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 Clean Truck Programs not enjoined by court despite anticompetitive concerns raised by Federal Maritime Commission
On April 15, 2009, the United States District Court for the District of Columbia denied a motion for a preliminary injunction filed by the Federal Maritime Commission to stop certain aspects of the Clean Truck Programs instituted by the Port of Los Angeles (“POLA”) and Port of Long Beach (“POLB”). The POLA and POLB Clean Truck Programs (“CTPs”) are environmental programs aimed at reducing air pollution caused by trucks used for “drayage” or shipping of cargo to and from the Ports. The Ports designed their CTPs in response to December 2007 rules promulgated by the California Air Resources Board (“CARB”) to reduce emissions from diesel trucks at California’s ports. POLA and POLB are neighboring, and competing, ports in Los Angeles County's San Pedro Bay which together form the largest port area in the United States. Approximately 40 percent of the United States’ import and export container traffic flows through the Ports, making them critical components of the nation’s economy. The Ports’ CTPs, while not identical, share similar features, including a rolling ban on older trucks, a Clean Truck Fee of $35 on containers leaving each port, and a concession agreement into which Licensed Motor Carriers must enter to transport cargo to or from the Ports.
The Federal Maritime Commission is an independent federal agency with responsibility for administering the Shipping Act. It has jurisdiction over the rates, practices, and certain agreements of the ports. Its authority includes determining whether agreements between the ports are likely to produce anticompetitive results, including an unreasonable reduction in transportation services or an unreasonable increase in transportation costs under Section 6(g) of the Shipping Act.
The Commission sought to enjoin a provision in the POLA’s program mandating that Licensed Motor Carriers use only employee operators to ship goods. Currently, up to 20,000 independent owner operators ship cargo to the ports of Los Angeles and Long Beach through up to 1,300 Licensed Motor Carriers. The POLA’s employee-mandate provision will prevent these owner-operated trucks from continuing to ship cargo through Los Angeles. The Commission also sought to enjoin certain aspects of both Ports’ Clean Truck Fee exemptions and subsidies that it had determined would likely cause an unreasonable increase in transportation costs and an unreasonable decrease in transportation services. In refusing to enjoin the Ports’ programs, the district court found that while “some [independent owner operators] and some smaller [Licensed Motor Carriers] may be adversely affected by the employee-mandate and the Clean Truck Fees and exemptions, the [Commission] has not established that these changes are likely to result in irreparable harm to overall competition in the drayage market or to the shipping public.” The district court also found that the public interest weighed against enjoining the CTPs. The district court recognized that both parties were “acting to protect the public interest,” with the Ports implementing their programs to reduce high levels of pollution and to increase public safety and the Federal Maritime Commission seeking “to protect the public from anticompetitive agreements that it believes are likely to unreasonably raise rates and decrease services.” Citing the responsibility of the Ports for improving the area’s public health and managing their operations, the court found that the public interest favored denying a preliminary injunction.
The CTPs are also the subject of separate litigation brought by the American Trucking Association (“ATA”). In July 2008, the ATA filed a complaint in the Central District of California and sought to enjoin the programs as preempted by the Federal Aviation Administration Authorization Act (“FAAAA”). The district court denied the ATA’s motion for a preliminary injunction. But on March 20, 2009, the Ninth Circuit Court of Appeals reversed the district court’s decision, citing as one concern “the phasing out of thousands of independent contractors (many or most of them small businessmen who own their own trucks).” The Ninth Circuit has remanded the case to the district court for entry of an appropriate preliminary injunction.
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.
Obama directs EPA to reconsider denial of California waiver - enabling states to set stricter standards regulating vehicle greenhouse gas emissions
*Updated 1/27/09 - added link to text of memorandum.
President Barack Obama today issued a memorandum directing the EPA to reconsider a previous denial of waivers to California and at least twelve other states, allowing them to set auto emissions standards stricter than the current federal standard. The move would reverse a Bush administration decision denying California’s application for a waiver, and would open the door for stricter regulations in many other states. Some 17 states, including New York and Florida – accounting for up to 50% of the US population – have already adopted or are considering the stricter California standards, which require the EPA waiver of federal preemption in order to be enforceable.
As part of California’s aggressive effort to reduce greenhouse gas emissions, California passed a law to regulate vehicle emissions in the state, but enforcement of the regulations implementing the law was blocked by years of litigation, ultimately concluding that California could move forward only with a waiver from the EPA. Under the Bush administration, the EPA denied the waiver, contending that allowing states to set their own pollution rules would create an unenforceable and unworkable patchwork of regulations.
