California requires greenhouse gas emissions to be part of environmental impact calculus
Greenhouse gas emissions are officially factors to be considered in determining the environmental impact of local projects in California. On December 30, 2009, the California Natural Resources Agency adopted amended guidelines to aid public agencies and developers in complying with the California Environmental Quality Act (CEQA). The guidelines expressly provide that greenhouse gas emissions are included in the environmental impact calculus under CEQA.
CEQA is the California equivalent to the federal National Environmental Policy Act (NEPA). Like NEPA, CEQA requires state and local agencies to conduct environmental reviews before undertaking certain projects. However, CEQA has unique procedural and substantive requirements. The new guidelines are therefore essential to ensuring that state and local agencies are familiar with the state requirements.
The California legislature began the path to including greenhouse gas emissions in CEQA after passing the Global Warming Solutions Act of 2006 (AB 32). AB 32, inter alia, mandates a reduction in greenhouse gas emissions by 2020. Soon after the passage of AB 32, many lawsuits against public agencies and developers arose based on greenhouse gas emissions issues. In response, the California legislature adopted SB 97, which required the CRA to amend the guidelines to aid public agencies and developers in complying with AB 32. After the submission of amendments, the CRA had until January 1, 2010 to adopt the new guidelines. Accordingly, the new guidelines expressly provide for the consideration of greenhouse gas emissions. For example, one section describes how to determine the “significance” of potential greenhouse gas emissions.
The guidelines also describe how to create a plan for reducing greenhouse gas emissions. The “Environmental Checklist Form” for new projects now includes categories for the project’s effect on greenhouse gas emissions. In the CRA’s Final Statement of Reasons, the CRA emphasizes that the amended guidelines will not adversely affect businesses. The CRA asserts that the guidelines will provide greater certainty to CEQA analysis, thereby reducing the costs of environmental analyses and litigation.
Greenhouse gas emissions are also becoming a concern on the national scale, as the White House Council on Environmental Quality is completing draft guidance to federal agencies in considering greenhouse gas emissions under NEPA.
Lawsuit alleges California's cap-and-trade plan fails to minimize GHG emissions
A lawsuit by several environmental advocacy groups against the California Air Resources Board (CARB) (09-509562) continues to wend its way through the San Francisco Superior Court, with a scheduled hearing on the Environmental Defense Fund’s motion to file an intervening complaint being the next step in the litigation. The complaint alleges that the agency’s plan fails to minimize greenhouse gas emissions and protect vulnerable communities, which contravenes the Global Warming Solutions Act of 2006 (AB 32). The complaint also alleges violations of the California Environmental Quality Act (CEQA).
The lawsuit has garnered significant attention because of its focus on an emissions trading program proposed by the agency. The lawsuit could be viewed as foreshadowing similar challenges to federally implemented cap-and-trade programs. Even if cap-and-trade and similar programs win the approval of mainstream environmental activists, they can still face major legal challenges by smaller groups.
The Association of Irritated Residents and similar groups allege that CARB chose an emissions trading program on the basis of political feasibility, and ignored data suggesting such programs do not reduce emissions and do not improve air quality. They also claim that CARB has failed to meet procedural review and public participation standards required under California law.
CARB has strongly disputed the allegations: according to CARB Chairman Mary D. Nichols, “Our process for developing the Scoping Plan was unprecedented in its openness and transparency, including many opportunities for substantive comment and interaction as the plan went through the draft process and through the final adoption.” She also noted that “Ironically, some of the plaintiffs sit on ARB's Environmental Justice Advisory Committee (established by AB 32) and enjoyed unparalleled access to ARB staff and board members throughout the plan preparation.” Nichols expressed concern over an attack on the emissions trading program in its early stages, writing, “Now is the time to begin focusing on mechanisms to assure that the program is designed to assure that the communities that are most negatively impacted by industrial pollution receive a proportionately greater share of the benefits, including direct co-benefits from cleanup of existing sources.”
