Welcome to Abbott & Kindermann, Inc.’s December 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 November 2021 Environmental Action News post, click here:
- SUPREME COURT
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?
A. WATER RIGHTS AND SUPPLY
- Mississippi v. Tennessee,595 U.S. ___ (2021) – Supreme Court Unanimously Denied Mississippi’s Claim Against Tennessee Over Alleged Water Theft And Extends Equitable Apportionment Doctrine To Interstate Aquifers.
The U.S. Supreme Court unanimously rejected Mississippi’s claim that Tennessee was illegally stealing its water. Mississippi’s $615 million lawsuit alleged that Memphis, Tennessee, illegally “siphoned” groundwater from the Middle Claiborne Aquifer that was subject to Mississippi’s sovereign ownership. While Memphis’s pumps were within the state of Tennessee, Mississippi alleged that more than 400 billion gallons of groundwater were pulled into Tennessee due to the pumps. The Supreme Court rejected this argument and held that water from the Middle Claiborne Aquifer is subject to the equitable apportionment doctrine that has previously applied only to shared surface waters. Equitable-apportionment law seeks to balance the states’ sovereign interests in water by delineating exactly how the two states will share an interstate waterway. Writing for the majority, Chief Justice Roberts characterized the aquifer as naturally “flowing interstate waters” where “actions taken in Tennessee to pump water from the aquifer clearly have effects on the portion of the aquifer that underlies Mississippi.” The Court reasoned that “[s]uch interstate effects are a hallmark of the Court’s equitable apportionment cases” and thereby rejected Mississippi’s ownership theory. The Court dismissed the case with leave to amend as Mississippi did not argue the merits of an equitable apportionment case. It is unclear whether Mississippi will be entitled to equitable apportionment as the complaining state has a heavy burden of demonstrating that the other state’s water use is causing the complaining state significant injury.
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B. WATER QUALITY
- 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 this economic context when determining compliance with the permit requirements. The reversed judgment was remanded with instructions to the trial court.
C. RENEWABLE ENERGY
- California Public Utilities Commission Announced Proposed Reductions To Rooftop Solar Incentives.
The California Public Utilities Commission (“CPUC”) proposed sharp reductions in current subsidies and the addition of new fees related to rooftop solar use. The reduction in subsidies means that residential solar customers would get a lower credit for their excess electricity sent to the grid based on the value of the energy costs avoided by utilities. Rooftop solar users would also have to pay a new grid-connection fee that would average $40 a month. The stated goal for these changes is incentivizing customers to install batteries that can store electricity during shortages and reforming a system that currently “subsidizes” richer households that can afford rooftop solar at the expense of lower-income households that cannot. CPUC Commissioner Martha Guzman Aceves said “[t]he reform is about incentivizing the right thing we need today for the grid for the benefit of all ratepayers.” The Utility Reform Network praised the proposal as “a step in the right direction” that prioritizes low-income households “who have been left behind under the current program.” Southern California Edison offered similar praise, calling the decision “a meaningful step toward modernizing California’s rooftop solar program” that will “reduce the financial burden on non-solar customers who have subsidized net energy metering.” The solar industry, a $13 billion industry that relies heavily on solar subsidies, strongly opposes the proposed change. The industry states that the proposal would gut the subsidy plan, impose the highest solar fees in the U.S., threaten thousands of jobs and tarnish California’s clean energy legacy. They also emphasize that the changes will deter many from installing rooftop solar and storage and slow clean energy development in the state.
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- President Biden Signs Executive Order Catalyzing America’s Clean Energy Economy Through Federal Sustainability.
On December 8, 2021, President Biden signed an executive order that set out a whole-of-government strategy to address climate change. The Biden Administration expects this action will catalyze the development of at least 10 gigawatts of new clean electricity production by 2030 and accelerate America’s capacity to supply zero-emission vehicles and electric vehicle batteries, spurring the creation of new jobs in manufacturing, engineering, and skilled-trades. The executive order is accompanied by a Federal Sustainability Plan that details the specifics. The executive order and Federal Sustainability Plan focus on achieving five primary goals:
- 100% carbon pollution-free electricity by 2030, at least half of which will be locally supplied clean energy to meet 24/7 demand;
- 100% zero-emission vehicle acquisitions by 2035, including 100% zero-emission light-duty vehicle acquisitions by 2027;
- Net-zero emissions from federal procurement no later than 2050, including a Buy Clean policy to promote use of construction materials with lower embodied emissions;
- A net-zero emissions building portfolio by 2045, including a 50%emissions reduction by 2032; and
- Net-zero emissions from overall federal operations by 2050, including a 65% emissions reduction by 2030.
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D. HAZARDOUS MATERIALS AND REMEDIATION
- Bipartisan Infrastructure Deal Reinstates CERCLA Chemical Excise Tax And Invests $3.5 Billion In Superfund Site Cleanup.
