements. Later, CARB relied on a negative declaration, which the Court also set aside. Further, CARB failed to comply with the California Administrative Procedures Act (CalAPA). As such, the Court directed CARB to comply with CEQA in modifying a set of 2008 regulations known as the Truck and Bus Regulations (Regulations).

CARB issued the Regulations to reduce greenhouse gas emissions from large vehicles by, as pertinent here, requiring vehicle owners to retrofit and upgrade existing vehicles by January 2014. In mid-2013, CARB staff found the global recession substantially reduced trucking activity making compliance with the Regulations financially difficult, especially for those in rural areas and small business settings. CARB responded by delaying reporting deadlines and requesting modification proposals. In November 2013, CARB issued a regulatory advisory stating a handful of modifications to the Regulations would be implemented. Specific changes included: delaying compliance dates, eliminating filter replacement requirements for certain light trucks, and providing a 10-year window where only engines less than 20-years-old would require modernization. After circulating a staff report and proposed modifications in March 2014, CARB issued its final approval in December 2014. Plaintiffs and Respondents filed suit on behalf of fleets that had already incurred significant cost in complying with the unmodified regulations, alleging CARB failed to comply with CEQA and CalAPA requirements.

The Appellate Court found agencies that operate under a certified regulatory program are exempt from certain elements of CEQA review yet still subject to the “functional equivalent” of CEQA environmental review, per the Court’s holding in POET, LLC v. State Air Resources Control Board (2013) 218 Cal.App.4th 681. CARB’s regulatory program requires the preparation of a public staff report at least 45 days before public hearing on a proposed regulation, discussion of environmental alternatives, response to public comment, and compliance with CEQA. Within the regulatory scheme, documents like the CARB staff report are expected to be analyzed and considered before project approval in the same way that CEQA documents are considered.

Applying CEQA principles, the Court determined that project approval triggering CEQA or its equivalent occurred where the regulatory advisory “opened the way” for a project to proceed. CARB conduct following the advisory was “detrimental to further fair environmental analysis.” That the final approval was not to be until 2014 and there was stated CARB authority to change the modifications before that time was insufficient to show the regulatory advisory was not project approval. Language in the advisory that truckers could immediately take advantage of certain programs and the subsequent CARB reliance on the advisory “foreclosed alternatives” to the proposed modifications. Because the advisory was issued before environmental review was complete, CARB failed to comply with CEQA timing requirements.

Next, the Court held the proper baseline for CEQA consideration in this case is the actual environmental conditions at the time of review, not those allowable by the current regulations. As such, CARB acted within its discretion to use a baseline that recognized some trucks and buses were not yet in compliance

Despite this, substantial evidence supported a fair argument that modifications to the Regulations would negatively and significantly impact air quality therefore CARB was incorrect to rely on a negative declaration. CARB failed to address that the modifications, while continuing to decrease emissions in the long term, would increase emissions in the short term. CARB also failed to address the inconsistencies between the proposed project’s emissions and applicable general plans, specific plans, and regional plans.

Notwithstanding these findings, the Court held that the trial court incorrectly directed CARB to prepare an EIR, or its functional equivalent. Such a remedy is only appropriate where the agency no longer has discretion to act in compliance with CEQA. Here, CARB still retained such discretion so the proper remedy is to simply direct CARB to comply with CEQA.

Lastly, CARB failed to comply with CalAPA where it did not adequately address economic impacts to intrastate commerce. While the Court usually gives deference to the agency on determinations of economic impacts, there is no deference for improperly adopted regulations. Here, CARB heard public testimony that relaxing the regulations would impact intrastate competition where those in compliance took on a large expense to be so and others would be able to undercut them. The Court held that testimony, while not written in a formal letter or report, nonetheless put CARB on notice of such issues. While CARB claimed it answered this issue in other comment answers, the Court found that its responses were not supported by any record evidence or meaningful analysis.

Key Point:

A regulatory advisory may be “project approval” triggering CEQA where it forecloses project alternatives therefore environmental review must be complete before its issuance. This standard applies to partially-exempt regulatory bodies and state agencies when their certified regulatory programs are intended to be CEQA-compliant.

