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National Paint & Coatings Association, Inc. v. South Coast Air Quality Management Dist.

September 29, 2009


Appeal from a judgment of the Superior Court of Orange County, Ronald L. Bauer, Judge. Affirmed in part; reversed and remanded with directions in part. (Super. Ct. No. 03CC00007)

The opinion of the court was delivered by: Sills, P. J.




A trade group, the National Paint & Coatings Association, has brought this action against the South Coast Air Quality Management District, challenging the district‟s 2002 amendments to its rule limiting the amount of volatile organic compounds allowed in various kinds of paint and coatings in Southern California.*fn1

The challenged rule basically says: Here‟s a list of the maximum levels of volatile organic compounds that paint manufacturers may have in different kinds of paint and coatings, with the effective levels kicking in at various times.*fn2 The rule also has an averaging provision, similar to federal car mileage standards, which allows manufacturers to average the "actual cumulative emissions" of their paints and coatings so that the total emission can be under a hypothetical compliance limit, even if some of their paints and coatings are not.

The paint association‟s challenge is also conceptually simple enough: It asserts that the district has exceeded the authority given it by the statutes governing its authority to promulgate air pollution regulations, because the rule specifies limits that are not actually "available" and "achievable." (See Health & Saf. Code, § 40440, subd. (b)(1); 40406.*fn3

As we explain below, the paint association‟s challenge fails as to all of the categories of paints and coatings governed by the rule, except for two. In a word, if it exists, it‟s both "available" and "achievable," even if there is not much of it by way of variety or market penetration. There is substantial evidence that there are floor coatings, industrial maintenance coatings, high temperature industrial maintenance coatings, nonflat coatings, primers, sealers and undercoaters and quick dry primers, sealers and undercoaters which both exist and comply with even the most recent limits (effective July 2006) required under the rule. That is, technology complying with the limits is both available and achievable.

However, the administrative record shows there are zero -- count "em, zero -- products that comply with the most recent limits in two categories: quick-dry enamels and rust preventative coatings. We have no evidence that, in these categories, the technology is both "available" and "achievable" to comply with the district‟s amended limits; we have only speculation that one day in the future the technology will exist to comply with the limits.

We will therefore affirm the trial court in denying the paint association‟s requested writ of administrative mandate as to everything but these two categories. We will direct the writ to be granted as to quick-dry enamels and rust preventers, but with this proviso: Recognizing that, as we write in 2009 working with an administrative record largely based on information existing in late 2002 (and there‟s a reason for the long lag time, as will soon be apparent), instead of directing that the rule be vacated as to these two categories, the writ will conditionally give the district the opportunity to show, based on current technology, that quick-dry enamels and rust preventers can be made which comply with the most recent limits. Only if, after a hearing on remand, the district cannot show availability and achievability based on existing coatings in these two categories should a writ issue requiring the amended rule to be rolled back to earlier limits.*fn4


A. National Paint Association I

As mentioned, the rule was first promulgated in 1977. The rule was amended in 1999. The amended rule put very restrictive limits on volatile organic compounds. Those amendments were quickly challenged, as exceeding the district‟s enabling statutes, by the paint association in the Orange County Superior Court, then later in this court.

The challenge resulted in an unpublished decision, National Paint & Coatings Association, Inc. v. South Coast Air Quality Management District (June 24, 2002, G029462) [unpub. opn] [2002 WL 1365641] ("National Paint Association I").) In National Paint Association I, this court reversed a judgment denying the requested writ of administrative mandamus on procedural grounds. We noted that, at the very last moment -- that is, within about 10 days before the hearing at which the district considered the amended rule -- the district announced two significant exceptions. One exempted essential public services from certain interim limits. The other allowed small manufacturers to average their emissions. (See id. at p. 3.)

