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VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF FRESNO AMERICAN CHEMISTRY COUNCIL AND GENERAL COATINGS MANUFACTURING CORP., Petitioners and Plaintiffs, v. CALIFORNIA DEPARTMENT OF TOXIC SUBSTANCES CONTROL, MEREDITH WILLIAMS, in her official capacity as Acting Director of the Department of Toxic Substances Control and Deputy Director of the Safer Products and Workplaces Program; BRUCE LABELLE, Ph.D., Chief of the Environmental Chemistry Laboratory, GAVIN NEWSOM, in his official capacity as Governor of the State of California; and XAVIER BECERRA, in his official capacity as Attorney General of the State of California, Respondents and Defendants. Case No. VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF (California Code of Civil Procedure §§ 1060 and 1085) (Filed concurrently with Memorandum of Points and Authorities; Declaration of Eric Montie; Declaration of Lee Salamone; Request for Judicial Notice) Complaint Filed: August 9, 2019 Sean A. Commons (SBN 217603) SIDLEY AUSTIN LLP 555 West Fifth Street Los Angeles, CA 90013 Tel: 213-896-6010 Fax: 213-896-6600 Email: [email protected] Paul J. Zidlicky (pro hac vice pending) Joseph T. Zaleski (SBN 318745) SIDLEY AUSTIN LLP 1501 K Street, NW Washington, DC 20005 Tel: 202-736-8000 Fax: 202-736-8711 E-mail: [email protected] E-mail: [email protected] Attorneys for Petitioner/Plaintiff American Chemistry Council Edward S. Orchon (SBN 67039) P.O. Box 2743 Winnetka, CA 91396 Tel: (747) 224-1010 E-mail: [email protected] Attorney for Petitioner/Plaintiff General Coatings Manufacturing Corp.

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Page 1: SIDLEY AUSTIN LLP - Courthouse News Service · 2019-08-12 · SIDLEY AUSTIN LLP 1501 K Street, NW Washington, DC 20005 Tel: 202-736-8000 Fax: 202-736-8711 E-mail: pzidlicky@sidley.com

VERIFIED PETITION FOR WRIT OF MANDATE AND

COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

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SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF FRESNO

AMERICAN CHEMISTRY COUNCIL AND GENERAL COATINGS MANUFACTURING CORP.,

Petitioners and Plaintiffs, v.

CALIFORNIA DEPARTMENT OF TOXIC SUBSTANCES CONTROL, MEREDITH WILLIAMS, in her official capacity as Acting Director of the Department of Toxic Substances Control and Deputy Director of the Safer Products and Workplaces Program; BRUCE LABELLE, Ph.D., Chief of the Environmental Chemistry Laboratory, GAVIN NEWSOM, in his official capacity as Governor of the State of California; and XAVIER BECERRA, in his official capacity as Attorney General of the State of California,

Respondents and Defendants.

Case No.

VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF (California Code of Civil Procedure §§ 1060 and 1085)

(Filed concurrently with Memorandum of Points and Authorities; Declaration of Eric Montie; Declaration of Lee Salamone; Request for Judicial Notice)

Complaint Filed: August 9, 2019

Sean A. Commons (SBN 217603) SIDLEY AUSTIN LLP 555 West Fifth Street Los Angeles, CA 90013 Tel: 213-896-6010 Fax: 213-896-6600 Email: [email protected] Paul J. Zidlicky (pro hac vice pending) Joseph T. Zaleski (SBN 318745) SIDLEY AUSTIN LLP 1501 K Street, NW Washington, DC 20005 Tel: 202-736-8000 Fax: 202-736-8711 E-mail: [email protected] E-mail: [email protected] Attorneys for Petitioner/Plaintiff American Chemistry Council Edward S. Orchon (SBN 67039) P.O. Box 2743 Winnetka, CA 91396 Tel: (747) 224-1010 E-mail: [email protected] Attorney for Petitioner/Plaintiff General Coatings Manufacturing Corp.

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Comes now Petitioners/Plaintiffs, the American Chemistry Council (“ACC”) and General

Coatings Manufacturing Corp. (“General Coatings”), by and through their attorneys, and state as

follows:

INTRODUCTION AND SUMMARY

1. This lawsuit is brought by ACC on behalf of its members and General Coatings to

challenge the legality of the decision of the California Department of Toxic Substances Control

(“DTSC” or “the Department”) to list Spray polyurethane foam (“SPF”) systems containing

unreacted methylene diphenyl diisocyanates (“MDI”) (collectively, “SPF Systems”) as a Priority

Product under the Department’s Safer Consumer Products Regulations, Cal. Code Regs., tit. 22, §

69501 et seq.

