Am. Coatings Ass'n, Inc. v. S. Coast Air Quality Dist.

• Decision Date: 25 June 2012
• Docket Number: No. S177823.,S177823.
• Court: California Supreme Court
• Parties: AMERICAN COATINGS ASSOCIATION, INC., Plaintiff and Appellant, v. SOUTH COAST AIR QUALITY DISTRICT, Defendant and Respondent.

54 Cal.4th 446
278 P.3d 838
142 Cal.Rptr.3d 581
12 Cal. Daily Op. Serv. 7136
2012 Daily Journal D.A.R. 8699

AMERICAN COATINGS ASSOCIATION, INC., Plaintiff and Appellant,
v.
SOUTH COAST AIR QUALITY DISTRICT, Defendant and Respondent.

No. S177823.

Supreme Court of California

June 25, 2012.

[142 Cal.Rptr.3d 585]Fulbright & Jaworski, Los Angeles, Jeffrey B. Margulies and William L. Troutman for Plaintiff and Appellant.

Shute, Mihaly & Weinberger, San Francisco, Matthew D. Zinn, Heather M. Minner; Daniel P. Selmi, Los Angeles; Kurt R. Wiese, Barbara B. Baird and William B. Wong for Defendant and Respondent.

Philip M. Jay and Catherine T. Redmond for San Joaquin Valley Unified Air Pollution Control District as Amicus Curiae on behalf of Defendant and Respondent.

Frank G. Wells Environment Law Clinic and Sean B. Hecht, Los Angeles, for Sierra Club and Natural Resources Defense Council as Amici Curiae on behalf of Defendant and Respondent.

Kathrine C. Pittard for Sacramento Metropolitan Air Quality Management District as Amicus Curiae on behalf of Defendant and Respondent.

Edmund G. Brown, Jr., Attorney General, J. Matthew Rodriquez, Chief Assistant Attorney General, Gordon Burns, Deputy State Solicitor General, Mary E. Hackenbracht, Assistant Attorney General, and Gavin G. McCabe, Deputy Attorney General, for California Air Resources Board as Amicus Curiae on behalf of Defendant and Respondent.

LIU, J.

[278 P.3d 841]

[54 Cal.4th 451]The South Coast Air Quality Management District (District) is charged with regulating nonvehicular air pollution emissions in a large area that encompasses much of Los Angeles and other parts of Southern California, regions that have some of the worst air pollution in the country. This case concerns the District's 2002 amendments to its Rule 1113, which limits certain pollution-causing substances in paints and coatings. The American Coatings Association (Association), formerly known as the National Paint and Coatings Association, challenged the amendments on the ground that they exceeded the District's regulatory authority under statutes requiring the use of “best available retrofit control technology.” According to the Association, the District failed to show that technology necessary to meet the emissions limits set by the 2002 amendments was “available” within the meaning of the relevant statutes.

The Association adopts the position of the Court of Appeal below that a technology cannot be considered “available” unless it already exists or is ready to be assembled at

[278 P.3d 842]

the time a pollution standard is promulgated. The District contends that the relevant statute, which defines “best available retrofit control technology” by reference to “achievable” emissions reductions, authorizes pollution standards that are “technology-forcing.” On the District's view, if new or developing technology will enable industry to meet a pollution standard by the compliance deadline, that standard is “achievable”—and, under the statute, the technology is “available”—even if the technology does not exist at the time the standard is promulgated. The regulations at issue here were originally proposed in 1999 and amended in 2002, and they required full compliance by July 2006.

The Association also contends that the paint and coating categories employed by Rule 1113 were too broad and heterogeneous, and that the District's emissions limits were not achievable for many products and applications within a given category. Thus, the Association argues, the District did not adequately demonstrate that the technology needed to meet the standards for such products were “available” under the statute. The District contends that the categories were reasonably drawn and [142 Cal.Rptr.3d 586]that it need not show that the technology to achieve the emissions limit for each category is available for every paint or coating application within that category. On this issue, the Court of Appeal agreed with the District.

[54 Cal.4th 452]We conclude that the relevant statutes give the District the authority to promulgate pollution standards based on technologies that do not currently exist but are reasonably anticipated to exist by the compliance deadline. In addition, we conclude that the District sufficiently demonstrated that its challenged emissions limits were achievable in each category and that the categories were reasonably drawn. We therefore reverse in part the judgment of the Court of Appeal.

I.

