The 1998 Environmental Legislative Forecast: An Era of Uncertainty and Change

by Gary A. Lucks, J.D.*

Copyright 1998 © All Rights Reserved

This article was originally published in the CALIFORNIA ENVIRONMENTAL LAW REPORTER (Matthew Bender). Permission to reprint is hereby granted by the publisher.

Legislative Direction at a Crossroad

As we enter the second year of the biennial legislative session and the last year of the Governor's term, the outcome of the California environmental legislative session remains uncertain. Whether 1998 will be a bellwether year for environmental policy may turn on the ambitions of the Governor and whether he intends to leave an environmental legacy in the waning stages of his term. The productivity and policy directions of this session will also be influenced by whether the Legislature capitalizes on an improving bipartisan atmosphere buoyed by a healthy economy and the enjoyment of revenue surpluses for the first time in several years.

With term limits, it has become increasingly difficult to carry out consistent and sustained policy directions due to the regular and rapid turnover of policy committee chairs. Every couple of years there is a rolling reorganization resulting in new leadership and committee composition and ultimately new and different policy directions. This session is no different with the recent announcement of another new speaker of the Assembly. Antonio Villaraigosa (Los Angeles), who has only logged three years in the Legislature, was recently installed as the Assembly's fifth speaker in three years. Other expected leadership changes include Senator Lockyer (Hayward) stepping down as the Senate leader to be replaced by the more liberal Senator Burton of San Francisco.

Traditionally, the last year of a gubernatorial term is a politically preoccupied period resulting in limited policy developments. Moreover, the last year of a two-year session is often more political and less substantive. Despite this backdrop, the 1998 legislative session has the potential to offer up substantial policy developments in the areas of water policy, Superfund and brownfields, and the possible restructuring or elimination of Cal/EPA.

In a recent meeting with key environmental legislative committee consultants and administration legislative liaisons, the following environmental forecast emerged shaping the 1998 legislative session.

Water Quality

Legislative battles in recent memory have been dominated by difficult choices imposed by perpetual budget deficits. Today, awash in another anticipated budget surplus, the nature of the fiscal debate has changed from a discussion of whether to fund particular programs to how much to fund. Fiscal environmental policy will center on the general obligation bonds expected from the Governor and Senator Costa for either the June or November ballot. These all-encompassing bond measures are expected to generate more than $2 billion in revenues to support watershed, the coast, wildlife, flood protection and parks improvements.

Key provisions of the water bond will include a pot of money for levee maintenance, spillway modifications for state-managed dams, flood easements to promote groundwater recharge and parkways, agricultural preservation, and promotion of safe drinking water. The Governor wants to leave a legacy of coastal protection as do Democrats, many of whom won reelection in 1996 as a result of advocating for coastal protection. Bond provisions may also include purchase of access ways to beaches as well as provisions to minimize non-point source pollution. Other more controversial aspects of the water bond may include provisions to raise the height of existing dams to increase water storage.

Leftover legislation from the 1997 session includes AB 1241 (Keeley) which would promote sustainable fisheries by limiting commercial fishing or setting up marine preserves. Additionally, Assembly member Ted Lempert authored AB 667 which would make the release of three barrels (126 gallons) or more of oil into "waters of the state" (i.e., non-marine/inland waters) subject to civil and criminal penalties.

1998 could be a watershed year for water supply legislation supporting the reemergence of an effort to build a conveyance structure (formerly dubbed the "peripheral canal") around the San Francisco Bay and Delta. The momentum behind water transfers from north to south may hinge on the success of stalled negotiations over the San Francisco Bay-Delta CALFED process. The issue could emerge into a bond measure or be resolved through the budget process. The debate will likely center on whether to construct an isolated conveyance facility to shunt water south or whether to enhance projects designed to restore the bay and delta habitat and to encourage conservation. Other possible legislation would include a proposal to establish a clearing-house as a repository for water transfer information.

Hazardous Substances, Superfund, and Brownfields

With the Carpenter, Presley, Tanner Act (California's Superfund law) scheduled to sunset by July 1998, significant developments are anticipated in the Superfund and brownfield areas. The Administration has convened a working group, composed of members of Cal/EPA, the California Department of Toxic Substances Control (DTSC), legislative staff, and members of both the industrial and environmental communities, to discuss issues surrounding the state Superfund reauthorization. The debate will center on the current liability scheme. The business community prefers retaining the existing proportional liability approach with the state providing money to pay for cleaning up orphan shares; the environmental community supports the joint and several liability scheme. The other key issue for resolution revolves around the cleanup standard. The business community supports the emerging risk-based cleanup approach while the environmental community is championing cleanup methodologies and standards that are protective of children and minorities.

The emergence of risk-based corrective action (RBCA) as the cleanup standard of choice for brownfields cleanups and the State Water Resources Control Board's (SWRCB) containment zone policy (Resolution 92-49) have received praise from industry and criticism from the environmental community. This emerging cleanup approach is expected to meet with opposition from the environmental community this legislative session.

