On July 26, 2016, the California Department of Water Resources (DWR) provided notice of Sustainable Groundwater Management Act (SGMA) emergency rulemaking. This is the next step in finalizing the regulations local agencies must follow when preparing Groundwater Sustainability Plans (GSPs) and Alternatives under SGMA.
The Ninth Circuit reversed a district court’s denial of a motion to dismiss claims brought against a smelting operation alleging that air pollutants from the operation that were blown downwind and deposited on land and water made the smelting operation an “arranger for disposal” under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). The case is Pakootas v. Teck Cominco Metals, Ltd.
On July 21, 2016, the California Supreme Court validated California’s pre-condemnation entry and testing statutes (Code of Civil Procedure sections 1245.010-1245.060), but determined that the law must be judicially reformed to be consistent with constitutional requirements for eminent domain proceedings by allowing affected landowners to have a jury determine the measure of damages to which they are entitled. In Property Reserve, Inc. v. Superior Court, the State Department of Water Resources (“DWR”) sought a court order to enter more than 150 privately owned properties as part of DWR’s effort to investigate the feasibility of building a new tunnel or canal in the Sacramento-San Joaquin Delta for delivering water from Northern California to Central and Southern California.
In the ongoing process of finalizing updated warning language for California’s Prop. 65 (Safe Drinking Water and Toxic Enforcement Act of 1986), the Office of Environmental Health Hazard Assessment (“OEHHA”) has issued a notice of further revisions to the third proposed version of the statutory language.
This regulation was originally the subject of a Notice of Proposed Rulemaking on November 27, 2015, which repealed a January 16, 2015, Notice, and provided fairly significant changes from the January 2015 issuance. After accepting written comments and holding a public hearing, on March 25, 2016, OEHHA published a Notice of Modification of the proposed regulation. OEHHA then accepted a second round of written comments, and this notice responds to those comments and provides further revisions.
OEHHA’s focus on refining the regulatory language since the first issuance in January 2015, allowing stakeholders repeated opportunities to comment, and making steady progress on revision efforts suggests it intends to finalize the proposed regulation by the one year deadline, which runs on November 27, 2016. Once enacted, stakeholders will have two years to implement any new requirements.
The changes to the proposed regulation continue to refine the language and mode of traditional per se reasonable Prop. 65 warnings, add categories of people obligated to provide warnings, and clarify issues related to stream of commerce relationships and indemnity under Prop. 65. The redlined text of the recent revisions can be found here.
The United States Environmental Protection Agency (“EPA”) recently launched its “eDisclosure” portal intended to facilitate self-disclosure of civil violations of environmental law. The portal aims to streamline EPA’s Audit Policy and Small Business Compliance Policy, which provide incentives to regulated entities – such as penalty reductions and avoidance of criminal prosecution – for voluntary discovery and correction of federal environmental violations. The eDisclosure portal does not make any substantive changes to the Audit and Small Business Compliance Policies; rather, EPA expects the portal to “result in faster and more efficient resolution of self-disclosures, while saving considerable time and resources for regulated entities and EPA.”
Disclosures made through the new portal may fall into one of two categories. “Category 1” disclosures include violations of the Emergency Planning and Community Right-to-Know Act (“EPCRA”) for which the disclosing entity can show compliance with all conditions of either the Audit or Small Business Compliance Policy. Category 1 disclosures through eDisclosure will automatically generate an electronic Notice of Determination confirming resolution of the violation(s) with no assessment of civil penalties. “Category 2” disclosures include EPCRA violations not covered by Category 1 and all non-EPCRA violations. The eDisclosure portal will automatically generate an “Acknowledgment Letter” for Category 2 disclosures, which will notify the disclosing entity that EPA will determine penalty mitigation eligibility if and when it considers taking enforcement action for the violation(s).
With the launch of eDisclosure, EPA is requiring all self-disclosed civil environmental violations, except new owner disclosures, to be made through the portal. To submit a self-disclosure through eDisclosure, an entity must first register with EPA’s Central Data Exchange (“CDX”), then submit the self-disclosure within 21 days of discovery, and certify compliance within 60 or 90 days after discovery. Entities may not claim confidential business information (“CBI”) on any disclosures submitted through eDisclosure; however, they may submit CBI manually to EPA and coordinate the manual submission and the eDisclosure submission. More information about eDisclosure is available on EPA’s website. Entities considering self-disclosure should seek the advice of counsel.
