The Year 2001 Environmental Legislative Forecast - An Energy Obsession

By Gary A. Lucks*

Copyright 2001 © 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.

The California Legislature convened in January 2001 marking the beginning of another biennial session that will see the introduction of approximately 2,000 assembly bills and upwards of 1,400 senate bills. Despite a flurry of legislative proposals already circulating in the halls of the State Capitol building, the likelihood of accomplishing much major environmental policy in 2001 is not very great. The Legislature's attention will be trained on keeping the lights on and preserving the historic budget surplus estimated to be around $5 billion at the beginning of the legislative session. The decennial duty of redrawing legislative districts will further distract the Legislature from delivering much substantive policy this session.

Energy and the Environment

With reliable and affordable energy in short supply and California's economy and prosperity hanging in the balance, Governor Gray Davis convened an extraordinary session of the Legislature to tackle the daunting challenges presented by California's failed experiment with electricity deregulation. This special session is running concurrently with the regular legislative session and promises to dominate environmental policy.

Energy siting, conservation, and market structure reform initiatives top the current list of environmental legislative priorities dominating the legislative agenda. Although there is no silver bullet that will magically return California to a stable energy market, the ultimate solution will involve a multi-faceted approach. Part of the answer will include efforts to decrease energy demand through conservation. Other initiatives will include legislation addressing the "supply side" of the energy equation by promoting renewable sources of energy. The 1973 oil crisis provides a blueprint for accomplishing this objective through tax credits and other creative models that promote solar, wind, and other forms of renewable energy. Another aspect of the supply side issue will address the siting of new conventionally fueled power plants.

Notwithstanding recently enacted reforms to the Warren Alquist Act that were designed to expedite permitting of large power plants in California, President Bush fueled the controversy by declaring that California's energy crisis is self-imposed. The Bush rhetoric blames the energy crisis on overly stringent environmental permitting standards that have deterred the development of new power projects in the state. The green-leaning California Legislature is therefore girding for a backlash to its famous air quality programs and the California Environmental Quality Act (CEQA). We can expect the environmental community, armed with data showing continued increases in asthma levels in the state, to mount a strenuous response to any attempt to relax air quality standards. Nonetheless, streamlined permitting of power plants may be an unavoidable remedy to California's energy woes.

Other energy-related policy initiatives percolating include market structure reform and state-ownership of hydropower plants and transmission lines.

Land Use

Due to the historic alignment of land use reform-minded committee chairs we can expect a number of bills promoting the nexus between land use development and sufficient resources to build and maintain infrastructure. This year's unique constellation of land use reformers includes Senator Tom Torlakson (Chair of Senate Local Government Committee), Assembly member Patricia Wiggins (Chair of the Assembly Local Government Committee and chair of the Smart Growth Caucus), and Senator Jim Costa (Chair of Senate Agriculture and Water Resources Committee). These committee chairs could very well succeed in retooling land use law to promote sustainable land use policies that link jobs and housing in an effort to, among other things, manage the state's burgeoning population.

As California's existing road, school, utility, and other infrastructure systems have strained to keep pace with suburban growth, the limited funds available to maintain these resources have also been stretched. Given the dwindling maintenance funds for existing infrastructure, the California Legislature will be exploring creative solutions to promote "infill" development where infrastructure resources already exist.

Following a Maryland legislative experiment, the California Legislature is considering rationing limited infrastructure maintenance to support existing resources. The Maryland program only funds maintenance in targeted areas that promote infill growth, not sprawl. The objective is to discourage sprawl-inducing projects and direct more investment dollars to the city centers. This approach would shrink the urban limit line "footprint" that is already served by existing, government-subsidized infrastructure projects. Growth can, of course, be approved outside these limits, but developers would have to pay their own way.

To further combat suburban sprawl and unfettered growth, the Legislature is entertaining a reformulated sales tax design to remove incentives for local governments to promote development in order to maximize sales tax revenues. Legislation may emerge that delinks sprawl-inducing growth from its sales tax inducement by restructuring the post Proposition 13 (1978) sales tax formula. Sales taxes received by local municipalities would be reduced by 50 percent and offset with a commensurate 50 percent in increased revenues provided from the state's general fund. This "smart growth" policy may also position the state to qualify for mobile and area source air quality offsets for use in permitting new power plants.

In an effort to take farmland off the table for development, other legislation is designed to offset farmland conversion with urban infill growth.

The Legislature is also entertaining legislation to require cities and counties to develop and implement an energy element to their general plans to promote the linkage of general plan design with energy efficiency standards. Legislation may also be introduced to provide financial incentives and subsidies for linking public transportation with population centers and older downtown areas.

