Required Action on the Horizon for California Consumer Products Companies

Yesterday, the Department of Toxic Substances Control (“DTSC”) released its draft Stage 1 Alternatives Analysis Guide (“Guide”) under the California Safer Consumer Products program.  Public comments are being accepted on the Guide through October 24, 2015, and DTSC is specifically asking commenters to “provide the names of tools, methods, approaches, and data sources not already mentioned, as well as examples for steps and approaches, to complete an [alternatives analysis].”

By way of background, California’s Safer Consumer Products program took effect on October 13, 2013, and seeks to reduce certain chemicals from consumer products.  The program establishes a list of “candidate chemicals” of concern and “priority products” that contain candidate chemicals.  Candidate chemicals are identified here.  Initial priority products include paint stripper with Methylene Chloride; spray polyurethane foam with unreacted MDI; and children’s foam-padded sleeping products with TDCPP (or TCEP).

Manufacturers and other supply-chain participants of priority products will be required to submit priority product notifications to DTSC sixty (60) days after the effective date of the regulation establishing a product-chemical combination as a final priority product.  Subsequently, alternatives analyses will be required, in which manufacturers and other supply-chain participants will need to submit information regarding whether there is a “safer” way to make priority products.  Thereafter, DTSC is required to implement a regulatory response, which could include mandated product labeling requirements, safety measures, and bans.

Consumer products manufacturers and supply-chain participants are advised to keep abreast of California’s Safer Consumer Products program.  Although it has been slow-moving up until this point, required action is on the horizon.  Looking ahead in the next few years, DTSC also plans to examine “Beauty, Personal Care, and Hygiene Products,” “Building Products and Household, Office Furniture and Furnishings,” “Cleaning Products,” “Clothing,” “Fishing and Angling Equipment” and “Office Machinery.”

Can a Public Agency Inadvertently Waive Attorney-Client & Work Product Privileges? First and Second Appellate District Split on the Issue

Environmental Litigation

In January, I wrote about the Second Appellate District case of Ardon v. City of Los Angeles.  In Ardon, the court found that a public entity can waive statutory privileges that it otherwise would have if it produces privileged documents in response to a California Public Records Act (PRA) request, even if inadvertently.  Recently, the First Appellate District in Newark Unified School District v. Superior Court came to the opposite conclusion in holding that a public agency cannot inadvertently waive attorney-client and work product privileges.  These contradictory holdings have created what is known as a “split of authority.” 


In Newark Unified School District, some parties requested documents from the Newark Unified School District (District) under the PRA.  The PRA requires public entities to make their public records open for inspection and copying upon request.  Within hours of delivering the documents in response to the request, the District’s interim superintendent discovered that the District had inadvertently included over one-hundred documents that it contended were subject to the attorney-client or attorney work product privileges.  The District immediately sent e-mails to the recipients of the documents requesting that they return the documents.


Citing California Government Code Section 6254.5, the document recipients argued that the District waived the privileges by its inadvertent release of the documents.  The court in Ardon had previously cited this provision in finding that a public entity waives any privilege if it discloses a privileged document pursuant to a PRA request, even if such disclosures are made inadvertently, by mistake or through excusable neglect.  However, the court in Newark Unified School District concluded that the District did not inadvertently waive the privileges.

The Newark Unified School District court reviewed the Legislative history of Government Code Section 6254.5 and determined that the Legislature intended the section to prevent public agencies from intentionally disclosing documents to some members of the public while asserting confidentiality as to other persons.  In contrast, the Legislature did not intend that a public agency could waive its privilege by inadvertent disclosure.  Finally, the court concluded that to harmonize Government Code Section 6254.5 and California Evidence Code Section 912 (in which courts have found that a privilege cannot be waived by an inadvertent disclosure), it must construe Section 6254.5 as not applying to an inadvertent disclosure of a privileged document.

