Final 030404


This SETTLEMENT AGREEMENT AND RELEASE ("Agreement") is made and entered into as of March 30, 2004, by and among (i) Communities For A Better Environment ("CBE"), a California nonprofit corporation, (ii) Transportation Solutions Defense And Education Fund ("TRANSDEF"), a California nonprofit corporation, (iii) the Bay Area Air Quality Management District ("the District"), a public agency, and (iv) the Metropolitan Transportation Commission ("MTC"), a public agency. The effective date of this agreement is the last date on which this Agreement is signed by any of the parties to this Agreement. (CBE, TRANSDEF, the District and MTC hereinafter may be referred to collectively as the "Parties" or in the singular as "Party," as the context requires.)


A. The District and MTC, along with the Association of Bay Area Governments ("ABAG"), are collectively responsible for the preparation of regional air pollution control plans to attain and maintain state and federal standards for regional air quality. The District is responsible for preparing, adopting and implementing air pollution control plans for the San Francisco Bay Area. MTC is primarily responsible for preparing and implementing transportation control measures for reducing emissions from transportation sources in the San Francisco Bay Area. ABAG is the council of governments for the San Francisco Bay Area and is responsible for preparing population, land use and employment projections for use in air pollution control plans.

B. On October 24, 2001, the District, MTC and ABAG jointly adopted the 2001 San Francisco Bay Area Ozone Attainment Plan For The 1-Hour National Ozone Standard ("2001 Ozone Plan"). The 2001 Ozone Plan was developed and adopted to address the requirements of the federal Clean Air Act (42 U.S.C. § 7401 et seq.). The 2001 Ozone Plan's control strategy for the reduction of ozone-forming pollutant emissions includes thirteen control measures. The thirteen new control measures include seven new stationary and area source control measures, one new mobile source control measure and five new transportation control measures ("TCMs"). The 2001 Plan incorporated a series of Air Resources Board ("ARB") on-road and off-road mobile source control measures of statewide applicability, and incorporated all of these emissions reductions into the Bay Area's future emissions inventories. The 2001 Plan identified ARB's future mobile source control measures as the Plan's contingency measures.

C. In connection with the approval of the 2001 Ozone Plan, the District adopted a Negative Declaration in accordance with the California Environmental Quality Act ("CEQA") (Pub. Resources Code, § 21000 et seq.). The Negative Declaration stated that implementation of the 2001 Ozone Plan's control measures will not have significant adverse environmental impacts.

D. On November 1, 2001, ARB approved the 2001 Ozone Plan into the California state implementation plan ("SIP") and submitted this SIP revision to the U.S. Environmental Protection Agency ("EPA").

E. CBE and TRANSDEF ("Petitioners") filed a Petition For Writ Of Mandamus And Complaint For Declaratory And Injunctive Relief against the District, MTC, ABAG and the ARB (San Francisco Superior Court, Case no. 323849), which was subsequently amended by leave of the court ("Second Amended Petition for Writ").

F. The District and MTC filed separate answers generally denying the allegations of the Second Amended Petition for Writ.

G. On April 22, 2002, CBE voluntarily requested and the court entered dismissal without prejudice of the Sixth, Eighth, Ninth and Tenth Causes of Action in the Second Amended Petition For Writ. The causes of action alleged violations including pattern and practice of CEQA violations and Health And Safety Code § 40233, denial of due process rights under the California Constitution and violation of the Brown Act, respectively. On May 3, 2002, TRANSDEF voluntarily requested and the court entered dismissal without prejudice of the same Sixth, Eighth, Ninth and Tenth Causes of Action.

H. On June 24, 2002, the trial court sustained ABAG's demurrer to Petitioners' Second Amended Petition for Writ.

I. On September 11, 2002, Petitioners voluntarily requested and the court entered dismissal without prejudice of the Fifteenth and Sixteenth Causes of Action alleging violations of the Brown Act and the California Clean Air Act, respectively.

J. The Causes of Action One through Five, Seven, Eleven, Twelve, Thirteen, and Fourteen, as pled in the Second Amended Petition For Writ constitute "the Lawsuit." The Lawsuit alleged that the District violated CEQA by failing to prepare an Environmental Impact Report ("EIR") in connection with the 2001 Ozone Plan, that the District, MTC and ABAG violated Health & Safety Code section 40233, and that the District violated the California Public Records Act, Government Code section 6250 et seq. The CEQA and Health and Safety Code claims are resolved through this Agreement.

