Ass'n of Irritated Residents v. Dep't of Conservation

• Decision Date: 04 May 2017
• Docket Number: F073018
• Citation: 218 Cal.Rptr.3d 517,11 Cal.App.5th 1202
• Court: California Court of Appeals Court of Appeals
• Parties: ASSOCIATION OF IRRITATED RESIDENTS et al., Plaintiffs and Appellants, v. DEPARTMENT OF CONSERVATION, Defendant and Respondent; Aera Energy, LLC, Real Party in Interest and Respondent.

11 Cal.App.5th 1202

218 Cal.Rptr.3d 517

ASSOCIATION OF IRRITATED RESIDENTS et al., Plaintiffs and Appellants,

v. DEPARTMENT OF CONSERVATION, Defendant and Respondent;Aera Energy, LLC, Real Party in Interest and Respondent.

F073018

Court of Appeal, Fifth District, California.

Filed May 4, 2017

William B. Rostov and Irene V. Gutierrez for Plaintiffs and Appellants.

Gibson, Dunn & Crutcher, Jeffrey D. Dintzer, Matthew C. Wickersham and Nathaniel P. Johnson, Los Angeles, for Real Party in Interest and Respondent.

No appearance for Defendant and Respondent.

OPINION

KANE, Acting P.J.Appellants Association of Irritated Residents, Center for Biological Diversity and Sierra Club filed a petition for writ of mandate in Kern County Superior Court challenging the actions of the California Department of Conservation, Division of Oil, Gas and Geothermal Resources (DOGGR) in issuing permits for 214 new oil wells in the South Belridge Oil Field of Kern County. The recipient of the separately issued permits was respondent Aera Energy, LLC (respondent). According to the petition, DOGGR failed to comply with the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq., CEQA)¹ when it issued each individual permit because, allegedly, no CEQA exemption was applicable and DOGGR failed in each instance to conduct any environmental review. Respondent demurred, arguing that res judicata barred the cause of action stated in appellants' petition based on a final judgment entered in a prior action in Alameda County (the Alameda action). The trial court agreed and sustained the demurrer without leave to amend. In their appeal from the ensuing judgment of dismissal, appellants contend that res judicata did not apply because the judgment in the Alameda action was not on the merits but, instead, was due to a finding of mootness following the enactment of a new law known as Senate Bill No. 4.² We conclude that appellants are correct, which means the trial court erred in sustaining the demurrer on the ground of res judicata. Accordingly, we reverse the judgment, with directions that the trial court enter a new order overruling said demurrer.

FACTS AND PROCEDURAL BACKGROUND

The Alameda Action

We begin by summarizing the Alameda action, since the judgment in that former litigation was the purported basis for the application of res judicata here.

On October 16, 2012, several environmental organizations, including Center for Biological Diversity, Earthworks, Environmental Working Group, and Sierra Club filed what we refer to as the Alameda action, which was a complaint for declaratory and injunctive relief against DOGGR.³ The complaint alleged that DOGGR had engaged in a consistent "pattern and practice" of issuing permits for oil and gas wells in California without complying with CEQA. In particular, the complaint stated "DOGGR's practice of approving permits for oil and gas wells after exempting such projects from environmental review or otherwise issuing boilerplate negative declarations finding no significant impacts from these activities undermines the fundamental review requirements of CEQA." Allegedly, DOGGR's failure to comply with CEQA was especially "troubling" in light of the well stimulation treatment known as hydraulic fracturing or "fracking" that had become common practice at oil and gas wells throughout the state. The complaint described the nature of fracking and alleged the existence of potentially significant environmental impacts caused by it. According to the complaint, DOGGR "does not even mention, let alone analyze or mitigate, the potential impacts from fracking" when it issues permits. More broadly, the complaint alleged that DOGGR's pattern and practice of permitting oil and gas operations in the absence of appropriate CEQA review "causes permanent and/or long-lasting impacts to water quality, air quality, wildlife, ... of the areas affected by oil and gas operations."

