AMERICAN COATINGS ASSOCIATION v. SOUTH COAST AIR QUALITY

Respondent's Reply Brief on the Merits

Cal.June 22, 2010

IN THE SUPREME COURT OF CALIFORNIA Case No. 8177823 AMERICAN COATINGS ASSOCIATION Plaintiff and Appellant, U SOUTH COAST AIR QUALITY MANAGEMENTDISTRICT, Defendant and Respondent. After a Decision by the Court of Appeal Fourth Appellate District, Division Three Case No. G040122 Appeal from the Orange County Superior Court, Case No. 08CC00007 The Honorable Ronald L. Bauer, Judge Presiding - DEFENDANT’S REPLY BRIEF ON THE MERITS Matthew D. Zinn (SBN 214587) Heather M. Minner (SBN 252676) Shute, Mihaly & Weinberger LLP 396 Hayes Street San Francisco, California 94102 Phone (415) 552-7272 Fax (415) 552-5816 Daniel P. Selmi (SBN 67481) 919 Albany Street Los Angeles, CA 90015 Phone (213) 736-1098 Fax (949) 675-9861 Attorneys for Defendant and Respondent South Coast Air Quality Management District Kurt R. Wiese (SBN 127251) Barbara B. Baird (SBN 81507) Wiliam B. Wong SBN 120354) South Coast Air Quality ManagementDistrict 21865 Copley Drive Diamond Bar, CA 91765-0940 Phone (909) 396-3535 Fax (909) 396-2961 SUPREME COURT ray exe 5 R Sore Co if JUN 22 2019 Frederick K. Ohirich Clerk am e a Deputy TABLE OF CONTENTS Page INTRODUCTION oooeeeecesnecesssaeecsssaneeesssseeseessseeseaeeeoseagaaes 1 ARGUMENT oooeeeeccceccessneeeeeneeerenessaeeeecessessssseseseneesssceeeeneenaes 2 I. The BARCTDefinition, Its Statutory Context, andIts Legislative History Demonstrate that a BARCTStandard May Anticipate Foreseeable Technological Innovation and Yet Be “AChIievable.”......cccccccccccccccecccecececcceeeeeeeeeaeesseeeeeeesaeaaeeenes 2 A. The Association Does Not Explain Its Jarring Reversal of Position on the Meaningof “Achievable.”..............ccccccceeeeees The Association Virtually Ignores the Statutory Definition of BARCT, Which Demonstrates that a BARCT Standard Need Not Be Immediately Achievable....... The Association Conflates BARCT and BACT, but Their Differences Demonstrate that BARCT Need Not Be Immediately Achievable. ..........cccccseceeseeees 1. BARCT and BACTAre Different. Standards that Serve Different FUNCCtIONS. ..........cecececcecescevescescecsascece 2. Rather than Suggesting BARCT and BACT Are Equivalent, the Subsequent Legislation Cited by the Association Emphasizes Their Differences. ...........cccccceeccescacceesecesceeces The Legislature Did Not Intend BARCT to Be Less Stringent than BACT............see eseees 3 boven 4 seveeee 7 eceees 8 bees 12 bees 15 The Requirement that the District Must Evaluate Cost-effectiveness Does Not Demonstrate that the District May Adopt Only Immediately Achievable Standards....... 18 1. The District Carefully Considers the Costs of Its Proposed Regulations. ...........cc::sescssceeecessesseseeeeeneees 19 The District Must Estimate the Costs of Its Rules Only to the Extent There Is an Evidentiary Basis for Doing So. .............cseesseeeeeeeeeenees 21 II. The Legislature Required BARCT as a Regulatory Floor, Not a Ceiling. ..........ccceceeceeceeeee sees 22 A. The Association Scarcely Mentions the Abundant Evidenceof the Legislature’s Intent to Mandate BARCT as a Minimum Standard.........cccecccccssevccevsevecceverccevesceveccevsveeeues 23 1. The Association Largely Ignores the Most Important Statutory Provision in this Case: Section AOAAO. oo... ecceccceeceecccesssessetsnencceceeeceeeeeeeeees 23 The Association Largely Ignores the Statutory Provisions that Expressly Allow the District to Adopt Standards More Stringent than Those Required by State Law....... 24 Section 40920.6 Does Not Support the Association’s Position. ..........cee 26 The Association Never Explains Why the Legislature Would Impose Unique Limitations on Air Districts with the Most Polluted Air, ...........cccccccceeeecceceeeeeeeeseesees 28 il C. Although BARCT Does Not Cap the Stringency of District Rules, Other Constraining Principles Do So. ..............:0scceee 30 III. The Association’s Proposed Standard of Review Ts Meritless. .........ccccccssssesssssnnscccccececccceeceseeseeeseeseeeeeeees 34 A. The Association’s Proposed Standard Is Inconsistent with Core Principles of Administrative Law. .........cccccccccceccssssssseeeeceeeees 35 B. The Association’s Proposed Standard Would Paralyze the Regulatory Process......... 38 C. The Association’s Cited Cases Are Not Analogous and Underminethe Association’s Own Interpretation of “Achievable.”..........cccccsscccececeesssseceeeeeeeeesecsssanes 40 IV. The Rule’s Categorization of Coatings Is Rational and Supported by Substantial EVIGONCE... eee eecc cece cee eececceeesesseseeeecesceseeeeecasseeugeeeeseeeeess 44 CONCLUSIONcescccscscccssescosssesssssesessstessssivesestssssstisessitessstesisessestee: 46 CERTIFICATE OF WORD COUNT vecccccccssssecsssssesessstessssevessssesees AT lii TABLE OF AUTHORITIES Page(s) FEDERAL CASES AFL-CIO v. OSHA (11th Cir. 1992) 965 F.2d 962.000. ccceeecceseccnesscseescseeeees 42 Asarco, Inc. v. OSHA (9th Cir. 1984) 746 F.2d 48300cececccssccssccceuseseseeeueeseseees 43 Lingle v. Chevron U.S.A. Inc. (2005) 544 U.S. 528 voc iicccsccccccccesessscccseessseeesseeesesseeeeeescssees 34 National Lime Association v. Environmental Protection Agency (D.C. Cir. 1980) 627 F.2d 416 ooo.eeececcsccsesccceeeseeeneseeeeers 43 National Paint & Coatings Association v. South Coast Air Quality Management District (C.D. Cal. 2007) 485 F.Supp.2d 1153... 14, 34, 35, 45 United Steelworkers ofAmerica, AFL-CIO-CLC v. Marshall (D.C. Cir. 1980) 647 F.2d 1189.0... eceeeeceessesstteeeeeeesssseeeens 43 STATE CASES Alliance ofSmall Emitters /Metal Industry v. South Coast Air Quality Management District (1997) 60 Cal.App.4th 55 oo... cccccccccceceeceesesseeees 19, 21,22 Architectural Heritage Association v. County ofMonterey (2004) 122 Cal.App.4th 1095 oo... ccccecccseeeeeeeneeeeeeeeaees 38 California Hotel & Motel Association v. Industrial Welfare Com. (1979) 25 Cal.8d 200 occcceccceesesceceesessteeeeseeesneeeees 31, 35, 36 Canal Insurance Company v. Tackett (2004) 117 Cal.App.4th 239 ooo.ccccetcceeeeertteeeesenssseteeeees 16 Commonwealth Edison Companyv. Pollution Control Board (ULApp.Ct. 1974) 823 N.F.2d 84 oo. ecceccccesessntteeeeeeststnneeeens 41 Curle v. Superior Court (2001) 24 Cal.4th 1057.00... ccccssccccetsstecceseesstsseeeecesersteeeeenas 5 Granite City Division ofNational Steel Company v. Pollution Control Board (Ill. 1993) 613 N.E.2d 719.00... eccccccesseeseeeeecereeeeeeeeteeeseneneenens 41 In re Monrovia Evening Post (1926) 199 Cal. 2638 ooo. ccccccccsesseseesseeeeeeeeeeereesseeseeseesneeeenees 5 Kasler v. Lockyer (2000) 23 Cal.4th 472 oo. ccccccccsssessssseseccereeeeeeeeseneseeeeeneeeens 34 Kavanau v. Santa Monica Rent Control Board (1997) 16 Cal.4th 761.0... cccceeceecsseeeceeeeeeereertsreesseeseneenes 34 Laurel Heights Improvement Association v. Regents of the University of California (1993) 6 Cal.4th 1112.cecccceseccceeeeeececeteneeeeeereneeees 37 Manufacturers Life Insurance Company v. Superior Court (1995) 10 Cal.4th 257.0...deeeeeceseesesusaeeeceneeeeeeeeesseeaeeesensentes 25 Ortega v. Contra Costa Community College District (2007) 156 Cal.App.4th 1078occcccccncsenereeeeeeessneesnneeeseeees 16 People ex rel. Lockyer v. R.J. Reynolds Tobacco (2005) 37 Cal.4th 707 ......ccccccsscccccessssssenecensneeececcesssneatneaeeseeseees 8 People v. Licas (2007) 41 Cal.4th 362...ccessceeeestceececeeeessneereauaesecnennaes 13 Pitts v. Perluss (1962) 58 Cal.2d 824 ooo ccccccceccceeseesenetentteeeeees 36, 37, 39, 45 San Remo Hotel L.P. v. City & County of San Francisco (2002) 27 Cal.4th 648 occccccccccccccccssesccsesccceeceeeeceeereeeeeeeeteeeees 32 Santa Monica Beach v. Superior Court . (1999) 19 Cal.4th 952occcccccccseseesereeenteeaeeeeeereesecneeeeeees 32 Security Environmental Systems, Inc. v. South Coast Air Quality ManagementDistrict (1991) 229 Cal.App.3d 110.0...cee cceeeeeeenneeeeeeecesresssaaeeeeeees 11 Sherwin-Williams Co. v. South Coast Air Quality Management District (2001) 86 Cal.App.4th 1258... 19, 21, 22, 45 Western Oil & Gas Association. v. Air Resources Board (1984) 37 Cal.8d 502 oooeeceecccsseeesceeeeeeees 28, 36, 39, 40 Western States Petroleum Association v. South Coast Air Quality ManagementDistrict (2006) 186 Cal.App.4th 1012.0... 