K. The Eleventh and Twelfth Causes of Action alleged violations of the California Public Records Act by the District. These Causes of Action were resolved through a "Stipulation and Order Regarding Bay Area Air Quality Management District Records Retention Policy," previously filed on September 20, 2001. For jurisdictional simplicity, the obligations of that order are included in this Agreement.

L. Following four hearings on the merits of the Lawsuit, the trial court issued a Statement of Decision and Order dated July 23, 2003. The trial court granted in part and denied in part the Petition For Writ. With respect to Petitioners' CEQA claims, the court did not invalidate the 2001 Ozone Plan. The court, however, ruled that the Negative Declaration's description of Stationary Source Measures 13 and 14 was impermissibly vague. The court ordered the District to prepare an EIR for the adoption of rules to implement SS-13 and SS-14. The Court also ruled that the ARB did not violate the California Clean Air Act or any other applicable authority with respect to its approval of the 2001 Ozone Plan.

M. The court further ruled that MTC and the District violated Health & Safety Code section 40233, and directed Respondents to prepare, within 60 days, a draft plan to achieve 26 tons per day in volatile organic compound emissions reductions.

N. MTC filed a Notice Of Appeal on September 9, 2003. The District filed a Notice Of Appeal on September 17, 2003. CBE and TRANSDEF also filed a joint appeal on September 26, 2003.

O. The parties now desire to settle and dispose of the Lawsuit in its entirety in order to avoid the expense, delay and uncertainty of further litigation, and to forever resolve, settle and compromise the Lawsuit between the parties as set forth herein.


NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged by each Party, the Parties, on behalf of themselves and their respective directors, officers, employees, agents, representatives, successors in interest or assigns, agree as follows:

A. Obligations of the District

1. The District will prepare an EIR or EIRs for its next plan for the national 1-hour ozone standard, whether that plan is an attainment plan or a maintenance plan, and for its next plan for the California ozone standard. Without waiving any future objection by CBE and TRANSDEF to the legality and adequacy thereof, one EIR may cover both the federal and state plans if the plans are prepared concurrently.

2. The District will perform technical review and analysis, including consultation with technical working groups, and will hold public workshops regarding potential air pollution controls for the following source categories as described in the Further Studies Measures of the 2001 Plan with the exception of the additional evaluation of refinery blowdown systems:

• Refinery blowdown systems (FS-8)
• Marine Tank vessel activities (FS-1 1)
• Refinery wastewater systems (FS-9)
• Refinery pressure relief devices (FS-8)
• Refinery flare controls (FS-8)

For refinery blowdown systems, in addition to the description identified in Further Study Measure 8, the District will evaluate the potential for control of uncontrolled refinery blowdown systems.

The technical review will include:

• Identification and evaluation of potentially available control methods
• Evaluation and quantification of emissions from each source category
• Evaluation of feasibility and cost-effectiveness of potential controls

Upon conclusion of the technical review and public workshops for each source category, the District staff will present to the District Board of Directors a report summarizing the technical review and the public consultation process and either (1) propose regulatory language for adoption, which controls emissions from the source category, or (2) explain why further regulatory controls for the source category are not being recommended for adoption at that time.

Recommendations for rule adoption will follow the District's usual process for rule adoption, which includes a public review and comment period and a public hearing before the Board of Directors. Reports concluding that further control for a given source category are not being recommended for adoption at that time will be circulated for public review and comment and subject to a public hearing before the Board of Directors.

All public hearings before the Board of Directors to adopt further controls or to consider a report explaining why further controls are not being recommended for adoption at that time will be completed by December 31, 2005.

This Agreement in no way binds the District staff to make a recommendation to adopt regulations, nor does it bind the Board of Directors to adopt regulations.

The Parties recognize that the above-described process has commenced for all of the source categories described above. This Agreement does not obligate the District to duplicate work that has already been performed as part of that process.

