Clean Air
Observations from an environmental law practice. — an interview with David R. Farabee of Pillsbury Winthrop Shaw Pittman LLP
Julien Capers
Graeme Freeman

Posted Tuesday, January 29, 2008
8 U.C. Davis Bus. L.J. (2007)

Q: How much of your practice intermingles with concepts from corporate or business law? Do you find those areas of law at all helpful in practicing environmental law?

A: All of my clients are corporate entities or partnerships, and I represent these entities in issues arising with air quality. Aspects of corporate or business law intertwine with my practice occasionally. For example, the law requires businesses whose operations emit air pollutants to have a stationary source [1] permit. Corporate air quality issues arise where there are different co–located stationary source facilities under common ownership, which can go all the way back up to the top of the corporate ladder. Additionally, we sometimes collaborate with our corporate lawyers on transactions in which they handle the corporate aspects of the law and we focus on environmental aspects of the law. Corporate law may also surface when clients request a security interest in permits or in operation of a facility. While corporate law is relevant in these instances, my practice primarily involves representing businesses in air quality actions.

Q: Can you tell us a little bit about both the Federal and California Clean Air Acts and its impact in your practice?

A: Early forerunners of the Federal Clean Air Act (Federal Act)[2] originated before the 1970s, but Congress passed significant amendments in 1977, and the last changes came in 1990. The Federal Act directs the Environmental Protection Agency (EPA) to set the national ambient air quality standards. Furthermore, the Federal Act establishes requirements for state implementation plans: plans that local and regional air quality agencies put together to attain, or stay in compliance with, the national ambient air quality standards. It also establishes minimal levels of emission controls called Reasonably Available Control Technology (RACT), for specified categories of pollution sources.

The 1977 amendments to the Clean Air Act required the entire country to comply with national air quality standards by 1987. This exemplifies Congress' attempt to create a mandate without considering whether it can feasibly be achieved. Unfortunately, these standards were not met. By 1987, the areas with the worst air quality did not reach, or even come close, to the goals established by the legislation. While Congress contemplated further action, the California legislature decided to act before Congress. In 1989, California passed the California Clean Air Act.[3] An extensive body of California clean air law existed prior to this legislation, but the California Clean Air Act provided something new. For the first time, legislation gave air districts direction. In California, air quality is managed by geographically–organized Air Pollution Control or Air Quality Management Districts. Under the direction of the California Clean Air Act, California districts adopted plans to reach state air quality standards, which are more stringent than federal standards. Before the California Clean Air Act's enactment, legal directives to meet the California air quality standards had never been implemented. They were viewed as a problem to tackle in the future.

A key feature of the California Clean Air Act is that it requires Best Available Retrofit Control Technology (BARCT) for all existing significant emission sources in California. BARCT determinations aid districts in developing regulations to attain and maintain state ambient air quality standards by identifying the best available technology. These stringent emission controls are unique to California.

In the federal arena, Congress established the New Source Review program, a federal preconstruction program that ensures air quality is not significantly degraded from additions or modifications to factories, industries, or power plants. The objective of new source review is to install the best available emission controls when an emission source is new or renovated. This is the best approach because the emission controls are designed directly into the renovation resulting in the best levels of control. Unfortunately, because improving air quality using only New Source Review relies on turnover of facilities and equipment, emission reductions only occur by replacing old sources with new ones at a potentially high cost.

California did not want to wait for facility modifications and replacements in order to achieve emission reductions. California, particularly the Los Angeles area, had such poor air quality that many areas of the state began adopting mandatory emission control retrofit rules many years ago, well before the 1989 California Clean Air Act imposed additional requirements. California's longstanding emission control requirements, for stationary sources as well as for motor vehicles, have resulted in a huge quantity of emission reductions. The air quality in the state has improved dramatically over the last forty years. It has been getting better because of improved motor vehicle emission standards and additions to standards on stationary sources. This differs from much of the rest of the country, which has lacked the political will to impose mandatory emission control add–on requirements in most circumstances.

Q: What is the California Clean Air Act's connection to the United States Environmental Protection Agency (EPA)?