In November 2021, Congress passed the Bipartisan Infrastructure Deal, also known as the Infrastructure Investment and Jobs Act, which increased monetary support for Superfund site cleanups by reinstating the chemical excise tax and designating $3.5 billion for cleanup. “Superfund” is the informal name for the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) that was passed in 1980. CERCLA gave the EPA the authority and funds to hold polluters accountable for cleaning up the most contaminated sites across the country. When no viable responsible party is found or if the responsible party cannot afford the cleanup, funds appropriated by Congress are used. Until 1995, a tax on chemical and petroleum industries provided funds to the Superfund Trust fund for Superfund cleanups. The Bipartisan Infrastructure Bill reinstates the chemical excise taxes, with some modifications to the historical tax. The chemical tax is still imposed on the sale or use of 42 identified chemicals, as well as certain substances manufactured or produced from such chemicals, however, the threshold for a taxable substance has been reduced–previously a taxable substance was one comprised of more than 50 percent of the weight (or more than 50 percent of the value) of a taxable chemical. Under the new tax that percent is lowered to 20 percent. The tax rate per ton on taxable chemicals is doubled. The law also gives deference to the list of taxable substances contained in existing law, as modified over time by the IRS through guidance, but requires IRS to issue the initial list by Jan. 1, 2022. As revived, the chemical tax would be effective for almost 10 years, beginning in July 2022. In December of 2021, the U.S. Environmental Protection Agency (“EPA”) announced the first $1 billion in funding for 49 Superfund sites across the nation while emphasizing that 60% of the sites selected are in traditionally underserved communities.
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E. NATIONAL ENVIRONMENTAL POLICY ACT (“NEPA”)
- Native Village of Nuiqsut v. BLM (9th Cir. 2021) 9 F.4th 1201.
The Bureau of Land Management (“BLM”) approved a winter drilling exploration program for Conoco Alaska, Inc. (referred to as “Project Proponents”) in the National Petroleum Reserve-Alaska. In connection with its approval of the exploration program, in 2018 the BLM published an environmental assessment (“EA”) that incorporated a 2012 Integrated Action Plan/Environmental Impact Statement (“IAP/EIS”), a document that analyzed environmental impacts in the Petroleum Reserve, and two supplemental EISs for separate drill pad projects. Plaintiffs sued the BLM alleging violations of the Administrative Procedure Act, National Environmental Policy Act, and the Alaska National Interest Lands Conservation Act. The BLM argued that the case was moot because the Project Proponents fully completed the exploration program. The District Court concluded the action was not moot and granted the BLM’s motion for summary judgement on each of the substantive claims. Plaintiffs appealed and the United States Court of Appeal vacated and remanded with instructions to dismiss the case as moot.
Plaintiffs contended that the “capable of repetition yet evading review” exception to mootness applied. This exception requires a showing that: (1) the duration of the challenged action was too short to allow full litigation before it ceased or expired, and (2) there was a reasonable expectation that the Plaintiffs would be subjected to the challenged action again. Here, the 2018 EA met the duration requirement because the winter exploration program lasted only five months. As to the capable of repetition requirement, generally a case would not be moot if the environmental report would be used by the agency in approving a future project. Here, although the 2018 EA was confined to the winter exploration program, the BLM could potentially rely on the 2012 IAP/EIS and the two supplemental EISs in future EAs. However, a multitude of new circumstances when taken together showed that the mootness exception did not apply. First, there was no reasonable expectation that Plaintiffs would be subjected to the challenged action again because in 2020 the Council on Environmental Quality revised the regulations implementing NEPA which rendered the case moot. Second, the BLM issued a new IAP/EIS for the Petroleum Reserve in 2020 and there was no showing that Plaintiffs would be subjected to tiering to the 2012 IAP/EIS. Third, the Court of Appeal held that the BLM could not tier from the two supplemental EISs for a document similar to the 2018 EA because the EISs pertained to specific projects in another part of the Petroleum Reserve and did not address exploration activities. Finally, the Project Proponents contended that they did not plan to conduct additional winter exploration. Thus, the Court of Appeal found that the case was not capable of repetition and was therefore moot.
F. ENVIRONMENTAL ENFORCEMENT
- U.S. Department Of Justice Announces Increased Civil And Criminal Environmental Enforcement.
Remarks given at the American Bar Association’s National Environmental Enforcement Conference by senior U.S. Department of Justice (“DOJ”) Environment and Natural Resource Division (“ENRD”) officials preview increased civil and criminal environmental enforcement.
Announcing a shift in tactics, the Chief of DOJ’s environmental crimes section said the DOJ is “going to head more to vigorous enforcement as opposed to just aiming for compliance.” Assistant Attorney General Todd Kim pointed to the importance of criminal enforcement as “an indispensable and powerful deterrent to illegal behavior,” more so than “the threat of civil enforcement alone.” He warned that “to the extent a corporate actor violates either civil or criminal law in a manner that implicates environmental justice or the climate crisis, corporations should be aware that [ENRD] is paying particular attention to these issues.” Kim also emphasized “the need for a corporation to exercise due care throughout its supply chain.” A company’s failure to fulfill its “due care” obligation, which means to take responsibility for their products and fully know their supply chain, could carry significant consequences: “the prospect of criminal sanction; the potential seizure and forfeiture of illegally-sourced  goods, vessels and other equipment; and the unavailability of an innocent owner defense.” While the full impact of the shift towards enforcement is not yet clear, companies should place a renewed focus on compliance with environmental laws.
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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.