Economic and Allocation Advisory Committee (EAAC) established to advise CARB regarding cap and trade program
Already sporting a Climate Action Team, Environmental Justice Advisory Committee, Economic and Technology Advancement Advisory Committee, and Market Advisory Committee, on May 22 the California Air Resources Board (CARB) established another committee known as the Economic and Allocation Advisory Committee (EAAC). The EAAC was established to advise CARB regarding the implementation of the California Global Warming Solutions Act of 2006 (AB 32) and the cap and trade system to be implemented to reduce California’s greenhouse gas emissions. Per AB 32, the cap and trade program is to be developed by January 1, 2011 and implemented in beginning of 2012.
EAAC Purpose and Coordination with Others
The purpose of EAAC includes: 1) evaluating allowance allocation strategies involving free allocation, auction, or a combination of both; 2) advising CARB regarding the costs and benefits to various options involving the distribution of cap and trade allowances/auction revenue; 3) providing CARB revisions to its economic analysis; and 4) preparing a report with its findings by end of 2009.
At its first meeting on July 1, the EAAC and various stakeholders, discussed allocation approaches and including those being considered by the U.S. federal government, Regional Greenhouse Gas Initiative States (RGGI), Western Climate Initiative (WCI) and European Union. A review of the materials from the first meeting clearly indicates the EAAC is very aware that the nature of the allocations and revenue distribution will dramatically influence the program’s success and cost effectiveness.
Furthermore, because of the somewhat unique electricity market in California, which requires significant generation from outside the state, California must ensure that its cap and trade program does not lower emissions in California only to increase them elsewhere (a.k.a. leakage). Per the CARB, December 2008 Climate Change Scoping Plan the EAAC will develop a California cap-and trade program that links with the WCI to create a regional market system. The WCI has formed a Cap Setting and Allowance Distribution Committee (CSAD), and released its recommended design and regional cap and trade program in September 2008. The WCI anticipates that its preliminary budget and cap for its partners (states including California and Canadian Provinces) will be published in first quarter of 2010.
In addition to the linkage with WCI, the federal government is proposing that holders of allowances from California, WCI, and GGI before December 31, 2011 be allowed to exchange them for federal allowances under the program to be develop by the federal government. American Clean Energy and Security Act of 2009 (H.R. 2454), Section 790: Exchange for State-Issued Allowances.
CARB Funding, EAAC Coordination/Efforts, and Economy
CARB estimates that approximately $36 million per year will be needed on an ongoing basis to fund implementation of the cap and trade program. CARB is currently developing fee regulation and expects to take a regulation to the Board in mid-2009 with the aim of collecting fees in 2009/2010 year. That said, the budget, schedules, and EAAC efforts and coordination are likely to be impacted due to the recent July 1, 2009 Executive Order, S-13-09, calling for furlough for CARB employees of 3 days per month starting July 10, 2009 and ending June 25, 2010. The furloughs are due to the “unprecedented” California state budget deficit. California may look to the federal government and others (WCI/RGGI) to take the laboring oar on cap and trade while it tries to reconcile its budget.
California passes Schwarzenegger's Low Carbon Fuel Standard
On Thursday California Air Resources Board (“CARB”) adopted a regulation implementing Governor Schwarzenegger's Low Carbon Fuel Standard (“LCFS”) making it the first state in the nation to mandate carbon-based reductions in transportation fuels. This “new low-carb” standard hopes to officially slash from California’s diet the greenhouse gas emissions blamed for climate change. Specifically, the new standard is expected to significantly reduce the state’s carbon emissions waistline by trimming California transportation fuels by 10% and replacing 20% of the petroleum fuels burned by California cars by the year 2020. The new low-carbon standard was recently proposed as part of the implementation of the California Global Warming Solutions Act (AB 32).
Said CARB Chairman Mary Nichols after the vote, “The new standard means we can begin to break our century-old dependence on petroleum and provide California with greater energy security.”
The passage of the Low Carbon Fuel Standard is being touted by CARB as good not only for the environment, but for California’s economy as well. Said Nichols, “(This) will be a boon to the state's economy and public health — it reduces air pollution, creates new jobs and continues California's leadership in the fight against global warming.” CARB projects that 25+ new biofuel facilities will be required to produce the estimated 1.5 billion gallons of biofuel needed, and will create 3,000+ new California jobs, mostly in the state’s rural regions.