The complaint elaborates that DOGGR allegedly "regularly permits new oil and gas wells without any environmental analysis at all" by categorically excluding such projects from CEQA based on purported exemptions that are wholly inapplicable to such activities. The alleged inapplicable exemptions asserted by DOGGR in permitting new oil and gas wells included purported exemptions for " ‘Existing Facilities' " and for minor alterations to land. In instances where DOGGR elected to prepare negative declarations, such documents were allegedly inadequate because they were merely "boilerplate negative declarations that [did] not provide the required environmental review" and failed to describe or evaluate the impacts of hydraulic fracturing. The complaint's allegations included several examples of individual wells permitted by DOGGR in 2011 and 2012, which DOGGR had either deemed to be exempt from CEQA or approved based on allegedly inadequate boilerplate negative declarations.⁴

Based on the above allegations, the complaint sought declaratory relief that DOGGR's "pattern and practice" constituted a violation of CEQA. The declaratory relief allegations framed the issue as follows: "DOGGR's pattern and practice of approving oil and gas wells without any mention, let alone evaluation or mitigation, of the environmental and public health impacts of oil and gas development, including the effects of hydraulic fracturing, is a violation of CEQA." The nature of the controversy was set forth in similar terms: "There is a present and actual controversy between Plaintiffs and DOGGR as to the legality of these practices that are of an ongoing nature. DOGGR has prejudicially abused its discretion and not proceeded in a manner required by law in that it repeatedly and as a policy, practice, and/or ongoing conduct issues permits for oil and gas wells without conducting proper CEQA review. [¶] ... Such conduct by DOGGR irreparably harms and will continue to irreparably harm Plaintiffs in that DOGGR's actions expose Plaintiffs and the public in general to environmental degradation of the public resources of this state due to its failure to evaluate, understand, and mitigate the impacts of oil and gas development, including the effects of hydraulic fracturing."

The only other cause of action in the complaint filed in the Alameda action was for injunctive relief. The complaint sought injunctive relief "prohibiting the approval of new oil and gas wells until DOGGR complies with its legal requirements to evaluate and mitigate the significant environmental and public health impacts caused by hydraulic fracturing at oil and gas wells."

On September 20, 2013, while the Alameda action was pending, Governor Brown signed Senate Bill No. 4 into law. Senate Bill No. 4 sought to redress, in a comprehensive fashion, the lack of adequate information, environmental review and regulation of hydraulic fracturing (i.e., fracking) and other well stimulation techniques. (Stats. 2013, ch. 313, §§ 1 & 2; see Sen. Floor Analysis of Sen. Bill No. 4, dated Sept. 12, 2013; Assem. Floor Analysis of Sen. Bill No. 4, dated Sept. 9, 2013.) The passage of Senate Bill No. 4 led defendants in intervention in the Alameda action (i.e., Western States Petroleum Association, California Independent Petroleum Association, and Independent Oil Producers Agency) to seek dismissal of that action on the ground that the pattern and practice issues alleged in the complaint had been rendered moot by the new law. Before discussing the ruling on that motion by the trial court in the Alameda action (the Alameda court), we shall first briefly summarize the nature and import of Senate Bill No. 4.

The Enactment of Senate Bill No. 4

In passing Senate Bill No. 4, which took effect on January 1, 2014, the Legislature made findings that included the following: "(a) The hydraulic fracturing of oil and gas wells in combination with technological advances in oil and gas well drilling are spurring oil and gas extraction and exploration in California. Other well stimulation treatments, in addition to hydraulic fracturing, are also critical to boosting oil and gas production. [¶] (b) Insufficient information is available to fully assess the science of the practice of hydraulic fracturing and other well stimulation treatment technologies in California, including environmental, occupational, and public health hazards and risks. [¶] (c) Providing transparency and accountability to the public regarding well stimulation treatments, including, but not limited to, hydraulic fracturing, associated emissions to the environment, and the handling, processing and disposal of well stimulation and related wastes, including from hydraulic fracturing, is of paramount concern." (Stats. 2013, ch. 313, § 1.)

To accomplish the objectives stated above, Senate Bill No. 4 added a number of new statutory provisions, including sections 3150 to 3161.⁵ Sections 3150 to 3159 establish the operative definitions of some of the essential terminology. " ‘Hydraulic fracturing’ " is defined as "a well stimulation treatment that, in whole or in part, includes the pressurized injection of hydraulic fracturing fluid or fluids into an underground geological formation in order to fracture or with the intent to fracture the formation, thereby causing or enhancing, for the purposes of this division, the production of oil and gas from a well." (§ 3152.) " ‘[W]ell stimulation treatment’ " is defined as "any treatment of a well designed to enhance oil and gas production or recovery by increasing the permeability of the formation. Well stimulation treatments include, but are not limited to, hydraulic fracturing treatments and acid well stimulation treatments." (§ 3157, subd. (a).) " ‘Acid well stimulation treatment’ " means "a well stimulation treatment that uses, in whole or in part, the application of one or more acids to the well or underground geologic formation. The acid well stimulation treatment may be at any applied pressure and may be used in combination with hydraulic...