BOARD MEETING DATE: July 11, 2003
AGENDA NO. 21

Report on the Negotiated Rulemaking Pilot Program for Metal Finishing

SYNOPSIS:

In February 2002, the Board adopted a workplan to implement eight Strategic Alliance Initiatives. Initiative #8, Negotiated Rulemaking Pilot Program, calls for a trial negotiated rulemaking process for metal finishing to develop a proposed rule which would also undergo the traditional public comment process and subsequent Board consideration. The negotiated rulemaking process resulted in Proposed Amended Rule 1469 – Hexavalent Chromium Emissions from Chrome Plating and Chromic Acid Anodizing Operations, and Proposed Rule 1426 – Emissions from Metal Finishing Operations, which were considered by the Board in May 2003. Initiative #8 also calls for a formal evaluation of the negotiated rulemaking process for presentation to the Board.

RECOMMENDED ACTION:

Receive and file.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

On February 1, 2002, the AQMD Governing Board adopted a work plan to implement eight strategic alliance initiatives to strengthen and create new partnerships at the local, state, and federal level. Initiative #8, Negotiated Rulemaking Pilot Program, specifies that on a trial basis, a negotiated rulemaking process will be carried out to arrive at a proposed rule which will also undergo the traditional public comment process and subsequent Board consideration. The intent of negotiated rulemaking is to promote consensus-based rules that result in necessary emission reductions, and result in fewer litigation actions. Metal plating rules were selected for this pilot program.

The negotiated rulemaking process included industry representatives, environmental and community groups, staff from AQMD and other agencies, technical experts, representatives from the Small Business Alliance and the Ethnic Community Advisory Group, a facilitator, and an independent observer. The Executive Officer played an active role in the negotiation process. Legal counsel was present throughout the process to ensure that all statutory requirements for rule adoption were met.

On May 2, 2003, the Governing Board approved amendments to Rule 1469 – Hexavalent Chromium Emissions from Chrome Plating and Chromic Acid Anodizing Operations and adopted Rule 1426 - Emissions from Metal Finishing Operations. At the public hearing, public testimony from stakeholders indicated acceptance of the rules proposed and supported the negotiated rulemaking process by which they were developed.

Evaluation of Negotiated Rulemaking Pilot Program

Mr. Daniel P. Selmi, a professor at Loyola Law School who served as independent observer, has completed an evaluation of the negotiated rulemaking pilot program. The report is based on observations from working group and subcommittee meetings, a literature review, and interviews with participants during and after the process. The report includes a comparison of the traditional AQMD rulemaking process and negotiated rulemaking, an assessment of the pilot program, and recommendations for future use of this process. The report is included as an attachment to this Board letter.

The report concludes that the negotiated rulemaking for metal finishing rules was successful in three key respects:

• The parties to the negotiation, which represented a wide variety of interests, all viewed it as successful;
• The negotiation reached agreement in several areas on a rule to control chromium emissions, which the Board subsequently adopted; and
• The pilot program provided a sound basis for evaluating whether AQMD could make more regular use of the negotiated rulemaking process.

The report makes the following recommendations concerning future use of the negotiated rulemaking process by AQMD:

• AQMD should consider adopting a formal policy setting forth the steps needed to decide whether to convene a negotiated rulemaking. The convening process should be comprehensive, because not all disputes are amenable to negotiation, and AQMD should obtain as much assurance as possible that the particular dispute chosen can be negotiated. The report suggests that the individual who conducts the convening process perhaps should be different from the facilitator who actually carries out any negotiation that follows.
• The report concludes that there is no clear "formula" for determining when a particular dispute is amenable to negotiation. The report then suggests that the following four criteria are the most important ones for consideration:

• Whether AQMD can commit the extensive resources needed for a negotiation;
• Whether all affected interests, particularly the environmental interests, can be effectively represented in the negotiation;
• Whether there is "room" for a consensus solution (i.e. whether the possibility for trade-offs or for creating new solutions exists); and
• Whether, given AQMD’s legally imposed time constraints, there is sufficient time to negotiate.

• AQMD should consider its willingness to provide limited funding of technical expertise to environmental participants in negotiated rulemakings. Without that funding, those interests may claim an "uneven playing field," or even ultimately decline to participate. The report suggests that limited funding is appropriate when absolutely needed.
• While the procedural aspects of the negotiation worked very well, the time commitment required of the individual participants to the negotiation was a concern. The report suggests that, although much of the time commitment is unavoidable, future negotiations could be structured to better facilitate the timing of data exchanges. An improved structure would increase the productivity of individual meetings and reduce unnecessary frustrations with the process.
• The Governing Board should consider adopting a policy on how individual Board members will participate in negotiated rulemakings. The policy should consider whether Board members will act as negotiators. If they do, there must be a commitment to full participation; partial participation by Board members would be counterproductive. The Board should also consider how members will treat lobbying activities by participants to a negotiated rulemaking while that negotiation is ongoing.

Staff will consider incorporating report recommendations into any future negotiated rulemakings, as well as traditional rule development efforts which are not part of a formal negotiated rulemaking process.

Attachment

Evaluation of Negotiated Rulemaking at the South Coast Air Quality Management District Concerning Emissions from Chrome Plating and Chromic Acid Anodizing

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