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W.M. Barr & Company, Inc v. South Coast Air Quality Management District

June 28, 2012

W.M. BARR & COMPANY, INC., PLAINTIFF AND APPELLANT,
v.
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT, DEFENDANT AND RESPONDENT.



(Los Angeles County Super. Ct. No. BS127359) APPEAL from a judgment of the Superior Court of Los Angeles County, Thomas I. McKnew, Judge. Affirmed.

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

CERTIFIED FOR PUBLICATION

In July 2010, the South Coast Air Quality Management District (the District) adopted Rule 1143, which required manufacturers of consumer paint thinner and solvent products to limit the use of ozone-forming volatile organic compounds (VOC's) in their products in order to meet the District's commitment under the federal Clean Air Act (42 U.S.C. § 7401 et seq.) and the California Clean Air Act (Health & Saf. Code, § 40910 et seq.).*fn1 The District believed that the adoption of Rule 1143 would result in manufacturers substituting acetone for VOC's in their products, and prepared an environmental assessment under the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq. (CEQA)) evaluating the fire hazard risks of substituted acetone, and proposing specific product labeling to alert consumers to the reformulation of products under Rule 1143. W.M. Barr & Company, Inc. (Barr), a manufacturer of paint thinners and solvents, challenged Rule 1143 on the grounds that (1) Rule 1143 was preempted by the Federal Hazardous Substances Act ((FHSA) 15 U.S.C., § 1261 et seq.); (2) Rule 1143 was preempted by regulations simultaneously promulgated by the California State Air Resources Board (the Board); and (3) the District did not comply with CEQA because Rule 1143 failed to consider alternatives to the measures it adopted.

The trial court rejected these claims, finding that (1) the FHSA did not preempt Rule 1143 because Rule 1143's product labeling did not address the same risks as the FHSA; (2) Rule 1143 did not conflict with the Board regulations because Rule 1143 was enacted for a different purpose; and (3) the District's environmental assessment of Rule 1143 complied with CEQA because it determined that Rule 1143 would create no significant impacts on the environment, and thus need not consider alternatives or mitigation measures. We affirm.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

1. The Parties and General Regulatory Framework

Barr, domiciled in Tennessee, is one of the largest retail suppliers of solvents within the United States, and distributes its products nationally. Barr's products currently use mineral spirits as the primary solvent component.*fn2 Barr stands to lose substantial revenue and incur significant costs in complying with Rule 1143.

The District was created in 1977 pursuant to Health and Safety Code section 40410, and has the responsibility for developing and enforcing air pollution control rules within parts of the counties of Los Angeles, Orange, Riverside, and San Bernardino (those counties making up the South Coast Air Basin). (Health & Saf. Code, §§ 40410-40540.) The District is required to adopt an air quality management program (AQMP) that complies with federal and state ambient air quality standards for the district. (Health & Saf. Code, § 40460, subd. (a).)

Pursuant to the Federal Clean Air Act, the Environmental Protection Agency (EPA) sets ambient air quality standards for a number of pollutants, including ozone,*fn3 at levels "requisite to protect the public health." (42 U.S.C., § 7409, subd. (b)(1).) The EPA has adopted National Ambient Air Quality Standards (NAAQS) for certain pollutants, including ozone. (40 C.F.R. § 50.10.) In addition, the EPA has designated air quality control regions; Metropolitan Los Angeles is one such area. (40 C.F.R. § 81.17.) Each state must adopt a plan to implement, maintain, and enforce the national air quality standards. (42 U.S.C. § 7410(a)(1); Health & Saf. Code, § 39000 et seq.) In state regions that have "nonattainment" status for NAAQS, the state must prepare a state implementation plan (SIP) that provides for implementation, maintenance, and enforcement of air quality standards in each air quality control region (or portion thereof) within such state. The SIP must "include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the applicable requirements of this chapter," and "provide for establishment and operation of appropriate devices, methods, systems, and procedures necessary to . . . [¶] . . . monitor, compile, and analyze data on ambient air quality." (42 U.S.C. § 7410(a), (b).)

