Judge: Mitchell L. Beckloff, Case: 22STCP03597, Date: 2023-01-25 Tentative Ruling

Case Number: 22STCP03597    Hearing Date: January 25, 2023    Dept: 86

BAKER COMMODITIES, INC. v. SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT HEARING BOARD, et al.

Case No. 22STCP03597

Hearing Date: January 25, 2023

[Tentative]       ORDER DENYING MOTION TO STAY ADMINISTRATIVE ORDER

Petitioner, Baker Commodities, Inc., requests the court stay enforcement of the order for abatement issued September 30, 2022 by Respondent, South Coast Air Quality Management District Hearing Board (the Board). The Board and Respondent, South Coast Air Quality Management District (the District) oppose the request.

The motion is denied.

Petitioner’s request for judicial notice (RJN) of Exhibits 1 through 5 is granted.

Evidentiary Rulings:

The District’s evidentiary objections are sustained as follows: 1, 11, 12, 16, 17, 18 and 19.

The District’s evidentiary objections are sustained in part as follows: 2 (all except the final sentence), 3 (all except second sentence), 4 (as to “the Order . . . shut down”), 10 (as to the final sentence), 13 (except as to the example at lines 2 through 4), 14 (as to “in order to . . . at their facilities” and the final sentence) and 15 (as to the final sentence).

The District’s evidentiary objections are overruled as follows: 5, 6, 7, 8 and 9.  

Petitioner’s evidentiary objections are sustained in part as follows: 1 (except as to the first sentence) and 2 (except as to the first sentence).

Petitioner’s third evidentiary objection is sustained.

Petitioner’s request to provide live testimony pursuant to California Rules of Court, Rule 3.1306 is denied. The court finds no good cause for such testimony and notes the new evidence could have been provided by declaration to the extent the court would consider the post-briefing evidence.

APPLICABLE LEGAL STANDARD

The parties agree Code of Civil Procedure section 1094.5, subdivision (g) governs Petitioner’s motion—this court “may stay the operation of the administrative order or decision pending the judgment of the court . . . . However, no such stay shall be imposed or continued if the court is satisfied that it is against the public interest.” (Code Civ. Proc., § 1094.5, subd. (g).)[1] The Administrative Procedure Act does not apply to the District, a local agency. (See People v. A-1 Roofing Service, Inc. (1978) 87 Cal.App.3d Supp. 1, 11-12.)

THE ORDER AT ISSUE

On September 30, 2022, the Board issued its findings and decision (the Order). The Order addressed alleged violations of the District’s Rule 415—Odors From Rendering Facilities, adopted November 3, 2017. The Board ordered Petitioner to abide by certain conditions, including:

• Petitioner stop receiving raw rendering materials, including trap grease seven days after the order is issued;

• Petitioner stop all rendering and wastewater operations within seven days;

• Petitioner remove or render all raw rendering materials within seven days;

• Petitioner remove all wastewater materials from the open-air pit within seven days;

• Petitioner wash all exposed surfaces free of animal material at least once a day;

• Petitioner shall provide an abatement plan to address certain violations related to certain operations not occurring within a permanent total enclosure; and

• Petitioner cease operations at Plant 1 until the plant may be operated in a permanent total enclosure. (Order, Attachment A.)

Of the five members of the Board hearing the petition for an order of abatement, one did not agree with the Order. The dissenter noted, in his view, certain of Petitioner’s operations were not subject to Rule 415 (sludge handling, open-air pit activities, butcher trimming operations). The dissenter also noted Petitioner’s evidence demonstrated “the permanent total enclosure and odor scrubber and alternative enclosure was completed by 3/9/22.” (Order, p. 11.) Additionally, the dissenter noted “[t]he inspector also testified conveyors that were left open have been enclosed and the access door to the material separation equipment using magnets has been closed.” (Order, p. 11.)

ANALYSIS

Petitioner contends it provides “an essential public service.” (A’d Memo 1:7.) Petitioner argues “[a] stay of the Order would protect the public interest by ensuring that the food system in Southern California is able to operate in a safe and environmentally-conscious manner.” (A’d Memo 11:3-5.) Petitioner reports its operations:

“are one of a very limited means of proper, non-harmful disposal of: (1) waste from butchers and grocery stores handling raw animal carcasses that cannot be disposed of in landfills; (2) grease-laden water from restaurants and other commercial food preparation facilities to prevent contaminating sewers, and (3) used cooking oil from commercial kitchens that cannot be placed in landfills or into sewer systems.” (A’d Memo 1:7-12.)