19 li FEDERAL STATUTES B U.S.C. § 558 oc ccccccccccssscccccessseeccssseecesseneeececseseeeeseceseaaeeesessnnananeeees 42 29 US.C. § 651 Cf S€Q. cee ceccccccccesssscccccessenseceeneeeeececessnnaueeceeeeeeeeerens 42 42 U.S.C. § 7401 et SOQ. .oeccecccccccccsssccccccceesnecceecesceeceecetecesereseeseseeseess 17 42 US.C. § 7410 oo. ceccccscccessccccesnteeeeseseeceescssnsneeeecesssseeeeesesseesaeees 18 AZ ULS.C. § TALLcee cccccccccccsstecccnsneeeeceneeeeecessstseeeesseesaeeeevessessaaaes 17 CALIFORNIA STATE STATUTES Health & Safety Code § 39002 0.0... ceccesseeeecceeeeeeeserenenaeaaeeees 25 Health & Safety Code § 40001 ooo... eccccccceceeeceeeeeeeereeeeseees 29 Health & Safety Code § 40402 veccecccccscssscescsssscessessssesssssssesveeeeess 32 Health & Safety Code § 40405 000...cccceeeeeeeeeeeee 8,9, 10,11 Health & Safety Code § 40406 oo... ceccccccceeeeeeeteeeeeeespassim Health & Safety Code § 40420 ooocccscntceeceeeeeeeeeeensaanees 32 Health & Safety Code § 40440 oo.cececececeseeseetteeeeeeespassim Health & Safety Code § 40440.10 woeeeeseeceeeeereeeeeeeeeennens 12 Health & Safety Code § 40440.11 oo... cccccceeeeesettteeeeespassim Health & Safety Code § 40449 oooccccececcceeeeeeeeeeeeeeeneneees 30 Health & Safety Code § 40456 ooocceceececeeeeeeeereensennaes 33 Health & Safety Code § 40458 00... cccccccccccccneeeeeeeeeeeeeeeensaanaes 33 Health & Safety Code § 40702 ooo... cceecccccceccccccceeececeenereseeeeeeeens 29 Health & Safety Code § 40717.6 ........cccccccccccccccceeececeeteeeseeeeeeeens 33 Health & Safety Code § 40717.8 0.0... cccccccccccccceseceeceeeteeeeceeeeens 33 Health & Safety Code § 40723 ooo... cecccccececccceceneeeeeeeeeeeeespassim Health & Safety Code § 40727 ........cccccccceessccecseeeennetsetneeseseereee 30 Health & Safety Code § 40728.5 wo... eccececesssssteeeeeeeeeeenettnntsenneaes 21 Health & Safety Code § 40916 0...eecceccceeeeeeeeeseneeneenenaeaaes 26 Health & Safety Code § 40920.6 .......... cesses eeeeeeeeeeeeeepassim Health & Safety Code § 40922 ooo... ecccssceccecessesesseneeeeeees 21, 22 h e be be ba te Health & Safety Code § 41508 ......eeVeeceuaecccuecesaueecnseeses 25 Health & Safety Code §§ 42350-42372oeeececceeeeeeeeeeee 31-32 Health & Safety Code §§ 42365-42372 ooo....ccccccccccececceeeseeeeeeees 32 Public Resources Code § 21000 ef Seq. .......ceccccecceeeeeeeeteeneneeeeeeeeees 36 Public Resources Code § 21080 ............cccceecsesseesseecccecceeeeeneeeeeeeeeees 36 CALIFORNIA RULES OF COURT Rule 8.520 oo.eeeceecessneeeeeesseeeesseeasecsseeesssesseseesseesssenseeenees 16, 47 Rule 8.252eescscceccessneeeecesnneeessseeeeeeeaeeeeseneesceseenseeeeseeseeseseeees 16 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT RULES Rule 201 .......ceeccceececccececensscececseeececautsecevssececesauseecesseccecseccsausccersecseeeus 9 Rule 11138 voceccceeccccseseseccccccesacensveccesesseseessseveees seeeeeneeeeeeeteteneneass 2 Rule 13808 ......cee cece ccseecccnssccecccsccceccssvescenssscscocsssescuseseseussceusvceevessesss 10 OTHER AUTHORITIES Assem.Floor, Third Reading Analysis of Sen. Bill No. 382 (1995-96 Reg. SeSS.) ...c.ccceccccsesscccesscsessseeessseessseesssaeeeceeseeeeesseeeesenes 33 H.R.Rep. No. 95-294 (1977) ....cccccccecsessscscccessesteceecceeeeenersesteeseaaeees 18 Manaster, Fairnessin the Air: California’s Air Pollution Hearing Boards (2006) 24 UCLA J.of Envtl. L. & Pol’y 1...eee 32 Sen. Amend. to Assem.Bill No. 1877 (1999-2000 Reg. Sess.) ......ccccccccsscccesssssesessteesecesteeeeeeeessssteeeeeess 14-15 Sen. Floor Analysis of Assem.Bill No. 2581 (1993-94 Reg. SeSS.) ....ccccsccesessesesecssesenecsessenenessesensenseeseeeeneesenes 33 Sen. Transportation Com., Analysis of Sen. Bill No. 1403 (1993-94 Reg. Sess.) ...cccccccccccccssccccssssesssseessesccssesseseesesensceeeessseeeenees 33 1V INTRODUCTION The principal response of Appellant American Coating Association on thefirst issue before the Court, the meaning of “best available retrofit control technology” (““BARCT”), is to borrow and apply language from a separate statute, one defining “best available control technology” (“BACT”). Only such misdirection can secure the Association’s objective: to transform the key word in the statutory definition of BARCT,“achievable,” into the past tense, “achieved.” But that attempt fails because BACTservesa different regulatory function and is governed by a different set of statutes. Aside from this effort, the Association refuses to confront the most pertinent law, the statutory definition of BARCT. Nor does it explain why, in the courts below,it repeatedly conceded the correctness of Respondent South Coast Air Quality ManagementDistrict’s interpretation. This pattern of studied evasion continues with the Association’s response on the second major issue, whether BARCTestablishes a statutory minimum or maximum standard. The Association does not address the pertinent statutes cited by the District. For example, the Association never explains why BARCTshould be exempt from the Legislature’s repeated and explicit authorizations to air districts to adopt standards more stringent than those required by state law. Finally, the Association asks the Court, without so much as a single supporting citation, to discard long-established law and adopt a new standard of review for the District’s quasi-legislative rulemakings. The Court should reject that radical change. When the long-settled standard of review is accepted, it becomesclear that District Rule 1113 (“Rule”) must be upheld in full. Indeed, the Association offers virtually no argument otherwise. ARGUMENT I. The BARCT Definition, Its Statutory Context, and Its Legislative History Demonstrate that a BARCT Standard May Anticipate Foreseeable Technological Innovation and Yet Be “Achievable.” The plain meaningof the definition of BARCT, and every other indicatorof legislative intent, show that a BARCT standard need not be already achieved, but rather need only be “achievable”—thatis, “capable of being achieved.” A standard that can be achieved by the deadline for compliance is a BARCT standard. (Defendant’s Opening Brief on the Merits (“Opening Brief’) at 26-39.) t o In the court of appeal, the Association clearly and repeatedly agreed. (See id. at 35-36.) Nonetheless, the court of appeal ignored this concession and held that a BARCT standard must be capable of being achieved at the time the standard is | adopted. (Slip Op. at 21-22.) The Association now argues that the court of appeal was correct. (Appellant’s AnswerBrief on the Merits (“AnswerBrief’) at 2.) However, the Association bases its ex post rationalization of the court of appeal’s unprompted holding on two fundamental errors. First, the Association virtually ignores the statutory definition of BARCT. Second, the Association collapses the Legislature’s intentional distinctions between BARCT and BACT, which applies only to new and modified pollution sources. However, the very real differences between those regulatory concepts demonstrate that the District’s position is correct. A. The Association Does Not Explain Its Jarring Reversal of Position on the Meaning of “Achievable.” In stark contrast to its position below, the Association now aggressively argues that a BARCT standard must be already achieved when adopted. (AnswerBrief at 2.) Below, the Association stated repeatedly that BARCTis a “technology forcing” standard that need only be achieved by the date on which compliance is required. (Opening Brief at 35-36.) For example, it wrote that “BARCT maybe considered ‘technology- forcing’ in the sense that [the District] may force companiesto implement technology if there is a showing that implementation is achievable by the effective date.” (Appellant’s Opening Brief | (“AOB Below”) at 25 [emphasis added].) The Association has not acknowledged or respondedto the litany of instances in which it conceded the very position it now attacks. It offers no explanation for its remarkable turnabout. B. The Association Virtually Ignores the Statutory Definition of BARCT, Which Demonstrates that a BARCT Standard Need Not Be Immediately Achievable. In setting out its new theory of BARCT,the Association says almost nothing about the Legislature’s definition of that phrase in Health and Safety Code Section 404064 Yet that definition unquestionably governsthe issue before the Court, and it demonstrates that regulated sources need not be able to 1 All further statutory references are to the Health and Safety Code unless otherwise indicated. achieve a BARCTstandard at the time it is adopted. (See Opening Brief at 26-31.) Ignoring that definition, the Association, like the court of appeal, chooses to focus on a single component word of the defined phrase BARCT,to consult a dictionary definition of that word, and then to conclude that “achievable” means“achieved.” (AnswerBrief at 13-15.) But even that definition supports the District’s interpretation of BARCT. To begin with, the Association cannot ignore the Legislature’s chosen definition of BARCT: that definition must Le the touchstoneof a court’s interpretation. (See OpeningBrief at 30; see also Curle v. Superior Court (2001) 24 Cal.4th 1057, 1065 [declining to interpret a term asit is “ordinarily understood” becausethe