Environmental Justice

In addition to concerns about risk-based corrective action, the environmental community is expected to support legislation furthering environmental justice policies. Three unsuccessful bills from last session are expected to be resurrected, including one that would require general plan land use elements to distribute commercial and industrial uses involving hazardous substances in a fashion that avoids concentration of hazardous waste land uses. Another would require County Hazardous Waste Management Plans (CHWMP) to include environmental equity goals. Finally, the third bill would require that the California Environmental Quality Act (CEQA) incorporate environmental justice considerations.

Solid Waste/Recycling

Another mainstay in the environmental statutory landscape - the California Beverage Container Recycling and Litter Reduction Act (AB 2020, 1986) - is also up for reauthorization and possible overhaul by the close of 1998. The beverage industry is poised to eliminate the processing fee provision of the Act while recycling interests want to expand the scope of the Act. A likely compromise would allow reauthorization of the provisions of existing law and use a surplus from the beverage container recycling fund to "buy down" the processing fee and preserve the premise of the processing fee.

Cal/EPA Reorganization

Cal/EPA, formed by executive order in the summer of 1991, promised to streamline environmental regulation and unify the disparate single media environmental agencies, boards, and departments. The coalescence of the air, water, and waste agencies under one roof was intended to allow the multimedia agencies to speak with one collective voice. However, the Air Resources Board, the State Water Resources Control Board, the Department of Toxic Substances Control, the Integrated Waste Management Board and other bodies continue to largely function independently within a loose affiliation. This was recently underscored by the failure of Cal/EPA to anticipate the water quality impacts resulting from use of methyl tert butyl ether (MTBE) in an effort to improve air quality from mobile sources.

Before the creation of Cal/EPA, individual unipurpose agencies, departments, and boards functioned in a fashion similar to chess pieces. The statutory authority defined the rules governing their function on the board. Unfortunately, the executive order failed to change the statutory language to integrate more meaningfully the functions of the agencies.

Thus, the creation of Cal/EPA has done little to change the stalemate that existed between the industrial and environmental players prior to the executive order. Industry still perceives the environmental agencies as burdensome with overlapping and cumbersome regulatory standards. As a result, the industrial community continues to introduce legislation that would soften the reach of the command and control programs while the environmental community fights to defend the substantive standards of the existing laws.

In 1994 the Governor commissioned a blue ribbon panel to study the feasibility of redrafting the disparate environmental statutory codes and merging them into one unified environmental statute. The Unified Statute effort remains on the shelf, perhaps awaiting the transition to a new administration in 1999. The Administration must report to the Legislature by March 1 on progress with the Unified Statute as well as the unified permitting program. Meanwhile, the Legislature has become increasingly more frustrated with Cal/EPA for a perceived failure to be accountable to both the business community and environmental standards. Legislative attention and scrutiny of the beleaguered agency could emerge with the upcoming confirmation hearings for the new Cal/EPA Secretary.

Other structural concerns emerging with Cal/EPA center around the bifurcation of the health risk function of the Office of Environmental Health Hazard Assessment (OEHHA). OEHHA - perceived as the "weaker brother" of the scientific arm of the risk assessment discipline - must seek reimbursement from the agencies, departments, and boards that make risk management decisions. A recent report by the California Legislative Budget Office concluded that the risk assessment function must be supported by a stable, freestanding funding source in order to maintain its mission of objectivity.

Senator Byron Sher is expected to move a bill introduced last session designed to bring rationality to Cal/EPA decision making by providing peer review of all scientifically based regulations issued by Cal/EPA. Another bill affecting the regulatory process introduced by Senator Mountjoy would require legislative approval of all environmental regulations.

Air Quality

Although much of the heavy lifting concerning air quality legislation has taken place in previous legislative sessions, we can expect to see additional measures intended to shore up compliance with the California Clean Air Act. These measures will largely address particulate and ozone emissions and reformulated gasoline.

It is estimated that heavy-duty trucks emit one-third of the remaining particulate emissions that are potentially controllable. Compliance with the State Implementation Plan (SIP) for PM10 will hinge on the ability to creatively reduce PM10 emissions from mobile and off-road sources. Last year, SB 1096 (Brulte) introduced legislation to establish the Heavy-duty Vehicle Air Quality Improvement Program that would have provided incentives to accelerate deployment of cleaner heavy-duty vehicles by introducing lower emission technology and promoting early construction of refueling infrastructure for heavy duty vehicles. Offsets generated from the retired or re-powered trucks could be used for NOx and PM. Although this bill failed passage it is expected to be reintroduced this session. Other legislation is expected to regulate off road sources of diesel emissions. SB 1376 (Knight) would fund mitigation measures to control fugitive dust from the Owens Dry Lake.

