Communities for a Better Environment v. Bay Area Air Quality Management District (2016) 1 Cal.App.5th 715

By Glen Hansen

In Communities for a Better Environment v. Bay Area Air Quality Management District (2016) 1 Cal.App.5th 715 (“Communities”), the Court of Appeal for the First Appellate District affirmed the dismissal of  an action under the California Environmental Quality Act (“CEQA”) that challenged an agency’s approval, made without a notice of exemption, of a permit for a rail-to-truck facility under a ministerial exemption, because the action was not filed within 180 days after the agency’s decision; and because the discovery rule did not apply in that context. 

In Communities, respondent Kinder Morgan Material Services, LLC (“Kinder Morgan”), began operating an ethanol rail-to-truck transloading facility in Richmond, California, around 2009. In February 2013, Kinder Morgan applied to the Bay Area Air Quality Management District (“BAAQMD”) for approval to alter the facility and begin transloading crude oil from the Bakken Formation in the Great Plains. According to petitioners Communities for a Better Environment, Asian Pacific Environmental Network, Sierra Club, and Natural Resources Defense Council (collectively, “CBE”), Bakken crude oil is “highly volatile and explosive” and “[t]he range of significant adverse environmental impacts of Kinder Morgan’s operation includes a high risk to public health and safety from derailment, significant increases in toxic air contaminants, potential contamination of California’s precious waterways (that support entire ecosystems), and significant increases in greenhouse gas emissions.” BAAQMD determined that the project was “ministerial” and not subject to CEQA review. BAAQMD authorized Kinder Morgan to begin transloading crude oil by issuing a permit in July 2013 called an authority to construct. BAAQMD never issued an optional notice of exemption (“NOE”) that would have publicly announced its determination that the project was exempt from CEQA review. Kinder Morgan began transloading crude oil in mid-September 2013. 

On March 27, 2014, CBE filed a petition for writ of mandate and complaint for declaratory relief on the grounds that BAAQMD’s approval of the operational change at the transloading facility was not ministerial and an environmental impact report (“EIR”) was required pursuant to CEQA because there was a fair argument that the change would have a significant impact on the environment. The trial court dismissed the petition and complaint without leave to amend, concluding that the suit was time-barred under Public Resources Code section 21167, subdivision (d). The Court of Appeal affirmed. 

The only issue on appeal was whether CBE could successfully amend its petition and complaint to allege that the action was timely by virtue of the discovery rule. CBE argued that it did not learn, and could not with reasonable diligence have learned, of the project any earlier, because BAAQMD “gave the public no notice of Kinder Morgan’s switch to … Bakken crude oil” and “Kinder Morgan’s transloading operation is entirely enclosed, making the transported commodity, and any change to it, invisible.”  In response, the court explained that an action to challenge such a determination accrues not at the time of the determination but instead on one of three alternative dates explicitly provided in section 21167(d). Those dates are: First, if the agency files an NOE under section 21152, subdivision (b), the action must be brought within 35 days of the NOE’s filing; second, if the NOE has not been filed, then the action must be brought within 180 days of the agency’s decision to carry out or approve the project; and third, if a project is undertaken without a formal decision by the agency, the action must be brought within 180 days of commencement of the project. Here, the action was not filed within 180 days after the agency’s formal approval of the project. Rejecting CBE’s argument, the court concluded that the discovery rule cannot be applied to postpone the running of those limitations periods in section 21167(d). A plaintiff is deemed to have constructive notice of a potential CEQA violation on all three alternative dates of accrual under section 21167(d). The court stated that “[t]he discovery rule has never been applied to postpone the accrual of an action beyond the date the plaintiff has constructive notice of an injury, and we decline to so apply it here.” As CBE offered no theory under which the operative events occurred less than 180 days before the lawsuit was filed, the court assumed that CBE could not amend its petition and complaint to allege that it lacked any actual or constructive notice in that timeframe. Therefore, applying the discovery rule in this case would not postpone accrual of the action. Accordingly, the court affirmed the dismissal of the action.

The ramifications of this decision were evident in the comments of BAAQMD’s district counsel: “These [permit] decisions are made hundreds or even thousands of times across all the government entities every day. … What the statute said is in those circumstances, you don’t have to give notice. … I think most agencies don’t [give notice] for very routine permits.”[1]

Glen Hansen is a Senior Counsel at Abbott & Kindermann, LLP.  For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, or the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

[1] Comments of Brian C. Bunger, quoted in Logan Noblin, “Environmental Groups Lose CEQA Appeal,” The Daily Recorder (July 21, 2016), p.2