statute “sets forth controlling definitions”].) If the Legislature had intended the component words of BARCTto have their ordinary meaning, it would not have defined the phrase. (See In re Monrovia Evening Post (1926) 199 Cal. 263, 266 [rejecting the usual meaningof a term because the statutory definition expressed “the clear intent of the legislature”to provide a different meaning].) Accordingly, this Court must focus on the Legislature’s definition. That definition decides this issue. It specifies “an emission limitation that is based on the maximum degree of reduction achievable, taking into account environmental, energy, and economic impacts by each class or category of source.” (§ 40406.) The relevant wordin this definition is “achievable,” and that word denotes something “capable of being achieved,” not something already “achieved.” (Opening Brief at 28-29.) The Association does concede in passing the plain meaning of “achievable” as “capable of being achieved,” but it assigns predominant weight to the word “achieved”in that definition.? (AnswerBrief at 14.) The Legislature, however, defined BARCT as “the maximum degreeof reduction achievable,” not the maximum achieved. The Association also cites a dictionary definition of “available” to support its interpretation of BARCT (AnswerBrief at 14): “[c]apable of being employed with advantage or turned to 2 Also, oddly, the Association at one point states that “[a] ‘retrofit’ must also be achievable when it must be employed.” (Answer Brief at 15 [emphasis added].) This is precisely the District’s position. account; hence, capable of being madeuse of, at one’s disposal, within one’s reach.” (AnswerBrief at 14.) But even this definition supports the District. Like the plain meaning of “achievable,” it entails “capability” of employing or using something, not that the thing has already been employed or used. As described in the Opening Brief and ignored in the Answer, “capability” does not denote immediacy. (Opening Brief at 27-29.) C. The Association Conflates BARCT and BACT, but Their Differences Demonstrate that BARCT Need Not Be Immediately Achievable. The central premise of the Association’s argumentis that BARCT and BACT mustbe read together rather than independently, and indeed, it lumps the two together as “best available technologies.” (See, e.g., AnswerBriefat 1, fn. 2, 13, 19-21, 24-25.) The Association simply observes that both standards include those three words and chides the District for reading the standardsdifferently. Ud. at 15.) Then, the Association reasons: because (1) BARCT and BACT must be read together, and (2) BACT mustbe “achieved”at the timeit is imposed, thus BARCTisalso limited to a standard that has already been achieved. The manifest and fatal flaw in the Association’s logic is that the Legislature used—and defined—two regulatory standards, not one. And the differences between BARCT and BACT demonstrate that BARCT need not be already achieved when the District adopts it. The Legislature intended that BACT be immediately achievable, for the simple reason that BACT must be immediately implemented by new sources poised for construction. Compliance with a BARCTstandard, on the other hand, can be staggered or delayed for years, as it wasin this case. (OpeningBrief at 48.) 1. BARCTand BACTAre Different Standardsthat Serve Different Functions. The obvious problem with the Association’s amalgamation is that the Legislature chose to create two standards,not a single “best available technology” standard. “When the Legislature uses materially different language... the normal inference is that the Legislature intended a difference in meaning.” (People ex rel. Lockyer v. R.J. Reynolds Tobacco (2005) 37 Cal.4th 707, 717.) But the Legislature did not just use different terms;it separately defined them in ways that support the District’s interpretation of BARCT. Section 40405 defines BACT as “an emission limitation that will achieve the lowest achievable emission rate for the source to whichit is applied.” (§ 40405(a).) “Lowest achievable emission rate,” in turn, is defined in part as, “tlhe most stringent emission limitation that is achieved in practice by that class or category or source.” (§ 40405(a)(2) [emphasis added].) In contrast, the BARCTdefinition refers not to an emission reduction achieved, but rather to “the maximum degree of reduction achievable.” (§ 40406 [emphasis added].) The Association ignores this distinction. Plainly, however, the definition of BACT demonstrates that the Legislature knew how to formulate a standard where reductions have already been “achieved.” If it meant to limit BARCTin that same way,it would have doneso. Moreover,as the District has explained, the Legislature distinguished the two standards becausedistricts impose BACT ona source-by-source basis whenissuing construction permits for pollution sources to be built or modified immediately.2 By 3 New and modified sources must obtain a “permit to construct” from the District. (See District Rule 201, available at .) Those permits contrast, BARCTis adopted by quasi-legislative rules that can allow long lead times for compliance. (Opening Briefat 48.) The Association argues the District’s explanation “has no logical basis.” (AnswerBrief at 15-16.) However, the Association’s own interpretive authorities—the Legislature’s enactment of several statutes after the 1987 legislation that enacted the BARCT provisionsin section 40440 and 40406 (see infra Section I.C.2)—demonstrates that the District’s explanaticn is correct. First, the statutes defining BACT andestablishing procedural requirementsfor it refer explicitly to the new-source permitting process. (See § 40405(b) [BACT definition referring to “the permitting of a proposed new source or a modified source”]; § 40440.11(e) [statute establishing BACT proceduresreferring to “an application for authority to construct”].) Second, these statutes indicate that BACTis applied in on a source-by-source basis—asin a permitting process—whereas must incorporate BACT. (See District Rule 1303, available at .) 10 BARCTis developed by generally applicable regulation. (See § 40405(a) [referring to “an emission limitation that will achieve the lowest achievable emission rate for the source to whichit is applied” (emphasis added)]; § 40440.11(a) [BACT procedures referring to “establishing” BACT “for a proposed new or modified source”); § 40440.11(b) [referring to “determining the [BACT] for a particular new or modified source”]; § 40440.11(e) [“[a]fter the south coast district determines whatis the [BACT] for a source ...”]; 40723(c)(1) [allowing a source to contest a district’s BACT determination for the source because that source is unable to meetit in practice].) Moreover, Security Environmental Systems, Inc. v. South Coast Air Quality Management Dist. (1991) 229 Cal.App.3d 110, provides an example of the BACTprocessin action. The District had approved permits to construct a hazardous wasteincinerator, but during a lengthy delay before construction, the state of the art in the relevant pollution control technology had improved. The court upheld the District’s decision to demandthat the incinerator incorporate that new technology as BACT,as a condition of extending the validity of the permits to construct. Id. at 131-32. 11 2. Rather than Suggesting BARCT and BACT Are Equivalent, the Subsequent Legislation Cited by the Association Emphasizes Their Differences. The heart of the Association’s argument conflating BARCT and BACTandconverting “achievable” to “achieved”is not the statutory, or even dictionary, definitions. Rather, it is three statutes adopted after the 1987 BARCTlegislation: sections 40440.11, 40723, and 40920.6. (AnswerBrief at 14-15, 19-20.) However, that legislation consistently recognizes the Legislature’s explicit differentiation of BARCT and BACT,andits intention that BARCT standards need not be already achieved. a. Sections 40440.11 and 40920.6 In a 1995 statute, the Legislature enacted sections 40440.11 and 40920.6, which establish procedures for adopting BACT and BARCT,respectively. (Stats. 1995, ch. 837 [codified at §§ 40440.10, 40440.11, 40920.6].) As the Association notes, the procedures provided in those sections are similar to each other in numerous respects. (Compare § 40440.11(c)(1), (3)-(4) [BACT] with § 40920.6(a)(1)-(3) [BARCT].) However, they also includea crucial difference—a difference that the Association ignores, but that confirms the error of its conflation of BACT and BARCT. Only for BACT must the District “[d]etermine that the proposed emission limitation has been met” by a “commercially available” control technology for at least one year. (§ 40440.11(c)(2) [emphasis added].) The Association cites this provision as supposedly showing that the Legislature intended to require that BARCT standards be already achieved. (AnswerBrief at 19.) However, the otherwise parallel BARCT proceduresin section40920.6 omit this requirement.