David Pettit, NRDC - July 31, 2008.
NRDC and its allies Communities for a Better Environment, Coalition for a Safe Environment, and California Communities Against Toxics won a huge victory on July 28, 2008, when the Los Angeles County Superior Court ruled in their favor in a CEQA case challenging the South Coast Air Quality Management District’s “Priority Reserve” rules.
Here is the context for this win. Because the LA area is in “non-attainment” under the federal Clean Air Act for PM2.5 particulate matter (the really small stuff), a new facility can’t be built that emits PM2.5 particles unless it can buy credits on the open market for the amount particulate matter that it plans to emit. The credits typically come from existing, polluting companies that shut down or that are emitting less than they are permitted to do. Credits for PM2.5 have become hugely expensive in this market as a result of small supply and huge demand. The SCAQMD became concerned that facilities like hospitals and police stations might not get built because of this, and so created a “bank” for PM 2.5 credits that SCAQMD would give away for free to these public uses. This was called the “Priority Reserve.”
What the lawsuit is about is that SCAQMD decided to open up the Priority Reserve to private, profit-making electricity generating facilities such as the proposed Vernon Powerplant, and sell PM 2.5 credits to such facilities at far below market value. This meant that communities like Boyle Heights would be subjected to many tons of pollutants by facilities situated literally next door. Selling these credits at a cut-rate price is also a subversion of the market-based system that is doing exactly what it is supposed to do: make credits expensive in order to incentivize conservation, innovation and non-fossil fuel sources of power. Moreover, SCAQMD stands to make over $400 million by selling these credits: that is the price (at below-market rates) of the PM 2.5 credits they hope to sell to electrical plants and, eventually, to oil companies.
This twist to this whole scenario is that SCAQMD is the agency that is supposed to protect us against air pollution, but by making these credits available, and on the cheap, we could actually end up with more air pollution. Their response is that we need more power in the LA area. That may or may not be so, but SCAQMD has exactly zero expertise in this area (that is the job of the California Energy Commission), and the shoddy environmental documents that SCAQMD produced did not back up their excuse.
So, NRDC and its allies sued SCAQMD under the California Environmental Quality Act (CEQA), arguing that AQMD could not open its Priority Reserve to private entities such as the proposed Vernon Powerplant without doing full environmental review. Judge Jones of the LA Superior Court agreed in a decision issued on July 28, 2008. In her order, Judge Jones prohibited AQMD from “undertaking any action to further implement these rules” without complying with CEQA. It should take 1 to 2 years for AQMD to complete a decent environmental review.
In the mean time, projects such as the Vernon Powerplant cannot go forward unless they can buy credits on the open market, without governmental subsidies. That is as it should be. The health of the public cannot be priced and sold like a commodity.