Those last-minute exceptions contravened section 40725, requiring 30 days public notice of a new rule. As we explained, the timing of the exceptions served to ""sandbag‟" the opposition to the amended rule in three ways: They effectively bought off opposition to the rule from public agencies like CalTrans and Metropolitan Water District (both of which have a need for coatings relatively high in volatile organic compounds because they last longer); they made it more difficult for opponents of the limits to rally opposition; and, they even precluded opponents of any exemptions from being heard. (National Paint Association I, 2002 WL 1365641 at p. 3.) We directed a writ of mandate to command the district to vacate its 1999 amendments, so as to allow the amended rule the required time to circulate before adoption. (Id. at p. 5.)

In our unpublished opinion, we stated that we did not reach the "merits" of the paint association‟s challenge to the 1999 rule. We did observe in that regard, though, that, for certain heavy duty public uses such as electrical transformers and water pipelines, "there is a serious question as to whether there are now any low volatile organic paints available as substitutes." (National Paint Association I, supra, 2002 WL 1365641 at p. fn. 2.)*fn5

B. National Paint Association II

By the end of December 2002, that is, within less than seven months of the filing date of National Paint Association I, the district promulgated an amended rule, this time avoiding the procedural mistake of inserting exemptions at the last minute. Quickly -- January 2003 -- the paint association filed suit in Orange County Superior Court, again asserting that the amended rule (let‟s call this the 2002 rule) violated the district‟s enabling statutes.

Not to put too fine a point on it, the district‟s lawyers quickly outmaneuvered the paint association‟s lawyers into what was no doubt perceived to be a more favorable forum for their side. They had the case removed to federal court.*fn6

The details here are interesting: The district‟s notice of removal was based on the theory that there had been a consent judgment in an unrelated federal case going back to 1997 which gave the district a "colorable federal defense" to the paint association‟s lawsuit.*fn7 After the notice of removal to federal court, the paint association responded with a motion to remand back to state court. Federal trial court judges typically have enough federal work to do without having to unnecessarily kibitz matters of state law, and, in 2004, the federal court granted the paint association‟s motion to send the case back to state court.

But the district appealed that order, and, if one reads the ensuing unpublished Ninth Circuit opinion, one finds that the federal judge‟s remand order was reversed because the paint association‟s counsel filed its remand request too late.*fn8

In short, but for a procedural mishap by the paint association‟s counsel, the case would have gone back to state trial back in 2004, and then on to (presumably) this appellate court by 2005 or maybe 2006. Instead, the Ninth Circuit did not issue its decision reversing the remand order until summer 2006, requiring Federal District Court Judge Dean Pregerson to undertake the arduous task of deciding the merits of the paint association‟s challenge.

The task was accomplished in May 2007, resulting in a published decision, National Paint & Coatings Association v. South Coast Air Quality Management District (C.D. Cal. 2007) 485 F.Supp.2d 1153, or "National Paint Association II." Significantly, the decision was decided as a matter of the federal court‟s diversity jurisdiction, looking solely to California precedent and statutes to best ascertain how our state‟s highest court would rule. (See id. at pp. 1155-1156.) When one reads the decision one discovers that, despite the supposedly federal basis for the original remand request, there is no federal law component in the National Paint Association II opinion. (So much for that "colorable federal defense.")

The federal trial court decided to deny the paint association‟s requested writ in National Paint Association II. We will discuss -- and mostly agree with -- the federal trial court‟s decision National Paint Association II below in parts III.D. and III.E.1. of this opinion. (Our sole disagreement is with National Paint Association II's decision not to consider one of the statutes in the scheme.) It should be noted here, though, that the point on which we agree with the paint association concerning the two categories of paints and coatings for which there is no evidence of availability or achievability was itself not specifically addressed in National Paint Association II.

C. National Paint Association III

However, the paint association‟s lawyers hadn‟t been completely outmaneuvered. During the case‟s sojourn in the federal courts, the state case continued in fits and starts. (Remember that the federal trial court had decided the case should be sent back to state court by early 2004, so, from the state trial court‟s point of view, for the period 2004 through 2006, it had in front of it a case where remand to federal court had been rejected).