3. District shall comply with all the requirements of Government Code Section 60203 prior to any destruction of public records, including but not limited to Notice of Violation documents, in its possession. The District shall instruct its staff of its need to comply with Government Code Section 60203. In particular, the District shall instruct its staff, officers, and employees, not to destroy any public records or materials without first making an electronic, photographic, or other form of reproduction as allowed by Government Code Section 60203. The District shall develop and implement appropriate management controls (e.g., policy and procedure manual amendments, supervisory oversight, etc.) to ensure proper preservation and destruction of District records. This provision shall remain in force and effect until such time as the District amends its Records Retention Policy to comply with Government Code Section 60203. Any other new or further amended Records Retention Policy must be formally approved by the District Board of Directors, including public notice and a 14-day public comment period prior to such approval.

B. Obligations of MTC

1. MTC will prepare a 2005 Regional Transportation Plan 1 ("2005 RTP") and include in its Draft EIR an alternative entitled "TRANSDEF Smart Growth Alternative." MTC will model this alternative using assumptions supplied by TRANSDEF, as described below. The description of the alternative will clearly identify the conditions and assumptions that are beyond current MTC authority or funding constraints. MTC will run the travel demand model using these assumptions and provide the results to TRANSDEF as well as incorporate the results of the TRANSDEF Smart Growth Alternative into the Draft 2005 RTP EIR. MTC is under no obligation to adopt the TRANSDEF Smart Growth Alternative.

1. The 2005 RTP is alternatively known as the "Transportation 2030 Plan." ("T2030").

a. Assumptions Methodology and Approach for the TRANSDEF Smart Growth Alternative - Inputs

i. TRANSDEF will supply the 2030 land use assumptions to MTC consistent with MTC's new 1,454 travel analysis zone system.

•The land use assumptions will attempt to represent the Network of Neighborhoods scenario from the regional agencies' smart growth process. MTC will supply TRANSDEF with the 2020 input files used for the Network of Neighborhood Analysis at the 1,454 travel zone level. The TRANSDEF Smart Growth Alternative would describe the differences between the TRANSDEF land use assumptions and those in ABAG's Projections 2003. The description would also indicate that the assumptions are those of TRANSDEF and have not been reviewed with local governments or the public, other than through the Smart Growth process.

ii. TRANSDEF will identify which of the transportation projects that MTC has identified as meeting the criteria for a "committed project" would be deleted from the transportation network.

iii. TRANSDEF would specify a transit network for modeling which includes a detailed description of the service in terms of location, general operating characteristics, stations, peak and off peak frequency, etc. MTC would supply the estimates of capital and operating costs.

• The description of the TRANSDEF Smart Growth Alternative would indicate that MTC does not foresee that Bay Area transit operators will have the financial capacity to operate significant new service, and that this alternative assumes new sources of operating revenues.

iv. MTC will model an extensive system of ramp meters for freeway on-ramps as well as higher bridge tolls during the peak period (congestion pricing).

v. MTC will assume a $5.00 per day parking charge as a proxy to model parking cash-out at selected work attraction sites to be identified by TRANSDEF.

• TRANSDEF will identify for inclusion in the description of the TRANSDEF Smart Growth Alternative the authority that it believes MTC or the District has and/or would need in order to be able to impose fees and charges as sources of new transit operating revenues.

vi. MTC will consult with TRANSDEF on the assumptions for parking availability and household auto ownership in areas within a half mile of frequent transit service.

vii. MTC will review TRANSDEF's inputs for reasonableness and provide an opportunity to correct errors before the model runs are concluded.

b. Assumptions Methodology and Approach for the TRANSDEF Smart Growth Alternative-Outputs

i. MTC will provide TRANSDEF with the input files for the Fiscally Constrained Alternative in the EIR and the output files for the 2000 base year and the TRANSDEF Smart Growth Alternative.

ii. Outputs will be at the same level of detail as for the Fiscally Constrained Alternative in the Draft EIR, and the air quality analysis will use the travel activity outputs from the TRANSDEF Alternative together with the latest motor vehicle emission factors from the Air Resources Board.

iii. MTC will meet with TRANSDEF prior to preparing the Draft EIR to discuss the results and how the results will be presented in the Draft EIR. Once MTC and TRANSDEF reach this stage of the process, MTC is under no obligation to conduct additional model runs or to amend or revise the TRANSDEF Smart Growth Alternative.

iv. MTC will provide output files to TRANSDEF for the three sensitivity runs described below to investigate the impact of a $0.50 per gallon increase in the gas tax.