In addition, the Board is "the state agency charged with coordinating efforts to attain and maintain ambient air quality standards, [and] to conduct research into the causes of and solutions to air pollution." (Health & Saf. Code, § 39003.) The Board has adopted ambient air quality standards (CAAQS) for the South Coast Air Basin and the other air quality basins within California. (Health & Saf. Code, § 39606.) Similar to the EPA, the Board must determine attainment status for the air quality basins within California, and must prepare an attainment plan for each nonattainment region. (Health & Saf. Code, §§ 39608; 40911.)

The District's AQMP serves as both the SIP under the Clean Air Act and the attainment plan under state law. (Health & Saf. Code, §§ 40408, 40412, 40460.) The AQMP sets forth measures to achieve and maintain attainment in the District. (Health & Saf. Code, § 40913.)

2. Rule 1143

The South Coast Air Basin suffers from a serious ozone problem; under the Clean Air Act, the Basin has been designated as a nonattainment area for NAAQS ozone levels since 1978, and nonattainment for CAAQS since 1989. (See 43 Fed. Reg. 8962, 8972, Cal. Code Regs., tit. 17, § 60201.) Against this backdrop of regulation, the District's 2007 AQMP ozone reduction strategy was implemented by regulating the VOC and NOx content of consumer solvents and paint thinners, and the District adopted control measure No. CTS-04 to reduce the VOC content of consumer products. Ultimately, the District adopted Rule 1143 to combat ground-level ozone formation fueled by the release of VOC's into the air from consumer multipurpose solvents and paint thinners. The District believed that at full implementation, Rule 1143 would reduce VOC emissions by 3.81 tons per day in the South Coast Air Basin.

On March 6, 2009 the District adopted the first version of Rule 1143 governing consumer multipurpose solvents*fn4 and consumer paint thinners.*fn5 Rule 1143 required manufacturers of paint thinners and multipurpose solvents to limit VOC content to 300 grams per liter by January 1, 2010, with a final limit effective January 1, 2011 of 25 grams per liter. Both limits were subject to a one-year sell-through period permitting the sale of noncompliant products for a year after the effective date of each limit as long as the products were manufactured before the effective date of the limit.

3. The District's Environmental Assessment

Pursuant to CEQA, SCAQMD released a draft environmental assessment*fn6 for Rule 1143 for a 30-day comment period from November 13, 2008 to December 12, 2008. The environmental assessment noted that Rule 1143 had "no provisions that would dictate the use of any specific material," to account for lowered VOC's, but that under the "'worst-case' scenario," the District believed most conventional solvents would be reformulated with acetone because acetone does not contribute appreciably to ozone formation and is not a VOC, although acetone has a liquid flash point below 100 degrees Fahrenheit.*fn7 Acetone has a wide variety of household applications; such formulations advise the user to keep it away from heat, sparks, flame and other sources of ignition. The District concluded that the use of acetone in paint thinners and multipurpose solvents as a result of the implementation of Rule 1143 would not increase the risk of fire hazard because acetone was already widely used, distributed and sold.

During the public comment period, the Office of the State Fire Marshal voiced concern to the Board about the potential increased use of acetone in paint thinners and multipurpose solvents based upon acetone's low flash point. The Board agreed with the District's assessment that acetone would constitute the predominant method of compliance with the second tier limit of 25 grams per liter effective January 1, 2011, and observed that the Fire Marshal was concerned about the risk of fire from increased availability of acetone labeled as a paint thinner. However, although the District sought further input from the State Fire Marshal, none was received before adoption of Rule 1143.

At the March 6, 2009 public hearing on Rule 1143, Dr. Laki Tisopolus of the District testified that paint thinners and solvents accounted for more than 10 tons a day of unregulated sources of VOC's. Nonetheless, although acetone is highly flammable, the District asserted it had adequately assessed acetone's flammability extensively in the past in connection with other district rules it had promulgated, and through working very closely with affected fire departments.