The Central Valley, long frustrated by transported smog from the Bay Area region, wants to impose SMOG Check II on the Bay Area. We can expect to see two or three bills on this issue this session. One of these bill passed out of the Senate Transportation Committee in mid-January over the objection of the Chair - Senator Quentin Kopp of San Francisco.

Another measure would ensure that air districts follow the mandates of the California Clean Air Act (AB 2595, 1988) which require local and regional air districts to adopt all feasible measures to meet a 5 percent reduction per year of specified criteria pollutants.

Finally, the debate over continued use of methyl tert butyl ether (MTBE) as a gasoline oxygenate additive remains on the legislative agenda. Assembly member Bowen introduced AB 1642 which allows the use of alternative gasoline oxygenate additives as long as the air quality benefits realized by MTBE can be demonstrated. Additionally, the California Energy Commission (CEC) is expected to issue a report addressing the feasibility of alternatives to MTBE. Achieving a legislative resolution of the MTBE controversy during this legislative session is considered optimistic.

Natural Resources and Wildlife

Protection of wildlife and parks will also be the focus of the budget process and bond measures. $130 million of the bond measure referred to above would be earmarked for acquisition of the Headwaters forest. The $130 million state share may be conditioned on the state having an opportunity to review the habitat conservation plan negotiated between Pacific Lumber and the federal government.

Draft regulations to the California Endangered Species Act (CESA) designed to implement the Natural Communities Conservation Program (NCCP) may be the subject of legislative attention designed to guide the development of the program. In the wake of CESA reform last session, there is a perceived need to provide public funding for further mitigation to augment private party action for species protection with a focus on acquisition of habitat.

CEQA

In the aftermath of last session's AB 175 (Torlakson) where only a fraction of initial CEQA reform measures were enacted, the Governor is expected to issue a new set of California Environmental Quality Act (CEQA) guidelines incorporating these reforms in October 1998. One of the more controversial provisions involves a proposal to establish thresholds for significance. SB 1359 (Costa) would require that any impact to agricultural water supply be deemed a significant impact triggering preparation of an environmental impact report (EIR).

Land Use

AB 1498 (Campbell), an active two year bill, would limit police power regulation over drive-through restaurants. Thus, if enacted, municipalities would be stripped of their power to regulate hours of operations of drive-through restaurants.

SB 927 (Ayalla) is a bill that responds to a 1991 law suit (Martin v. City of Rialto) which held that once a city has imposed one development moratorium, it is forbidden from doing so again. This legislation is intended to expand the circumstances under which a city may issue subsequent moratoria.

AB 6X (Torlakson), enacted in the first extraordinary session of 1997, requires a property seller to provide a Natural Hazard Disclosure Statement to a prospective purchaser if the property is located in a flood hazard zone, a dam inundation area, a very high fire hazard area, a wild land fire area, an earthquake fault, or a seismic zone. The bill becomes operative on March 1, 1998.

Otherwise, progress with land use reforms has been made little by little over the years with gridlock remaining in a handful of areas such as housing general plan element reform. 1998 is not expected to be a big year for significant advances in land use law or in open space other than farmland conservation and preservation.

Hazardous Waste

The California Department of Toxic Substances Control (DTSC)'s Regulatory Structure Update (RSU), is tasked with finding a better way to classify hazardous wastes. Scientists are not making friends with industry and environmentalists and thus this issue could percolate upward for legislative resolution.

The 1997 budget earmarked money to support pollution prevention programs. Legislation is expected to define the scope of the pollution prevention projects eligible for funding. Other fee related legislation is expected by the industrial community, which is currently obligated to pay hazardous waste generator fees to its Certified Unified Program Agency (CUPA) at the local level as well as to the California DTSC. Generators are expected to seek a more equitable fee structure. Finally, legislation designed to exempt wastewater treatment facilities from DTSC jurisdiction is expected on the grounds that these facilities are adequately regulated by local air districts and regional water quality control boards.

Energy

As the Public Utilities Commission (PUC) is poised to implement the landmark electric utilities deregulation reform and restructuring program, environmental aspects of the program are under attack in the Legislature. The debate centers on environmental labeling and arriving at a satisfactory definition for "green power." The electric utilities regulatory restructuring reform has spawned the Little Hoover commission's evaluation of whether it is necessary to have both the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC) regulate energy policy. Any changes would require a constitutional amendment. Finally, in response to the recent Global Climate summit in Kyoto, a climate change bill is anticipated in this session.

Conclusion

Whether environmental legislation will stall on the Governor's desk or receive his signature this fall depends both on the Governor's ambitions in his final year in office and the Legislature's attention span in an election year. Although a number of policy initiatives will be entertained this legislative session, the fourth year of a gubernatorial term is typically the least productive. This, combined with term limits and the expected increase in campaigning fueled by the overturning of Proposition 208 (campaign reform legislation), could also distract lawmakers. However, despite this backdrop, the improving relations between the Legislature and the Governor's office along with the healthy economy could nurture a bipartisan atmosphere of compromise and yield a productive session.