A: The federal EPA has no direct role in implementing the California Clean Air Act. However, there is some collaboration concerning State Implementation Plans (SIP). A State Implementation Plan is a document prepared by each state describing existing air quality conditions and measures that will be taken to attain and maintain federal ambient air quality standards. At times, local districts utilize rules for both state and federal purposes. For example, if a rule is intended to satisfy federal requirements, it is submitted to EPA for approval as part of the State Implementation Plan. After it is submitted, it becomes federally enforceable as well as enforceable by the state. The EPA can directly enforce the SIP if a source is a particularly egregious violator or if they believe the local agency is not taking sufficient enforcement actions.

The EPA also has national emission standards for certain source categories. For example, federal law prohibits states from adopting vehicle emission standards, and EPA adopts national vehicle emission standards. Because California has implemented these types of standards since the 1950s, it has the authority to adopt vehicle emission standards subject to approval of a preemption waiver by EPA. California recently requested the EPA to waive federal preemption for motor vehicle standards on greenhouse gas emissions. The EPA has indicated that it intends to deny the waiver request, and the state has already sued the EPA for denying the waiver.

Q: Are subsequent changes or modifications in order for the Federal Clean Air Act?

A: It is difficult to tell because Congress is reluctant to act. Congress last amended the act in 1990. Those amendments are now seventeen years old and out of date in many respects. However, it is strenuous to gather the support of all the interest groups in order to change the federal program. At some point, especially if there is a change of party in the new administration after the Presidential election, Congress is certain to change federal law regarding greenhouse gases. A recent Supreme Court decision on EPA authority regarding greenhouse gases is the case of Massachusetts v. EPA.[4] The Supreme Court held that carbon dioxide and other greenhouse gases qualify as air pollutants under the Federal Act. This means that the EPA may have certain obligations to regulate additional pollutants that the EPA has asserted it did not have authority to regulate. However, the Federal Act is structured so that local areas or states resolve their own air quality problems, not the EPA. The system identifies non–attainment of federal standards as a localized problem. However, climate change is a global problem, not a national problem, not a state problem; so this air quality standard and state implementation plan model did not fit.

However, the Supreme Court decision pushes the EPA in the right direction to tackle this global issue. If Congress does not act, we will lack the proper tools necessary for addressing climate change on a national scale.

Q: In an ideal world, what changes do you hope to see as a result of an increased attention to environmental issues pertaining to air quality? What changes are reasonable or feasible?

A: The existing ambient air quality standards construct, which essentially focuses on health hazards, does not easily fit greenhouse gas emissions and climate change. This is in part because the ambient air quality standards presuppose that one can identify the level of a given air pollutant that is harmful to health. Greenhouse gases at current levels do not directly harm health; they are harmful to the climate. If the current Clean Air Act structure is used for greenhouse gas controls, an outcome is that the EPA would have to somehow develop an ambient air quality standard that states would then have to plan to achieve.

Most business people, and many economists, think that a cap and trade program is a better way to achieve greenhouse gas emission reduction targets. For example, last December, under California's groundbreaking climate change legislation—Global Warming Solutions Act of 2006, Assembly Bill 32[5]—the Air Resources Board identified the levels of greenhouse gases emitted by all California sources in 1990. Under Assembly Bill 32, this 1990 emissions level is the statewide greenhouse gas emission limit to be achieved by 2020. Now that emissions level has been established as the 2020 cap, there are numerous approaches one can take to achieve that standard.

At its most fundamental level, cap and trade means instead of imposing mandatory emission limits on a facility, I would give the facility a facility-specific emissions cap and an allocation of greenhouse gas emission credits. For example, if a facility emits 100 tons, its allocation may be 90 tons and its cap 100 tons. It can then emit up to 90 tons using the credits allocated and buy the extra credits if they need them. Similarly, if the facility emits less and does not need extra credits, it can sell unused credits to other facilities. This is a much more cost–effective way than command and control to reduce emissions on a society–wide basis.

There are also ways to introduce credits from outside the system. For example, there may be opportunities to obtain substantial emission reductions in locations outside of the United States at a lower cost than making those reductions in the United States. Again, it does not matter where carbon dioxide is emitted because it is a global problem. If it is less expensive to reduce emissions in South America, China, or elsewhere, the businesses may take that into consideration and seek to create those less expensive reductions. Whether we will have a program that implements such action remains to be seen. California's Governor said he wants California businesses to be able to trade with other states, potentially with whole United States, and even the EU.