California is joining private sector and federal investment to provide funding for projects developing and deploying low carbon fuels. For example, the California Energy Commission’s Alternative and Renewable Fuel and Vehicle Technology Program, will provide some $120 million dollars per year over seven years to deploy the cleanest fuels and vehicles. California investors and developers of alternative fuels are poised to benefit greatly according to Bob Epstein, co-founder of Environmental Entrepreneurs, whose 500-member California business organization supported the new standard. Transportation fuel is “a multibillion-dollar market in California that is currently exclusively owned by the oil companies, and they're going to lose their exclusive franchise,” said Epstein.
The “new low-carb” fuel standard could impact the Obama Administration’s ever evolving plan regarding the overall transportation industry. Said Nichols, “By changing the way we think about fuels and requiring them all to be lower carbon, I think we are now finally creating an opportunity for other types of advanced transportation to compete on a level playing field.”
Obviously, not everyone is pleased with the regulation’s passage. Businesses and oil industry critics warn that research is incomplete and that the Board’s adoption of the new standard could lead to higher costs borne by consumers in an already troubling economy. Bob Dinneen, President and CEO of the Renewable Fuels Association expressed disappointment and found the Board's decision premature, but said he “remains confident that the formation of the expert work group will result in a more balanced and fair assessment of the indirect greenhouse gas effects of all fuels.” According to RFA, “Adopting this standard sets a dangerous precedent about the application of unproven science to industries across the country. This standard is based on flawed analysis and selectively enforced penalties against biofuels only. In unfairly penalizing ethanol, ARB is relegating California to more petroleum use as biofuels are the only viable alternative liquid fuel.”
Catherine Reheis-Boyd, executive director of the Western States Petroleum Association lobbying group, which did not support the new regulation, argues that currently there are not enough biofuels available to meet the demands of the new regulation. In this regard, petroleum producers did get one major concession: they will be permitted to gradually reduce the carbon content of their fuels over several years to reach the 10-percent reduction.
California proposes regulations implementing Low Carbon Fuel Standard for transportation fuels
At its upcoming April 23-24 hearings, the California Air Resources Board (CARB) will consider adoption of recently proposed regulations for implementing a Low Carbon Fuel Standard pursuant to an Executive Order signed by Gov. Arnold Schwarzenegger in 2007. The proposed regulations, part of the implementation of the California Global Warming Solutions Act (AB 32) would require a 10 percent reduction in transportation fuel emissions by 2020, which would be accomplished by requiring regulated parties to incrementally reduce the carbon intensity of fuels sold in California. CARB predicts this will require 20 percent of fuel currently used statewide to be replaced with alternative energy sources (e.g. biofuels, electricity, and hydrogen). CARB Chairwoman Mary Nichols described the proposed rule as a “comprehensive, cradle-to-grave approach” for spurring competition and innovation in the alternative energy market.
A 45-day public comment period began following the March 5 proposal announcement. Thus far, the proposal has encountered criticism from various groups, including retired members of the United States armed forces and intelligence community, farmers, and the corn ethanol industry. Much of the criticism relates to CARB’s recommendations to factor greenhouse gas emissions from “indirect land use change” into life-cycle calculations of biofuel carbon intensity. Such calculations are based on the premise that greater demand for food crops, such as corn, increases worldwide prices and causes greater deforestation in order to clear more cropland.
New York City strengthens anti-idling laws, reflecting nationwide trend of state and local idling regulation
On February 10, 2009, New York Mayor Michael Bloomberg signed legislation reducing the amount of time that vehicles can idle near schools and expanding New York City's enforcement of idling laws. Introductory Number 631-A reduces the amount of time that non-emergency vehicles can idle adjacent to schools from three minutes to one minute. In addition, the legislation requires the Environmental Control Board and Department of Finance to submit annual reports on the number of idling violations issued and the total value of penalties assessed. Introductory Number 40-A authorizes the Department of Parks and Recreation and the Department of Sanitation to enforce idling laws (enforcement was previously limited to the Department of Environmental Protection and the Police Department). The new legislation also gives civilians the ability to report truck idling violations. (Previously, citizens were entitled to report noncompliant buses only.) Hearings were recently held on a third piece of potential legislation, known as Proposed Introductory Number 881-A, which, if passed would require the city to implement technology to allow traffic enforcement agents to issue idling tickets via their hand-held computers.