2. On February 25, 2019, DTSC denied ACC’s appeal to the Director challenging

DTSC’s decision to list SPF Systems. That determination was final agency action and is not

subject to further administrative review.

3. ACC and General Coatings seek (1) a writ of mandate requiring DTSC to delist SPF

Systems as a Priority Product; (2) a declaration that DTSC violated the California Administrative

Procedure Act and an order enjoining DTSC from continuing to exceed its statutory and

regulatory authority in listing SPF Systems as a Priority Product; (3) a declaration that DTSC

violated the California Environmental Quality Act (“CEQA”) and order enjoining the listing SPF

Systems as a Priority Product; and (4) any other and further relief as the court deems just and

proper.

THE PARTIES

Petitioners/Plaintiffs

4. Petitioner/Plaintiff ACC is one of America’s oldest trade associations, representing a

diverse set of nearly 170 companies in the $526 billion business of U.S. chemistry, which creates

the building blocks for 96 percent of all manufactured goods. See generally Decl. of Lee

Salamone in Support of Petition for Writ of Mandate ¶¶ 3-8 (Aug. 9, 2019) (Attached hereto).

ACC’s members include the leading companies of all sizes, engaged in every aspect of the

business of chemistry, including chemical manufacturing, transportation and distribution, storage

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and disposal, sales and marketing, consulting, use, logistics, and equipment manufacturing.

5. ACC brings this suit on behalf of its members. One or more of ACC’s members

possesses standing to sue it its own right because the listing of SPF as a Priority Product affects

ACC and its members manufacturing SPF Systems in and for sale in California. The listing of

SPF as a Priority Product subjects ACC’s members to additional regulatory burdens. ACC

members that manufacturer SPF Systems in or for use in California are harmed by DTSC’s listing

of SPF because they are required to complete a detailed and comprehensive Alternatives Analysis

whereby each individual company (or another entity such as a trade association authorized to act

on its behalf) analyzes whether potential alternatives exist. These regulated parties are subject to

additional harm in the form of a range of regulatory responses ordered by DTSC, including label

changes, restriction or potential prohibition on use of MDI in SPF Systems, or mandatory funding

of challenge grants to develop alternatives to SPF Systems. These regulatory responses, in turn,

would harm consumers who benefit from the unique, energy saving attributes that SPF Systems

provide when used as insulation and roofing for homes and buildings across California.

6. ACC participated on behalf of its members in the notice-and-comment period during

development of DTSC’s Safer Consumer Products regulations and also DTSC’s proposed listing

of SPF Systems as a Priority Product. ACC has also initiated an informal dispute resolution and

an appeal to the DTSC Director, as provided in the Safer Consumer Products regulations, in

response to the Department’s decision to list SPF Systems as a Priority Product.

7. Petitioner/Plaintiff General Coatings is a Fresno, California-based company that

produces SPF Systems for industrial, commercial, and residential use in numerous sectors in the

state of California, including roofing, wall insulation, cold storage, tanks, oil and gas, and military.

See generally Decl. of Eric Monte in Support of Petition for Writ of Mandate ¶¶ 3-9 (Aug. 8,

2019) (Attached hereto).

8. General Coatings participated in the regulatory process by filing comments with

DTSC. DTSC’s listing of SPF Systems as a Priority Product imposes burdens on General

Coatings and causes it harm.

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Respondents/Defendants

9. Respondent/Defendant DTSC is an agency of the state government and has

promulgated the regulation listing SPF Systems as a Priority Product under the Department’s own

Safer Consumer Products Regulations.

10. Respondent/Defendant MEREDITH WILLIAMS is Acting Director of DTSC and

responsible for overseeing implementation of the Department’s Safer Consumer Products

Regulations. Ms. Williams is named in her official capacity only.

11. Respondent/Defendant DR. BRUCE LABELLE is Chief of the Environmental

Chemistry Laboratory, which supports DTSC and the California Environmental Protection

Agency in implementing the Department’s Safer Consumer Products regulations. Dr. Labelle was

also specifically designated by Acting Director Williams to consider and render a final decision on

ACC’s appeal to the Director. Dr. LaBelle is named in his official capacity only.

12. Respondent/Defendant GAVIN NEWSOM is the Governor of the State of

California. Mr. Newsom is named in his official capacity only.