Last week, California Governor Arnold Schwarzenegger sent a letter to President Obama requesting reconsideration of the waiver denial, while California Air Resources Board (CARB) Chairwoman Mary Nichols appealed directly to new EPA administrator Lisa Jackson to open a “reconsideration process.”
While Obama’s directive does not explicitly demand that the EPA grant the waiver request, it is widely assumed that the agency will do so. At her Senate confirmation hearing earlier this month, Jackson indicated that she would reconsider the request and hinted that she would grant a waiver. A final decision from the EPA, however, is expected to take several months, and will likely face additional legal challenges.
Meanwhile, the auto industry is faced with the prospect of being forced to spend billions of dollars to comply with the stricter California emissions rules. Currently, only two mass-produced vehicles, the Toyota Prius and the hybrid Honda Civic, average at least 42 mpg. To reach that level fleetwide would require significant investment in new technologies, including hybrid vehicle technology. Auto industry estimates claim that the cost of compliance with the California standard could be as high as $5,000 per-vehicle. These costs and their impact are the subject of multiple lawsuits. (See Green Mountain Chrysler v. Crombie (D. Vt. 2007); Central Valley Chrysler v. Goldstene (E.D. Cal. June 2008); and Lincoln Dodge, Inc. v. Sullivan (D. R.I. Nov. 2008).)
The quick action the Obama administration on this issue – coming less than a week into his term in office – suggests an aggressive stance on climate change and could signal more far-reaching policy shifts to come.
Lawsuits seek protection of American pika as endangered species due to climate change
Alleging a failure of regulators to declare the American pika an endangered species based on the impact of climate change, the Center for Biological Diversity on August 19 filed lawsuits in California state and federal court seeking injunctive relief. To combat the perceived deleterious effects of global warming on the pika, the Center is seeking protection of the animal under the California Endangered Species Act and the federal Endangered Species Act. However, regulators have not been so quick to adopt the Center’s position and this reluctance has resulted in two lawsuits.
The American pika (Ochotona princeps) is a small mammal living on the slopes of high mountains throughout the western contiguous United States. Pikas are related to rabbits and hares. Though the pika’s dense hair protects it from harsh alpine winters, it also makes it uniquely susceptible to hyperthermia – or heat stroke. The Center for Biological Diversity alleges that pikas who do not seek shelter in their burrows die when air temperatures reach just 77.9° to 84.9° F. “The pika is the American West’s canary in the coal mine,” says Shaye Wolf, a biologist with the Center. “As temperatures rise, pika populations at lower elevations are being driven to extinction, pushing pikas further upslope until they have nowhere left to go.”
The pika lawsuits are part of a larger “regulation by litigation” trend, as environmentalists seek to use litigation under the ESA and other existing statutes as a “back door” to address climate change issues.
The first lawsuit, filed in San Francisco Superior Court against the California Fish and Game Commission, challenges the Commission’s April 10, 2008 denial of a petition to place the pika on the California endangered species list. In its Notice of Findings explaining the rejection of the pika petition, the Commission stated that it was “speculative” that climate change threatened the pika and that the petition failed to “definitively establish that pika distribution in California has contracted (or is contracting) upslope.” In its lawsuit, the Center asks the Court to issue a writ of mandate “commanding the Commission to set aside its prejudicial actions…and issue a new decision accepting the Center’s petition….” Greg Loarie, an attorney with Earthjustice, accused the Commission of “bury[ing] its head in the sand” as to the effects of global warming on California wildlife.
The second lawsuit, filed in federal court in the Eastern District of California, does not challenge the failure to include the pika on the endangered species list, but the failure to make any determination of the pika’s status. Brought under the federal Endangered Species Act, the suit alleges that the Secretary of the Interior was required to make a determination on the October 1, 2007 petition within 90 days of its submission, pursuant to 16 U.S.C. § 1533(b)(3)(A) but that, to date, the government has not taken any action on the petition. The Center filed a motion for summary judgment in the case on October 2, 2008, requesting that the Court order the Secretary to make an initial finding regarding the Center’s petition within 30 days of any order granting summary judgment. The matter is set for hearing on December 5, 2008.