Petitioner also asserts the public interest will not be harmed if the Order is stayed. Petitioner contends “[t]here is no evidence in the record that the Order will lead to any actual reduction in odors.” (A’d Memo 1:16-17.) Petitioner argues: “Shutting down one industrial operation in an area saturated with thousands of others has not and will not make an appreciable difference in odors.” (A’d Memo 1:23-24.) Petitioner provides evidence from a number of individuals who attest “the odor in the City of Vernon has not changed” since Petitioner shut down its operations as required by the Order.[2] (Macias Decl., ¶ 7. See also Alfonso Decl., ¶ 7; Maldonado Decl., ¶ 6; Vazquez Decl., ¶ 8.)

Petitioner reports it last received an odor violation more than 20 years ago. (Jason Andreoli Decl., ¶ 14.) In addition, Petitioner advises the District stated during the hearing before the Board that “nuisance odor [was] not part of [the] petition,” and the hearing did not concern “a Rule 402 issue . . . .”[3] (AR 2882.)

Petitioner also focuses on the services Petitioner provides to the Southern California community and claims its “shutdown has wreaked havoc on an already strained food processing system.” (A’d Memo 2:15.) The admissible evidence on the issue informs Petitioner has had contact with the five largest supermarket chains in Southern California since Petitioner shut down its operations. (A’d Fegel Decl., ¶ 7.) One chain inquired of Petitioner’s Procurement Operations Manager about Petitioner’s rendering facilities in Kerman, California which is 236 miles from Petitioner’s facility in the City of Vernon [the Vernon Facility]. (A’d Fegel Decl., ¶¶ 2, 11.) Petitioner’s Kerman facility is the rendering facility closest to Petitioner’s Vernon Facility other than the rendering facility of Darling International, also in the City of Vernon. (A’d Fegel Decl., ¶ 11.)

Petitioner also provides evidence 12 of its drivers “have provided pickup services for our Vernon Facility’s fat and bone customers, and have attempted to deliver the raw material to Darling International based on Darling International’s representation they would have the capacity to accept such material.” (A’d Fegel Decl., ¶ 14.) Petitioner reports its drivers have experienced “delays in delivering material to Darling International.” (A’d Fegel Decl., ¶ 15.) The wait times to offload raw materials at Darling International have increased from 15-30 minutes to 45 minutes to three hours.[4] (A’d Fegel Decl., ¶ 15.) Others have experienced similar delays with offloading raw material. (A’d Fegel Decl., ¶ 15.)

In addition, Petitioner provides evidence from one of its customers “there have been serious disruptions to [its] business and [its] ability to dispose of and recycle [its] fat and bone waste.” (Mendell Decl., ¶ 7.) The customer explains the “unloading and processing of [its] waste material at the sole remaining renderer in the region has been extremely slow and inefficient.” (Mendell Dec., ¶ 8.) The customer’s trucks “have regularly been forced to wait anywhere from 2-5 hours before being unloaded, and on several occasions they were held for 10-12 hours before being unloaded.” (Mendell Dec., ¶ 8.) The delays have “regularly” required the customer to “slow or even halt production” while it waits for its trucks to return to the customer’s facility. (Mendell Dec., ¶ 8.)

Petitioner’s customer also warns, “[i]f [Petitioner] is permanently shut down in Vernon, [the customer] will have nowhere to take its fat and bone, blood, and offal material if the sole remaining renderer in the area has a breakdown or needs to perform maintenance.” (Mendell Dec., ¶ 10.) To that end, the customer reports, “the sole remaining renderer in the region stopped accepting blood from [its] operations.” (Mendell Dec., ¶ 13.) The customer is now sending blood (30,000 to 40,000 pounds per day) to a “third-party slaughterhouse” in Brawley, California “that typically does not accept public raw material.” (Mendell Dec., ¶ 13.)

Finally, Petitioner provides evidence since its October 7, 2022 shutdown of operations it has lost over $1.6 million “in bottom line profit . . . .” (Faecke Dec., ¶ 12.) Petitioner reports the “losses will continue month over month unless the Vernon Facility is allowed to operate.” (Faecke Dec., ¶ 12.) Petitioner has also lost $330,000 in “bottom line profit from the lack of grease trap pumping services.” (Faecke Dec., ¶ 13.) Petitioner argues “[t]here is no public interest in destroying a private business merely because the District’s inspector issued violation notices.” (Reply 8:16-17.)