(1) The Fiscally Constrained Alternative

(2) The TRANSDEF Smart Growth Alternative

(3) The TRANSDEF Smart Growth Alternative, with a TRANSDEF land use scenario for 2015 (or another mutually agreeable interim year). TRANSDEF will supply the land use assumptions to MTC at the 1,454 zone level.

The sensitivity runs will be provided to TRANSDEF separately and will not be included in the EIR.

Should either TRANSDEF or MTC choose to introduce the sensitivity runs in public discussion, the parties shall be afforded an opportunity to respond and rebut.

2. MTC will provide CBE and TRANSDEF with data regarding the cost per new rider for each new transit project in the 2005 RTP. The steps below outline how MTC will approach this obligation. MTC will complete this analysis before adoption of the final 2005 RTP, and will allow for adequate public comment on the results. MTC is under no obligation to include this information in the EIR and shall include this information in the administrative record.

a. Identify new transit projects in the 2005 RTP. A new transit project is any new service, extension of existing service or expansion of existing services in the fiscally constrained EIR alternative. Examples include: new transit routes, increased frequency on existing routes and extensions of existing routes. This analysis would not extend to transit projects that cannot be coded in MTC's travel demand model such as projects that consist solely of system maintenance (including construction or upgrade of maintenance facilities and vehicle replacement), right of way acquisitions, grade separations or transit center upgrades or amenities such as improved walkways, elevators and bus bays.

b. Calculate annual new riders for each project identified in Step (a). New riders for a project are the anticipated riders on the transit service or segment that constitutes the new project. This is a comparison of the Fiscally Constrained Alternative to the No Project Alternative. Daily ridership forecasts will be annualized based on annualization factors for the operator in question or for comparable services.

c. Estimate capital and net annual operating costs for each project identified in Step (a). Net operating cost is the incremental annual operating cost to run the service, net of fare revenue generated by the service. Annualized capital cost will be calculated as the total capital cost discounted over the expected lifecycle of the project. MTC will follow FTA guidance on the lifecycle for transit capital investments. The discount rate will be based on federal guidelines.

d. Calculate cost per new rider for each project identified in Steps (a) (b and (c). Using the information generated in the steps above, calculate:

• Annualized capital cost per new rider
• Annual net operating cost per new rider
• Total cost per new rider: total annualized capital cost for new project plus total annual net operating cost for new project divided by the number of annual new riders

3. MTC will identify on an annual basis for five years the projects and programs that are recipients of MTC discretionary funding decisions, starting with the most recently completed fiscal year. The report shall be in the form of a spreadsheet, showing the total funding from each discretionary funding source, a list of the recipient project sponsors, a list of the projects or programs and the amounts programmed under each funding source. The list below identifies the universe of current discretionary funding sources.

Funding Categories: FTA Section 5307, FTA Section 5309, FTA Section 5311, Surface Transportation Program, CMAQ, TEA MTC-Funded portion, Regional Transportation Improvement Program, TDA Articles 3, 4, 4.5 and 8, State Transit Assistance Population Based, AB 664 Bridge Tolls, Regional Measure 1 Bridge Tolls, AB 1107.

Should the current discretionary funding sources change, MTC will report the projects or programs funded as a result of those changes in the next fiscal year's report.

C. Obligations of the District and MTC

1. Attorneys Fees and Costs

The District and MTC shall each pay attorneys' fees and costs of One Hundred Sixty-Two Thousand Five Hundred Dollars ($162,500) to CBE and TRANSDEF for a total sum of Three Hundred Twenty-Five Thousand Dollars ($325,000) for them to apportion as they deem appropriate. This payment shall satisfy any and all claims for attorneys' fees and costs arising out of the Lawsuit, including, but not limited to, the causes of action resolved by the Statement of Decision and Order dated July 23, 2003, the causes of action resolved by Order dated September 20, 2001, and any purported right to collect fees in connection with the court's Order dated November 21, 2002 allowing the District and MTC to supplement the administrative record. The full payment to CBE and TRANSDEF shall be made by payment to CBE within 45 days of the effective date of this Agreement. The payment shall be addressed to Scott Kuhn, Legal Director, CBE, 5610 Pacific Blvd., Suite 203, Huntington Park, CA 90255.