* (See § 40920.6(a).) That significant lacuna confirmsthe Legislature’s intent that districts may establish BARCTstandards not yet met by existing technology. (See People v. Licas (2007) 41 Cal.4th 362, 367.) b. Section 40723 Section 40723 demonstrates even more clearly that the Legislature intended BACT, but not BARCT,to be already achieved when adopted. The Legislature enacted section 40723 4 Section 40920.6(a)(1) does refer to “one or more potential control options which achieves the emission reduction objectives for the regulation” (emphasis added). But “achieves” does not mean “has achieved” and does not dictate that the “emission reduction objectives” be achieved immediately. 13 in 2000 to allow sources to challenge applicable BACT requirements. (Stats. 2000, ch. 501 [codified at § 40723].) However,it did not adopt, either then or since, any parallel statute for BARCT. As the Association emphasizes (AnswerBrief at 14), section 40723 directs the District to “review whether the applicable [BACT] requirements have been achieved.” (§ 40723(b) [emphasis added].) The Legislature’s refusal to adopt a similar requirement for BARCTstrongly indicates that it did not mean to require that BARCT standards “have been achieved.” (See Opening Brief at 29-30, 47 [citing Nat. Paint & Coatings Assn.v. South Coast Air Quality Management Dist. (C.D. Cal. 2007) 485 F.Supp.2d 1153, 1160, fn. 21, which found section 40723 to be inapplicable to BARCT].) Moreover, the legislative history of section 40723 reveals that lawmakers deliberately limited the statute’s reach to BACT. Early versionsof the bill applied to any “emission limitation or standard.” (See, e.g., Sen. Amend. to Assem.Bill No. 1877 (1999- 2000 Reg. Sess.) June 29, 2000, reproduced in Defendant’s Request for Judicial Notice (“RJN”), Ex. A.) But lawmakers heeded a committee report’s recommendation that they limit the bill to BACT. (Ud.; Sen. Comm. on Environmental Quality, 14 Analysis of Assem.Bill 1877 (1999-2000 Reg. Sess.) as amended June 29, 2000,p. 2, reproduced in RJN, Ex. B.) In light of the Legislature’s clear intent that sections 40723 and 40440.11 not apply to BARCT, those statutes do not support the Association’s argument. On the contrary, they demonstrate that a BARCT standard need not be already achieved whenit is adopted. D. The Legislature Did Not Intend BARCT to Be Less Stringent than BACT. Next, the Association argues that the Legislature differentiated between BACT and BARCTonly becauseit intended BARCTto “minimiz[e] the burden that could be imposed by the District on existing sources, while allowing for more stringent [BACT] emissions controls on new and modified sources.” (AnswerBrief at 17.) This argument misconstrues the legislative history of SB 151, the 1987 legislation that amended section 40440 and adoptedthedefinitions of BACT and BARCT.2 5 The Association relies on unpublishedlegislative history materials beyond those noticed by the court of appeal in response to the District’s motion. (See AnswerBrief 17-18, 20; see also Slip. Op. at 29, fn. 24.) But the Association has not brought a That history actually shows—without exception—that the Legislature intended the 1987 legislation to prompt the District to take bolder action to control emissions, not to ease the burden of District regulation on industry. (Opening Brief at 11-16, 32-35, 50-51.) The Association traces the bills that led to the final version of section 40440(b). The history starts with the preexisting, unenforceable requirement that the District “promote” BACT, proceeds to a mandate to “require” BACT alone, and ends with the current formulation, “[r]equire the use of [BACT] for new and modified sources and the use of [BARCT]for existing sources.” (See AnswerBrief at 17-18; § 40440(b)(1).) Nothingin this history suggests that the Legislature meant BARCTto beless stringent than BACT. At most, it indicates that the Legislature intended to differentiate between BACT and motion for judicial notice of those materials, as required by the California Rules of Court, nor has it submitted copies of the materials. (See Cal. Rules of Court, Rules 8.252(a), 8.520(g).) California courts have declined to notice documentsin these circumstances. (See, e.g., Ortega v. Contra Costa Community College Dist. (2007) 156 Cal.App.4th 1073, 1086, fn. 9; Canal Insurance Co. v. Tackett (2004) 117 Cal.App.4th 239, 243.) 16 BARCT, and meantthe District to “require” and not merely “promote” stringent standards. Thebill’s evolution is fully consistent with the evidence supra that BACT, but not BARCT, must be immediately achievable because it must be applied in permits for new sources. Moreover,the Association’s conclusion drawn from thebill’s evolution contradicts the Legislature’s clear purpose in enacting the bill: to demand more aggressive emission controls, not to ease the burden of those controls on industry. (Opening Brief at 32- 34.) The Association cites no statement of intent that would call into question this clear legislative purpose. Finally, the Association also attempts to bolster its argument that BARCT mustbeless stringent than BACT by analogizing to the federal Clean Air Act (42 U.S.C. § 7401et seq.). It argues that the Act establishesstrict national standardsfor new sources while “exemptling] existing sources.” (Answer Brief at 18.) The federal Act does not support this false dichotomy. The Act establishes minimum national standards for new sources to prevent states from engaging in a “race to the bottom” by setting lower standards to attract new businesses. (42 U.S.C. § 7411; 17 H.R.Rep. No. 95-294, at 184 (1977), reprinted in 1977 U.S. Code Cong. & Admin. News, 1077, 1263.) It does not follow, however, that Congress intended to “exempt” existing sources or even that they be regulated less stringently. The Act leaves regulation of existing sources almost entirely to the states. (42 U.S.C. § 7410(a)(2)(A).) In doing so, Congress recognized that, in areas with poor air quality, states would needto stringently regulate existing sources to attain the ambient standards. (H.R.Rep. No. 95-294, at 184, fn. 3 (1977), reprinted in 1977 U.S. Code Cong. & Admin. News, 1077, 1268, fn. 3.) Indeed, regulation of new sources can only reduce their additional pollution. Accordingly, in the Basin, stringent regulation of existing sources is the only way to reduce existing pollution levels as necessary to attain the air quality standards. This is exactly what the federal Act contemplates. E. The Requirement that the District Must Evaluate Cost-effectiveness Does Not Demonstrate that the District May Adopt Only Immediately Achievable Standards. The Association cites statutes requiring the District to evaluate the potential costs of its regulations. (AnswerBrief at 21-22.) These procedural requirements do not suggest that the 18 Legislature intended to substantively limit the regulatory standards that the District may adopt. (See OpeningBrief at 48- 49.) Moreover, as the record demonstrates, the District seriously evaluates the economic impactsofits regulations. 1. The District Carefully Considers the Costs of Its Proposed Regulations. The District diligently evaluates the potential costs and socioeconomic impacts of its rules. (See, e.g., Western States ’ Petroleum Assn. v. South Coast Air Quality Management Dist. (2006) 186 Cal.App.4th 1012, 1022-23; Sherwin-Williams Co.v. South Coast Air Quality Management Dist. (2001) 86 Cal.App.4th 1258, 1269-71; Alliance ofSmall Emitters/Metal Industry v. South Coast Air Quality ManagementDist. (1997) 60 Cal.App.4th 55, 61-65 [“Small Emitters”]).) Indeed, in this case, the District sought to estimate the costs of the Rule. (AR 3:793-95; 22:6150 et seg.) Although the refusal of coating manufacturers to share cost data hampered that analysis (AR 3:793), the District estimated compliance costs for the regulated categories, including costs to end users. (AR 3:794-95.) 