California Regulators Hitting Climate Policies Out of Ballpark


California's climate policies have been moving forward despite lawsuits challenging programs being implemented under the state's Global Warming Solutions Act of 2006 (A.B. 32), according to attorneys involved in various cases. 

``The California Air Resources Board is batting about 1000,’’ Tom McHenry, a partner with Gibson, Dunn and Crutcher in Los Angeles, said during a presentation on the status of legal actions the state still faces eight years after enactment of A.B. 32.

Henry represents the Climate Action Reserve, one of several groups intervening in the litigation on behalf of the state.

Board Winning Cases

CARB has prevailed, so far, on challenges to A.B. 32, the state’s cap-and-trade program and the low-carbon fuel standard largely due to broad language in the statute and the courts’ deference to the agency in implementing the programs, the attorneys said during a workshop held in advance of the opening of the Climate Action Reserve’s Navigating the American Carbon World conference in San Francisco.

Plaintiffs in some of the cases are challenging decisions favoring CARB, so outcomes and final impacts remain unknown, attorneys said.

Gavin McCabe, the state’s supervising deputy attorney general who is representing CARB in the litigation, said plaintiffs challenging the low-carbon fuel standard have asked the Supreme Court to consider whether the program violates the U.S. Constitution by discriminating against out-of-state fuel producers (Rocky Mountain Farmers Union v. Corey).

Last year, the U.S. Court of Appeals for the Ninth Circuit reversed a district court decision that found the fuel standard, designed to cut the carbon intensity of transportation fuels 10 percent by 2020, ran afoul of the Constitution’s dormant commerce clause.

The key issue in the case is CARB’s methodology for determining the lifecycle emissions of the various transportation fuels, McCabe said.

In a separate state case challenging the fuel standard, the court largely upheld the rule but found procedural errors in CARB’s adoption measure, forcing the agency to reopen the rulemaking (POET LLC  v. CARB).

CARB has launched the effort to reopen the rulemaking, but that process could take a year or long, McCabe said.

Environmentalists Say LCFS Breaks Stranglehold

The low-carbon fuel standard is an important "tool" to help California achieve its climate goals and ``break the stranglehold the petroleum industry has on our transportation systems,’’ Erica Morehouse, an attorney at the Environmental Defense Fund, said. EDF is one of the groups intervening on the state’s behalf.

Two other lawsuits, which claim CARB’s cap-and-trade allowance auction amounts to an illegal tax, are working their way through the appeals process, the attorneys said.

Last year, a court rejected arguments by the California Chamber of Commerce and other industry groups that the state lacked authority to auction allowances (California Chamber of Commerce  v. CARB).

Future Litigation to Follow the Money

Henry said future challenges to California’s climate policies could be in response to how the state decides to allocate cap-and-trade auction proceeds and whether those decisions are consistent with the law's mandate requiring spending to further goals of A.B. 32.

The outcome of the Environmental Protection Agency’s greenhouse gas emissions permitting program for stationary sources also could have an impact on California’s programpossibly positiveshould the Supreme Court rule in the agency’s favor, William M. Sloan of Morrison & Foerster LLP’s San Francisco’s office said.

The Supreme Court heard oral arguments on the EPA's greenhouse gas permit program Feb. 24 (Util. Air Regulatory Grp. v. EPA).

A decision in the EPA's favor may spur Congress and industry groups to revisit the deployment of market-based programs, he said.


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