Railroad Tank CarsOn July 19, the First District Court of Appeal published its opinion in Communities for a Better Environment v. Bay Area Air Quality Management District. In this case, Communities for a Better Environment (CBE) and a host of other environmental groups sought to challenge a rail-to-truck facility for the transloading of crude oil permitted by the Bay Area Air Quality Management District (BAAQMD). The appeals court affirmed the trial court’s ruling that CBE’s petition was time barred under Section 21167(d) of the Public Resources Code for failure to bring the claim within 180 days of BAAQMD’s approval of an Authority to Construct (ATC) that authorized the transloading of Bakken crude. In doing so, both courts rejected the argument by CBE that the “discovery rule” should apply in CEQA cases where, as here, there is no public notice of the approval.

The rail-to-truck facility had been transloading ethanol through Richmond since 2009. In February 2013, however, the operator (Kinder Morgan) applied to BAAQMD for approval to alter the facility and begin transloading Bakken crude oil, a form of crude that CBE alleged was “highly volatile and explosive” (among other environmental risks). Without any public notice, BAAQMD in July 2013 found the approval “ministerial” (not subject to CEQA) and issued an ATC for transloading Bakken crude. The facility began transloading Bakken crude in September 2013 and BAAQMD later modified two conditions of the ATC in October and December 2013. BAAQMD in February 2014 finally issued Kinder Morgan a Permit to Operate (PTO)—a follow-on permit to the ATC that incorporated the modified conditions. BAAQMD exercised its discretion and declined to file a Notice of Exemption, which it could have done under Section 15062 of the CEQA Guidelines.

CBE filed suit in March 2014 to challenge the transloading of Bakken crude, which was within 180 days of issuance of the PTO but well over 180 days after BAAQMD’s approval of the original ATC authorizing the switch to Bakken crude. CBE argued that its petition was timely because its first discovery (i.e., “notice”) of the approval of Bakken crude did not occur until January 2014, “when one of CBE’s staff members received an email disclosing that the Richmond facility had begun transloading crude oil.” Citing Concerned Citizens of Costa Mesa, Inc. v. 32nd Dist. Agricultural Assn. (1986) 42 Cal.3d 929, CBE argued that:

[I]t could not with reasonable diligence have learned, of the project any earlier, because BAAQMD ‘gave the public no notice of Kinder Morgan’s switch to … Bakken crude oil’ and ‘Kinder Morgan’s transloading operation is entirely enclosed, making the transported commodity, and any change to it, invisible.’

In Costa Mesa, the Supreme Court had held that when the project under construction differs from the project originally approved by the agency, “an action challenging the agency’s noncompliance with CEQA may be filed within 180 days of the time the plaintiff knew or reasonably should have known that the project under way differs substantially from the one described in the EIR.” (Id., at 939–940.) But in that case, there was no formal “approval” and the project opponents were not aware of substantial changes in an amphitheater project until the venue held its first concert. The Court reasoned that this interpretation of the statute of limitations was appropriate because the opponents “could not with reasonable diligence have discovered” the changes earlier.

The First Appellate District declined to apply Costa Mesa, citing an important distinction: here, BAAQMD had issued its approval of the switch to Bakken crude in July 2013, which served as one of three alternative dates specified in Section 21167(d) that starts the limitations period (from “notice,” “approval,” or “commencement” of the project). At that point—and despite no public notice of the approval—the public is deemed to have “constructive notice” of the project under CEQA.

The court further emphasized that the “discovery rule” has never been applied in CEQA cases to postpone accrual of the statute of limitations. In other actions, the discovery rule “postpones the accrual of an action . . . until the date the plaintiff has actual or constructive notice of the facts constituting the injury.” The Supreme Court in Concerned Citizens, however, “specifically rejected ‘as contrary to the Legislature’s intent’ the plaintiffs’ position ‘that their action was timely because it was filed a few days before the expiration of 180 days after the first concert was held at the theater.’” Rather, the Supreme Court held that “an action accrues on the date a plaintiff knew or reasonably should have known of the project only if no statutory triggering date has occurred.” In Costa Mesa, there was no “notice” and no formal “approval” of the changed amphitheater project, and thus no earlier “triggering date” for accrual of the limitations period.

The First District acknowledged that while public participation plays an important role in CEQA, “arguments about the proper balance between the interests of public participation and of timely litigation are better directed at the Legislature.”