19 The Association never challenged the District’s cost analysis for the Rule. Thatfailure is odd, given the Association’s claim that the Rule is not achievable. If, as the Association contends, the Rule is not achievable and the District cannot evaluate the cost of an unachievable standard, then, by the Association’s logic, the District’s cost analysis must have been inadequate. The Association also has not demonstrated that the District is unable to estimate the costs of an emission standard merely because the standard cannotbe achieved until a future date. For example, where a rule cannot be achieved at the date of adoption, it may be achievable by the compliance deadline based on technology transfer from another industry or technology application. Where the District relies on technology transfer, it can estimate the cost based on the setting from which the technology may be transferred. Likewise, where new technology must be developed to attain a standard, the District may estimate the cost of developing that technology. The mere requirementofcost- effectiveness analysis, therefore, cannot demonstrate that the District may adopt only immediately achievable rules. 20 2. The District Must Estimate the Costs of Its Rules Only to the Extent There Is an Evidentiary Basis for Doing So. Two courts have sensibly held that the District need estimate the costs of proposed regulationsonly if the cost data necessary to do so is available. ‘(Opening Brief at 48-49 (citing Sherwin-Williams, supra, 86 Cal.App.4th at 1274-75, and Small Emitters, supra, 60 Cal.App.4th at 64.) The Association responds that these cases did not expressly apply sections 40440.11 or 40920.6, and that these two statutes require the evaluation of actual costs. (AnswerBriefat 22.) Asan initial matter, section 40440.11 applies only to BACT andis therefore inapplicable. (See supra Section I.C.2.a.) Both cases also suggest that section 40920.6, which does apply to BARCT,do not require cost estimates where supporting datais unavailable. Thus, Small Emitters concluded that “[nleither {section 40728.5] nor any other precludes issuance of antipollution rules until data exist allowing a precise analysis of the socioeconomic impactsof those proposed rules.” (60 Cal.App.4th at 64 [emphasis added].) Furthermore, Sherwin- Williams applied a rule of reason like that of Small Emitters to the District’s cost analysis under section 40922, a statute 21 requiring a cost-effectiveness analysis similar to that in section 40920.6. (86 Cal.App.4th at 1270-71 [citing Small Emitters].) Moreover, section 40922 requires the District to evaluate the cost-effectiveness of control measures included in the District’s air quality management plan. (§ 40922(a).) Those | measures need not be achievable, immediately or otherwise. Indeed, the plan includes “long term measures” contemplating future regulation over a 10- to 20-year period. (See Opening Brief at 56-57.) The District nonetheless evaluates the cost- effectiveness of those measuresto the extent data is available. Il. The Legislature Required BARCTas a Regulatory Floor, Not a Ceiling. The Association haslittle response to the District’s broader argument: the Legislature commandedtheDistrict to adopt standardsat least as stringent as BARCT,but did not prohibit the District from adopting standards more stringent than BARCT. (Opening Brief at 39-53.) Indeed, the Association expressly acknowledgedits failure to confront most of the District’s evidence of legislative intent. (AnswerBrief at 24.) 22 A. The Association Scarcely Mentions the Abundant Evidence of the Legislature’s Intent to Mandate BARCTas a Minimum Standard. 1. The Association Largely Ignores the Most Important Statutory Provision in this Case: Section 40440. Section 40440(b) is the source of the supposed cap on the District’s regulatory authority. The language of that section reads most naturally not as a prohibition on adopting standards more stringent than BARCT,but rather as a mandatethat those standards constitute at least BARCT. (Opening Brief at 40-42.) The Association offers no rejoinder based on the language of section 40440. Instead, it contends that BARCT must be a 666ceiling because the definition requires the ““maximum’ achievable reduction.” (AnswerBrief at 26 [paraphrasing § 40406].) However, this argument ignores the remainderof the statutory definition. That definition refers not to an absolute maximum, but rather to the “the maximum degreeof reduction achievable, taking into account environmental, energy, and economic impacts by each class or category ofsource.” (§ 40406 [emphasis added].) That is, the BARCTdefinition refers to the maximum emission reduction given certain considerations and conditions, not the absolute maximum reduction, which would presumably be a 100 percent reduction. 2. The Association Largely Ignores the Statutory Provisions that Expressly Allow the District to Adopt Standards More Stringent than Those Required by State Law. The Association also mostly refuses to confront the several statutory provisions that expressly allow districts to adopt standards morestringent than those dictated by state law. (See OpeningBrief at 42-45.) The Association does briefly recognize the Legislature's statement of intent, in adopting BARCT requirements for districts with major air pollution problems,that (1) it “intended to establish minimum requirementsfor air pollution control districts and air quality managementdistricts,” and that (2) “[nJothing in this act is intended to limit or otherwise discourage thosedistricts from adopting rules and regulations which exceed these requirements.” (Stats. 1992, ch. 945, § 18, pp. 4512-13, quoted in Opening Brief at 43.) But the Association dismisses this clear language as “a non-specific and uncodified savings clause tacked on at the end of the amendments.” (AnswerBrief at 24.) That characterization does nothing to refute its plain meaningandinfact “renders a part of a statute 24 meaningless or inoperative,” an interpretive offense the Association itself condemnsin the subsequent paragraph. (Ud. at 25 [quoting Manufacturers Life Ins. Co. v. Superior Court (1995) 10 Cal.4th 257, 274].) The Association doesassert that the District’s (unrebutted) interpretation of this provision makes the BARCT requirement superfluous. (AnswerBrief at 25.) On the contrary, section 40440(b)’s BARCT requirement performsa crucial function: setting a regulatory floor by prohibiting the District from adopting a standardless stringent than BARCT. Consequently, if the District were to adopt a lax standard for a category of existing sources, an environmental group could sue the District for violating section 40440(b)’s BARCT mandate. This interpretation is also consistent with the legislative history of section 40440(b), which the Legislature amended to prompt the District to more aggressive action. (See supra Section I.D.) The Association also never confronts sections 39002 and 41508. Yet those sectionsdictate that districts “may establish additional, stricter standards than those set forth by law,” unless the Legislature has specifically provided otherwise. (Opening Brief at 44 [quoting § 39002].) The Association cannot reasonably 25 contend that section 40440(b) specifically limits the stringency of District standards. (Id. at 44-45.) Finally, the Association cites section 40916, which directs the state Air Resources Board to adopta “feasible” model coatings rule. (AnswerBrief at 20-21.) But the Association neglects to mention the statute’s express savings clause, which states that “{m]othing inthis subdivision shall limit or affect the ability of a district to adopt or enforce rules related to architectural paint or coatings.” (§ 40916(d)(2); see Opening Brief at 49.) Here too, the Legislature preserved districts’ authority to adopt standards more stringent than the state standards, while explicitly requiring that those statewide standardsbe “feasible.” 