The decisions in Ardon and Newark Unified School District create a clear split of authority on whether a public agency can inadvertently waive privilege.  In this author’s opinion, Newark Unified School District has the better argument.  From a public policy standpoint, it would be very burdensome on local agencies’ resources if they had to respond to PRA requests without any safeguard from inadvertent disclosure of privileged documents.  Public agencies would be held to a higher standard than private litigants, because in private litigation inadvertent disclosure does not result in a waiver of privilege.  Fortunately, this split of authority should be resolved soon, because the Ardon case is now before the California Supreme Court.  Stay tuned …

State Water Board Approves Composting General Order

Water Quality

     Earlier this month, the California State Water Quality Control Board (“State Water Board”) approved a General Order for Waste Discharge Requirements (“WDRs”) for composting operations, which will streamline and standardize permitting processes and regulate water quality at new and existing composting facilities.  While the General Order was approved with very little fanfare or media coverage, its implications are significant.

General Order Coverage

    The General Order, which applies to State composting facilities that process at least 500 cubic yards of material per year, will impose a regulatory scheme on a large number of the organics facilities already operating in the State.  Moreover, the General Order’s facility coverage is likely to expand in the coming years, given the recent passage of California Assembly Bill 341 (“A.B. 341”) (2011), which encourages the addition and expansion of State composting facilities by establishing a State policy goal that at least 75 percent of the solid waste generated in the State be source-reduced, recycled, or composted by 2020.

Waste Disposal and Composting in California

     The State of California currently disposes of an annual estimated 35 million tons of waste in landfills, of which an estimated 32 percent is compostable organic material, 29 percent is construction debris, and 17 percent is paper.  Much of the organic material could be, but is not being, composted, which is leading to the excessive and unnecessary filling of State landfills.  Composting yields environmental benefits by preserving nutrients, diverting waste from landfills, improving soil, reducing runoff, and sequestering carbon.

Prior Regulatory Scheme 

     In the past, potential water quality issues arising from composting facilities were regulated by the State’s nine Regional Water Quality Control Boards through individual facility WDRs, or waivers of WDRs.  California Water Code section 13263 requires that the water boards prescribe WDRs that, among other things, implement water quality control plans and consider the beneficial uses to be protected.

     Historically, the principal water quality issue at composting facilities has been the control of “leachate,” a liquid byproduct of composting.  Leachate consists of a variety of pollutants, including salts, nitrates, pesticides, and metals, which have the potential to impact ground waters and surface waters of the State.

Permit Basics

     The General Order puts most composting facilities in either a Tier I or a Tier II category, with Tier II facilities being subject to heightened regulatory requirements.  Classification is predominantly based on feedstock type, total volume of materials, and hydrogeological siting.

     With respect to each tier, the General Order sets forth standards for depth to groundwater, distance to surface water, allowable and prohibited feedstocks, additives, surface pads, wastewater handling, berms, and facility monitoring.  Some composting facilities will fall into neither tier, necessitating the continued use of individual WDRs.

 Over-Regulation of Composting?

     A number of composting industry participants have suggested that the cost of compliance with the General Order is high compared to the relatively innocuous threats posed to water quality by composting activities.  Consequently, they argue, composting facilities may consider shutting down or raising fees—both of which would be detrimental to the State’s A.B. 341 goals.

     In response to industry comments, the State Water Board revised a number of the General Order’s more onerous regulatory requirements.   For example, in an earlier draft of the General Order, detention ponds at composting facilities were required to contain all runoff from working surfaces in addition to precipitation from a 25-year, 24-hour storm event.  Industry participants argued that the requirement lacked flexibility.  In response, the General Order was revised to indicate than an “equivalent alternative” to the detention pond requirement could be approved by a regional water board.

     Whether the General Order strikes the appropriate regulatory balance between encouraging composting and adequately protecting water quality is still in question.  Only time will tell whether the General Order accomplishes those dual objectives.

 Next Steps for Composting Facilities

     Existing composting facilities, except those with individual WDRs or conditional waivers of WDRs, are required to seek coverage under the General Order by submitting a Notice of Intent (“NOI”), filing fee, and technical report within one year of adoption of the General Order (as indicated above, the General Order was adopted on August 4, 2015).  New composting operations that propose to begin operating after adoption of the General Order, are required to seek coverage under the General Order by submitting a complete NOI, filing fee, and technical report at least 90 days prior to commencement of operations.

