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In American Chemistry Council v. Dept. of Toxic Substances Control (Nov. 18, 2022, F082604) __Cal.App.4th__ [2022 Cal. App. LEXIS 1004], the Fifth District Court of Appeal found a CEQA challenge to the regulatory decision of the Department of Toxic Substances Control (DTSC) to list a chemical for special scrutiny to be untimely. In a separate holding, not discussed further in this summary, the Court also determined that DTSC acted within its authority and properly complied with the Administrative Procedures Act (APA).

In early 2018, DTSC decided to list spray polyurethane foam systems (spray foam systems) as a priority product under California’s “Green Chemistry” law (Health & Saf. Code, §§ 25251-25257.2) due to health/safety concerns, and the agency issued a Notice of Exemption (NOE), relying on the common sense exemption (CEQA Guidelines, § 15061(b)(3)). DTSC did not, however, forward the NOE to the Office of Planning and Research or any other relevant government agency. In March 2018, DTSC submitted the final regulatory package for listing spray foam systems to the Office of Administrative Law, and it was approved shortly thereafter.

After engaging DTSC in the regulatory appeals process under the Green Chemistry law and Safer Consumer Products regulations, all of which were ultimately denied in February 2019, the American Chemistry Council, joined by General Coatings Manufacturing Corp. (collectively, Plaintiffs), filed suit in August 2019, alleging claims under the APA and CEQA. As to the CEQA claim, the trial court held that the suit was timely and that the agency had violated CEQA. DTSC cross-appealed the trial court’s CEQA holding.

On cross-appeal, DTSC argued that Plaintiff’s CEQA cause of action was time-barred and that the trial court erred in finding DTSC’s exemption in violation of CEQA. While neither party contested that the 180-day CEQA statute of limitations was applicable here, as DTSC failed to properly file the NOE, they did dispute when the 180-day period began to run. Plaintiffs argued it should have begun after they exhausted all administrative remedies through the Safer Consumer Products’ administrative appeals process. DTSC argued it began earlier, when it issued the NOE.

The Court found that CEQA’s exhaustion requirements with regard to administrative appeals only apply when the agency has crafted administrative proceedings that include CEQA issues within their scope. As such, the issue here turned on whether the relevant administrative appeals process included review of CEQA issues. The Court concluded that they did not, and rejected Plaintiffs’ argument that the limitations period began to run in February 2019, after their administrative appeal was ultimately denied.

Plaintiffs argued that, even if they were not required to exhaust CEQA issues under the Safer Consumer Products regulations, the CEQA statute of limitations did not begin to run until that process was completed because those regulations did not allow for a final agency decision until their regulatory appeal was complete. Noting that an “approval” for the purposes of CEQA generally begins when an agency makes its “earliest firm commitment” to a proposed course of action, the Court found that the statute of limitations here began to run, at the latest, when the Office of Administrative Law filed DTSC’s regulatory packet for listing spray foam systems in early 2018. Since Plaintiffs did not file their CEQA claim until late 2019, the claim was untimely under the 180-day statute of limitations. Because the Court determined the claim was time-barred, it did not reach the merits of the DTSC’s CEQA arguments.  

Key Point:

CEQA’s statute of limitations runs from project approval and is not tolled while administrative remedies not affecting the CEQA determination are being exhausted.