13. Respondent/Defendant XAVIER BECERRA is Attorney General of the State of

California. Mr. Becerra is named in his official capacity only.

JURISDICTION AND VENUE

14. ACC brings this action as a petition for a writ of mandate pursuant to article VI,

section 10 of the California Constitution and section 1085 of the California Code of Civil

Procedure, and as a complaint for declaratory and injunctive relief under section 1060 of the

California Code of Civil Procedure.

15. ACC has no other plain, speedy, and adequate remedy in the ordinary course of law,

meets the requirements for a beneficially interested petitioner, and seeks to correct DTSC’s abuse

of discretion and failure to perform duties. This action is based upon an actual controversy

relating to the legal rights and duties of the respective parties.

16. ACC has exhausted all available administrative remedies by initiating an informal

dispute resolution with the Department and raising an appeal to the Director of DTSC, as provided

in California Code of Regulations § 69507 et seq.

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17. ACC has complied with Code of Civil Procedure § 388 by serving a copy of this

petition on the Attorney General, who is also a Respondent/Defendant in this action.

18. Venue is proper in this Court pursuant to sections 393(b) and 401 of the Code of

Civil Procedure.

GENERAL ALLEGATIONS

“Green Chemistry” Law and the Safer Consumer Product Regulations

19. The California Legislature passed a “Green Chemistry” law under the state Health

and Safety Code in 2008. (Stats. 2008, ch. 560, § 1, codified at Health & Saf. Code, § 25251 et

seq. The Green Chemistry statute authorized the California Environmental Protection Agency’s

Department of Toxic Substances Control (“DTSC” or “the Department”) to adopt regulations

establishing a process for identifying and prioritizing chemicals of concern in consumer products

and then evaluating these chemicals of concern through an alternatives analysis process.

20. Pursuant to the Green Chemistry law, DTSC promulgated a set of “Safer Consumer

Product” regulations that became effective in 2013. (Cal. Code Regs., tit. 22, § 69501 et seq.

(“Safer Consumer Product Regulations” or “SCP Regulations”). The SCP Regulations establish

the process for identifying candidate chemicals, listing chemicals as priority products, requiring

industry to conduct alternatives analyses for those identified priority products, and the process of

raising administrative challenges to the Department’s listing decisions.

Description of Spray Polyurethane Foam Systems Containing Unreacted Methylene Diphenyl Diisocyanates

21. SPF is an umbrella term for different categories of products prized for providing

exceptional thermal insulation under a wide range of temperatures, effective air-impermeable

sealants, durable roofing, and rigid structural enhancement. SPF Systems include high-pressure

and low-pressure two-component systems. High-pressure and low-pressure SPF Systems have

distinct physical properties, different exposure profiles, and separate uses. Further, there are

numerous distinct products within both the high-pressure and low-pressure categories of SPF

Systems.

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DTSC’s Decision to List SPF Systems as a Priority Product

22. In March 2017, DTSC proposed to list SPF Systems as a “Priority Product” under

the SCP Regulations (RJN Ex. 6.) The Department’s proposal did not distinguish between the

various, materially distinct types of SPF Systems, encompassing distinct physical properties and

different exposure potentials, in its proposed listing. In June 2017, ACC and General Coatings

submitted comments as part of the regulatory notice-and-comment period opposing the listing of

SPF Systems as a Priority Product (RJN Exs. 9 and 10.) ACC’s comments explained that the

Department failed to distinguish between materially distinct products, did not follow its regulatory

procedure for listing a Priority Product, failed to satisfy the procedural requirements of the

California Administrative Procedure Act, and improperly determined that its listing decision was

exempt from the environmental review requirements of CEQA.

23. In May 2018, DTSC issued its Final Statement of Reasons and a variety of technical

documents in support of its decision to list SPF Systems as a Priority Product. DTSC’s listing of

SPF Systems triggers a variety of mandatory actions by manufacturers of SPF Systems in

California, including submission of a Priority Product Notification to the Department and

preparation and submission of an Alternatives Analysis (RJN Ex. 11.)

24. In response to DTSC’s decision to list SPF Systems as a Priority Product, ACC

initiated an informal administrative dispute resolution process with the Department, as provided in

the SCP Regulations, in May 2018 (RJN Ex. 14.) (See Cal. Code Regs., tit. 22, § 69507.1.) ACC

explained that DTSC’s listing of SPF Systems as a Priority Product was unlawful because SPF

Systems do not meet the criteria for inclusion as a Priority Product and should not have been

deemed exempt from CEQA.