     After the appropriate regional water board determines that an NOI and technical report are complete and the operation can be appropriately regulated under the General Order, the regional water board will issue a Notice of Applicability (“NOA”) which will confirm the facility’s tier and a timeline for compliance with the General Order.  Existing facilities will have six years to come into full compliance with the General Order.

Insurance Protection for Losses May Be Freely Assigned in Connection with a Corporate Sale or Reorganization

Environmental Litigation

On August 20, 2015, the California Supreme Court handed down its much anticipated decision in Fluor Corporation v. Superior Court (Hartford Accident & Indemnity Company). The court held that Insurance Code §520, a seldom cited provision of the Insurance Code dating back to 1935, bars an insurer from refusing to honor a policyholder’s assignment of policy coverage regarding injuries or damages that pre-date the assignment. In the process, the high court overruled its 2003 decision in Henkel Corp. v. Hartford Accident & Indemnity Co., 29 Cal.4th 934, which had held that when a liability policy contains a “consent-to-assignment” clause (a standard provision in pre-1985 policy forms), the policyholder may not assign its rights to policy benefits without the insurer’s consent until the claim against the insured is reduced to a judgment or settlement with the claimant.

 The decision, which deals with post-loss assignment of insurance benefits under general liability policies in the context of a corporate reorganization, has particular relevance to companies who acquire companies with existing environmental or other long-tail liabilities. Before the Fluor decision, it was often necessary to structure a transaction as a stock purchase and maintain the target company as a subsidiary of the acquiring company to obtain the benefit of the target company’s legacy coverage typically dating back many years to the time period when the environmental or other liabilities for the target company’s operation arose. In Fluor, the California Supreme Court expressly recognized that its decision will protect the ability of a policyholder “in the course of transferring assets and liabilities to another business entity in connection with a corporate sale or reorganization, to assign rights to claim defense and indemnification coverage provided by prior and existing insurance policies concerning the business’s previous conduct.”

 Greenberg Glusker represents policyholders in insurance recovery litigation against insurers.  For more information regarding our insurance coverage practice, please contact Jonathan B. Sokol at 310.201.7423 or


EPA Must Consider Costs in Deciding Whether to Regulate HAPs From Power Plants

Air Quality

Last week, in Michigan v. EPA, the U.S. Supreme Court held that it was unreasonable for the U.S. Environmental Protection Agency (“EPA”) to refuse to consider costs in connection with its finding that it was “appropriate and necessary” to regulate hazardous air pollutant (“HAP”) emissions from power plants under the federal Clean Air Act (“CAA”).

By way of background, the CAA instructs EPA to regulate HAP emissions from power plants if it concludes that regulation is “appropriate and necessary.”  The “appropriate and necessary” language stems from the 1990 CAA amendments, wherein Congress established a procedure for determining the applicability of the HAP program to power plants.  Those amendments require EPA to regulate power plants as ordinary major sources if, after conducting several studies, EPA finds that it is “appropriate and necessary.”

After EPA completed the required studies in 1998, it concluded that regulation of power plants was in fact “appropriate and necessary.”  EPA’s “appropriate” finding was based on a conclusion that power plants emitted mercury and other HAPs which posed a risk to human health and the environment and that emission reduction controls were available.  EPA’s “necessary” finding was based on its conclusion that then-existing requirements did not eliminate risks.  In conjunction with its conclusions, EPA determined that “costs should not be considered” in determining whether power plant HAPs should be regulated.  A Regulatory Impact Analysis issued by EPA estimated that EPA’s decision would cost power plants $9.6 billion per year, whereas quantifiable regulatory benefits would be worth $4 to 6 million per year.

Reviewing EPA’s statutory interpretation under the test enunciated in Chevron USA, Inc. v. NRDC, Inc., 720px-Seal_of_the_United_States_Supreme_Court_svgthe U.S. Supreme Court concluded that the phrase “appropriate and necessary” requires “at least some attention to cost.”  Moreover, the Supreme Court found that statutory context reinforced the relevance of cost, as EPA was asked to study cost prior to determining whether it was “appropriate and necessary” to  regulate HAP emissions from power plants.  Although EPA argued, among other things, that the statute at issue did not mention cost and therefore did not require EPA to consider cost, the Supreme Court maintained that the statute’s broad reference to “appropriateness” encompassed multiple relevant factors—including cost.