Numerous states and municipalities have enacted similar laws aimed at reducing idling with idle times ranging from approximately 2 minutes to 15 minutes and fines ranging from approximately $25 to $25,000 (and in some cases, imprisonment). In April 2006, EPA compiled a list of state and local anti-idling laws. However, new state and local laws have since been passed and existing laws have since been modified. Accordingly, the EPA website now directs viewers to a continually-updated list of state and local anti-idling laws compiled by the American Transportation Research Institute.
California's anti-idling laws are some of the most rigorous. In July 2004, California adopted the Airborne Toxic Control Measure to Limit Diesel-Fueled Commercial Motor Vehicle Idling ("ATCM"), which prohibits drivers of diesel-fueled commercial motor vehicles with gross vehicular weight ratings of greater than 10,000 pounds from idling the vehicle's primary diesel engine for more than 5 minutes anywhere in California. In October 2005, the California Air Resources Board ("ARB") amended the ATCM, effective January 1, 2008. The amended ATCM applies to sleeper berth trucks, which were previously exempt from the anti-idling regulations. In addition, the amended ATCM requires heavy-duty diesel engines manufactured for model year 2008 and later to either include a non-programmable engine shutdown system that automatically shuts down the engine after five minutes of idling or meet a new standard of emitting no more than 30 grams of nitrogen oxides per hour while idling. Operators of trucks with heavy-duty diesel engines manufactured before model year 2008 are required to manually shut down their engines when idling more than five minutes. The amended ATCM also imposes restrictions on emission producing alternative technologies, such as diesel-fueled auxiliary power systems ("APS") and fuel-fired heaters. Violations of the amended ATCM range from a minimum penalty of $300 for first time violators to up to $10,000 and/or criminal charges. Further, as part of the California Global Warming Solutions Act of 2006 (also known as AB 32), ARB has proposed that strong enforcement of anti-idling laws for trucks be added to the list of early action measures.
Critics of state and local anti-idling laws worry that the laws will be used as a source of revenue for state and local governments, particularly during these difficult economic times. Other opponents have expressed concern about inconsistencies between various state and local laws, and the interplay between anti-idling laws and other laws. For example, workers in the trucking industry are concerned that anti-idling laws could interfere with their ability to comply with other laws, such as laws requiring truck drivers to have specified amounts of uninterrupted rest. Workers in the trucking industry are further concerned about the problems associated with drivers having to continually be aware of the applicable state and/or local laws at each break location. Some trucking industry workers have even indicated that they will avoid California because of its rigorous laws. Of course, depending on the industry and the degree of federal regulation involved, there are also likely to be federal preemption issues implicated by these types of state and local efforts.
CARB unanimously approves AB 32 implementation plan
California’s top air agency – the California Air Resources Board (CARB) – unanimously approved a sweeping plan yesterday to implement the state’s law 2006 Global Warming Solutions Act (commonly referred to as “AB 32”), requiring dramatic cuts in greenhouse gas emissions. After several months of comment on the draft proposal, CARB adopted what is referred to as its “Scoping Plan”, a 134-page plan that outlines targets for every sector of the economy, including cars, refineries, buildings, landfills, energy sources, and others. The ambitious plan requires a third of California’s electricity needs to come from solar energy, wind farms, and other renewable sources to meet the greenhouse gas reduction goals set forth in AB32.
AB32 was the first statewide effort to reduce greenhouse gas emissions and requires the state to cut its emissions to 1990 levels by the year 2020, and reducing them to 80% below 1990 levels by 2050.
CARB’s approval of the plan is a major step toward California’s implementation of AB32, though before the plan can go into effect, specific implementing regulations must still be drafted and approved. Much more remains to be done. (The plan has been compared to a menu for a meal, with the recipes still to be developed.) And, of course, the rules are likely to face stiff opposition from various industries and interest groups – particularly in light of California’s struggling economy – however, California Governor Arnold Schwarzenegger recently stated that California has “no intention of backing away from our historic commitment to the fight against global warming because the economy has slowed down.”
