How Environmental Justice Advocates Dismantled the Oil Industry’s Prized Pollution “Reduction” Program In Los Angeles

A disaster of an experiment with pollution trading is coming to an end.

Last week, Communities for a Better Environment, Sierra Club, Center for Biological Diversity, and the Natural Resources Defense Council dismissed their lawsuit against the South Coast Air Quality Management District over its ineffective pollution trading program called RECLAIM – or Regional Clean Air Incentives Market. This litigation spanned more than six years, and marks the next chapter in an environmental justice struggle that pitted Big Oil versus communities. This marks a massive environmental justice win as it marks a critical moment in the fight against ineffective programs designed by fossil fuel interests for fossil fuel interests.

The RECLAIM program shielded some of the largest polluters like refineries in the nation’s second largest metropolitan region from controlling emissions. Over three decades, communities critiqued and consistently pointed out the flaws of this program. And, eventually, advocates stitched together a winning strategy to take on Big Oil and its scam of a pollution reduction program. The story plays out in three acts below.

Part 1: The Air District Buys What the Oil Lobbyists Are Selling

In the early 1990s the Air District abandoned the mandatory rules fundamental to regulation, and instead took a dangerous detour into a new type of program alleged to reduce pollution called pollution trading. Like a juicer salesperson on late-night television, oil lobbyists invented and sold the air district on a grandiose vision for a pollution trading scheme that they claimed would deliver emissions reductions quickly and economically.

These lobbyists convinced the Air District to rip up its rules called “command and control,” which set specific requirements for large polluters to install what was then the best available pollution control technology. In its place, they created the Regional Clean Air Incentives Market — or RECLAIM. The trading was for nitrogen oxides or “NOx,” which are harmful pollutants that, when mixed with volatile organic compounds and baked in the sun, form smog. NOx are generated by burning fossil fuels, and they’re a major contributor to the blankets of smog that cover Los Angeles for more than a third of the year. It’s kind of like a stock market where people make money selling and trading, but instead of stocks, bonds, or commodities like grain and steel, they are trading the right to send pollution into the lungs of Southland residents.

The pollution trading program has been and continues to be a nightmare. It gave a veneer of pollution reductions happening with one big problem — the amount of reductions the law required was not actually occurring. As one of the seminal critiques of RECLAIM stated it, “Pollution trading in Los Angeles has led to concentrated toxic air emission hot-spots that have shackled low-income and minority communities with the region’s air pollution.”

Part 2: The Air District Doubles Down on Its Failed Experiment 

By 2015, it was glaringly clear that the RECLAIM program was a massive failure. With far too many credits available, the glut made credits so cheap that mega-polluters like refineries were hoarding credits. This led to a shocking increase in refinery emissions over the course of 20 years, as refineries opted to buy credits instead of installing vitally needed and readily available pollution control equipment.

Faced with mounting evidence that RECLAIM was failing to create the promised pollution reductions, Air District staff recommended removing a lot of credits from the system. Staff hoped that this basic reform would drive the cost of credits up enough to at least nudge some of the region’s largest polluters to clean up their pollution.

But even this modest reform was too much for the oil industry. Oil industry lobbyists leapt back into action, creating their own alternative proposal full of loopholes so that polluters could keep polluting at will. Instead of supporting their own staff’s recommendations for a more health-protective proposal to curb harmful smog, the Air District’s appointed leaders rubber stamped industry’s far weaker plan. This decision was so outrageous that it elicited a scathing editorial in the Los Angeles Times, where the editorial board called out the agency, blasting its choice to “make it easier for oil refineries, power plants, and other big industrial operations to keep spewing smoggy emissions.”

The decision to back industry’s proposal left a deep stain on the Air District and a bitter taste in the mouths of folks who were frustrated with the RECLAIM program — and now even more frustrated that the agency had just rubber-stamped a plan to allow refineries to continue their deadly pollution.

Part 3: Frontline Communities Have Had Enough and Take the Air District to Court

The blatant illegality of the Air District’s maneuver was met with stiff resistance. Earthjustice, on behalf of Communities for a Better Environment, the Center for Biological Diversity, and the Sierra Club, along with the Natural Resources Defense Council, filed a lawsuit challenging the air district board’s approval of this unlawful plan. And we won.