Several commentators have concluded that the effect of the Supreme Court’s decision in Michigan v. EPA is somewhat inconsequential, since EPA can nevertheless regulate HAP emissions from power plants (including mercury) provided that it merely considers costs in the future.  It is unclear whether this conclusion is true, as the Supreme Court’s opinion is chock-full of intimations that in determining “appropriateness,” EPA must also weigh—to at least some extent—costs against benefits.   For example, the Supreme Court stated that “[o]ne would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”  Moreover, although the Supreme Court acknowledged that “[i]t will be up to [EPA] to decide . . . how to account for cost,” the Court also acknowledged that EPA must nevertheless consider costs “within the limits of reasonable interpretation.”  Thus, in any event, Michigan v. EPA stands for the principle that EPA must engage in reasoned decision making in its decision to regulate HAP emissions from power plants.


State Water Board Continues Deadline for Compliance with New California Industrial General Permit for Stormwater until August 14, 2015

Water Quality

As an update to a previous write-up on the deadline for compliance with the new California Industrial General Permit for Stormwater (General Permit), the State Water Resources Control Board (State Water Board) has continued the deadline for registration and compliance from July 1, 2015 to August 14, 2015.

In a notice circulated on the original deadline for compliance, July 1, 2015, the State Water Board acknowledged that its web-based database for stormwater compliance (SMARTS) was experiencing technical issues which were limiting registration access.

As a result, the State Water Board extended the deadline for registration from July 1, 2015 to August 14, 2015.  This extended deadline should enable those industrial facilities that were either unaware of the July 1, 2015 deadline or those struggling to meet that deadline to timely register.

As mentioned before, determining whether an industrial facility is subject to the General Permit and maintaining compliance with the General Permit can be complicated.  Simplifying that process can be done through enlisting the assistance of water quality professionals such as legal counsel or consultants.  If you haven’t already, it is important to identify water quality professionals with experience in stormwater permitting and compliance to ensure a facility appropriately complies with the new General Permit.






Christopher ‘Smitty’ Smith


Deadline For Compliance With New California Industrial General Permit For Stormwater Is A Week Away (July 1, 2015)

Water Quality

On July 1, 2015, the new California Industrial General Permit for Stormwater (General Permit) will take effect and along with it come a host of new compliance obligations. Chief among those obligations is the completion and submission of a notice of intent (NOI) to be bound by the new General Permit. The last time industrial facilities were obliged to submit an NOI was when the soon-to-be-expired General Permit was updated back in 1997.  Much has changed in the world of industrial stormwater compliance since then.

For those less familiar with the General Permit, it applies in California to the tens of thousands of industrial facilities throughout the state and serves to regulate stormwater emanating from those facilities. The application of the General Permit to any given facility is based on that facility’s Standard Industry Classification (SIC) code. The SIC code for a given facility is determined based on the primary industrial activity at the facility.

The first step in complying with the new General Permit is to determine if an industrial facility is subject to it.  For those industrial facilities that already have their own individualized permit for stormwater, the General Permit’s compliance obligations are inapplicable. And for those industrial facilities that are already operating under the soon-to-be-expired General Permit, the new General Permit’s compliance obligations may be inapplicable.  Oftentimes, industrial facilities will just re-notice their intent to be bound by a new permit without evaluating whether their facility should be subject to a permit. This common practice should be avoided, if possible, to ensure that a facility is not expending time and money to comply with a permit that is inapplicable. Finally, for those industrial facilities that are not already operating under the General Permit, it’s time to evaluate whether the General Permit applies.

Determining whether a facility is subject to the General Permit begins with identifying the primary operations at a facility and locating the associated SIC code. To determine a facility’s SIC code, the State Water Resources Control Board has included Attachment A to the new General Permit which matches up SIC codes with a facility’s primary activity. Generally, the SIC codes covered include industrial operations ranging from manufacturing, oil and gas, mining, hazardous waste, landfill and recycling, transportation, and sewage and wastewater treatment works.