Air pollution is regulated by federal, state, regional, and local governmental entities. The federal Clean Air Act mandates that the Environmental Protection Agency (EPA) set national ambient air quality standards. (42 U.S.C. § 7409(a).) States have primary responsibility for meeting these standards, and the Clean Air Act requires states to formulate and enforce implementation plans designed to meet national standards within their borders. ( Id., §§ 7407(a), 7410.) State implementation plans are subject to EPA approval. ( Id., § 7410(k).) If the EPA determines that a state plan is inadequate to meet federal standards or that the requirements of an approved plan are not being met, it may adopt a federal implementation plan and impose sanctions on the state. ( Id., §§ 7410(c)(1),7410(m), 7509.)

A.

Under California law, the California Air Resources Board (Board) is charged with developing the state implementation plan and overseeing its enforcement. (Health & Saf.Code, §§ 39602, 41502–41505; all statutory references hereafter are to this code unless otherwise indicated.) The Board establishes ambient air quality standards to protect public health for each air basin in the state. (§ 39606, subd. (a).) While the Board is responsible for regulating vehicular pollution throughout the state, regulation of nonvehicular emissions is assigned to local and regional air pollution control districts. (§ 39002.) The Legislature has created five regional districts, and the South Coast Air Quality Management District is one. (2 Manaster & Selmi, Cal. Environmental Law and Land Use Practice (1989) § 40.51, pp. 40–86, 40–87 (rev. 2012) (Manaster & Selmi).)

All districts are required to “adopt and enforce rules and regulations to achieve and maintain the state and federal ambient air quality standards in all areas affected by emission sources under their jurisdiction, and shall enforce all applicable provisions of state and federal law.” (§ 40001, subd. (a).) The Board monitors district compliance with air quality standards and, in the case of ozone and carbon monoxide pollution, classifies districts as in attainment of those standards or in moderate, serious, severe, or extreme nonattainment. ([54 Cal.4th 453]§§ 40918, 40419, 40920, 40920.5, 40921.5.) The nonattainment classifications trigger increasingly stringent requirements on air quality districts to control pollution. (§§ 40918, 40919, 40920, 40920.5.)

[278 P.3d 843]

The South Coast Air Quality Management District is California's largest air pollution control district. Its jurisdiction, the South Coast Air Basin (Basin), covers all of Orange County and the urban portions of Los Angeles, Riverside, and San Bernardino Counties, and has some of the worst smog in the United States. The District was created in 1976 by the Lewis–Presley Air Quality Management Act [142 Cal.Rptr.3d 587](§ 40400 et seq.), which observed in its findings that the “South Coast Air Basin is a geographical entity not reflected by political boundaries” and that the Basin has “critical air pollution problems.” (Stats.1976, ch. 324., § 5, p. 893; § 40402, subds. (a), (b).) The 1976 act required the District to adopt an air quality management plan to achieve and maintain the state and federal air quality standards by 1979 and to regularly review and revise the plan thereafter. (§§ 40460, 40463, subd. (a).) The District's plan constitutes the “federally required state implementation plan for the South Coast Air Basin.” (§ 40460, subd. (d).)

As originally enacted, section 40440 required the District to adopt rules and regulations by the end of 1977 “that are not in conflict with federal and state laws and rules and regulations and reflect the best available technology and administrative practices.” (Stats. 1976, ch. 324, § 5, p. 897.) In 1987, section 40440 was amended to provide in subdivision (b) that the “rules and regulations adopted pursuant to subdivision (a) shall ...: [¶] (1) Require the use of best available control technology for new and modified sources and the use of best available retrofit control technology for existing sources.” (Stats.1987, ch. 1301, § 9, p. 4653, italics added.) The meaning of those terms, and particularly the latter term, is at the heart of this case.

In order to adopt, amend, or repeal a regulation, a district must hold at least one noticed public hearing. (§ 40725.) During such hearings, a district “shall provide for the submission of statements, arguments, or contentions, either oral, written, or both.... Following consideration of all relevant matter presented, a district board may adopt, amend, or repeal a rule or regulation, unless the board makes changes in the text originally made available to the public that are so substantial as to significantly affect the meaning of the proposed rule or regulation.” (§ 40726.) Before adopting or amending a regulation, a district must make several findings, including a finding of “necessity.” (§ 40727, subd. (a).)

[54 Cal.4th 454]The statutory scheme also authorizes districts to grant variances under certain conditions when compliance with a regulation would “result in either (A) an arbitrary or unreasonable taking of property, or (B) the practical closing and elimination of a lawful business.” (§§ 42352, subd. (a) (2), 42368, subd. (a)(2).)

B.

The District regulates stationary sources of ozone. Ozone forms when volatile organic compounds (VOCs) react with oxides of nitrogen in the presence of sunlight. Ozone irritates the respiratory system,...