Filed 6/24/02

 NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b).  This opinion has not been certified for publication or ordered published for purposes of rule 977. 

 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

 

NATIONAL PAINT & COATINGS ASSOCIATION, INC. et al.,       Plaintiffs and Appellants,       v. SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT et al.,       Defendants and Respondents.

G029462          (Super. Ct. Nos. 810488,           810492, and 810699)          O P I N I O N

                        Appeal from a judgment of the Superior Court of Orange County, William F. McDonald, Judge.  Reversed and remanded with directions.

                        Smiland & Khachigian, William M. Smiland, Kenneth L. Khachigian, William C. Ahders; Parker, Milliken, Clark, O’Hara & Samuelian, Jeffrey B. Margulies and Curtis L. Coleman for Plaintiffs and Appellants.

                        Barbara B. Baird, William B. Wong, Frances L. Keeler and Daniel P. Selmi for Defendants and Respondents.

*                        *                        *

I.  Introduction

                        In May 1999, the South Coast Air Quality Management District adopted a proposed amendment to its rule (Rule 1113) governing the amount of volatile organic compounds allowed in paints and other coatings.  The amendment will drastically reduce the number of paints and coatings (e.g., rust proofers) on the market by lowering allowable levels of volatile organic compounds.  Roughly 97 percent of the 7,000 different kinds of paints and coatings will disappear by the time the amended rule is finally implemented in 2006.  What will be left will be paints and coatings that generally won’t last as long (something undisputed in the record), and may be wholly unsuitable in certain circumstances (e.g., harsh weather or exposure to corrosive elements).

                        This litigation was instituted by a number of small and large paint manufacturers challenging both the procedure which adopted the amended rule and the substance of the rule itself.  The appeal comes to us after the trial court denied the manufacturers’ petition for a writ of mandate. 

                        The manufacturers have one point which requires reversal of the trial court’s judgment and remand with directions to enter a new order granting the petition requiring the air quality district to vacate and set aside its adoption of the amendment:  Changes were made to the text of the amended rule in the last thirty days which were so substantial as to significantly affect the meaning of the proposed rule.  (See Health & Saf. Code, § 40726.)  Basically, the board exempted public agencies as users of paints and coatings, and gave small manufacturers two years extra time to comply with interim limits.  Those changes made it far easier for members of the air quality district’s board to vote yes on the amendment by undercutting the opposition of key constituencies who otherwise might have been affected by the new regulation.[1]  And perhaps even more significantly, the last minute changes precluded those members of the public who might have been opposed to anybody receiving a special exemption from making their voices heard before the board.

II.  Background

                        In the spring of 1999, the South Coast Air Quality Management District considered a proposed amendment to its rule (Rule 1113) governing the amount of volatile organic compounds allowed in paints and other coatings.  The proposed amendment would drastically reduce the amount of volatile organic compounds in paints and other coatings.  (For example, rust preventive coatings will be reduced from their current limits of 400 grams per liter to 100 grams per liter in 2006; roof coatings would go from their current limit of 300 grams per liter to 50 grams per liter in 2006.) 

                        While there have been low volatile organic compound paints and coatings on the market for some time, not all paints and coatings are good for all uses.  Generally speaking, low volatile organic compound paints and coatings don’t last as long as their higher volatile organic counterparts,[2] and may be unsuitable for such heavy-duty uses as, say, electrical transformers and water pipelines. 

                        During the circulation of the rule, a number of government entities who themselves are major consumers of paints and coatings voiced opposition to the air quality district’s proposed rule, noting that they needed paints with higher volatile organic compound limits.  A letter from the Sanitation Districts of Los Angeles County, noting that such districts operate around the clock, pleaded for a minimum of two and one-half years of laboratory and field testing to determine which coatings would work in their “unique, severely corrosive conditions.”  The Los Angeles Department of Water and Power made the point that there were “no known reduced VOC coatings (i.e., < 420 grams/liter) that are proven to adequately protect electrical equipment,” and requested an “exemption.”  The County of Orange Waste Management Department argued that the new limits would “negatively impact” its hazardous waste collection and recycling programs and also asked for an exemption.  A collective letter from four agencies (three water agencies and Caltrans) worried about the “availability” of satisfactory coatings once the new rule became effective.  The letter also pointed out that 80 percent of coatings tested in the lab failed to meet the performance standards of the Metropolitan Water District.  ( separate letter from the Metropolitan Water District said that “certain aspects” of the proposed rule would “directly impact the ability to protect and prolong the life of Metropolitan’s water delivery infrastructure.”  And a separate letter from Caltrans said that the agency could not do without higher volatile organic compound paints “for isolated areas on most structures and for a few structures located adjacent to the coast.”

