Climate Change


The California Air Resources Board (CARB) has released the Preliminary Draft Cap-And-Trade Regulation and announced a December 14, 2009 Public meeting to discuss the Preliminary Draft Regulation.

In December 2008, CARB adopted the AB 32 Scoping Plan. The Plan incorporates a range of measures to reduce greenhouse gas (GHG) emissions in California, including the creation of a cap-and-trade program. As proposed, the California cap-and-trade program would include a stringent declining emissions cap. Emissions trading and the limited use of offsets would provide flexibility for covered entities to comply. If adopted, the cap-and-trade program would allow trading to ensure cost-effective emissions reductions and cover 85 percent of California’s GHG emissions.

CARB has issued the PDR in the hope to garner public comment and support.  To further its effort, CARB has scheduled a public meeting on Monday, December 14, 2009, from 1:00 pm to 5:00 pm at the Byron Sher Auditorium, 2nd Floor, at Cal/EPA Headquarters Building, 1001 I Street, Sacramento, California 95814.  In addition, CARB has inserted narrative into the PDR to highlight certain issues on which it is  specifically seeking comment.  For example, Section 95820 discusses “Covered Entities” the PDR “provides background on why the proposed covered entities were selected.” Along with the PDR, CARB issued an Excel spreadsheet entitled “Example Base Allowance Budgets for the California Cap-and-Trade Program” to provide example cap numbers.

There are five fundamental parts to the PDR:

  1. The Cap. The cap on emissions is set for each compliance period, first of which will begin January 1, 2012.  CARB is proposing to have three year compliance periods, with the possibility of staggering the phase-in of the program.
  2. Allowances.  Permits to emit GHG are “allowances.”  Every year the cap would decline and thus, the number od allwances issued would decline. At the end of a compliance period each covered entity would surrender allowances and any needed offsets that would equal its total GHG emissions during the compliance period.  Entities may do the following with their allowances: (1) surrender to to comply; (2) bank them for for future use; (3) trade them; (4) ask CARB to retire them.
  3. Banking. Refers to the ability to carry-over unused allowances or offsets from one compliance period to another.  Provides incentive for covered entities to make early reductions.
  4. Offsets.  Covered entities could buy offset credits in lieu of buying allowances or reducing their emissions on-site.  Offsets are tradeable credits that represent GHG emissions reductions that are made in areas or sectors not covered by the cap-and-trade program.
  5. Linkage to Other Greenhouse Gas Emissions Trading and Offset Crediting Systems.  The PDR proposes to link its cap-and-trade program to other trading systems.

At least initially, the program will be limited to large sources that emit 25,00 metric tons or more of GHG a year.  The list of covered entities proposed by CARB contains the usual suspects:  Electricity deliverers, transportation fuel deliverers, and facilities with the following operations or processes.

  • Stationary combustion;
  • Cement manufacturing;
  • Cogeneration;
  • Petroleum refining;
  • Hydrogen production;
  • Aluminum production;
  • Facility operators calcining carbonates;
  • CO2 supplier or transfer recipient;
  • Electricity generation;
  • Glass production;
  • Iron and steel production;
  • Lime production;
  • Natural gas transmission and distribution;
  • Nitric acid production;
  • Oil extraction field operation;
  • Gas extraction field operation;
  • Production of industrial gases;
  • Pulp and paper production; and
  • Soda ash production.

CARB states in its Notice that “while staff has specifically highlighted a number of areas for public comment, we welcome and will consider comments on all portions of the draft for the Spring 2010
proposed draft regulation.”  Comments are due no later than January 11, 2010 and can be submitted at: http://www.arb.ca.gov/lispub/comm2/bcsubform.php?listname=dec-14-pdrws&comm_period=1.

The Incentive Programs Advisory Group Meeting, scheduled for December 3, 2009, is being postponed until early 2010.  We will send out a meeting notice once we select a revised meeting date. The meeting is being rescheduled to better align with upcoming revisions to both the Carl Moyer Program Guidelines and the Goods Movement Emission Reduction Program Guidelines.

These proposed guideline updates will be considered by CARB in March 2010. CARB believes the next Advisory Group meeting will be most productive if it is held after CARB staff has held workshops on its proposals but before Board consideration.

The Incentive Programs Advisory Group, led by ARB Board Member Sandra Berg, provides a forum for discussing policy level issues relating to the development and ongoing implementation of California’s air quality incentive programs. These include the Carl Moyer Program, the Lower-Emission School Bus Program, the Goods Movement Emission Reduction Program, the AB 118 programs, and other locally run air district programs, among others.  The group meets twice a year to provide a venue for policy level coordination among agencies and programs.

For more information about the Advisory Group, please visit ARB’s web site at http://www.arb.ca.gov/msprog/moyer/advisory_group.htm .