D. Obligations of CBE and TRANSDEF

CBE and TRANSDEF, on behalf of themselves and their respective directors, officers, employees, agents, representatives, successors in interest or assigns, waive, relinquish and release any and all claims, rights, liabilities, demands, obligations, duties, promises, damages, actions and causes of action of any kind whatsoever, whether known or unknown, arising under any provision of law (collectively "Claims") to challenge judicially or administratively, directly or indirectly:

• the adequacy, adoption, or approval of the 2001 Ozone Plan; or
• any finding by EPA that the San Francisco Bay Area has attained the national 1-hour ozone air quality standard as proposed in EPA's Notice of Proposed Rulemaking published in 68 Federal Register 62041, October 31, 2003, and the factual basis for such finding set forth therein;

and agree not to raise such Claims against any other person or entity, including but not limited to EPA or ARB. This clause does not create any third-party enforceability of this waiver or agreement. Notwithstanding the waiver and release, this waiver and release does not apply to state and federal ozone attainment plans adopted after March 1, 2004, and this waiver and release does not apply to any redesignation or reclassification of the Bay Area's nonattainment status.

2. CBE and TRANSDEF, on behalf of themselves and their respective directors, officers, employees, agents, representatives, successors in interest or assigns, waive, relinquish and release any and all claims, rights, liabilities, demands, obligations, duties, promises, damages, actions and causes of action of any kind whatsoever, whether known or unknown, arising under any provision of law to challenge judicially MTC's development, preparation and/or adoption of the 2005 RTP or its EIR.

3. Without in any way limiting the foregoing, CBE and TRANSDEF do not waive any rights to participate in the administrative processes, including public comment and review, with respect to any action, activity or project of the District, MTC, ABAG, the ARB or EPA. CBE and TRANSDEF do not waive any rights to contest in a court of law any matters outside the scope of this Agreement. The waiver of rights agreed to by CBE and TRANSDEF shall extend only to claims specified in this section.

E. Obligations of all Parties

Except for the obligations set forth in this agreement, each Party, on behalf of itself and its respective directors, officers, employees, agents, representatives, successors in interest or assigns, shall release, resolve and forever discharge each other party from any and all Claims with respect to, pertaining to, or arising from the facts of the Lawsuit. Each Party waives all rights and benefits that any of them may have under section 1542 of the Civil Code of the State of California, which states as follows:


CBE: (?)

2. Within fifteen (15) days of the effective date of this Agreement, and in accordance with Rule 20 of the California Rules of Court, the parties shall enter into and finalize a stipulation for dismissal of all appeals in this matter. Specifically, the stipulation shall reflect that the District and MTC voluntarily dismiss Appeal Number A103991 and CBE and TRANSDEF voluntarily dismiss Appeal Number A104179. By this Agreement the Parties intend that the trial court's Statement of Decision and Order, dated July 23, 2003, shall have no force and effect; pursuant to Rule 24(b)(2)(E) of the California Rules of Court, the parties, by and through the stipulation for dismissal, shall request that the court of appeal issue its remittitur to this effect immediately. The parties will request that the remittitur order that the July 23, 2003 Statement of Decision and Order be vacated. For the purpose of this case, July 23, 2003 is the trial court's final judgment. This Agreement constitutes a final determination of any and all allegations contained in the Lawsuit.

3. Each party shall reasonably cooperate so as to facilitate the other party's efforts to carry out its obligations under this Agreement.

F. General Provisions

1. Settlement of Disputed Claims. The Parties hereto understand and agree that this Agreement is a compromise of disputed claims, and neither this Agreement nor its terms are intended to be or shall be used by any party as an admission of liability or of fact with respect to any issue in the Lawsuit.

2. Representations and Warranties of Authority. Each party represents to all other parties that such party has the full power and authority to enter into this agreement, that the execution and delivery thereof will not violate any agreement to which such party is a party or by which such party is bound, and that this agreement, as executed and delivered, constitutes a valid and binding obligation of such party, enforceable in accordance with its terms. The corporate signatories to this agreement expressly warrant that they have been authorized by their respective corporate entities to execute this agreement and to bind them to the terms and provisions hereof. Any public agency signatory to this agreement represents and warrants that the agreement is executed in compliance with a resolution of the governing entity of the public agency, duly adopted by the governing entity and transcribed in full in the minutes of the governing entity. Any individual signing this agreement on behalf of a public agency represents that she/he has full authority to do so.