25. ACC proposed that DTSC and ACC explore an enforceable consent agreement

(“ECA”) that could produce an example Alternatives Analysis as one possible outcome.

26. In December 2018, DTSC rejected ACC’s request that the Department withdraw its

proposal to list SPF Systems as a Priority Product as well as ACC’s request that the Department

consider entering into an ECA with SPF Systems manufacturers (RJN Exs. 16a and 16b).

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27. ACC timely initiated a formal appeal to the DTSC Director, as provided in the SCP

Regulations (RJN Ex. 17). (See Cal. Code Regs., tit. 22, § 69507.2.) ACC explained that (i) the

listing of SPF Systems is contrary to the DTSC regulations and unsupported by the record, (ii) DTSC

has authority to adopt an enforceable consent agreement in lieu of the Priority Product listing, (iii)

DTSC had failed to comply with procedural obligations, and (iv) that the Department improperly

concluded that its listing decision was exempt from CEQA.

28. On February 25, 2019, DTSC denied ACC’s Appeal to the Director. (RJN Ex. 18.)

29. ACC has exhausted all administrative remedies provided for in the SCP Regulations

to challenge the Department’s decision to list SPF Systems as a Priority Product.

FIRST CAUSE OF ACTION

Writ of Mandate – Code of Civil Procedure § 1085

(Violation of Statutory and Regulatory Authority)

30. ACC re-alleges and incorporates by reference all of the prior paragraphs set forth

above.

31. Respondents/Defendants have only the authority conferred on them by the Green

Chemistry statute. Respondents/Defendants exceeded their statutory and regulatory authority by

listing SPF systems as a Priority Product. Respondents/Defendants have adopted a definition of

SPF Systems that impermissibly includes different products, used for different purposes, under

materially distinct circumstances and with materially distinct exposure profiles, including those

designed for use by professional installers that fall outside the commonsense definition of

“consumer products.”

32. Further, the Green Chemistry law required DTSC to “establish an identification and

prioritization process that includes . . . [t]he potential for exposure to the chemical in a consumer

product.” (Health & Saf. Code, § 25252, subd. (a)(2).) The SCP Regulations, which implement

the Green Chemistry law, require that before a Candidate Chemical is listed as a Priority Product

it meet two criteria: (1) “[t]here must be a potential public and/or aquatic, avian, or terrestrial

animal or plant organism exposure to the Candidate Chemical(s) in the product,” and (2) “[t]here

must be the potential for one or more exposures to contribute to or cause significant or widespread

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adverse impacts.” (Cal. Code Regs., tit. 22, § 69503.2, subds. (a)(1), (2).)

33. Respondents/Defendants listed SPF Systems as a Priority Product even though SPF

Systems satisfy neither criteria. First, DTSC has failed to define a minimum threshold for

“exposure.” Under DTSC’s approach, nearly every product sold in California containing a

Candidate Chemical could have the potential for public and/or aquatic, avian, or terrestrial animal

or plant organism exposure to a chemical in a chemical-product combination. The failure to

identify an exposure threshold expands the Department’s authority to identify Priority Products

beyond the limits imposed by the California legislature and by the Department’s own SCP

Regulations. Second, the data identified by DTSC do not satisfy the adverse impact requirement

under the SCP Regulations because they do not demonstrate a “potential for . . . significant or

widespread adverse impacts.”

34. SPF Systems also cannot be listed a Priority Product because they are already

regulated by existing federal and state law. (See 22 Cal. Code Regs., tit. 22, § 69503.2, subd.

(b)(2).) Exposure to MDI is regulated by federal Occupational Safety and Health Administration

and Cal/OSHA, which have set quantitative MDI exposure limits and also require employers to

adopt engineering and administrative controls ensuring proper workplace ventilation, worker

training programs, and personal protective equipment requirements for applicators. Listing of SPF

Systems would not meaningfully enhance the protection of public health or the environment.

Listing of SPF Systems is contrary to the limitations included in the SCP Regulations.

SECOND CAUSE OF ACTION

Declaratory Relief – Code of Civil Procedure § 1060

Government Code § 11350

(Violation of California Administrative Procedure Act)

35. ACC re-alleges and incorporates by reference all of the prior paragraphs.

36. DTSC has failed to conduct an adequate analysis of alternative regulatory pathways

to listing SPF Systems, as required by the California Administrative Procedure Act. DTSC’s

alternatives analysis did not properly address the potential for an enforceable consent agreement

with SPF Systems manufacturers.