One of the plan’s central features is a carbon cap-and-trade program for businesses, in an attempt to provide financial incentives to businesses to reduce carbon emission, which will enable companies who need to use greater emissions in their operations to purchase emission credits from companies who are able to reduce emissions. Such a trading program would cover about 85 percent of the state's emissions, from sectors such as electricity production, transportation and industry, according to CARB’s press release announcing the plan.
The Los Angeles Times reports that the plan “lays out targets for virtually every sector of the economy, from electrical plants and automobiles to landfills and city planning.” The broad regulatory scheme may serve as a blueprint for regulation at the national level, with President-elect Barack Obama promising national action to control emissions.
For additional background, see GlobalClimateLaw.com’s previous posts on the subject:
Lawsuit against mega-dairy in California's Central Valley seeks to reduce greenhouse gases
On October 15, 2008, the Center for Biological Diversity and California Rural Legal Assistance filed a lawsuit challenging the failure to consider global warming impacts in conducting the environmental review of a mega-dairy in the Central Valley of California. This is the latest in a series of actions focusing on the environmental review process under the California Environmental Quality Act (CEQA), which requires public agencies to consider the environmental impacts of a proposed project before approving it. In the case of greenhouse gas emissions, several suits have claimed that CEQA requires identification of a project’s emissions, and if they are significant, may require the agency to impose mitigation measures to lower the project’s carbon footprint.
The new lawsuit asserts that the San Joaquin Valley Unified Air Pollution District failed to properly consider the global warming and human health impacts of a mega-dairy with 6,120 animals when it conducted its project review under CEQA. Mega-dairies produce large amounts of greenhouse gas emissions, including methane, ozone precursors, particulate pollution, hydrogen sulfide, and ammonia. The lawsuit contends that the mega-dairy project’s impacts were ignored or down-played.
New and expanding dairies, poultry houses, and other agricultural operations in the Central Valley have been targeted by environmental groups in recent years, once they lost their exempt status from Clean Air Act permitting requirements. Agencies reviewing permits and other approvals for such facilities are struggling to define which impacts are potentially “significant” impacts under CEQA. In Senate Bill 97, a companion bill to the California Global Warming Solutions Act (“AB 32”), the California legislature required the Office of Planning and Research (“OPR”) to develop draft CEQA guidelines “for the mitigation of greenhouse gas emissions or the effects of greenhouse gas emissions” by July 1, 2009 [link to Joanne Lichtman’s ClimateBlog posting on this], but no regulations are currently available to assist the public agencies in conducting their reviews. Air pollution agency officials belonging to the California Air Pollution Control Officers’ Association (“CAPCOA”) have published a non-binding white paper to assist local governments in conducting these reviews.
AB 32 Final Implementation Plan issued by CARB
This week, the California Air Resources Board (“CARB”) issued its final implementation plan directed at meeting the greenhouse gas reduction goals set forth in the state’s amibitious 2006 Global Warming Solutions Act, commonly referred to as AB 32. The 142-page final version of the plan incorporates feedback received in the four months since a Draft Scoping Plan was released by CARB in June. In it, CARB provides estimates of how and where the state and its residents will need to reduce emissions to return to 1990 carbon emission levels. The plan estimates that California will need reduce its annual emissions by about 4 tons per person—from 14 tons currently to about 10 tons in 2020.
While the final plan includes steps designed to reach these reductions goals – notably including a cap-and-trade program for businesses – the specific implementing regulations have yet to be drafted, leaving significant hurdles to clear in order to achieve AB 32’s GHG emission reduction goals, particularly in a time of such serious economic challenges in the state.
AB 32 set a goal of reducing California GHG emissions to 1990 levels by 2020, and reducing them to 80% below 1990 levels by 2050. The implementation plan seeks to achieve these reductions by, among other things, reducing leakage of harmful air conditioning and refrigeration gases, expanding commercial recycling programs, and establishing greenhouse gas reduction targets for local governments.