3. Dispute Resolution. In the event it becomes necessary for any party to this Agreement to take any action to interpret or enforce any of the Agreement's terms, at least ten days prior to filing suit, the filing party shall provide the other parties with notice of its intent to sue and shall provide an opportunity for the other parties to meet and confer regarding the proposed suit. If the meet and confer is not successful, the parties shall make themselves available for one (1) day of mediation, the costs of which shall be paid for by MTC and/or BAAQMD. The mediation shall be convened within fifteen (15) days of service of the notice of intent to sue and all parties shall make themselves available or agree to extend the time within which to conduct the mediation. Upon expiration of the 10-day notice period, a legal action may be commenced, regardless whether mediation has been completed.

4. Remedy for Violations of the Agreement. The parties retain the full range of legal and equitable remedies to enforce the terms of this Agreement, including injunctive relief and specific performance, to ensure the parties comply with their commitments under this agreement. The Parties agree that no bond shall be required for injunctive relief.

5. Agreement May be Pled as a Defense. This agreement may be pled as a defense by the parties against any action in violation of this agreement.

6. Entire Agreement. This agreement constitutes the entire agreement between the parties, and it is expressly understood and agreed that the agreement has been freely and voluntarily entered into by the parties with the advice of counsel, who have explained the legal effect of this agreement. The parties further acknowledge that no warranties, representations or inducements not contained in this agreement have been made on any subject in connection with this agreement, and that they have not been induced to execute this agreement by reason of non-disclosure or suppression of any fact. This agreement may not be altered, modified or otherwise changed in any respect except by writing, duly executed by the parties or their authorized representatives. This agreement is fully integrated.

7. Construction. The parties acknowledge that each party and its counsel have reviewed and revised this agreement and that no rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall be employed in the interpretation of this agreement. For the purposes of this agreement, the words "shall" and "will" have the same legal effect.

8. Severability. In the event any of the terms, conditions or covenants contained in this agreement are held to be invalid, any such invalidity shall not affect any other terms, conditions or covenants contained herein which shall remain in full force and effect.

9. Governing Law. California law shall govern the interpretation and enforcement of this agreement.

10. Venue. Venue for any action to enforce or interpret this Agreement shall be in San Francisco County Superior Court or Alameda County Superior Court.

11. Captions. Paragraph titles, headings or captions contained herein are inserted as a matter of convenience and for reference, and in no way define, limit, extend or describe the scope of this agreement or any provision thereof.

12. Notices. Where required by this agreement, notice shall be provided by regular mail or overnight delivery, and shall be considered made when deposited in U.S. or express mail.

13. Successors and Assigns. This Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the parties hereto.

14. Counterparts/Facsimile. This Agreement may be executed and delivered in any number of counterparts, each of which, when executed and delivered, shall be deemed an original, and all of which together shall constitute the same agreement. The parties may rely upon a facsimile copy of any party's signature as an original for all purposes.

IN WITNESS THEREOF, the parties have executed this Agreement effective as of the date last signed below.

By: J. Scott Kuhn
Name: J. Scott Kuhn
Title: Legal Director

By: David Schonbrunn
Name: David Schonbrunn
Title: President

By: Jack P. Broadbent
Name: Jack P. Broadbent
Title: Executive Officer

By: Steve Heminger
Name: Steve Heminger
Title: Executive Director

Approved as to form and content:

By: William Rostov
William B. Rostov
Attorney For Communities For A Better Environment

By: Marc Chytilo
Marc Chytilo
Attorney For Transportation Solutions Defense and Education Fund

Date: March 24, 2004 WEATHERFORD and TAAFFE, LLP
By: Daniel J. Taaffe
Daniel J. Raaffe
Attorneys for Bay Area Air Quality Management District

Date: March 30, 2004 REMY, THOMAS, MOOSE and MANLEY, LLP
Tina A. Thomas
Tina A. Thomas
Attorneys for Metropolitan Transportation Commission