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9 VERIFIED PETITION FOR WRIT OF MANDATE AND

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THIRD CAUSE OF ACTION

Declaratory Relief – Code of Civil Procedure § 1060

Government Code § 11350

(Violation of California Administrative Procedure Act)

37. ACC re-alleges and incorporates by reference all of the prior paragraphs.

38. Respondents/Defendants violated the California Administrative Procedure Act by

failing to provide a full, final cost estimate for listing SPF systems as a Priority Product. DTSC’s

economic analysis of the proposed listing presents mismatched costs and benefits because the

Department has omitted certain, material costs to industry.

FOURTH CAUSE OF ACTION

Writ of Mandate – Code of Civil Procedure § 1085

Public Resources Code § 21168.5

(Violation of CEQA)

39. ACC re-alleges and incorporates by reference all of the prior paragraphs.

40. DTSC has abused its discretion by concluding that the decision to list SPF Systems

as a Priority Product is exempt from the environmental review requirements of CEQA, in

violation of Public Resources Code § 21168.5. This decision improperly bifurcated consideration

of the listing decision from the impacts of any regulatory action undertaken in response to the

Alternatives Analysis process and also impermissibly relied on the premise that the listing

decision was intended to provide environmental benefits to reach the CEQA exemption

determination.

RELIEF REQUESTED

WHEREFORE, Petitioners/Plaintiffs respectfully pray for relief as follows:

1. Issue a writ of mandate directing Respondents/Defendants to remove SPF Systems as

a listed Priority Product and prohibiting the listing of SPF Systems as a Priority Product under the

Green Chemistry Statute and SCP Regulations;

2. Issue a declaratory judgment that Defendants/Respondents have violated the

California Administrative Procedure Act by failing to conduct an adequate economic analysis and

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enjoining the listing of SPF Systems as a Priority Product;

3. Issue a declaratory judgment that Defendants/Respondents have violated the

California Administrative Procedure Act by failing to conduct an adequate analysis of alternatives,

including the viability of enforceable consent agreement, and enjoining the listing of SPF Systems

as a Priority Product;

4. Issue a declaratory judgment that Defendants/Respondents have violated CEQA and

enjoining the listing of SPF Systems as a Priority Product; and

5. For such other and further relief as the court deems just and proper. Dated August 9, 2019 SIDLEY AUSTIN LLP By: /s/ Sean A. Commons Sean A. Commons

Paul J. Zidlicky Joseph T. Zaleski

Attorneys for Petitioners and Plaintiffs American Chemistry Council

By: /s/ Edward S. Orchon Edward S. Orchon Attorney for Petitioners and Plaintiffs

General Coatings Manufacturing Corp.

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1 VERIFICATION FOR AMERICAN CHEMISTRY COUNCIL

2 I, Lee Salamone, declare as follows:

3 I am Senior Director of the Center for the Polyurethanes Industry, which is a self-funded

4 group of the American Chemistry Council ("ACC"), Petitioner/Plaintiff in this action. I have read

5 the foregoing VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT FOR

6 DECLARATORY RELIEF and know its contents. The same is true of my knowledge, except as

7 to those matters which are therein stated on information and belief, and as to those matters I believe

8 it to be true.

9 I declare under penalty of perjury under the laws of the State of California that the foregoing

10 is true and correct.

11 Executed this 9th day of August, 2019, in Washington, District of Columbia.

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11

Lee Salamone Senior Director

VERIFICATIO FOR AMERICAN CHEMISTRY COUNCIL

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VERIFICATION FOR GENERAL COATINGS MANUFACTURING CORP.

I, Ashish Dhuldhoya, declare as follows:

I am the President of General Coatings Manufacturing Corp. ("General Coatings"),

Petitioner/Plaintiff in this action. I have read the foregoing VERIFIED PETITION FOR WRIT

OF MANDATE AND COMPLAINT FOR DECLARATORY RELIEF and know its contents.

The same is true of my knowledge, except as to those matters which are therein stated on

information and belief, and as to those matters I believe it to be true.

I declare under penalty of perjury under the laws of the State of California that the foregoing

is true and correct.

Executed this 9th day of August, 2019, at Fresno, California.

Ashish Dhuldhoya

12 VERIFICATION FOR GENERAL COATINGS CORPORATION