One of the key aspects of the plan, however, is a cap-and-trade program, designed to enable companies who need to use greater emissions to operate to purchase emissions credits from companies who are able to reduce emissions. Such a trading program would cover about 85 percent of the state's emissions, from sectors such as electricity production, transportation and industry, according to CARB’s press release announcing the plan.
Final decisions regarding the regulations needed to put the implementation plan into action are likely several years away. Debate over all aspects of the final implementation plan, and lobbying by all parties concerned, is sure to fill the intervening time.
CEQA and Senate Bill 97 will require agencies to consider greenhouse gas emissions in evaluating projects
The role of the California Environmental Quality Act ("CEQA"), if any, in addressing climate change and greenhouse gas emissions ("GHGs") was the subject of debate in California after the passage in 2006 of the California Global Warming Solutions Act, often referred to as Assembly Bill 32 (“AB 32”). CEQA is a public disclosure law that requires public agencies to identify "significant environmental effects" of discretionary projects that they intend to carry out or approve, and to mitigate such significant effects when it is feasible to do so. AB 32 provided that GHG emissions can cause significant environmental effects, but did not address how public agencies in carrying out their duties pursuant to CEQA in approving projects should evaluate those emissions. For example, how does a public agency determine whether GHG emissions relating to a project meets a threshold of "significant impact"?
AB 32, in brief, provides that California is the source of substantial amounts of GHG emissions and establishes a state goal of reducing GHG emissions to 1990 levels by the year 2020 – a reduction of approximately 25% from predicted emission levels. (The law requires the California Air Resources Board to establish a program to track and report GHG emissions and to undertake numerous other regulatory actions and measures to ensure that the required reductions are implemented.)
In 2007, the California legislature passed a "companion" bill – Senate Bill 97 – to amend the CEQA statute to specifically establish that GHG emissions and their impacts are appropriate subjects for CEQA analysis. But the law does not address the evaluation and determination of "significance." The law simply directs the state's Office of Planning and Research ("OPR") to develop draft CEQA guidelines "for the mitigation of greenhouse gas emissions or the effects of greenhouse gas emissions" by July 1, 2009 and directs the state Resources Agency to certify and adopt the CEQA guidelines by January 1, 2010. Until that time, the OPR has issued a Technical Advisory (“Addressing Climate Change through CEQA Review”) to help guide agencies through the process by providing suggested standards on calculating GHG emissions, determining potential significance, and implementing mitigation measures, if necessary and feasible.
CARB announces draft plan for implementation of AB 32
In September 2006, California enacted the first major state initiative for reducing climate change or greenhouse gas (GHG) emissions. Commonly referred to as Assembly Bill 32 ("AB 32"), California's Global Warming Solutions Act sets a goal of reducing GHG emissions to 1990 levels by 2020 – a reduction of about 25 percent – followed by a reduction of 80% below 1990 levels by 2050. On June 26, 2008, the California Air Resources Board (CARB) issued a "Climate Change Draft Scoping Plan," which details the concrete measures that it proposes to not only reach AB 32’s GHG emissions reduction goals, but also to drive innovation, support an emerging "cleantech" sector of the state's economy and create new jobs.
Workshops are planned throughout the state to present details to the public and for CARB to take public comments. The Board is expected to adopt the plan in November 2008, subject to public comments. Public comment will be critical because the measures and policies outlined in the plan will not only guide the implementing regulations, but will form the basis for significant enforcement action against companies who do not meet these aggressive standards.
Among many others, key elements of the plan are:
- A cap and trade program covering 85 percent of the state's emissions. This program will be developed in conjunction with the Western Climate Initiative, composed of seven states and three Canadian provinces, to create a regional carbon market.
- A proposal that utilities produce a third of their energy from renewable sources such as wind, solar and geothermal.
- Implementation of the California Clean Car law to provide a wide range of lower emitting and more efficient cars and trucks.
- Strong enforcement mechanisms.
Those seeking additional information and commentary on AB 32 and the draft plan may wish to review ClimateConnect’s “AB 32 101” page.