Steve Bunting, the Division Chief, Fire Marshal, of Newport Beach and President of the Orange County Fire Marshal's Association, spoke at the hearing and stated that the prior Monday, he had received a "frantic" phone call from the State Fire Marshal's Office asking whether he knew anything about Rule 1143, and asking whether he could participate in a phone call with District staff. Chief Bunting participated in the call, and subsequently learned that none of his colleagues in Orange County were aware of Rule 1143; indeed, he did not believe he had sufficient time to respond to the Rule. Acetone's low flash point was a "big red flag" for Chief Bunting.

The District responded to these fire concerns by directing its staff to meet with Chief Bunting and other fire department officials and recommend further action to the District.

4. Barr's First Challenge to Rule 1143 (Barr I)

On April 1, 2009, Barr commenced an action seeking a writ of mandate under Public Resources Code section 21168.9 and Code of Civil Procedure section 1085 challenging the adoption of Rule 1143. Barr alleged that Rule 1143 disregarded the increased fire risk posed by the addition of acetone to solvents and paint thinners. Barr presented evidence its paint thinners and solvents are made with mineral spirits, which has a flash point of 104 degrees, compared with -4 degrees for acetone; as a result, paint thinners made with acetone would catch fire when exposed to a spark, while those with mineral spirits would not.

While Barr I was pending, between March and September 2009, the District held numerous meetings with the State Fire Marshal, local fire officials, and Board staff. Chief Bunting pointed out that many solvents and paint products are marketed under a name that does not reflect their constituent ingredients. Fire officials were concerned that if a manufacturer reformulated its product with acetone in order to comply with Rule 1143, past users of the product would not be aware of the product's lower flash point.

Around this time, the Board was in the process of adopting regulations addressing the increased use of acetone in paint thinners and solvents.*fn8 Ultimately, the Board adopted a labeling requirement to warn consumers of potential product changes, and required any flammable or extremely flammable multipurpose solvent or paint thinner to either (1) be accompanied by a hangtag or sticker indicating that the product has been formulated to meet California VOC limits and directing attention to the products warning labels, or (2) display the common name of the chemical that causes the product to be labeled flammable or extremely flammable. This regulation became effective on December 31, 2010. (Cal. Code Regs., tit. 17, § 94512, subd. (e).)

The court in Barr I held that there was significant evidence of the fire hazard raised by acetone-based paint thinners, triggering the District's duty to address the issue in its EA by considering every fair argument about possible significant effects and the District's reasons for deciding that impacts are insignificant. "Plainly, the opinion of the Fire Marshal, supplemented by the Southern California fire department representatives, the advice of [the Board], and the comments of trade groups and Barr, is significant evidence that acetone-based paint thinners will create an increased risk of fire hazard." Thus, the court concluded the EA was deficient in its consideration of the fire hazard: "[t]he obvious problem with [the District's] analysis is that it fails to rely on any pertinent expert opinion, or even address, the issue--whether acetone-based paint thinner is a significantly higher fire risk than mineral-based paint thinner."

The court held that the District failed to adequately consider and document the fire hazard associated with Rule 1143's effective substitution of acetone-based paint thinner for current products, and ordered the District to prepare a supplemental environmental assessment that considered the fire hazard issue, and on December 7, 2009, the court issued its ruling. In April 2010, the court ordered the District to rescind Rule 1143's final VOC limit pending further CEQA review, but permitted the District to keep in place the interim limit.

In July 2010, the District filed its supplemental environmental assessment for proposed amended Rule 1143. Amended Rule 1143 changed its definitions of paint thinners*fn9 and multipurpose solvents.*fn10 The supplemental environmental assessment addressed the relative flash points of potential replacement solvents with existing solvent ingredients in great detail. In addition, Rule 1143(e)(2) now contained a hangtag labeling feature:

"(A) Products [must] include an attached 'hang tag' or sticker that displays, at a minimum, the following statement: 'Formulated to meet low VOC limits: see warnings on label.'

