Welcome to Abbott & Kindermann, Inc.’s March Environmental Action News. This summary provides brief updates on recent environmental cases, legislation, and administrative actions in 2021.
PREVIOUS MONTH’S UPDATE
To read the December 2020 Environmental Action News post, click here:
There is one case pending at the California Supreme Court. The case and the Court’s summary is as follows:
County of Butte v. Department of Water Resources, S258574. (C071785; 39 Cal.App.5th 708; Yolo County Superior Court; CVCV091258.) Petition for review after the Court of Appeal dismissed an appeal in an action for writ of administrative mandate. This case presents the following issues: (1) To what extent does the Federal Power Act (16 U.S.C. § 791a et seq.) preempt application of the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) when the state is acting on its own behalf and exercising its discretion in deciding to pursue licensing for a hydroelectric dam project? (2) Does the Federal Power Act preempt state court challenges to an environmental impact report prepared under the California Environmental Quality Act in order to comply with the federal water quality certification under the federal Clean Water Act?
- City of Duarte v. State of Water Resources Control Board (2021) 60 Cal.App.5th 258.
The Court of Appeal reversed and remanded the trial court’s ruling by holding that water quality control boards could consider economic factors in satisfaction of Water Code section 13241 for a NPDES permit. The Court further stated that the water control boards gave well supported reasoning to comply with the statutory requirements. The appeal arose when a permit issued by state and local water boards required 86 Southern California municipalities to reduce effluent discharge pollutants in stormwater sewage systems. The trial court ruled that the water boards and state did not sufficiently consider factors outlined in Section 13241 of the Water Code before issuing a permit, and this failure invalidated portions of the permits that were issued. The Court of Appeal disagreed. It held that the numeric effluent limitations in the Permit issued was no more stringent than the requirements outlined in the CWA. The Court reviewed the factual findings under the substantial evidence standards and held that the Water control boards had sufficiently considered the necessary factors under Water Code Section 13241, including the need to consider “economic considerations” under subsection (d).
The Court held that the water boards had significant discretion when considering the factors, so long as they are supported by evidence in the record and factual findings. As for the “economic considerations” factor at issue, the Court reasoned that this discretion should be left with the water boards because in exceptional financial downturns like those resulting from the COVID-19 pandemic, the water boards must retain control so that they can account for these economic context when determining compliance with the permit requirements. The reversed judgment was and remanded with instructions to the trial court.
- United States v. Lucero, 2021 U.S.App.LEXIS 6307 (9th Cir. March 4, 2021).
The Ninth Circuit reversed a conviction of Defendant Lucero for discharging a pollutant in violation of the Clean Water Act (“CWA”), because the jury instruction failed to clearly indicate that: (i) Mr. Lucero must have knowingly discharged; and (ii) the error was not harmless. The Ninth Circuit further held that the jurisdictional waters were clearly defined at the time of defendant’s trial, and that the courts could not rely on the 2020 regulatory changes in the law to retroactively apply standards for conviction. Mr. Lucero was executing a dumping scheme whereby in 2014, during a particularly drought heavy year, he was dumping debris on sites in the San Francisco Bay Area that would have been inundated with water and subject to protection under the Waters of the United States (“WOTUS”) definition of the CWA. A jury convicted Mr. Lucero on three counts of violating the CWA for illegal discharges into navigable waters without a permit. Upon conviction, Mr. Lucero filed the subsequent appeal. Mr. Lucero’s defense included three main arguments: (1) the jury instruction omitted the CWA’s knowledge element, (2) the WOTUS definition is unconstitutionally vague; and (3) the 2020 WOTUS rule adoption should apply retroactively.
Regarding the knowledge element, the Ninth Circuit declined to further improve on what is “into water” and what is “to waters of the United States.” Instead, the panel focused on the knowledge element itself and stated that the burden is merely to prove that the defendant knowingly discharged “into water.” It then held that since the facts presented did not convey that Mr. Lucero knowingly discharged into water, the jury instruction was not properly read. The Court further reasoned that because the jury instruction was vague, and the panel could not say whether the jury would have properly reached the same guilty verdict, it reversed the conviction and remanded the case for a new trial with clear jury instructions.
As to Mr. Lucero’s second argument that the WOTUS definition is unconstitutionally vague, the Panel disagreed. It held that it is not unconstitutional simply by being difficult to determine how it applies. Instead, it must be proven to be unreasonable to the point where no standard of conduct could apply at all. The Court noted that while the WOTUS rule is complex it provides ascertainable standards to protect jurisdictional waters.
Lastly, Mr. Lucero called on the Court to apply the 2020 WOTUS rule retroactively to conviction, but the Court rejected that argument. It held that generally legislative actions lack retroactive effect unless so indicated by Congress expressly. As the Panel indicated, the 2020 WOTUS rule was intended to be applied prospectively since the executive branch did not expressly indicate that enforcement would apply retroactively. The Court reversed the conviction and remanded the case for a new trial with clear jury instructions.