                        So, on May 4, 1999 -- a mere 10 days before the formal hearing before the district’s board on May 14, 1999 -- the district’s staff proposed to amend the circulating text of the amendment to the rule to exempt “essential public service” uses from the interim limits.  It was clear from the transcript of the hearing on May 14 that several public entities lent their support to the measure only because of the special treatment they had received.[3]

                        Another change concerned manufacturers’ ability to “average” the volatile organic compound levels in their lines of paints to bring their total output into compliance.  Averaging had been proposed as a way to allow some relatively higher volatile organic compound paints to be available, but smaller, so-called “niche” manufacturers who make specialty paints that are generally higher in volatile organic compounds pointed out that they would not be able to take advantage of the averaging provisions.  Accordingly, staff proposed amendments to allow “small businesses” another two years to meet interim limits scheduled to go into effect on July 1, 2002.

III.  Discussion

A.

                        Health and Safety Code section 40725, subdivision (a) does not allow the air quality district to adopt any new rule without first holding a public hearing.  (“A district board shall not adopt, amend, or repeal any rule or regulation without first holding a public hearing thereon.”)

                        Subdivision (b) of the statute requires that a copy of the regulation to be adopted must be publicly available at least 30 days before the hearing.  (“Notice of the time and place of a public hearing to adopt, amend, or repeal any rule or regulation shall be given not less than 30 days prior thereto to the state board, which notice shall include a copy of the rule or regulation proposed to be adopted, amended or repealed, as the case may be, and a summary description of the effect of the proposal, and by publication in the district  . . . .”)

                        The idea is that the board can receive input about the rule during the 30-day period.  As the first sentence of Health and Safety Code section 40726 provides:  “The public hearing held pursuant to Section 40725 shall provide for the submission of statements, arguments, or contentions, either oral, written, or both.”

                        The district has the power to continue its meetings to allow more input.  Section 40726 continues:  “A district board may continue or postpone the hearing from time to time, to a time and place as it shall determine.”

                        Changes in the text of the proposal as a result of the input can be made without further notice, but only if they are not so substantial as to significantly affect its meaning.  The key sentence of section 40726 provides:  “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.”  (Emphasis added.)

                        There is no dispute in the present case that the “essential public service exemption” and the two-year extension of interim limits for small businesses were not in the “text originally made available to the public.”  The question is whether these exemptions were “so substantial as to significantly affect the meaning” of the new regulation.

B.

                        Preliminarily, we must point out the obvious.  The standard of review on the question of whether a textual change in a proposed regulation is “so substantial as to significantly affect the meaning of the proposed rule or regulation” is most assuredly not that of whether “substantial evidence” exists to support the board’s determination.  Rather, “questions relating to the interpretation of statutes are matters of law for the reviewing court.”  (E.g., In re Marriage of Drake (1997) 53 Cal.App.4th 1139, 1151 (internal quotation marks omitted).)  The board itself obviously cannot be the final arbiter of whether a change in the text of a proposal is “so substantial as to significantly affect the meaning of the proposed rule or regulation.”  If that were the case, section 40726 would be a

dead letter. 

                        We hold that the changes here clearly were so substantial as to affect the meaning of amended rule 1113. 

                        The special exemptions for government agencies and “small businesses” from the interim limits by themselves were substantial changes.  They were substantive changes in the reach of the rule, not just reformulations of words to say the equivalent of the same thing as had been circulated to the public.

                        The two changes served to “sandbag” the decisionmaking process of the board from public input in at least three ways.  One, they clearly defused the opposition of the various public agencies.  Two, they made it harder for the opponents of low volatile organic compound limits to rally opposition.  But three, they totally precluded those individuals and groups who might have objected to any exemptions for anybody from being heard at all.