Additionally, the Legislature will be taking a second look at the linkage between land use development and the availability of water. Previous legislation (SB 901, Costa in 1995) requires that developers of large land developments (i.e., developments including 250,000 square feet or more of commercial property or 500 residences or more) demonstrate that their proposed projects will be served by a reliable dry year water supply. State Clearinghouse data shows that developers have largely ignored this requirement since the 1995 law was enacted, despite the development community's pledge to follow through at the time SB 901 was enacted. As a result, we can expect cleanup legislation that puts teeth into former SB 901.

Another land use proposal would require mandatory approval of an affordable housing project if the developer can demonstrate among, other things, that the proposed project is consistent with the general plan and the project is compliant with specified aspects of CEQA.

Land use legislation regarding school siting that failed last term is expected to reemerge. This legislation would require new school siting to be consistent with the city or county general plan land uses designations.

Finally, we can expect to see labor unions propose another round of anti-"big box" legislation designed to limit approval of mega-stores like Costco and Home Depot, as they did a few years back.

California Environmental Quality Act

Since the 1998 revamp of the CEQA Guidelines, the Resources Agency uncovered a number of alleged inconsistencies between the CEQA Guidelines and established judicial precedent. Unless this matter is resolved by pending litigation, we can expect legislative intervention to resolve these perceived discrepancies.

Since the historic enactment of the mitigation monitoring and reporting program (MMRP), the record reflects poor adherence to this CEQA provision. As a result, the Legislature is considering cleanup legislation designed to strengthen these obligations, perhaps by requiring the lead agency or the project proponent to certify commitment to implementing the MMRP.

Hazardous Waste

There are no sweeping changes anticipated in the hazardous waste arena during this legislative session. However, there is momentum to eliminate elementary neutralization from the tiered permitting hazardous waste treatment requirements given the perception that there are no serious environmental impacts associated with this practice. Exempting elementary neutralization could have a potentially large beneficial impact on small businesses.

Hazardous Substances Remediation/Brownfields

To encourage lending institutions to fund brownfields cleanups, there is a movement to establish uniform, default cleanup levels for six or seven of the most commonly encountered pollutants. For example, these preliminary remediation goals would identify the cleanup standard for a particular chemical in question at a sensitive area, like a school, and another level for the same pollutant at a less sensitive area, such as a parking lot. The Legislature will also be considering the prospect of replacing the traditional cleanup programs or creating a new program to expedite cleanup efforts hampered by California's overburdened bureaucracy.

The California Department of Toxic Substances Control (DTSC) is conducting a two-year study evaluating the administrative fee-for-service structure that supports the organization. This funding set up has been criticized because poorer communities who are not able to afford the agency fees have been traditionally under served by DTSC. One possible outcome could be a recommendation to fund DTSC under the general fund.

The Legislature continues to focus on underutilized, brownfields sites. One measure will explore authorizing local governments to require some landowners or facility operators to initiate site investigations to characterize the nature and extent of potential property contamination. The debate will turn on defining the nature and types of sites (e.g., minimum lot size or minimum number of employees) covered by this obligation.

Depending on the state of any California surplus, there may be an attempt to finally fund the orphan trust fund and to raise the lead abatement cap in schools to $16 million.

Finally, the health, safety, and environmental conditions at California schools continue to capture the Legislature's attention. There is interest in modifying 1999 legislation (SB 162/Escutia) that requires completion of a preliminary endangerment assessment (PEA) to ascertain the potential for contamination at school sites prior to new construction. Possible new legislation would tinker with the time considerations associated with issuing the results of a PEA for a new school. The policy debate hinges on the public's desire to be informed sooner of potential hazardous substances releases and exposures compared to the school districts' preference for flexibility on when to initiate public notifications and outreach.

Hazardous Materials

There may be a variety of bills regulating exposure to hazardous chemicals and toxic molds. With persistent bioaccumulative toxins (PBT) raising fears among the public, the Legislature may well move to trim pesticide use. We may also see an attempt to further enhance the authority of agricultural commissioners to levy fines for illegal pesticide spraying during inappropriate meteorological conditions. The farming community, on the other hand, will resist any changes to the agricultural commission's enforcement authority, arguing that such a move would be an overreaction to a situation involving only a few bad actors - not an industry-wide problem. Other legislation will address toxic fumes released when Styrofoam packaging is heated, along with a continued focus on toxic molds.

Water Quality

The Legislature will be keenly focused on water quality legislation this year with a number of policy initiatives on tap. These include the regulation of nonpoint pollution and heavy metals, drinking water standards, total maximum daily load (TMDLs) allocations, conjunctive use, and wetlands.