The Board contends it considered Petitioner’s public-interest arguments during the hearing and “determined that there was greater harm to the public in allowing Petitioner to continue violating Rule 415 than there was in requiring it to cease operations until it came into compliance.” (Board Opposition 9:14-15.)[5]

The Board also objects to Petitioner relying on claims of monetary harm given that Petitioner objected to such evidence being introduced during the hearing. (See AR 3238. [“That’s all confidential trade secret.”] AR 3234 [Petitioner’s refusal to advise of amount of material received daily for rendering].)

The District argues Petitioner’s motion “should be denied because it would be against the public interest to permit a repeated rule-breaker like [Petitioner] to avoid consequences for its actions and continue to violate air contamination rules that apply to all similar business in the area.” (District Opposition 2:25-27.) The District contends Petitioner’s “too big to fail” position should fail because “the public’s interest in having air regulations enforced will be gutted.” (District’s Opposition 3:10-11.) In fact, the District notes the Board expressly rejected Petitioner recasting its non-compliance as the Board creating a public health emergency. (AR 3386 [“they’re trying to,  . . . put the burden on us, . . . if we do not uh, let them stay open . . . and it will be our fault there is an emergency”, “it was called a die off emergency and die off event”, “we’re here because of their lack of coming into compliance”].)

The District focuses on Petitioner’s repeated violations of Rule 415,[6] and Petitioner’s failure to comply with Rule 415 in more than five years. (District Opposition 3:14-21.) Petitioner, after having participated in the rule making process for Rule 415, knew its wastewater operations would have to be enclosed. (AR 3229 [Petitioner advised in a response to comment need for permanent and total enclosure].) The District contends Petitioner’s “tactical choices [] produced the current situation.” (District Opposition 4:13-14.)

The District contends Petitioner has not supported its claims of “disaster for the region’s food processing systems” with admissible evidence. (District Opposition 4:23-24.) The District notes its inspector observed Darling International’s facility “appeared” “able to process the materials in a timely fashion” after Petitioner closed. (Harris Decl., ¶ 5.) Petitioner’s single customer’s delay experience, according to the District, “is hardly evidence of a public emergency . . . .” (District Opposition 5:13.)

Finally, the District argues Petitioner’s claim the odor in the area of the Vernon Facility remains as it did prior to Petitioner’s shut down “is a red herring.” (District Opposition 4:15-16.) The District notes Rule 415 is designed to reduce air contamination from rendering facilities. That Petitioner’s facility is near other odor-producing facilities is irrelevant, according to the District, because under the circumstances, all odor-producing businesses could make the same argument to avoid rule enforcement. (District Opposition 4:17-21.)

The evidence offered to support Petitioner’s request for a stay largely falls into three categories—general inconvenience within the industry, lack of odor mitigation from the Order in the community, and loss of income. In addition, the court notes the Board did not reach a unanimous decision on the Order. The Board’s dissenter questioned the applicability of Rule 415 to certain of Petitioner’s operations and noted certain issues, according to the District’s inspector, had been remedied.

First, Petitioner has established there is some inconvenience for meat processors based on Petitioner’s inability to operate under the Order. The evidence reveals Petitioner’s customers (as well as Petitioner) have experienced delays (sometimes for several hours and overnight on one occasion) offloading waste material. Petitioner’s customers also have incurred delays related to out-of-the-area travel to reach other rendering facilities.

Second, Petitioner has submitted uncontroverted opinion evidence there has been no appreciable difference in the reduction of odors in the community since Petitioner has ceased operations. Members of the community have attested the odors today remain as they did prior to October 7, 2022, when the Order took effect.

