In National Association of Home Builders v. San Joaquin Valley Unified Pollution Control District, (2008 WL 4330449, September 19, 2008), the United States District Court for the Eastern District of California considered whether the Clean Air Act preempts an air emissions rule of the San Joaquin Valley Air Pollution District (“District”) that was implemented to reduce emissions associated with construction. This case has been appealed to the Ninth Circuit Court of Appeals, however, it is significant to public agencies and developers in that, if the on-site measures can not fully mitigate impacts on air pollution, the District may impose mitigation fees to fund off-site mitigation measures like replacing older model high-polluting engines with newer, cleaner engines and to promote other pollution saving measures. The court held that the Clean Air Act does not preempt the District’s rule.
The National Association of Home Builders (“NAHB”) brought a lawsuit to invalidate and enjoin the enforcement of a District rule relating to land development emissions. The NAHB is a trade association with over 235,000 members, including land developers, individuals, and firms involved in constructing and remodeling residential, commercial, and industrial projects.
The District is a unified pollution control district that was created to develop and implement strategies to reduce emissions in eight San Joaquin Valley counties. The governing board of the District (“Board”) adopted Rule 9510, “to achieve reductions in air pollution attributable to development projects.”
Rule 9510 targets indirect sources of air pollution and sets target reductions for “construction emissions” and future operation of developments projects (“operational emissions”). Under the rule “a computer model is used to calculate emissions attributable to ‘construction’ and ‘operational’ phases of a development project, and the project developer is responsible to mitigate a portion of those emissions.” A developer may mitigate (1) “on site” through “incorporating design features and other pollution mitigation measures into the project;” (2) “off-site” by “paying a mitigation fee, which the District uses to ‘buy’ requisite amount of emissions reductions through its emissions reduction incentive program”; or (3) by choosing to use a “combination of ‘on-site’ and ‘off-site’ measures.”
Construction emissions are defined by Rule 9510 “as any NOx or exhaust PM10 emissions resulting from the use of internal combustion engines related to construction activity, which is under the control of the applicant through ownership, rental, lease agreements, or contract.” Operational emissions are defined as “the combination of area and mobile emissions associated with an indirect source.” Mobile emissions are defined as “the NOx and PM10 emissions generated by motorized vehicles.” Rule 9510 also provides that exhaust emissions for construction equipment greater than 50 horsepower must be reduced by 20% of the total NOx emissions and 45% of the total PM10 exhaust emissions. Operational emissions from area and mobile sources must also be reduced.
Both NAHB and the District filed motions for summary judgment. The trial court found that Rule 9510 is valid and enforceable and is not preempted by federal law.
The Clean Air Act (“CAA”) at 42 U.S.C. § 7543(a) prohibits a state from adopting or attempting “to enforce any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines.” Section 7543(e)(1)(A) prohibits a state from adopting or attempting “‘to enforce any standard or other requirement relating to the control of emissions’ from ‘[n]ew engines which are used in construction equipment or vehicles . . . and which are smaller than 175 horsepower.'”
The trial court found that the CAA does not preempt Rule 9510 and that the rule is not a standard that is subject to Section 7543(e)(1), because Rule 9510 “neither dictates permissible pollutant levels nor mandates emission control technology.” The rule merely “sets emissions targets for individual development projects, not individual engines.” There are no emissions limits that new nonroad vehicles must satisfy. The court found that this same reasoning holds true for Section 7543(e)(2)(A), which applies to new engines of 175 or more horsepower and used nonroad engines or vehicles.
As for new vehicles and engines covered by Section 7543(a), the court found that “Rule 9510 is not a standard for control of emissions in the absence of dictates for new engines or vehicles. . . . [it] does not mandate vehicle or engine emissions limits or require pollution-control devices or emissions control designs for new vehicles of engines subject to Section 7543(a).”
The District argued that Rule 9510 is an “in use requirement” that is authorized by Section 7543(d). This Section “provides that states are not denied ‘the right otherwise to control, regulate, or restrict the use, operation, or movement of registered or licensed motor vehicles.'” States are permitted “to adopt in-use regulations – such as carpool lanes, restrictions on car use in downtown areas, and programs to control extended idling of vehicles – that are expressly intended to control emissions.” The court concluded that Rule 9510 is authorized under Section 7543(d), because it is a regulation “that touches on use and movement of post-sale vehicles” and the rule “is a proper exercise of the District’s power to control emissions.”
The court also concluded that “Rule 9510 does not adopt emissions standards or regulations under the guise of ‘indirect source review.'” The rule sets emission targets for mobile sources of emission that are associated with the construction and operation of a project. If a developer can not reduce these emissions to meet the targets, the developer must pay a mitigation fee.
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