On Tuesday, November 10th, the second meeting of the California Air Resources Board’s Truck Regulations Advisory Committee (TRAC) and its designated subcommittees will be held. The main TRAC meeting will be held from 3-5 PM PST in the Sierra Hearing Room at the CALEPA Building in Sacramento, CA and webcast.

For webcast information, please visit http://www.calepa.ca.gov/broadcast/?BDO=1.

The agendas of the day’s event can be found by clicking here or by visiting the TRAC website.

Background on the TRAC:

The California Air Resources Board (CARB) created the Truck Regulations Advisory Committee (TRAC) as part of its implementation of the Truck and Bus regulation and the Heavy-Duty Diesel Greenhouse Gas Emission Reduction regulation.  TRAC was formed to assist CARD in facilitating communication with stakeholders and to obtain stakeholder feedback on the implementation tools used for these regulations. According to CARB, The goals of TRAC is to help CARB staff fine tune its outreach, training, and implementation materials and provide a mechanism for stakeholders to discuss other implementation issues.

This post was authored by Rajiv Tata, who currently serves as General Counsel for Utility Trailer Manufacturing Company:

California’s Heavy-Duty Greenhouse Gas Reduction Measure (GHG Measure) will affect the transportation of goods between California and other states, and will therefore impact interstate commerce. Although the federal government seems as though it will eventually regulate greenhouse gases, thereby possibly preempting state regulations like the GHG Measure, for now, the constitutionality of the GHG Measure will likely depend upon a dormant commerce clause analysis.

There is ample precedent under U.S. Supreme Court jurisprudence establishing that absent discrimination a state regulation affecting interstate commerce will be upheld unless the burden imposed on interstate commerce is clearly excessive in relation to the regulation’s putative local benefits. It is also well established that the power of the state to regulate the use of its highways is broad and pervasive. It is not surprising then that the Court’s recognition of the peculiarly local nature of safety issues, both in the context of highways and human health, resulted in such regulations being upheld despite their impact on interstate commerce.

Under dormant commerce clause analysis, the threshold inquiry is to determine whether a challenged law discriminates against interstate commerce. Here, the GHG Measure is not likely to be considered discriminatory against out of state transportation companies since the requirements actually increase the operating costs of companies domiciled within California.

Typically, if the challenged regulation is not discriminatory, it will be upheld unless there is an excessive burden on interstate commerce in relation to its “putative local benefits.” Therefore, any analysis involving the constitutionality of the TRU ATCM and GHG Measure will have to weigh their respective burdens and benefits. The Supreme Court applied a dormant commerce clause analysis to a state regulation in a factual context similar to that presented by California’s GHG Measure. In Bibb v. Navojo Freight Lines, Inc., the Court determined the constitutionality of an Illinois statute requiring the use of a specific rear fender mudguard on trucks and trailers operating on that state’s highways.

The Court’s analysis balanced the statute’s safety benefits against the burdens it imposed on interstate commerce. Initially, the Court noted that statutes pertaining to safety are afforded a strong presumption of validity because they often involve policy decisions that are best left to the discretion of state legislatures. In the Bibb case however, the Court found that the statute placed burdens on interstate commerce that were outweighed by its benefits. Specifically, the facts the Court found to be outcome determinative included the costs associated with the installation, maintenance, and replacement of mudguards, safety issues relating to decreasing the effectiveness of truck and trailer brakes, and mudguards’ susceptibility to fall off during use. In addition, the Court found that Illinois’ regulation conflicted with that of another state, thereby requiring interstate carriers to shift loads to differently designed vehicles when traveling between the states. Combined, the heavy burden on the interstate movement of trucks and trailers led the Court to strike down the regulation because it surpassed the permissible limits for safety regulations.

The GHG Measure imposes burdens on the movement of trucks and trailers in interstate commerce similar to those relied upon by the Court to strike down the Illinois statute in Bibb. Under the GHG Measure carriers will need to purchase side skirts, front and rear trailer fairings, low-rolling resistance tires, and incur the cost of installing, maintaining, and repairing these items on their fleets.
Similar to the statute in Bibb, the GHG Measure also presents a safety issue. Trailer side skirts can be easily damaged while crossing railroad tracks and driveways, and while loading and unloading at docks with tapered ramps. Truck drivers will need to remove the devices if damaged under such circumstances, resulting in down time, or bear the liability risk of the devices detaching from the trailer while driving. Moreover, the aerodynamic side skirts will likely operate in treacherous weather conditions, often bearing the additional weight of snow or ice that could compromise the devices’ safety and result in failure at high speeds.

The California regulations present a third burden identified in Bibb, requiring interstate carriers to shift loads to differently designed vehicles when traveling between the states. Entire out of state fleets will incur the costs of compliance with the California regulations because it is often not possible for carriers to know in advance which equipment will be used in a particular region on a particular day. Moreover, those carriers not wanting to incur these operating costs would need to expend time and resources in ensuring that cargo was transferred to designated trailers equipped to legally operate in California.

