Berkeley Hillside Preservation  v. City of Berkeley (Feb. 15, 2012) (First Dist.)

2012 DJDAR 2123

A131254
Size Matters!

The trial court ruled the City of Berkeley’s categorical exemption under CEQA and approval of a permit to construct a large single-family residence were legally proper.
The Court of Appeal disagreed, holding the categorical exemption is not appropriate if there are “unusual circumstances” and a fair argument can be made that significant environmental impacts could occur, even if there is contrary evidence of such. In particular, the Court found the size of the proposed residence, 6,478 square-foot house with 3,394 square-foot 10-car garage on a hillside, was “unusual” relative to typical projects under that exemption,  even if only slightly larger than some other homes in the immediate vicinity. Also, the Court found the possibility, supported by an expert’s submission, that a large amount of grading and foundational support would be required, and the possibility of lurching in an earthquake zone, supported a fair argument that there could be significant environmental impacts. The Court reversed the decision.

Pacific Rivers Council v. U.S. Forest Service
Feb. 3, 2012
(9th Cir.) 08-17656

The Ninth Circuit held the U.S. Forest Service (USFS) failed to comply with National Environmental Policy Act (NEPA) when it failed to discuss the environmental impacts on fish of a proposed Sierra Nevada Forest Plan.

Congress commissioned a study which concluded in 1996 that the Sierra Nevada environment had been severely degraded and that aquatic/riparian  habitats were the most altered and impaired. The USFS had prepared an Environmental Impact Statement (EIS) in 2001 for a forest plan which included extensive discussion of potential impacts on fish and amphibians.

After a change in the Administration (from Clinton to Bush), the USFS then pursued and modified one of the alternatives from the 2001 EIS, which it assessed in a new 2004 EIS. The new proposal greatly increased logging, permitted burning near streams, allowed greater construction of new roads, and reduced restrictions on cattle grazing. The USFS, however, failed to discuss any impacts to fish, much less impacts caused by the specific new changes to the forest plan, despite a Washington staff letter expressing an opinion of such necessity.

The Court of  Appeal held NEPA requires agencies to take a “hard look” at environmental consequences, which the USFS failed to do here with regard to fish and amphibians and which was “reasonably possible” to do.

Maxton v. Western States Metals
Feb. 1, 2012
Cal. Court of Appeal (Second Dist., Div. Three)
2012 DJDAR 1320
B227000

The Court of Appeal affirmed the trial court ruling that a worker, who claimed to have suffered pulmonary fibrosis as a result of exposure to toxic fumes and dust during a manufacturing process, could not sue suppliers of steel, aluminum, and other raw materials.

The Court reviewed the Component Parts Doctrine as set forth in the Restatement Third of Torts. The doctrine allows liability of a supplier which provides a defective component, or substantially participates in the integration of the component into the design of the product, which causes the product to be defective, and causes harm.

The Court then reviewed the 1998 Artiglio case factors in which that California Court of Appeal described circumstances where a supplier would not be liable to the ultimate consumer (the Restatement Third was just in draft form then): the component is not inherently defective, the materials are sold to a sophisticated buyer, the material is substantially changed during the manufacturing process, and the supplier has a limited role in developing and designing the end product.

The Court then distinguished the present case from those which subjected suppliers of asbestos to liability because asbestos is inherently dangerous, both before and after integration into the product. The Court found this case more like those where kerosene, sulphuric acid, silicone, and the like, were used, and where no liability was found because the supplier was in no position to oversee how its product was used or what it might be compounded with. Also, those components were not inherently defective.

As a matter of public policy, it would be overly burdensome and inequitable for a supplier to have to assemble a team of experts to assess how its components would be handled by a manufacturer which could result in many different end-products. The manufacturer is in the best position to do so.

The Component Parts Doctrine applies to negligence as well as strict liability. The result here was that the suppliers owed no duty to the worker, and the case was dismissed.

General Development, LP v. City of Santa Maria (January 25, 2012)

Cal. Court of Appeal (Second District, Division 6) B228631

The Court of Appeal held that the short 90-day statute of limitations contained in Government Code section 65009 barred a later-filed action by a developer challenging a city decision denying a zoning change. The developer argued the plain meaning of section 65009(c)(1) only barred actions filed after 90 days “To attack, review, set aside, void, or annul the decision of a legislative body to adopt or amend a zoning ordinance.” Because the city had merely denied developer’s request for a zoning change, developer argued such section did not apply.

The Court of Appeal disagreed. Section 65009(b)(1) states the shortened statute of limitation applies to any “action or proceeding to attack, review, set aside, void, or annul a finding, determination or decision of a public agency made pursuant to this title at a properly noticed hearing … .” The Court agreed with the trial court, the California Supreme Court, and a District Court decision that the foregoing language is not limited to only those decisions that adopt or amend a zoning ordinance, but, rather, applies to any decision by a legislative body involving planning or zoning. Further, the legislative intent is to avoid placing any cloud over the property; that is best accomplished by applying the shorter statute of limitations rather than the general three-year statute of limitations applying to real property.

Klein v. Chevron USA, Inc. (2^nd Dist.) B219113 (Jan. 25, 2012)

Class action plaintiffs sued Chevron, alleging that Chevron overcharged California customers for gasoline by failing to adjust the price when selling gas above 60 degrees F. It was uncontested that the wholesale price at which Chevron bought gas is rated at 60 degrees (industry custom) and that gas expands and has less energy when it is sold at a higher temperature, thus making it less valuable to a consumer. Thus, Chevron makes more money when it fails to disclose that less gas is sold above 60 degrees, and the consumer pays slightly more than the advertised price.