The state court was going to try the paint association‟s suit in three phases:

(1) the legal authority of the district to propound the 2002 rule; (2) other claims by the paint association (e.g., that the district had not engaged in an adequate socioeconomic impact assessment); and (3) the district‟s own affirmative defenses. Phase 1, dealing with the issue of the district‟s authority, was tried to the court in September 2004. After that, however, there appears to have been a hiatus in the state court of about a year, until April 2006, when the district proposed a statement of decision. The paint association objected to that proposed statement in June 2006. In July 2006, before the trial court decided the matter, the Ninth Circuit reversed the federal court‟s decision to reject the remand to federal court. In the period August 2006 through May 2007, National Paint Association II was being litigated in the federal trial court. After the May 2007 decision by the federal trial court, the paint association dismissed its claims not associated within the scope of the district‟s authority, that is, not otherwise covered by Phase 1. The dismissals left no causes of action in the state case for judgment, and finally, in January 2008, the trial court issued its statement of decision as to Phase 1 proposed back in April 2006.*fn9

The statement of decision noted the evidence in the administrative record that a number of compliant paints and coatings were present on the market, and further referenced a 1997 assessment by Eastern Michigan University on the state of technology for low volatile organic compound coatings. The assessment concluded that low volatile organic compound technology ""should witness major progress over the next 5 to 7 years.‟" The assessment further "concluded that by the year 2005, there will be near-zero [volatile organic compound] coatings commercially available in a number of categories" (which, of course, also suggests that they would not be available in at least some others).

The statement of decision also pointed to four ""escape routes‟" that "address" the paint association‟s "feasibility concerns." One was the averaging provision (discussed above). The second was an extension of compliance deadlines for small "niche" paint manufacturers "that may be unable to utilize averaging." The third were requirements that the district‟s staff "conduct technology assessments to evaluate industry‟s progress in meeting" the limits and report back to the board as to the ""appropriateness of maintaining‟" future volatile organic compound limits. Finally, the statement of decision pointed to the statutory product variance process as set out in section 42365 et seq.

With the statement of decision, a judgment ensued denying the paint association‟s petition. A timely notice of appeal followed.


A. Collateral Estoppel: Public Interest Exception

The paint association‟s appeal is not foreclosed by the federal trial court‟s decision in National Paint Association II. The reason is the public interest exception to the doctrine of collateral estoppel. (See Kopp v. Fair Pol. Practices Com. (1995) 11 Cal.4th 607, 620-621 [refusing to apply public interest exception to collateral estoppel and res judicata doctrines where Ninth Circuit had upheld federal trial court decision declaring parts of California campaign finance reform initiative unconstitutional]; City of Sacramento v. State of California (1990) 50 Cal.3d 51, 64 [prior decision adversely affected taxpayers or, alternatively, affected receipt of federal funds; either way, public interest required definitive decision]; Greenfield v. Mather (1948) 32 Cal.2d 23, 35 [recognizing public interest exception to res judicata]; Modesto City Schools v. Education Audits Appeal Panel (2004) 123 Cal.App.4th 1365, 1379 ["courts recognize an exception to the rule of collateral estoppel where there is a prior ruling on a question of law and the issue concerns a matter of public interest"].)

As the California Supreme Court pointed out in Kopp, state courts are the ""principal expositors of state law‟" (Kopp, supra, 11 Cal.4th at p. 620, quoting Moore v. Sims (1979) 442 U.S. 415, 429) and ""federal courts "lack jurisdiction authoritatively to construe state legislation‟" (Kopp, supra, 11 Cal.4th at p. 620, quoting United States v. Thirty-Seven Photographs (1971) 402 U.S. 363, 369).

The need for authoritative state construction of state legislation is illustrated in Arcadia Unified School Dist. v. State Dept. of Education (1992) 2 Cal.4th 251 (Arcadia). There, a prior state appellate decision was unpublished and thus could not be cited as legal authority. (Id. at p. 257.) Because of the void, our high court thus applied the public interest exception.

Arcadia is a template for the case before us. As otherwise persuasive or helpful as it might be, National Paint Association II is not binding on any California trial court. And of course the matter is of significant public interest. Everyone breathes. And everyone has some contact with paint or coating, even ...

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