Recent beach testing revealed a great number of bacteriological exceedances or "hot spots," which resulted in several high-profile beach closures. According to the State Water Resources Control Board (SWRCB)'s sewer system overflow database, high volumes of grease generated from the food service industry are a primary cause of sewage overflows from storm sewer systems. These overflows have resulted in a great number of beach closures, which has prompted the Legislature to allocate millions of dollars to clean up and prevent future harm to the California coast. New legislation is expected to create a pilot project to identify upstream hot spots such as restaurant clusters responsible for releases of grease. The bill would promote the conducting of routine pipe maintenance and retrofitting of restaurants with grease traps or grease interceptors. Other beach legislation is expected to fund the installation of jetties and projects to maintain and enhance sand deposits on the California coastline.

We may see an industry-sponsored bill to require that any increased loadings to impaired water bodies be offset by waste load reductions from other sources of that particular waste stream. This offset requirement would be a prerequisite for implementing TMDL allocations for existing dischargers to receiving waters. Other TMDL legislation may call for more water quality monitoring to gather better data for use in TMDL allocations. Additionally, water policy initiatives could focus on source reduction strategies to reduce upstream discharges of mercury from upstate mines, as well as the adoption of a more health-protective arsenic drinking water standard. The latter initiative will likely be considered regardless of the U.S. EPA's regulatory actions on the arsenic maximum contaminant level (MCL) under the federal Safe Drinking Water Act.

Maintaining an adequate water supply in the arid Golden State remains a perennial preoccupation of the Legislature. This year will be no different, with a continued focus on conjunctive use and managing the long-term water needs of the state. Some legislative proposals will include raising existing dams like the Oroville Dam or establishing off-stream reservoirs. The agricultural community will likely make its interests heard concerning access to sufficient water supplies under the CALFED process.

There also may be a legislative response to the Monterey Decision, in which the Third District Court of Appeal set aside principles governing the revision of long-term contracts addressing statewide water allocations under the State Water Project [see Planning and Conservation League v. Department of Water Resources (2000) 83 Cal. App. 4th 892, 100 Cal. Rptr. 2d 173, 2000 CELR 291].

Other water supply issues under the legislative spotlight will include the Lower Colorado River Water Use Plan (i.e., the 4.4 Plan) and its use of Colorado River in the Imperial Valley in Southern California. As negotiations proceed on resolving water supply allocations among six states and Mexico, the Legislature may be called on to clear obstacles to implementing these agreements. One such obstacle involves the class of "fully protected species" whose habitat is located in the Colorado River watershed; a "take" permit can not be issued for these "grandfathered" species. Legislative amendments to the California Endangered Species Act may be considered to establish mechanisms for issuing take permits for some or all of these species.

We can also expect legislative attention to focus on the understaffed Coastal Commission. The beleaguered Coastal Commission is suffering from staff turnover and lower staff levels, which are seen as hampering the agency's ability to issue timely Coastal Commission permits. Other issues that may be ripe for consideration involve jurisdictional questions pertaining to the overlap between the California Department of Fish and Game and the Coastal Commission.

Finally, there is a possibility of a legislative response to the recent U.S. Supreme Court ruling on jurisdictional wetlands [see Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers (2001) 121 S. Ct. 675, 2001 CELR 34, 69]. Any forecast on this matter, however, is premature pending legislative review of the implications of this case.

Parks and Endangered Species

As no consensus emerged among the stakeholders in the ongoing CALFED process, the Legislature is expected to weigh in on fashioning an appropriate governance structure for CALFED. This governing system will likely delineate powers among the parties and the respective oversight roles and functions of the State and federal agencies.

To take advantage of the historic budget surplus and more permanently support conservation and resource projects, the Legislature may establish a conservation trust fund. The interest payments from the trust fund would serve as a long-term, reliable funding source to avoid the perennial funding battles, which are exacerbated in lean years.

In response to the recent explosion in new nature conservancies and the unanticipated impact of competition between them for funds, we can expect a legislative remedy designed to ensure better definition and purpose of these organizations.

Conclusion

Not since the New Year's flooding of 1997 has the legislative agenda been so dominated by a single issue. The energy crisis threatens not only the California economy and budget surplus, but also the ability of the Legislature to craft a creative solution to the deregulation problem while addressing other matters on the legislative front. Perhaps the high stakes associated with this dilemma present an unprecedented opportunity to forge an energy reform package that would otherwise not be possible. Whether the Legislature and Governor can deliver a lasting solution will only be known in the critical summer months and years ahead.

*Gary A. Lucks is Senior Environmental Counsel at Environmental Sustainable Solutions (ESS) where he is responsible for multimedia environmental management systems and regulatory compliance matters. He is a regular instructor at U.C. Berkeley and Davis Extension, where he teaches several courses on environmental law. He is also a member of the California Bar Environmental Legislation Committee.