In Canada, where temperatures are often well below 60 degrees, the opposite holds true in both respects. There, the oil industry and Chevron have a policy of installing equipment that adjusts the price depending on the temperature so that they do not lose money when selling below 60 degrees. In California, the oil industry and Chevron have the opposite policy and do not install such equipment with the result that they make more money.

Of interest here, plaintiffs sued under the Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA). After initially ruling in favor of some of plaintiffs’ claims over several demurrers, the trial court ultimately ruled in Chevron’s favor in a motion for judgment on the pleadings. The court concluded it should exercise judicial abstention because the California Energy Commission (CEC) had already been asked by the Legislature to look into the cost-benefits of requiring the equipment that adjusts the price depending on the temperature.

CEC concluded in 2009 that if the temperature adjusting equipment were installed at all retail outlets, then consumers would have purchased about 117 million less gallons of gas (because fuel was sold at average of 71.1 degrees F). Nonetheless, CEC believed the costs of installing the equipment would be added to the price of gas, resulting in a net cost for consumers. The court then dismissed the action.

The Court of Appeal reversed in all key respects. The Court started by reviewing several judicial abstention cases and derived the rule that abstention is appropriate where 1) plaintiff’s claims necessarily require the court to resolve complex policy issues and 2) there is an alternative mechanism to resolve plaintiff’s complaints. Such scenarios can occur when a regulatory body has addressed the subject matter of plaintiff’s complaint. Here, however, the Court found CEC had merely done a cost/benefit analysis and had not taken further action to address the issue temperature and price. The fact CEC could address the issue in the future is not a basis for abstention. Also, some of plaintiff’s complaints could not be addressed by CEC, including whether disclosures should be required.

As for specific claims, the Court went on to allow UCL claims for business practices that are “unfair,” “fraudulent,” and “unlawful” as well as the CLRA claim for fraud or deceit.

Center for Sierra Nevada Conservation v. County of El Dorado
Jan. 20, 2012
Cal. Court of Appeal (3rd App. Dist.)  2012 DJDAR
C064875

The Court of Appeal reversed the trial court’s approval of the County’s Negative Declaration in conjunction with an oak woodland plan. The County tried to rely upon a prior program EIR prepared four years earlier when it approved a new general plan. At the time of the general plan approval, the EIR contemplated the need for a future oak woodland management plan and fee program for mitigation purposes. There was no actual guidance provided in that EIR. The EIR also acknowledged that significant impacts would result to the oak woodland habitat by development. The EIR discussed an intended one-to-one on-site mitigation ratio until a plan could be developed and a fee plan adopted that allowed for off-site mitigation.

When the County later tried to rely upon the prior EIR, the Court of Appeal held that to be improper. The County prepared an initial study which should have determined whether the prior EIR had already addressed the environmental issue of concern; here, the consultant and County Counsel advised to prepare a tiered EIR which the County ignored.

The Court found that because the particulars of the fee program and scope of the mitigation were never defined, their effectiveness could not be measured. Similarly, no attempt was made to address or reconcile the general plan requirement to protect various oak and hardwood habitat and ensure connectivity among protected areas. Thus, the County’s attempt to bootstrap the current negative declaration onto the prior EIR failed. A fair argument could be made that the plan and fee program would have a significant impact on the environment, and thus an EIR should have been prepared.

Sierra Club v. U.S. E.P.A.
(9th Cir. 2012)
Jan. 20, 2012
2012 DJDAR 844
10-71457

Environmental organizations challenged the federal EPA’s approval in 2010 of California’s proposed 2004 state implementation plan (SIP) for the San Joaquin Valley’s nonattainment area for the one-hour ozone National Ambient Air Quality Standard, where the degree of danger to human health from ozone was considered extreme.

While California can regulate stationary sources of emissions, it must get first get EPA approval before setting standards from mobile sources such as vehicles.

The Ninth Circuit Court of Appeal had original jurisdiction under the Clean Air Act (CAA) to hear the case. The Court agreed with plaintiffs that the EPA had acted arbitrarily and capriciously by approving the SIP knowing that the emissions inventory upon which it relied were outdated and inaccurate. The CAA requires nonattainment plans to “include a comprehensive, accurate and current inventory of actual emissions from all sources of relevant pollutant or pollutants in such area.” The state based the 2004 SIP on data from 2002. By the time the EPA considered the SIP in 2010, new data from a newer computer modeling tool had become available. Rather than use this data, the EPA relied upon an internal guidance memo that suggested it could use data that was current as of the time the SIP was submitted to the EPA. The Court found the memo (Seitz memo) even questioned reliance on greatly outdated data after much time had elapse.

Another Circuit Court of Appeal had previously approved EPA reliance on the Seitz memo where the EPA ignored new data that became available one year before EPA approval of a SIP. The reasoning was that an agency might not be able to work efficiently if it were forced to stop everything and consider every new piece of information. But here, the EPA had new data for three years before approval. The Court held the EPA could not ignore evidence that showed a nonattainment plan was inadequate while relying on insignificantly outdated data.

The EPA also argued it could ignore the 2007 8-hour ozone emissions data because they were not relevant to the 2004 1-hour data. The Court was unpersuaded and noted the 2007 data showed significantly different and higher NOx emissions which can lead to harmful ground-level ozone. That underscored that the 2004 SIP may have been significantly flawed.

Finally, the Court concluded that EPA’s own failure to address substantively the disparities between the 2007 and 2004 emissions inventories prevented the Court from determining if there were any merit to EPA’s argument. The EPA’s failure to explain its choice of certain data over other data made its approval of the SIP arbitrary and capricious.