House committee releases draft cap-and-trade legislation, challenging state and regional initiatives
On October 7, 2008, John D. Dingell (D-MI), Chairman of the House Committee on Energy and Commerce, and Rick Boucher (D-VA), Chairman of the Subcommittee on Energy and Air Quality, released a discussion draft of legislation establishing a cap-and-trade system designed to cap greenhouse gas emissions. In a memorandum to members of the Committee on Energy and Commerce, Representatives Dingell and Boucher observed:
Since January 2007, the debate over climate change has evolved dramatically, beginning with groundbreaking reports released by the International Panel on Climate Change, which affirmatively settled the question of whether human activity is contributing to global warming. In addition, in the absence of Federal action, some 24 states and several regional organizations have moved towards regulation of greenhouse gases. While the States should be lauded for their progressive stance in addressing the problem, their actions, if not properly coordinated and directed and accompanied by Federal action, could be disruptive to interstate commerce and counterproductive to the goal of limiting national greenhouse gas emissions. (Emphasis added.)
Among other things, the draft legislation proposes limits on state and regional emissions-control programs. For example,
- Section 403(c)(1) would provide the Federal Energy Regulatory Commission with
exclusive jurisdiction over accounts, agreements, and transactions involving a regulated instrument [defined to include emission allowances, offset credits and allowance derivatives], whether inside or outside the United States, that are not subject to the jurisdiction of the Securities and Exchange Commission.
- Section 733(b) would limit the ability of states to implement their own emissions caps:
[N]o State, local, or regional authority may adopt or enforce a program that caps the amount of greenhouse gases that may be emitted or sold, and that uses tradable emission allowances for the purpose of meeting that cap.
- One of two proffered options for Section 816(b) preempts state motor vehicle standards:
(b) [OPTION B] PREEMPTION OF STATE STANDARDS FOR MOTOR VEHICLES.— Notwithstanding sections 177 and 209(b) of this Act, or any other provision of law, no State or any political subdivision thereof shall adopt or attempt to enforce any standard relating to the control of greenhouse gas emissions from new motor vehicles or new motor vehicle engines for which greenhouse gas standards have been established under title II of this Act or for which corporate average fuel efficiency standards have been established under chapter 329 of title 49 of the United States Code. No State shall require certification, inspection, or any other approval relating to the control of greenhouse gas emissions from any new motor vehicle or new motor vehicle engine as condition precedent to the initial retail sale, titling (if any), or registration of such motor vehicle, motor vehicle engine or equipment.
The legislation was not warmly received in all quarters. Fred Krupp, president of the Environmental Defense Fund, cautioned that
[t]he unbending science demands that we reduce global warming pollution far enough — and fast enough — to protect us from the worst consequences of climate change. The near-term targets and timetables in the current draft of the proposal fall far short of that goal.
The potentially preclusive effect of the legislation on existing and prospective state and regional initiatives — among them the Regional Greenhouse Gas Initiative ("RGGI") and the Western Climate Initiative ("WCI") — remains to be seen. Meanwhile, existing initiatives continue to move forward:
- The WCI (a collaboration of seven U.S. states, including California, and four Canadian provinces) released its “Design Recommendations for the WCI Regional Cap-and-Trade Program” on September 23, 2008, followed by the September 30, 2008 release of its "Essential Requirements of Mandatory Reporting for the Western Climate Initiative, Second Draft."
- The week before the House cap-and-trade draft was released, six states participating in the RGGI announced that allowances for the right to emit carbon dioxide from power plants in the northeastern U.S. sold for $3.07 per allowance in the first U.S. greenhouse gas auction. The $38,575,783 in proceeds from the September 25, 2008 auction, operated by World Energy Solutions, Inc., will be distributed to Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont, the six RGGI states that participated in the auction. (The RGGI also includes Delaware, New Jersey, New Hampshire and New York.)
- On October 14, 2008, all ten states of the RGGI initiated the bidding process for the next RGGI allowance auction, set for December 17, 2008.
- The California Air Resources Board ("CARB") released its final draft of a plan designed to reduce emissions to 1990 levels. The “Climate Change Proposed Scoping Plan”, issued on October 15, 2008, includes plans to "develop a cap-and-trade program for California that will link with the programs in the other WCI Partner jurisdictions to create a regional cap-and-trade program."
The release of the draft House bill highlights a looming legislative (and probably judicial) jurisdictional battle over cap-and-trade and other emissions-control programs.
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.