                        The obvious purpose of the hearing provided for in section 40725 is to insure that decisionmakers who have (as revealed here) the power to put whole companies out of business understand the consequences of their decisions.  It is analogous to the presentation of an environmental impact report, the purpose of which is to force decisionmakers to have a “real confrontation” with the sometimes ugly consequences of a yes vote.  (Vedanta Society of So. California v. California Quartet, Ltd. (2000) 84 Cal.App.4th 517, 527; see also Kleist v. City of Glendale (1976) 56 Cal.App.3d 770, 779.)  A change in the nature of the “confrontation” as brought about by a change in the rule necessarily effects a substantive change in the nature of the rule itself.

                        It is irrelevant that the changes here were generally ameliorative of the “harshness” of the rule, at least from the point of view of paint and coating manufacturers, and paint consumers qua paint consumers (as distinct from paint consumers qua breathers).  By not circulating a proposed rule that initially exempted essential public service consumers and small businesses from the immediate effects of the rule, not only did the district prevent opponents of lower limits from rallying opposition based on the idea that it was unfair to give some constituencies a special exemption, but it prevented proponents of lower limits from making their voices heard as to whether there should be any exemptions.

C.

                        Even if this were not wholly a question of language for the court, and we were to defer to the board’s own internal guidelines for determining compliance with section 40726, our conclusion would be the same. 

                        The district’s internal procedure provides, without limitation, that “the following factors shall be considered:  [¶] (i) impact of the change on emission reductions, [¶] (ii) impact of the change on sources regulated by the rule, [¶] (iii) the contents of the public notice, and [¶] the range of project alternatives described in the CEQA document.”   

                        The district now argues that the changes did not affect the meaning because, in light of these factors, (a) there was no impact on “overall” reductions because of the changes, (b) the same “sources” remain subject to regulation, (c) the public notice anticipated further changes, and (d) the CEQA document told the public of the possibility that preexisting limits might be retained, i.e., that there might be no change in existing allowable volatile organic compound limits.

                        The district is much too generous with itself in applying its own factors.  Three of its own factors, on closer analysis, actually favor the conclusion that the two changes here were substantial alterations to the original meaning.[4]

                        First, it is disingenuous to read “sources” (as in the “impact of the change on sources regulated by the rule”) to refer only to paint and coating manufacturers.  Paint and coatings only have a potential to cause air pollution when the containers are opened and they are applied to some surface.  The only sane way to look at “source,” at least in this particular context, is to include the consumers who open the containers.  And by that standard the changes effected a huge change in the “sources regulated.” 

                        Second, the district points to language in the original public notice which said that the air quality board “may make other amendments . . . which are justified by the evidence presented . . . .”  The language, by itself, is patently insufficient -- it is circular to say that because the original language said that there might be unspecified “other amendments,” any and all “other amendments” are within the original language.  Under the board’s reading, section 40726 can be ignored simply by including a “never mind the text, we reserve the right to make any changes we might want” language in the original notice. 

                        The “original language” factor is obviously intended to measure the degree by which the original notice gave warning of a specific change, and by that standard there was a significant change in meaning:  The original language here gave no warning that public agencies, qua consumers, would be exempted.

                        Finally, the same may be said for the CEQA document.  Just because one of range of “project alternatives” (options) is “no change at all” doesn’t mean that potential opponents were given adequate notice that major constituencies would be exempted.  No change at all does not give anyone any warning of a strategy of special exemptions.  Here, the CEQA document did not list, as a project alternative, the possibility of exempting specific classes of consumers or of small manufacturers.  

IV.  DISPOSITION

                        Our disposition obviates the need to discuss the myriad other issues raised by the parties.  Nor should we.  After all, assuming timely recirculation of the amendment as adopted by the air quality district’s board on May 14, 1999, the vote might be quite different.

                        The judgment is reversed, with directions to enter a new judgment to the effect that a writ of mandate should issue commanding the South Coast Air Quality Management District to vacate its adoption of the amendments to Rule 1113 as adopted on May 14, 1999.  Because of the interim procedural nature of today’s decision (we don’t reach any of the merits), it is appropriate that each party bear its own cost on appeal.

                       

                        SILLS, P. J.

WE CONCUR:

 BEDSWORTH, J.

 MOORE, J.