- Cabatit v. Sunnova Energy Corporation (2020) 60 Cal.App.5th 317.
In a suit arising out of the careful examination of a residential solar contract, the Court of Appeal stated that in narrow contexts a mandatory arbitration clause can be invalid. The Court held that a mandatory arbitration clause is unconscionable when the clause is not called to the signatory’s attention at the time of signing and the clause is clearly one-sided. The case before the Court arose when plaintiffs, the Cabatits, entered into a solar power lease agreement with Sunnova Energy Corporation. After the unit was installed, leaking occurred around the solar panels leading to roof damage. At the time the parties entered into the contract, the Sunnova salesperson made a presentation at the Cabatit home telling the family to initial certain provisions of the contract and did not explain or have them read them through carefully. The family lacked internet access and a computer, and Mrs. Cabatit did not speak English well enough to understand the complexity of the contract she signed.
After the Cabatits filed their lawsuit, Sunnova responded stating that the arbitration clause required the case to proceed through arbitration first. Plaintiffs argued that the arbitration clause should be stricken because the contract was both procedurally and substantively unconscionable. Finding for Plaintiffs, the Court held that the contract was procedurally unconscionable for several reasons: (i) the Cabatits had no opportunity to “bargain over its terms”; (ii) the arbitration clause was not called to the attention of the Cabatits; (iii) the Cabatits were not given a copy of the contract; and (iv) the contract was presented as a standardized agreement thus “supporting a finding of a high degree of procedural unconscionability.” The Court further held that the contract was substantively unconscionable because of the “breadth of the term ‘default’ favoring Sunnova, and the limitations imposed on the Cabatits regarding their own available court relief.” The Court affirmed the trial court’s ruling that the contract was in fact unjustifiably one-sided and held that the arbitration clause was unenforceable.
ENDANGERED SPECIES ACT
- United States Fish & Wildlife Service v. Sierra Club, Inc. (2021) 209 L.Ed.2d 78.
The United States Supreme Court held that the deliberative process privilege applies to in-house drafts of an agencies’ last word on a proposal to list a potentially endangered or listed species. As the High Court held, when agencies deliberate about the potential threats to foreseeable listed species through the biological opinion process, those internal draft deliberations shall be protected by the “deliberative process privilege” under Exemption 5 to the Freedom of Information Act (“FOIA”). FOIA mandates that a federal agency disclose all documents generated by an agency when making a biological assessment on a potential listing of a species unless the documents fall into one of nine exemptions to FOIA. Exemption 5 is the inter-agency or intra-agency exemption which incorporates the deliberative process privilege shielding the agencies from disclosing “documents reflecting advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated.” (NLRB v. Sears, Roebuck & Co., 95 S.Ct. 1504, 1544 (1975).) The Court concluded that so long as the document does not have “real operative effect” or reflect the “consummation’ of the agency’s decision-making process” it is protected by the deliberative process privilege. It, thus, held that “if the evidence establishes that an agency has hidden a functionally final decision in draft form, the deliberative process privilege will not apply.” The Court concluded by stating that draft biological opinions are both prejudicial and deliberative and therefore should be protected.
HAZARDOUS MATERIALS AND REMEDIATION
- Vincent v. Mayhew Center, LLC, 2021 U.S.Dist.LEXIS 31529 (N.D. Cal. February 19, 2021).
A U.S. District Court for the Northern District of California dismissed a lawsuit between parties over a property in Walnut Creek, California, that was environmentally contaminated and the contamination was spreading into neighboring properties. In 2007, Mayhew Center was held liable and ordered to clean up the neighbor’s property as well as its own pursuant to CERCLA. In 2017, Mayhew Center defaulted on its mortgage, failed to fulfill its obligations to cleanup both properties, and the property was foreclosed on. In the foreclosure sale, plaintiff Vincent, entered into an agreement with the Regional Water Quality Control Board (“Regional Board”) to assume remediation obligations under the purchase and sale agreement. Vincent then sued Mayhew Center, Beards, and Etch-Tek for liability to remediate the property under CERCLA. Beards and Etch-Tek moved to dismiss claims against them on res judicata grounds to which the U.S. District Court agreed. The Court held that Vincent could not hold Beards or Etch-Tek liable under CERCLA because liability arose out of the same nucleus of facts and that a judgment had already been rendered against Mayhew Center who was obligated to clean up the property. Vincent argued that cost recovery under CERCLA was substantially different from the prior case because Vincent sought recovery under a different section of the CERCLA statute. The Court held that while recovery was in fact sought under a different section of CERCLA, this would not allow for plaintiffs to use different procedural CERCLA vehicles to accomplish the same ends. As such, the Court dismissed the case against defendants Beards and Etch-Tek with prejudice.
William Abbott, Diane Kindermann, Glen Hansen, and Daniel Cucchi are attorneys at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., 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.