3. Section 40920.6 Does Not Support the Association’s Position. The Association leans most heavily on section 40920.6 in arguing that the District cannot adopt standards morestringent than BARCT (AnswerBrief at 25-26), but the section cannot bear the Association’s weight. It imposes only procedural requirements. Nothingin it limits the stringency of District rules or requires that the District demonstrate that its rules are achievable. Indeed, as demonstrated above, the Legislature 26 consciously did not adopt such a requirementin section 40920.6. In the same 1995 statute that enacted section 40920.6, the Legislature enacted section 40440.11, which, for BACT, demands that the District “ [djetermine that the proposed emission limitation has been met.” (See supra Section I.C.2.a.) Norcan the requirement that a district “[i]dentify one or more potential control options which achieves the emission reduction objectives for the regulation” be read to substantively limit the stringency of the underlying regulation. (§ 40920.6(a)(1).) This requirement does notrestrict the scope or timing of “the emission reduction objectives for the regulation.” It directs districts to “/ijdentify ... potential control options” to reach those objectives, but it does not demandthat districts demonstrate—uponpenalty of invalidation of the rule—that the rule’s “emission reduction objectives” can be met by any particular “potential control option.” Finally, section 40920.6(b) states that “[a] district may establish its own [BARCT] requirement based upon consideration of the factors specified in subdivision (a) and section 40406.” (§ 40920.6(b) [emphasis added].) This provision hardly suggests that the Legislature intended those “factors” to function as 27 absolute limits on the stringency of the standard. (Cf. Western Oil & Gas Assn. v. Air Resources Bd. (1984) 37 Cal.3d 502, 506- 507 (“Western Oil v. State Bd.”) {in setting state air quality standards, Air Resources Board wasnot obligatedto adopt Department of Health Services’ recommendation of a standard based on the health impact of pollution; it was only oneof several “factors” that the Board had to consider in setting standards].) B. The Association Never Explains Why the Legislature Would Impose Unique Limitations on Air Districts with the Most Polluted Air. The Association’s position would subject the District—the jurisdiction with the most polluted air in the country—to regulatory limitations not imposed on otherair districts, cities, or counties. (Opening Brief at 36-37.) But not all air districts must require BARCT-only those districts with the most compromised air quality. Moreover, the Legislature has expressly allowed cities and counties to adopt standards morestringent than the District’s. Ud. at 37.) The Association first responds that a district with“clean air” could not require standards morestringent than BARCT because such districts would need to show “authority” and “necessity” for regulations to address their nonexistent air 28 pollution. (AnswerBrief at 26 [citing § 40727].) However, the District did not argue that districts with no air pollution—if they exist—could or would adopt aggressive, technology-forcing regulation. Rather, districts that confront air pollution problems, though less severe than those faced by the District, can adopt any standard needed to respondto those problems. They would have ample “authority” to do so in sections 40001 and 40702, neither of whichis subject to the BARCT“limitation.” (Opening Brief at 37.) The Association then speculates that a district with less severe air pollution would not need to exceedBARCT. Sucha district, however, might adopt a stringent regulation to address a pollution problem caused by a single industry or source, rather than by an array of sources that can each be regulated less stringently. Or it may need to adopt such a standard to prevent its air quality from deteriorating further. Regardless, the District’s point is that, under the Association’s interpretation, districts with air pollution, but not severe pollution, would have broad discretion to respond to their pollution problems, but districts with more serious problems, such as the South Coast District, would lack that authority. This 29 anomaly undercuts the argumentthat the Legislature intended BARCTto cap the stringencyof District rules. The Association also asserts that the authority of cities and counties is irrelevant because they exercise plenary police power under the California Constitution. (AnswerBrief at 27.) But the Association never explains whythat fact is relevant. Nor doesit explain why the Legislature would carefully limit the stringency of District regulations while explicitly allowing anylocal governmentin the Basin to exceed those limits. (§ 40449(a) [authorizing “any city or county ... to adopt any ordinance with respect to air pollution control whichis stricter than the rules and regulations adopted by the south coast district board”]; see Opening Brief at 18, 36-37.) C. Although BARCTDoes Not Cap the Stringency of District Rules, Other Constraining Principles Do So. That the District may adopt regulations morestringent than BARCTcertainly does not meanits discretion is boundless. Several significant legal and practical limits constrain the application of this regulatory authority. First, a District rule must be reasonably necessary. (§ 40727(a), (b)(1).) Indeed, in arguing that districts with cleaner 30 air could not adopt technology-forcing standards, the Association acknowledgesthat this necessity requirement serves an important function in limiting a district’s emission regulations. (AnswerBrief at 26; see also supra Section II.B.) The District also could not adopt standards morestringent than BARCT unless they were reasonably necessary to combat the District’s severe pollution problems. Second, a regulation cannot be arbitrary and capricious. (Cal. Hotel & Motel Assn. v. Industrial Welfare Com. (1979) 25 Cal.3d 200, 212.) For example, the District could not regulate a firm or industry that does not contribute to the Basin’s air pollution problems. Nor could it adopt a regulation without substantial evidence in the record that it would in fact reduce emissions. Third, the Code provides for granting variances to individual firms that cannot comply with the District’s generally applicable standards. (See §§ 42350-42372.) Any regulated entity may apply to the District’s Hearing Board for a variance. (§ 42350(a).) The Board must grant a varianceif the applicant satisfies six statutory criteria, such as demonstrating that compliance would jeopardize its business or property rights. (§ 31 42352(a); see also Manaster, Fairness in the Air: California’s Air Pollution Hearing Boards (2006) 24 UCLA J. of Envtl. L. & Pol’y 1, 19-20 [“If the statutory criteria are satisfied, the applicantis entitled to a variance.”].) The Code also affords special “product variances” for manufacturers on behalf of their customers and distributors. (§§ 42365-42372; see also Manaster, supra, at p. 55 [noting the “most common”product variancesare for paints and coatings].) Some product variances may even trigger mandatory reconsideration of District rules and regulations. (§ 42372(c).) Fourth, in a democracy,the political process is the primary line of defense against burdensomerestrictions on liberty. (See San Remo Hotel L.P. v. City & County of San Francisco (2002) 27 Cal.4th 643, 671; Santa Monica Beach v. Superior Court (1999) 19 Cal.4th 952, 973-74.) That process has proved capable of | constraining the District’s regulatory initiatives. The District’s Governing Board is composed primarily of elected officials from throughout the Basin. (§ 40420; see also § 40402(h) [providing that the District is “largely to be governed by representatives of county and city governments”].) Theseofficials are necessarily interested in avoiding severe regulatory impositions on their constituents. 32 Furthermore, the Legislature can veto or modify any District rule that it finds objectionable, and it has used this power. For example, section 40458 provides that “Rules 1501 and 1501.1 adopted by the south coast district are void” (§ 40458(a)) and modifies a specified provision of District Rule 2202. (§ 40458(b).) Those rules established employee vehicle trip reduction (e.g., carpool) planning requirements for employers in the Basin. (Stats. 1996, ch. 993, § 1 [enacting § 40458]). Similarly, sections 40456, 40717.6, and 40717.8 prohibit the District from adopting proposedtraffic reduction rules.® 8 See Sen. Transportation Com., Analysis of Sen. Bill No. 1403 (1993-94 Reg. Sess.) as introduced Feb. 7, 1994 [bill codified at section 40456; explaining that the bill would prohibit the District from adopting a proposedrule requiring local governments to impose trip reduction requirements on small employers], reproduced in RJN, Ex. C; Assem. Floor, Third Reading Analysis of Sen. Bill No. 382 (1995-96 Reg. Sess.) as amended July 5, 1995, p. 2 [bill codified at section 40717.6; noting that an industry group sponsoredthebill to preempt a proposed rule imposing traffic reduction requirements on shopping centers], reproduced in RJN, Ex. D; Sen. Floor Analysis of Assem. Bill No. 2581 (1993- 94 Reg. Sess.) as amended June27, 1994 [bill codified at section 40717.8; indicating that an industry group sponsoredthebill to preempt a potential rule to impose trip reduction requirements on large eventfacilities such as Disneyland], reproduced in RJN, Ex. E. 33 Finally, the District is subject to state and federal constitutional limitations. The District cannot adopt a regulation that is “functionally equivalent”to the exercise of eminent domain, and therefore constitutes a taking of private property, without payment ofjust compensation. (See Lingle v. Chevron U.S.A. Inc. (2005) 544 U.S. 528, 539.) It cannot treat similarly situated entities differently without a rational basis for that treatment. (See Kasler v. Lockyer (2000) 23 Cal.4th 472, 480.) Andit