[This post follows up on our November 25, 2015 entry regarding new rulemaking under Proposition 65 (“Prop. 65”).]
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The “dirty dozen” is no more. But companies subject to Prop. 65 may not like what has taken its place. The newly revised Prop. 65 “safe harbor” warning regulation proposal contains several important substantive changes that, if adopted, will significantly impact California businesses, and any business whose reach extends into the state’s borders. Most notably, the new proposal would require the identification of at least one of the specific chemicals for which the exposure warning is being provided, from the list of over 900 chemicals identified by the state of California under Prop. 65.
Those who have followed the Prop. 65 rulemaking process this year may be aware that in January the Office of Health Hazard Assessment (“OEHHA”) proposed several new regulations, including developing a list of 12 chemicals – aka, “the dirty dozen” – that businesses would have been required to specifically identify when warning about exposure risks. Last week, however, OEHHA withdrew its prior proposal and replaced it with a new, more expansive proposal.
OEHHA now proposes to require a Prop. 65 warning in most instances to specifically identify one or more of the over 900 Prop. 65-listed chemicals for which the warning must be provided. While there are exceptions for some specific product and environmental exposure categories, the new warning regulation would apply to most consumer products and environmental exposures.
There are, however, two revisions aimed at providing business owners with some certainty as to potential future Prop. 65 litigation risk. First, the new regulation would establish that a warning provided pursuant to, and in compliance with, a court-ordered settlement or judgment is per se “clear and reasonable” for purposes of Prop. 65. For companies that have resolved Prop. 65 lawsuits through court-approved settlements, this proposed regulation should provide comfort that they can rely on their existing warning program to the extent a court has reviewed and approved it, even after the new regulations take effect.
Second, the newly proposed regulations would not apply to consumer products manufactured prior to the regulations’ effective date. For such products, the previous version of the Prop. 65 regulations (September 2008) would continue to apply. While including such a “no retroactive application” provision in the new regulations is logical, its codification will provide some finality for business owners in term of assessing their liability. However, businesses should be mindful that products manufactured before the effective date, but sold to consumers after that date, may still trigger notices of violation from private plaintiffs. Thus, it will be critical for businesses to be able to identify the manufacture date of consumer products they sell in California.
On November 24, 2015, the California Office of Environmental Health Hazard Assessment (“OEHHA”) issued notice of a new proposal to modify its Proposition 65 (“Prop. 65”) regulations and announced that it is withdrawing its earlier proposal to modify the Prop. 65 regulatory language. OEHHA stated that its decision to withdraw its January 16, 2015 proposal to modify Title 27, Article 6 of the California Code of Regulations was made “after reviewing oral and written comments from the public,” which resulted in “a number of substantive and clarifying changes to the proposed regulatory language and Initial Statement of Reasons.”
The California Attorney General has proposed amendments to regulations implementing the state’s Safe Drinking Water and Toxic Enforcement Act of 1986 (Prop. 65), in an effort to address her “significant ongoing concerns with respect to private enforcement actions under the statute.” The Attorney General’s proposed amendments appear to stem from similar concerns previously raised by Gov. Jerry Brown in his attempts to encourage Prop. 65 reform. While these amendments seem intended to benefit businesses targeted in Prop. 65 litigation, by requiring private plaintiffs to provide greater justification for certain monetary settlement terms, they will not likely reduce the number of Prop. 65 private enforcement actions and may result in higher settlement demands by plaintiffs.
The main emphasis of the Attorney General’s proposed amendments is to create greater accountability for private plaintiffs who funnel to themselves Prop. 65 settlement payments, under the guise of “payments in lieu of penalties,” that might otherwise go to the state’s Office of Environmental Health Hazard Assessment (OEHHA). Specifically, the proposed amendments are designed to:
- ensure that the state’s Office of Environmental Health Hazard Assessment (OEHHA) receives civil penalty payments specified in the statute;
- limit the ability of private plaintiffs to keep “in lieu of penalty” payments for themselves, defined in the amendments as “Additional Settlement Payments;”
- require entities receiving Additional Settlement Payments to show that those payments are spent to further the environmental and consumer protection goals of the litigation being settled and of the State of California; and
- reduce private plaintiffs’ financial incentive to prosecute Prop. 65 cases that do not confer a substantial public benefit.