Q: It looks like you do a lot of work with the California Environmental Quality Act (CEQA). Can you tell us a little bit about how it works, its main goals and objectives, and describe some of your experiences with it?

A: The California Environmental Quality Act[6] requires that any time a California governmental agency makes a discretionary decision—whether to adopt a rule, to build its own facility, or to permit or authorize another facility—it must conduct a high–level environmental analysis to determine if the project may result in an adverse effect on the environment. Based on this high–level initial study, the agency then either prepares a negative declaration—an analysis stating there is not going to be a significant environmental impact—or it prepares a full–blown environmental impact report. The environmental impact report assesses the potential environmental impact of the project in significant detail. For some projects, the report can be as long as 800 pages in length and take up to a year to prepare.

I am usually involved in the air quality aspects of the environmental impact reports. Virtually everything that affects traffic or would attract traffic because of parking has a potential air quality impact. Because my experience with air quality regulations and programs, colleagues often call upon me to help with air quality aspects of CEQA.

Q: How do these types of legislation and regulations affect your daily job?

A: I do Air Quality regulatory work day–in and day–out. This work runs the gamut from policy and rule development to permitting, compliance advice, and enforcement defense. An example in the rulemaking area concerns the San Joaquin Valley Air District. A few years ago the district approved a first–in–the–nation rule to adopt emission standards for wine fermentation. I worked with the wine industry to develop that rule and implement flexible compliance provisions. My practice also includes facility permitting. There are very strict standards for getting permits for new and modified air pollution emission sources. Compliance is also an important part of my job because of the complicated interplay between the different rules and how they work, and also simply because the rules are not always incredibly clear. We consistently provide advice on how to meet particular requirements or discuss what options exist for compliance with those requirements. Finally, there is enforcement. If somebody receives a violation notice or is being sued by an air quality agency, we represent them as well.

I love it. I've been doing it for almost 20 years now!

Q: In what direction do you see your practice heading? Are there specific areas that you expect to emerge and become more significant in environmental law?

A: Air quality practitioners will continue to stay busy as long air quality regulation continues to increase. Even setting aside the climate change issue, which is huge, this practice area will continue to grow as science learns more about the health impact of various pollutants such as PM 2.5, which is particulate matter with a diameter less than 2.5 microns. These are particles that come from cars driving on the road, vehicle tires kicking up dust, and the wear of brake pads at stop signs. These particles descend pretty far into the lungs, and researchers are continually learning more about the health effects of these particles. The more information there is, the more stringent the air quality standards become. As the air quality standards become more stringent, the emission standards get more stringent too.

Even though standards become more stringent, emission controls become better over time as more research on control technologies is done. When people adopt emission controls more widely they also become less expensive. For example, a control technology for nitrogen oxide known as SCR (Selective Catalytic Reduction) was developed when I began this business. At the time, companies hated to install it because it was exorbitantly expensive. Now, it is more or less taken for granted as the standard nitrogen oxide control technique for combustion sources. Obviously, it is still a cost people would rather not incur, but they recognize that it is needed. The SCR's ability to control nitrogen oxide emissions has improved and the cost on a per ton basis has come down remarkably over the last twenty years. The regulatory side it is a bit more complicated. Air toxic standards become more stringent and the various levels of government take different approaches. Sometimes, intentionally or otherwise, these standards conflict with one another. These conflicts, in addition to overlaying climate change, will ensure that attorneys in this practice area remain busy.

[1] A stationary source is an immobile site from where pollutants are released.

[2] See Federal Clean Air Act, 42 U.S.C. §§ 7401-7642 (2007).

[3] See Cal. Health & Saf. Code §§ 39000-44474 (2007).

[4] Massachusetts v. EPA, 127 S. Ct. 1438 (2007).

[5] 2006 Cal. Legis. Serv. 488 (West).

[6] See Cal. Pub. Res. Code §§ 21000-21177 (2007).

Graeme Freeman is a 2L at University of California, Davis, School of Law. Julien Capers is a 1L at University of California, Davis, School of Law.