Faced with the court case and mounting public pressure, the Air District’s Governing Board in 2017 at last relented and made a U-turn, directing staff to start dismantling the RECLAIM program and shift to command-and-control rules to finally clean up the largest industrial polluters in the region. The irony is the oil industry overreach in 2015 likely led to the backlash of dismantling their prized program that protected their pocketbooks for over 20 years.

At long last, the Air District began developing rules to curb the region’s largest stationary sources of pollution. Of those rules, the one that could eliminate the most pollution — and therefore the one that is most important — is the refinery rule.

Epilogue: Moving Forward Regaining Our Agency For People, Not Polluters

The sad truth is that hundreds, if not thousands, of lives could have been saved if we fixed this problem earlier. For nearly three decades, the Air District gave industry a free pass by letting lobbyists design an opaque trading scheme that allowed polluters to game the system and avoid cleaning up. The Air District is a pawn in industry’s deadly game, but the ultimate losers are the fenceline communities who have spent their entire lives struggling to breathe near these refineries. We can never get those years back, but what we can do is learn from our mistakes.

Trading did not work no matter how much industry lobbyists want to claim it did. Half of the equipment — hundreds of pieces at refineries — covered under the RECLAIM scheme did not install readily available and life-saving pollution controls. This dirty, decades-old equipment spewed out more pollution into communities than it should have for decades. And, this happened in the most ozone-choked area of the country, the South Coast Air Basin that includes millions of residents and families in Los Angeles, Orange, San Bernardino, and Riverside counties.

Mercifully, this three-decade disaster of an experiment with pollution trading is coming to an end. We have all learned a grave and painful lesson about what can happen if oil companies are allowed to exert unchecked control over their regulators for decades. In the end, the dismantling of the RECLAIM program is imperfect. The compliance deadlines are far too long, and more should be required of these polluting industries that took so much. But, as we turn to a new chapter at the Air District, the agency is taking major steps toward meaningful reductions and steering towards its mission to clean the air and protect the health of all residents. Earthjustice will continue in this fight alongside communities that for far too long have been forced to breathe in air that’s so polluted it’s illegal.

Hear From Our Partners

“We’re finally on a path to do what the failed RECLAIM pollution trading program did not do for over 20 years  reduce Nitrogen Oxides at oil refineries and other polluting facilities by millions of pounds per year. These emissions affect people’s breathing, exacerbate asthma, and create all this smog. Dismantling the RECLAIM scheme will provide some justice for communities such as Wilmington most exposed due to being so close to the refineries.” – Alicia Rivera, Wilmington Community Organizer, Communities for a Better Environment

“The Air District has spent years blaming its lack of progress in fighting smog on the weather. In reality, it relied on a dangerous pollution-trading scheme that cost people’s lives by allowing tons of nitrogen oxide pollution in one of the most polluted areas of the country. We hope the Air District has learned from its deadly mistake and puts aggressive industrial pollution-control standards into place going forward. – Maya Golden-Krasner, deputy director of the Center for Biological Diversity’s Climate Law Institute

“Southern California will have cleaner air thanks to the steadfast advocacy of the environmental justice movement against a failed pollution trading scheme invented by fossil fuel lobbyists. The lungs and health of our most vulnerable communities must be protected by strong regulation and proper leadership. We will continue to hold all regulators accountable for effective policy solutions to ensure our frontline communities do not become sacrifice zones” – Monica Embrey, Senior Associate Director of Energy Campaigns, Sierra Club


This blog was originally published on Nov. 3, 2021. It has been updated to reflect events since then.

Based in our Los Angeles office, Oscar works in the Community Partnerships Program. His entry into healthy communities and environmental justice work stems from his personal experience growing up in Long Beach and Wilmington, California, where he continues to witness first-hand the serious health impacts on his family and peers.

Based in Los Angeles, Adrian works on clean air, clean energy, and healthy communities issues as a deputy managing attorney for Earthjustice's Right to Zero campaign. Follow him on Twitter @LASmogGuy.

The California Regional Office fights for the rights of all to a healthy environment regardless of where in the state they live; we fight to protect the magnificent natural spaces and wildlife found in California; and we fight to transition California to a zero-emissions future where cars, trucks, buildings, and power plants run on clean energy, not fossil fuels.

Earthjustice’s Community Partnerships Program works hand-in-hand with frontline communities fighting for a safe, just, and healthy environment.

Kids play soccer near the Phillips 66 refinery in Wilmington, Calif.
Kids play soccer near the Phillips 66 refinery in Wilmington, Calif. (Hannah Benet for Earthjustice)