If the Attorney General’s amendments are adopted, the regulations would cap Additional Settlement Payments at the amount of civil penalties that OEHHA receives under the settlement. Settlements including Additional Settlement Payments would have to specify the activities to be funded with such payments, and such settlements would require judicial approval. Recipients of Additional Settlement Payments would also be required to document how those funds are spent and provide such documentation to the Attorney General upon request. The amendments also propose other changes to the Prop. 65 regulations, such as adding a rebuttable presumption that reformulation of a product confers a significant benefit on the public, and explicitly requiring settlements obtained without court approval to be served on the Attorney General.
However, without addressing any requirements for private plaintiffs to make a prima facie demonstration of the merits of their claims, the amendments are unlikely to reduce the number of Prop. 65 actions brought in California. Businesses faced with Prop. 65 notices of violation should also not expect these amendments, if adopted, to mean private plaintiffs will settle for less money over the long term. Rather, private plaintiffs will likely “adapt” to the new regulations by increasing their demands for civil penalties to be paid to OEHHA to match the Additional Settlement Payments they seek to recover in settlement.
The proposed amendments can be found here. Written comments are due to the Attorney General’s Office on November 9, 2015.
A recent California trial court ruling has the potential to increase the risk of Proposition 65 liability for businesses that rely on regulatory “safe harbor” levels in their compliance programs.
California voters adopted Proposition 65 through the initiative process in 1986. The law requires companies with 10 or more employees doing business in California to either ensure their products do not exposure workers or consumers to unsafe levels of substances that cause cancer or reproductive harm, or provide a warning that such exposure may occur.
The California Office of Environmental Health Hazard Assessment (OEHHA) identifies “listed” chemicals subject to Proposition 65 warning requirements. In addition, OEHHA is authorized to establish “safe harbor” levels—concentrations below which a listed chemical does not cause cancer or reproductive harm. These safe harbor levels provide an affirmative defense in Proposition 65 enforcement actions.
One of the most important provisions of Proposition 65 is its “private Attorney General” provision, which allows members of the public to enforce the initiative and entitles prevailing private plaintiffs to 25% of the civil penalty assessed and attorneys’ fees. The attorneys’ fees provision in particular has attracted an active plaintiffs’ bar that specializes in Proposition 65 litigation.
Mateel Environmental Justice Foundation, one of the more active plaintiffs, is at the center of ongoing litigation in Alameda County Superior Court challenging the safe harbor level for lead that OEHHA established in 1989. Mateel filed a petition for writ of mandate and complaint alleging that the safe harbor level lacked a sound scientific basis and seeking to compel OEHHA to rewrite the safe harbor regulation.
In moving for judgment on the pleadings, OEHHA argued that Mateel’s claims were untimely, given that they were filed 13 years after the three-year statute of limitations for challenging an administrative action expired. The court disagreed, however, holding that Mateel’s challenge to the safe harbor regulation created a “present controversy susceptible to declaratory relief.” The court cited Mateel’s interest as a private enforcer of Proposition 65 as a basis for classifying Mateel as an “interested person” for purposes of obtaining declaratory relief.
The trial court’s ruling has no precedential impact, but if sustained, it could increase uncertainty for manufacturers and retailers that rely on established safe harbor levels to protect themselves against Proposition 65 claims. We will continue to monitor developments in the trial court and in any appeal of the court’s ruling that could impact companies doing business in California.
The U.S. Supreme Court has left in place a Ninth Circuit Court of Appeals ruling that calls into question the scope of “permit shield” defense in Clean Water Act enforcement actions.
The permit shield under the Clean Water Act (33 U.S.C. § 1342(k)) protects a National Discharge Elimination System (“NPDES”) permit holder against liability for certain pollutant discharges that the permit does not explicitly mention, as well as for discharges of pollutants in compliance with explicit permit limits. The Second, Fourth, and Sixth Circuits have held that the permit shield extends to discharges of pollutants that were disclosed to the permitting authority and within the permitting authority’s reasonable contemplation, even if those discharges are not expressly identified in the permit.