AGA filed an amicus curiae (friend of the court) letter on January 4, 2012 at the California Supreme Court supporting member SoCalGas' petition for review of an anti-LNG rule promulgated by the South Coast Air Quality District. The two-part rule would essentially allow the local environmental agency to regulate gas quality – an issue normally within the jurisdiction of the state utility commission. The District asserts that the imported LNG-derived supplies will increase the average heat index of natural gas supplies, and that when combusted, this will increase nitrogen oxide (NOx) emissions and contribute to ozone smog. The California Public Utilities Commission (CPUC) considered the District’s concerns as well as the need to assure adequate gas supplies, and the net environmental benefit of using natural gas. Based on this review, the CPUC rejected the District’s request for a more stringent limit. The District, ignoring the CPUC’s jurisdiction and decision on gas quality, proceeded to launch its own two-stage control measure to regulate the quality of natural gas
SoCalGas challenged the rule as exceeding the District’s statutory powers. The District argued that the California air quality statute gives the District the power to regulate the “owner or operator” of an “emission source,” and that this applies not just to the owner or operator of equipment that emits pollutants, but also to the utility that delivers fuel to the equipment. The California Court of Appeals upheld the rule, deferring to the District’s odd interpretation of the statute. A dissenting opinion noted that the court should not defer to the agency but should conduct its own analysis of the statute, applying the normal rules of statutory construction. On this basis, the dissent would overturn the rule because “under no plain English reading of the facts can SoCalGas be said to ‘operate’ the gas in the pipeline.” SoCalGas asked the California Supreme Court to clarify the standard of review and to determine whether a fuel such as natural gas is an “emission source” within the meaning of the California statute.
AGA’s letter asks the court to grant the petition. We agree that the term “emission source” refers to equipment that emits pollutants, not the fuel delivered to the equipment. In addition, we note that the District’s rule could actually undermine its goal of improving air quality in Southern California -- by increasing costs and discouraging the more efficient direct use of natural gas in homes and businesses.