Bear in mind that if it is determined that a facility was not previously obligated to comply with the General Permit because that facility fell under the light industry exemption, that exemption is not carried through to the new General Permit. It remains unclear how many new facilities will be obligated to comply with the new General Permit based on the removal of this exemption, but the estimates are in the tens of thousands statewide. Despite doing away with the oft-utilized light industry exemption, the new General Permit provides a separate carve out from coverage known as the no exposure certificate (NEC). An NEC is available to a facility if that facility does not expose stormwater to industrial activities.  Practically, obtaining an NEC serves to circumvent the obligations associated with compliance with the General Permit.

Assuming an industrial facility is obligated to comply with the new General Permit, then along with completing and submitting an NOI, that facility must ensure registration in the stormwater multiple application and report tracking system (SMARTS). SMARTS is a web-based database for stormwater compliance and reporting. Instituting SMARTS is a change from the old model which involved submitting quarterly and annual reports in hardcopy. While SMARTS will make it easier and less expensive to maintain compliance with regulators, it will equally enable concerned citizens and environmental groups to have instant and up-to-date access to a facility’s records of compliance. A facility’s stormwater pollution prevention plan (SWPPP) may serve as the best example of how SMARTS may change the landscape for stormwater compliance.  Historically, some industrial facilities have been lax about maintaining and updating SWPPPs.  Prior to SMARTS, this lax effort may have gone unnoticed, but now that same lax effort is more likely to garner the attention of regulators, concerned citizens and environmental groups, or both.  And with the recent spike in Clean Water Act citizen suits filed in federal courts around the state, garnering the attention of any one of these groups can prove to be very costly and time consuming.

Determining whether your facility is subject to the General Permit and maintaining compliance with the General Permit can be complicated. Simplifying that process can be done through enlisting the assistance of water quality professionals such as legal counsel or consultants.  If you haven’t already, it is important to identify water quality professionals with experience in stormwater permitting and compliance to ensure a facility is afforded the protections available for compliance with the General Permit.



 Christopher ‘Smitty’ Smith

Public Entities Can Inadvertently Waive Privilege in Response to a Public Records Act Request

Environmental Litigation

200146012-001California’s Public Records Act (PRA) law requires public entities to make their public records open for inspection and copying. Environmental practitioners often use PRA requests as a tool to obtain information regarding a contaminated or a potentially contaminated site. In a recent case, Ardon v. City of Los Angeles, the California Court of Appeals found that a public entity can waive statutory privileges that it otherwise would have if it produces privileged documents in response to a PRA, even if inadvertently.

In Ardon, the plaintiff in litigation against the City of Los Angeles sought records under the PRA from the city concerning the subject matter of its complaint. After receipt of the records, Ardon’s counsel notified the city that it had obtained copies of some records that appeared to be privileged. The city responded by asserting that the documents had been inadvertency produced. The city demanded that Ardon return the documents to the city and agree not to rely upon the documents in any way. Ardon declined this request, asserting that the city had waived any privilege claim.

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Contaminated Property

contaminationOn September 25, 2014, Governor Brown signed SB 445 (Hill) Underground storage tanks; hazardous substances: petroleum: groundwater and surface water contamination into law (UST Law).  The UST Law was an urgency measure that took effect immediately.

The UST Law makes changes to the Underground Storage Cleanup Fund (UST Fund).  The UST Fund provides a mechanism to reimburse owners and operators of USTs the cost to remediate contaminated sites as the result of leaking USTs.  Most importantly, the UST Law extended the program’s sunset date by ten years to January 1, 2026.  Under the prior law, the UST Fund was set to expire in 2016, leaving many UST sites without access to state funds.

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CEQA Lead Agencies Do Not Waive Defense that CEQA Did Not Apply Despite Proceeding under CEQA

Environmental Litigation

cityscapeRecently, the court in Rominger v. County of Colusa found that a lead agency which approved a mitigated negative declaration for a project, can take the seemingly inconsistent position that the proposed project was not a California Environmental Quality Act (CEQA) project or was exempt from CEQA when its action is subsequently challenged.

In Rominger, real party in interest Adams Group, Inc. filed an application with the County of Colusa for the approval of a tentative subdivision map to divide 4 existing parcels into 16 parcels.  The application indicated that no specific plan for future expansion was available and that they intended to continue the existing use of the property.  The County prepared an initial study and issued a mitigated negative declaration under CEQA.

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