cannot adopt regulations that are so arbitrary as to violate due process. (See Kavanau v. Santa Monica Rent Control Bd. (1997) 16 Cal.4th 761, 857.) While these standards defer to the agency’s quasi-legislative judgments, they provide a backstopif the political process fails to control that judgment. Ill. The Association’s Proposed Standard of Review Is Meritless. The Association argues that BARCT requires the District to show that its coating rules are “achievable” for every coating use or application. This argumentis both baseless and unprecedented. This Court should therefore join (1) the superior court, (2) the court of appeal, and (3) the federal district court in the National Paint case in roundly rejecting such a revolutionary 34 standard. (See OpeningBriefat 59 [citing Nat. Paint, supra, 485 F.Supp.2d at 1157-58].) A. The Association’s Proposed Standard Is Inconsistent with Core Principles of Administrative Law. The Association clearly states the rule of law it seeks: [W]hen a district proposes a rule that requires the use of technology across a broad and heterogeneous category of products and substantial evidence shows that the technology is not available for discrete classes or categories within the regulatory category, the district needs to adjust the technology requirement for those subcategories in which the technologyis [not] available and the standardis [not] achievable. (AnswerBrief at 37-38 [emphasis added]; id. at 39 [“the district must ensure that technology is available for discrete subcategories of products identified by interested parties during the rulemaking process”].) This standardis not just unprecedented;it is revolutionary. It would invalidate a quasi- legislative regulation if it is contradicted by any substantial evidence submitted by the regulated industry. The law applicable to quasi-legislative enactmentsis longstanding andwell-settled. They must be upheld unless “arbitrary, capricious, or lacking in evidentiary support.” (Cal. Hotel & Motel Assn, supra, 25 Cal.3d at 212.) An enactment 35 must be upheld if supported by substantial evidence in the record, regardless of whether the evidence could also support a different result. (See, e.g., ibid.) The agency, not the reviewing court, resolves evidentiary conflicts, particularly those involving technical questions. (See, e.g., Western Oil v. State Bd., supra, 37 Cal.3d at 515; Pitts v. Perluss (1962) 58 Cal.2d 824, 832-33.) The Association cites no authority for its proposal to upend decades of administrative law. It merely offers a footnote— without citation—that analogizes its standard to the “fair argument” test applied under the California Environmental Quality Act (“CEQA”), Pub. Res. Code § 21000 et seq. (Answer Brief at 38, fn. 9.) The Association does not explain why the fair argument test should apply here, and it manifestly should not. Thetest is rooted in CEQA’s statutory language, which directs that an environmental impact report (“EIR”) be prepared “[ilf there is substantial evidence,in light of the whole record before the lead agency, that the project may havea significant effect on the environment.” (Pub. Res. Code § 21080(d)) No comparable language appearsin anyof the statutes relevant here. Thetest also reflects the EIR’s role as the linchpin of the environmental 36 review process. It ensures that the agency does not cut short the environmental review process, but it has no immediate effect on the substance of the agency’s action. (Laurel Heights Improvement Assn. v. Regents of the University of Cal. (1993) 6 Cal.4th 1112, 1123-35.) By contrast, the Association’s proposed standard would dictate the results of the District’s rulemaking process. It would mandate relaxation of an emission standardif any substantial evidence indicated the standard was unachievable for any coating application. The Legislature has not specified how the District should categorize sources in setting a BARCT standard. (Opening Brief at 64-65.) Accordingly, the District’s choice of categories, including a decision not to create a “discrete subcategory” for an individual use (AnswerBriefat 38), is subject not to a “fair argument”test, but rather to the traditional arbitrary and capricious standard. (See supra; see also Opening Brief at 64-65.) The Association must show that the District’s categorization is arbitrary. (Pitts, supra, 58 Cal.2d at 833, 844.) 37 B. The Association’s Proposed Standard Would Paralyze the Regulatory Process. At various times the Association has demanded that the Rule be achievable for “all uses,” for “all applications,” and for “all sources.” (See Appellant’s Appendix (“AA”) 1:173 [Petitioner’s Phase I Trial Brief]; AOB Below at 25; Appellant’s Reply Brief at 22.) The court of appeal correctly determined that this standard would paralyze the District’s rulemakingefforts. (Opening Brief at 61-63; Slip Op. at 17.) The Association nevertheless contends that its “fair argument” test would merely require the District to respond to complaints raised by industry during the rulemaking process. (AnswerBrief at 38.) In fact, it goes much further than that. Underthe Association’s test, once industry submitted any substantial evidence that the proposed emission standard was unachievable for any coating application, the District could do nothing to counter that evidence. (See Architectural Heritage Assn. v. County ofMonterey (2004) 122 Cal.App.4th 1095, 1110 (“If fsubstantiall evidence is found, it cannot be overcome by substantial evidence to the contrary.”].) Rather, the District would have to create a new subcategory for that application and 38 relax the emission standard for that subcategory. (Answer Brief at 37-38.) This approach would effectively place the regulated industry in firm control of the regulatory process. The Association also reframes its argument another way, as demanding that District rules be achievable for each “discrete subcategory” of coatings rather than for each “application”or “use.” (E.g., Answer Brief at 32, 35, 38.) But the Association continues to assert that the Rule must be achievableforall applications, describing the “key issue” as “whether [low-VOC] coatings ‘are adequate to meetall the performance needsfor all of the coatings in their category.” (Id. at 39 [emphasesadded].) Indeed, the Association would require the creation of separate subcategories for every coating application that a manufacturer claimed could not be served with a low-VOCcoating. Additionally, this “discrete subcategory” theory does not resolve the problem that delineating categories (or subcategories) of coatings is fundamentally a technical question within the agency’s expertise, the paradigmatic situation for application of the traditional, deferential arbitrary and capricious standard. (See Western Oil v. State Bd., supra, 37 Cal.3d at 515; Pitts, supra, 58 Cal.2d at 834-35.) The Association’s example 39 demonstrates as much. It complains that the District’s “industrial maintenance category” improperly includes both “chemical storage tank coatings” and “bridge coatings.” (Answer Brief at 34.) “Clearly,” the Association informs the Court, “chemical storage tank coatings and bridge coatings are not the same‘class or category of source.” (bid.) But that conclusion is hardly self-evident. Although bridges and chemical storage tanks differ in many respects, one cannot decide, a priori, that a regulation cannot reasonably aggregate the paints applied to them. Conversely, the Association’s proposed “discrete subcategories” might not be sufficiently specific. For example, one can imaginesignificant differences among chemical storage tanks. In sum, there can be no objectively correct categorization of coatings. Given the technical nature of the problem, deference to the District’s resolution of it is appropriate. (See Western Oilv. State Bd., supra, 37 Cal.3d at 515.) C. The Association’s Cited Cases Are Not Analogous and Underminethe Association’s OwnInterpretation of “Achievable.” The Association relies on decisions construing other regulatory programsthat are not analogous to the program 40 established for the District by the California Legislature. (AnswerBrief at 35-37.) Beyond being inapt, these decisionsfail to support the Association’s proposed test. Moreover, to the extent they are relevant, the decisions support the District’s interpretation of an “achievable” emission standard. (Opening Brief at 67-69.) The Association first cites an Illinois case requiring for pollution control regulations a showing that “needed systems are beyond the conceptually workable state of development”for “a substantial number” of the emissions sources. (AnswerBrief at 35 [citing Commonwealth Edison Co. v. Pollution Control Bd. (Il.App.Ct. 1974) 323 N.E.2d 84, 95, aff'd in part and rev'd in part on other grounds,(Ill. 1976) 343 N.E.2d 459].) But that case has since been implicitly overruled. The Illinois court later held that the agency “need not conclude that compliance with a proposed regulationis ‘technologically feasible and economically reasonable’ before it can adopt such a regulation,” but rather “may adopt technology-forcing standards which are beyond the reach ofexisting technology.” (Granite City Division ofNat. Steel Co. v. Pollution Control Bd. (Ill. 1993) 613 N.E.2d 719, 734 [emphasis added].). 