"(B) Products which include an attached 'hang tag' or sticker that displays, at a minimum the following statement: 'Formulated to meet low VOC limits with [the common name of the chemical compound (e.g., 'Acetone', 'Methyl Acetate', etc.)] that results in the product meeting the criteria for 'Flammable' or 'Extremely Flammable.'

"(C) Products which include an attached 'hang tag' as a second Principal Display Panel that displays, at a minimum, the following statement: 'Formulated to meet low VOC limits' placed adjacent to and associated with the required Consumer Product Safety Commission (CPSC) warning.

"(D) Products where the Principal Display Panel displays, in a font size as large as, or larger than, the largest font size of any other words on the panel, the following statement: 'Formulated to meet low VOC limits' placed adjacent to and associated with the required CPSC warning.

"(E) Products where the Principal Display Panel displays, in a font size as large as, or larger than, the largest font size of any other words on the panel, the common name of the chemical compound (e.g., 'Acetone,' 'Methyl Acetate,' etc.) that results in the product meeting the criteria for 'Flammable' or 'Extremely Flammable.'

"(F) Products that meet the labeling requirements of the CARB Consumer Product Regulation specified in title 17, CCR, section 94512(e) as adopted."

Rule 1143 provided that if the manufacturer did not want to use a warning hangtag, the manufacturer could change the product name to reflect its content by using a name that was the common name of the chemical compound it contained, such as "acetone," or "methyl alcohol." Amended Rule 1143 also included a public outreach program involving brochures and public service announcements.*fn11

Barr's comments to proposed amended Rule 1143 asserted that any warning label requirements were preempted by the FHSA under regulations promulgated by CPSC. Further, Barr cited serious, accidental fires that had occurred where workers used acetone-based cleaners, thus rendering any warning ineffective to reduce the fire hazard to less than significant. Barr concluded with a request that the District consider more effective mitigation measures and alternatives to the proposed amendments to Rule 1143.

Chief Bunting advised the District that the consumer warning hangtags and consumer educational programs fully addressed his concern regarding the fire hazards associated with increased acetone content in multipurpose solvents and paint thinners. Chief Bunting's primary concern with Rule 1143 as initially proposed was the "potential risk to consumers who are accustomed to using 'combustible' multi-purpose solvents and paint thinners and who may not be aware that the multi-purpose solvents and paint thinners may change to 'flammable' or 'extremely flammable' after Rule 1143's 25 g/l limit takes effect. Generally, a 'combustible' liquid has a flash-point above 100 degrees Fahrenheit while a 'flammable' liquid has a flash-point above 20 degrees Fahrenheit and below 100 degrees Fahrenheit. An 'extremely flammable' liquid has a flash-point at or below 20 degrees Fahrenheit." Chief Bunting opined that as a result of amended Rule 1143, any increased fire risk from acetone-based paint thinners, compared to mineral spirit-based paint thinners, would be mitigated to a less than significant level by the hangtag and other consumer admonition requirements of Rule 1143.

As a result, the District concluded that amended Rule 1143 "has less than significant fire hazard impacts based upon the Rule's incorporation of a labeling requirement alerting potential purchasers that the regulated product, if reformulated to be more flammable, has been changed so that it is more flammable."

By Resolution No. 10-21, the District adopted amended Rule 1143 on July 9, 2010.

5. Barr's Second Challenge to Rule 1143 (Barr II)

On July 15, 2010, Barr filed its second challenge to Rule 1143, seeking a writ of mandate and injunctive and declaratory relief, alleging (1) the supplemental environmental assessment was inadequate under CEQA because the hangtag was inadequate to warn consumers of the fire hazard, and the public outreach program was voluntary and thus ineffective; (2) Rule 1143's warning hangtag was preempted by the FHSA; and (3) Rule 1143 was preempted by pre-existing Board consumer standards.

On August 24, 2010, the trial court denied injunctive relief, finding that Barr had not established a likelihood of success on the merits, and further found that the comparative interim harm ...


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