Third, Petitioner will experience monetary losses unless it is permitted to operate. In the seven weeks following Petitioner’s shut down (as of November 22, 2022), Petitioner lost profits of approximately $1,630,000. While Petitioner has attempted to operate certain fat and bone collection as well as grease trap service routes, Petitioner “loses money operating these routes.” (Faecke Decl., ¶ 14.) “If these routes are no longer operated, [Petitioner] will lose all of its route income and grease trap pumping services income.” (Faecke Decl., ¶ 14.) Petitioner will continue to lose money as it is not permitted to operate. Petitioner does not, however, indicate it will go out of business based on revenue losses incurred while this matter is pending or until Petitioner makes the structural changes required by the Order.[7]

Rule 415 is a welfare measure aimed at protecting the community. The “purpose of [the] rule is to reduce odors from facilities rendering animals and animal parts.” There can be no dispute that the area where Petitioner is located smells of “oil, animal processing, and many other varying smells depending on the time of day.” (Sanchez Decl., ¶ 7.) There is also a “pig smell” and a “sewage smell.” (Rodriguez Decl., ¶ 5.) The area has a “very strong bad odor” of “coffee, pig, burning and general bad odor.” (Lopez Decl., ¶¶ 5, 7.)

The Board and the District argue the public interest in an agency’s enforcement of its rules is particularly important here where Petitioner has known for five years—since November 2017 when the District adopted Rule 415—it would be required to make physical changes to its facilities. In fact, Petitioner obtained necessary permits from the District in March and April 2020 to perform required facility modifications. (Order, p. 5.) While Petitioner should have completed the work within one year, it did not; instead it obtained one-year extensions allowing it to complete the work by March and April 2022. (Order, p. 5.) The Order notes the District issued six notices of violation to Petitioner between August 2019 and January 2022. (Order, p. 3.)

The Order notes Petitioner’s failure to comply with Rule 415 “means odors are more likely to emanate from [Petitioner’s] facility.” (Order, p. 4.) The Board’s conclusion is reasonable to the extent Petitioner has failed to comply with Rule 415 given Rule 415’s purpose. While any odor produced by Petitioner may be minimal, such odor would contribute to the cumulative odor impacts from all odor producers in the community.[8]

After weighing and balancing the competing considerations raised by the parties, the court finds a stay of the Order is unwarranted here. The court does not find Petitioner’s arguments (and the admissible evidence provided in support) particularly persuasive. That meat processors and food preparation facilities are inconvenienced by Petitioner’s closure pending resolution of the writ petition is not compelling. That there may be limited options available to Petitioner’s customers and those options may result in some delay, will not—as Petitioner suggests—create chaos in the food processing system and require “drastic, untenable measures” by Petitioner’s customers. (A’d Memo 2:15-16.)

Similarly, the lack of a detectable reduction in odors after the Order caused Petitioner to stop operating does not suggest the public has suffered no harm because of Petitioner’s operations or that the Order has no public benefit. As noted, Rule 415 is designed to reduce odors. To the extent Petitioner fails to comply with Rule 415 it is likely contributing to the cumulative odor impacts in the community. Every reduction of odor from rendering operations benefits the community.

Finally, the court acknowledges Petitioner is currently not operating and claims it cannot comply with the Order and make facility changes. While Petitioner’s revenues have been reduced, there is no evidence before the court Petitioner will be forced to go out of business if it cannot operate while this matter is pending. Moreover, the economic consequences of a shutdown to Petitioner—while challenging the validity of the Order—will be minimized by the court because the court intends to set this matter for trial as soon as the parties indicate they will be ready for trial.

Even assuming the court believed a stay was warranted here, the court cannot grant the stay because the court finds granting a stay under the circumstances here would be against the public interest. There is a substantial public interest in an agency’s ability to bring an enforcement action to require compliance with the law. The rulemaking process for Rule 415 concluded over five years ago. The rule is a public welfare measure designed to benefit the community. The issues raised in the administrative proceedings have been long pending—they are no surprise to Petitioner. Petitioner received six notices of violation between August 2019 and January 2022. The public interest does not benefit in further delay of agency enforcement of a rule made effective over five years ago.

CONCLUSION

Based on the foregoing, Petitioner’s request for a stay is denied. The court will set this matter for trial as soon as the parties indicate they will be ready for trial.

During the trial setting conference, the court intends to stay the third, fourth and fifth causes of action (civil claims), the special motion to strike and the related discovery motion. The stay will be lifted on those claims upon resolution of the first and second causes of action (the writ claims). The court will transfer the civil claims to Department 1 for assignment to an independent calendar court at the conclusion of the writ proceedings.

IT IS SO ORDERED.

January 25, 2023                                                                    ________________________________

                                                                                                                   Hon. Mitchell Beckloff

                                                                                                                   Judge of the Superior Court