41 The Association next cites cases reviewing standardsset underthe federal Occupational Safety and Health Act (“OSH Act”) (29 U.S.C. § 651 et seq.) and new source performance standards set underthe federal Clean Air Act. From them,it argues that the District cannot make achievability determinations for a “heterogeneous category” but must evaluate “discrete” coating applications. (AnswerBrief at 35-36.) But the Opening Brief demonstrated that these cases are inapt. (Open. Br. at 67-69.) Moreover, importing feasibility requirements from these cases would be improper because the statutes construed in them impose weightier evidentiary burdens on OSHA and EPA. For instance, “OSHA must followa procedure that is even more stringent than that in the federal Administrative Procedure Act, 5 U.S.C. § 553.” (AFL-CIO v. OSHA (11th Cir. 1992) 965 F.2d 962, 968-69.) Under the OSH Act, “the burden is on OSHAto show by substantial evidence that the standard is feasible.” (Id. at 980.) Under this standard, courts “take a harder look at OSHA’s action than [they] would if [they] were reviewing the action under the more deferential arbitrary and capricious standard... .” (/d. at 970.) Similarly, courts apply a “rigorous 42 standardof review” to new source performance standard decisions under the Clean Air Act. (Nat.Lime Assn. v. EPA (D.C. Cir. 1980) 627 F.2d 416, 451-52, 451, fn. 126.) Finally, the Association’s cases support the District’s construction of “achievable” as allowing standards not capable of being achieved immediately. (See OpeningBrief at 68, fn. 23.) For example, as the Association argued to the court of appeal, the OSH Act’s technological feasibility standard “does not restrict OSHA ‘to the state of the art in the regulated industry,’ but requires it to develop ‘evidence that companies acting vigorously and in good faith can develop the technology,’ before requiring that industry comply with standards‘never attained anywhere.” (AOB Below at 26 [quoting Asarco, Inc. v. OSHA (9th Cir. 1984) 746 F.2d 488, 495]; see also United Steelworkers ofAmerica, AFL- CIO-CLC v. Marshall (D.C. Cir. 1980) 647 F.2d 1189, 1264 (“Congress meant the [OSH Act] to be ‘technology forcing’...OSHAcanalso force industry to develop and diffuse new technology....”].) Because the Association continuesto insist on the relevanceof these cases, it must also accept that they undercutits argument that a standard must be achieved in practice to be considered “achievable.” 43 IV. The Rule’s Categorization of Coatings is Rational and Supported by Substantial Evidence. Underthe correct and longstanding standardofreview, the Rule is rational and reflects substantial evidence of achievability. (Opening Brief at 69-78.) The Association devotes virtually its entire argument about the Rule’s evidentiary basis to its claim that the Rule is not achievable forevery coating application in the Basin. (AnswerBrief at 38-41, 43.) The Association, however, has not shown that the District’s categorization of coatings is arbitrary. Tellingly, it never contests the definitions of the District’s categories. It offers only the conclusion that “chemical storage tank coatings” and “bridge coatings” are “clearly” different and therefore require separate categories. (AnswerBriefat 34; see supra Section ITI.B.) The Association does complain about the weight of the evidence relied on by the District, but such arguments have no merit under the proper standard of review. For example, the Association complains that manufacturers’ product data sheets are mere “marketing materials.” (Answer Brief at 40-41.) Apart from the irony of the Association’s maligning its own members’ data sheets, they have already been found to constitute 44 substantial evidence. (See Sherwin-Williams, supra, 86 Cal.App.4th at 1279; Nat. Paint, supra, 485 F.Supp.2d at 1166.) The Association also complains that the District’s testing was too “limited” (AnswerBrief at 41), a mere disagreement with the District about the weight of the evidence that presents no basis for overturning the Rule. (Pitts, supra, 58 Cal.2d at 832-33.) The Association also characterizes the flexibility measures built into the Rule (see Opening Brief at 72-74) as “not a relevant factor.” (AnswerBrief at 42-43.) But it never confronts the illogic of its assertion that measures easing compliance with the Rule have no bearing on whetherit is “achievable.” Regardless, the Association’s objections again go only to the weight accorded those measures in assessing achievability. Finally, in defending the court of appeal’s conclusion that the Rule was unachievable for the rust preventative and quick- dry enamel categories, the Association reiterates that the District did not “evaluate the achievability of the proposed limits for the discrete applications in these coating categories.” (AnswerBrief at 43 [emphasis added].) Butit identifies no substantial evidence that the Rule would be unachievable for any such “discrete applications” in those categories. Therefore, even applying the 45 Association’s unsupportable fair argument test, the Rule must be upheld for those categories. CONCLUSION This Court should reverse the court of appeal and direct that judgmentbe entered for the District. DATED: June 22, 2010 SHUTE, MIHALY & WEINBERGER LLP DANIEL P. SELMI KURT R. WIESE, GENERAL COUNSEL By: Matthew O Zan Cray MATTHEW D. ZINN Attorneys for Defendant and Respondent SOUTH COAST AIR QUALITY MANAGEMENTDISTRICT 46 CERTIFICATE OF WORD COUNT I certify that this brief contains 8,361 words, exclusive of this certificate and the tables of contents and authorities, according to the word count function of the word processing program used to produce the brief. The numberof wordsin this brief therefore complies with the requirements of Rule 8.520(c)(1) of the California Rules of Court. DATED: June 22,2010 SHUTE, MIHALY & WEINBERGER LLP DANIEL P. SELMI KURT R. WIESE, GENERAL COUNSEL By: M athe DO. Zr Cased MATTHEW D. ZINN Attorneys for Defendant and Respondent SOUTH COAST AIR QUALITY MANAGEMENTDISTRICT AT PROOF OF SERVICE American Coatings Association v. South Coast Air Quality Management District Supreme Courtof California, Case No. S177823 At the timeof service, I was over 18 years of age and not a party to this action. I am employed in the City and County of San Francisco, State of California. My business address is 396 Hayes Street, San Francisco, California 94102. On June 22, 2010, I served true copies of the following document(s) described as: DEFENDANT’S REPLY BRIEF ON THE MERITS DEFENDANT’S REQUEST FOR JUDICIAL NOTICE [PROPOSED] ORDER GRANTING DEFENDANT’S REQUEST FOR JUDICIAL NOTICE on the parties in this action as follows: SEE ATTACHED SERVICELIST BY MAIL: I enclosed the document(s) in a sealed envelope or package addressedto the persons at the addresses listed in the Service List and placed the envelope for collection and mailing, following our ordinary businesspractices. I am readily familiar with Shute, Mihaly & Weinberger LLP’s practice for collecting and processing correspondence for mailing. On the same day that the correspondenceis placed for collection and mailing,itis deposited in the ordinary course of business with the United © States Postal Service, in a sealed envelope with postage fully prepaid. I declare under penalty of perjury under the lawsof the State of California that the foregoing is true andcorrect. Executed on June 22, 2010, at San Francisco, California. \ toote Natalia Thurston SERVICE LIST American Coatings Association v. South Coast Air Quality Management District Supreme Courtof California, Case No. $177823 Jeffrey B. Margulies Clerk of the Court William L. Troutman Superior Court of Orange Fulbright & Jaworski, LLP County 555 South Flower Street, 41st Civil Complex Center Floor 751 West Santa Ana Blvd. Los Angeles, CA 90071 Santa Ana, CA 92701 Tel: (213) 892-9200 Tel: (714) 568-4700 Attorneys for Plaintiffand Respondent American Coatings Association Clerk of the Court California Court of Appeal Fourth Appellate District, Division Three 601 West Santa Ana Blvd. Santa Ana, California 92701 Tel: (714) 571-2600