Last week, the California State Water Resources Control Board (State Water Board) announced that it permanently banned 100 of Shell Oil Company’s underground storage tank (UST) claims from the California UST Cleanup Fund (Fund) for allegedly claiming reimbursement through false or misleading statements on its claim forms.  The State Board estimates that disqualifying Shell from pursuing these claims could save the Fund up to $150 million.

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The Fund was created by the Barry Keene Underground Storage Tank Cleanup Fund Trust Act of 1989 and is administered by the State Water Board. Among other things, the Fund provides reimbursement of up to $1.5 million for expenses related to the cleanup of leaking underground storage tanks (USTs) that impact the soil and groundwater.  However, the Fund prohibits claimants from obtaining “double recovery.”  Double recovery occurs when a claimant seeks reimbursement of costs that it already has been reimbursed through other sources such as through insurance claims, litigation and settlements.  Claimants must disclose all payments from other sources on a Non-Recovery from Other Sources Disclosure Certification.

According to the State Water Board, in 2010 a whistleblower filed a complaint against Shell alleging fraud under the California False Claims Act. The complaint alleged that Shell failed to disclose it previously had received reimbursement from other sources when it sought reimbursement of costs associated with UST sites.  The State Water Board joined in settlement negotiations based on its independent administrative and litigation claims that it could pursue against Shell.  The parties settled the action earlier this year.  The settlement requires Shell to pay a total of $20 million (including $11 million to the State Water Board) and permanently bans 100 of Shell’s UST claims, which could result in a savings to the UST Fund of up to $150 million ($1.5 million per claim).

Today, the California Supreme Court resolved this issue in Ardon v. City of Los Angeles.
Last year, I wrote about the Second Appellate District case of Ardon v. City of Los Angeles.  In Ardon, the appellate court found that a public agency 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.  However, half a year later, 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 created what is known as a “split of authority.”  Today, the California Supreme Court resolved this issue in Ardon v. City of Los Angeles.  The Court found that a public agency cannot waive the privileges if it inadvertently releases privileged documents in response to a PRA request.

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 inadvertently 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.  Citing California Government Code section 6254.5, the court found that in producing the documents, even inadvertently, the city waived any privilege claim.

The California Supreme Court characterized this issue as “one of statewide importance.”  In reaching its decision, the Court reviewed the statutory language of California Government Code section 6254.5 and the other relevant statutes pertaining to the PRA.  The Court concluded that the statutory language as a whole was ambiguous on this issue, and resolved the ambiguity by concluding that inadvertent disclosure does not waive the privileges. The Court stressed the importance of the statutory privileges and a party’s reasonable reliance that an inadvertent disclosure would not waive the privileges.  The Court further found that there was no reason to interpret California Government Code section 6254.5 differently from Evidence Code section 912 (which applies to discovery requests in litigated disputes) in this regard.  Under Evidence Code section 912, an inadvertent disclosure of privileged documents does not waive the privilege.

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.” iStock_000066888187_Full-683x1024

 

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.

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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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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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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OLYMPUS DIGITAL CAMERAOn November 6, 2013, ASTM revised its standard for conducting Phase I environmental site assessments, known as Standard E1527-13 (entitled “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process”).  ASTM E1527-13 is the first revision to the ASTM Phase I standard since its 2005 revision of the standard (known as ASTM E1527-05).

The ASTM standards are a helpful tool for parties seeking to avoid, or at least minimize, potential liability pursuant to the federal Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA,” also known as “Superfund”).  CERCLA imposes liability without regard to fault or negligence on present facility owners and certain past owners, as well as certain other parties, for any environmental contamination found on the property.  This means that a purchaser and current owner of land contaminated by the actions of others could be held liable under CERCLA for the cleanup of the property.  Fortunately, CERCLA has a few defenses for these situations for so-called “innocent landowners,” “bona fide prospective purchasers,” and “contiguous property owners.”  However, to qualify for these defenses, CERCLA requires a property owner to conduct “all appropriate inquiries” on or before the date of acquiring the contaminated property, among other requirements.

Prior to November 2005, there was no federally approved statute or regulation defining the procedure that a prospective purchaser must follow in conducting all appropriate inquiries.  However, on November 1, 2005, the United States Environmental Protection Agency (“EPA”), issued a final rule entitled the “Standards and Practices for All Appropriate Inquiries.”  Effective on November 1, 2006, the All Appropriate Inquiries Rule for the first time established federal standards and practices for conducting all appropriate inquiries, as a first step to qualifying for one of the elusive CERCLA defenses.

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Earlier this month, in Latinos Unidos De Napa v. City of Napa, the California Court of Appeals upheld the city of Napa’s determination that it did not have to prepare an environmental impact report (EIR) under the California Environmental Quality Act (CEQA) when enacting minor changes to its general plan and zoning ordinances.

Napa prepared a program EIR prior to adopting its comprehensive update of its general plan in 1998.  The general plan set forth Napa’s future plans for development through the year 2020.  The program EIR analyzed the impacts of future projected growth within the city through the same time period.  Although the future housing element was not updated at that time, the program EIR analyzed the impacts of the existing housing elements.

In 2009, Napa began the process of updating its housing element and prepared an initial study under CEQA.  Among other things, the initial study analyzed the extent to which the changes contemplated by the adoption of the housing element could result in new or different environmental impacts not already analyzed with respect to the general plan.  Based on this review, the city determined that the project was within the scope of the program EIR and required no further environmental review.

water_boardsOn May 1, 2012, the California State Water Resources Control Board (SWRCB) adopted via Resolution No. 2012-0016 the Water Quality Control Policy for Low-Threat Underground Storage Tank Case Closure (Low-Threat Closure Policy).  The Low-Threat Closure Policy finally became effective on August 17th.  This should be good news for the thousands of UST sites in California because the Low-Threat Closure Policy will hopefully make it easier to obtain closure.  At a minimum it defines more clearer criteria for obtaining closure.

The Low-Threat Closure Policy recognizes that many petroleum release cases pose a low-threat to human health and the environment. The policy’s purpose is to establish consistent California statewide case closure criteria for low-threat petroleum UST sites. To potentially qualify for closure, the site must satisfy eight general criteria (applicable to all sites), as well as media-specific criteria as it pertains to groundwater, vapor intrusion to indoor air and direct contact, and outdoor air exposure.  Below is a brief description of each of these criteria.

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House-150x150Yesterday, the California Energy Commission unanimously approved energy efficiency standards for new homes and commercial buildings. The new 2013 Building and Energy Efficiency Standards (Standards), which take effect on January 1, 2014, are projected to be 25 percent more efficient than previous standards for residential construction and 30 percent more efficient for nonresidential construction.

For new residential construction, the Standards include:

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