The Sacketts will have their day in Court to Challenge an EPA Compliance Order

Thursday, March 22nd, 2012

In a unanimous decision, the U.S. Supreme Court overturned the lower courts’ ruling and held that Michael and Chantell Sackett, Petitioners, may bring a civil action under the Administrative Procedure Act (APA) to challenge the Environmental Protection Agency’s (EPA) issuance of an administrative compliance order for alleged violation of Section 309 of the Clean Water Act (CWA), 33 U.S.C. section 1319, requiring Petitioners to take certain actions to restore their property to its natural condition or be faced with penalties up to $75,000 per day.  (Sackett v. EPA, 566 U.S. ___ (2012).)

Petitioners, who own a 2/3-acre residential lot in Bonner County Idaho near Priest Lake used dirt and rock to fill part of their lot prior to building a home.  Some months later, Petitioners received a compliance order from the EPA with findings and conclusions which listed several violations of the CWA.  On the basis of the findings and conclusions, the Petitioners were required to restore the site in accordance with an EPA Work Plan.  Petitioners did not believe their property was subject to the CWA and requested a hearing with the EPA, which they were denied.  The Petitioners then brought suit in the District Court, claiming that issuance of the compliance orders was arbitrary and capricious under the APA and deprived them of “life, liberty or property, without due process,” in violation of the Fifth Amendment.  The District Court dismissed for lack of subject matter jurisdiction.  The Ninth Circuit Court of Appeals affirmed and concluded that the CWA precludes pre-enforcement judicial review of compliance orders and does not violate due process under the Fifth Amendment.

The Supreme Court considered whether the compliance order was a “final agency action” under the APA.  The Court determined that the compliance order represented the conclusion of the agency’s consideration as: a) the Petitioners were required to restore their property;  b) legal consequences flowed from the issuance of the order;  c) the compliance order exposed Petitioners to double penalties in a future enforcement proceeding;  d) Petitioners were not allowed to receive a permit for fill with the U.S. Army Corps of Engineers (Corps’ regulations  do not allow the issuance of a permit with an outstanding EPA compliance order); e) Petitioners were not granted a hearing with EPA, and thus, the findings and conclusions of the compliance order were not subject to further agency review;  and f) the APA’s judicial review provision requires that a person have no other adequate remedy in court.  The Court stated that the compliance order “has all the hallmarks of APA finality” and therefore, is subject to judicial review.

The Court stressed that it was not deciding the merits of Petitioners case, only that they had a right to file a complaint now that the EPA’s compliance order is final.  Justice Ginsberg wrote in a separate opinion that she had concurred with the Court’s opinion on the understanding that the merits of the case were still open to debate.

In a separate concurring opinion, Justice Alito argued that “in a nation that values due process, not to mention private property, such treatment [by the EPA] is unthinkable.”  Justice Alito also took this opportunity to call out Congress, the EPA and the Corps for their failure to provide “clarity and predictability” in dealing with the CWA’s definition of “waters of the United States.”  Justice Alito opined
“[r]eal relief requires Congress to do what it should have done in the first place: provide a reasonably clear rule regarding the reach of the Clean Water Act.”

Key Points:

The Court’s ruling gives property owners relief from the EPA’s  practice of issuing “compliance orders” to property owners notifying them that their property is a federally protected wetland, and requiring them to stop using their land and restore it to its prior condition, under penalty of  severe fines.  In many cases, the EPA may then wait months or years before actually suing the property owner to collect the fines, which accrue daily. In the meantime, the EPA has operated under the belief that the property owners cannot challenge issuance of the compliance order in court, and instead must wait until the EPA sues them to collect the fines, which may have accrued to millions of dollars.   Under the Court’s ruling, CWA compliance orders are final agency actions, and are subject to pre-enforcement judicial review under the APA.

Written By: Tina Thomas and Michele Tong
For questions relating to this blog post or any other California land use, environmental and/or planning issues contact Thomas Law Group at (916) 287-9292.

The information presented in this article should not be construed to be formal legal advice by Thomas Law Group, nor the formation of a lawyer/client relationship. Readers are encouraged to seek independent counsel for advice regarding their individual legal issues.