Based on the Bibb factors, a court analyzing the costs associated with complying with the California regulations might conclude that they impose too great a burden on interstate commerce to be upheld.

Notwithstanding the numerous burdens placed on interstate commerce by the California regulations, a thorough dormant commerce clause analysis will need to consider their respective benefits. California’s stated purpose in enacting the GHG Measure is to control major sources of GHG emissions to alleviate a serious threat to California’s public health, natural resources and environment. To accomplish its goal, ARB grouped sources of those emissions into various sectors. Not surprisingly, the GHG Measure is grouped under the transportation sector.

The GHG Measure seeks to alleviate the harm GHGs pose to public health by improving the fuel efficiency of heavy duty trucks and trailers. The GHG Measure’s perceived benefits are illusory in several ways however. Test data used to justify the adoption of the GHG Measure demonstrates that desired fuel efficiencies materialize at sixty five miles per hour or more. Such speeds are unattainable both legally and practically. First, the California Motor Vehicle Code prohibits a truck from exceeding fifty-five miles per hour on a highway. In addition, CalTrans data demonstrates that the average truck speed on California’s main commercial corridor is less than sixty five miles per hour. At these speeds the fuel savings used to justify the regulation’s adoption cannot be attained. If the fuel savings cannot be attained, the corresponding health benefits from reduced GHG emissions cannot be realized. Under such a scenario, the burdens imposed by the GHG Measure will significantly outweigh the regulation’s unobtainable benefits, thereby reducing the likelihood that it will survive legal challenge.

Even if the GHG Measure’s intended benefits are realized, the problem California might encounter in sustaining the validity of its regulations under a dormant commerce clause challenge is that air contaminants contributing to public health concerns are inherently fluid, and therefore global in nature. Indeed, the heads of the U.S. Departments of Agriculture, Commerce, Transportation, and Energy, in response to the U.S. Supreme Court’s decision in Massachusetts v. Environmental Protection Agency, agreed that the regulation of GHGs must take a different approach than that used to historically regulate air pollution:

the Clean Air Act is premised on the idea that controlling
emissions in the United States will improve air quality in the
United States, and that a state or region can improve its air
quality by controlling emissions in that area. This is not true
in the case of greenhouse gases. Controlling greenhouse gas
emissions in the United States will reduce atmospheric
concentrations of those gases only if our emission reductions are
not simply replaced with emissions increases elsewhere in the
world.

In adopting the GHG Measure, California is clearly attempting to address a global issue, which as discussed above, will have a significant impact on interstate commerce. Under such a factual scenario, courts may need to develop a new standard for analyzing the validity of state GHG regulation. Such analyses will need to not only evaluate the burdens and benefits of such regulation on interstate commerce, but whether those benefits are realized at a local, state, national, or even international level. The result of such an analysis will hopefully determine how to equitably apportion the burden associated with such benefits.

For more information, please visit http://climatechangelegal.blogspot.com/ or
http://rajivtata.com

The California Air Resources Board unanimously adopted its Scoping Plan to implement the sweeping changes in greenhouse gas emission dictated by AB 32.

As envisaged by the Scoping Plan, the state’s greenhouse gas emissions would be cut by 15% over the next 12 years.  Although it seems to lay out targets for most sectors of the economy, there are some sectors that are missing, like aircraft and airports. All told,  it amounts to an average cut of four tons of carbon dioxide and other greenhouse gases for every person in the state.

The Scoping Plan, which  will be implemented over the next two years, puts California at the forefront of national climate policy at a time when President-elect Barack Obama has vowed to put control of greenhouse gas emissions at the top of his environmental agenda.

Past posts on this topic:

As part of the California Air Resources Board’s (CARB) “Climate Change Proposed Scoping Plan,” the Board, on October 24, 2008, released its Preliminary Draft Staff Proposal on recommended approaches for setting Interim significance thresholds for greenhouse gases under the California Environmental Quality Act (CEQA).  Since these thresholds of significance will affect the conduct of EIRs for projects subject to CEQA, such as airport development projects and Airport Land Use Compatibility Plans, participation in the setting of these standards is critical.

California law provides that climate change is an environmental effect subject to the CEQA.  Lead agencies, such as Airport Land Use Commissions, are therefore obligated to determine whether a project’s climate change-related effects may be significant, thereby requiring preparation of an Environmental Impact Report and to impose feasible mitigation to substantially lessen any significant effects.

CARB is specifically requesting participation from the public stakeholders and local lead agencies.  The Preliminary Draft Staff Proposal suggests a “sector approach” due to the fact that “(1) some sectors contribute more substantially to the problem, and therefore should have a greater obligation for emissions reductions, and (2) looking forward, there are differing levels of emissions reductions expected from different sectors in or to meet California’s climate objectives.”

The PDSP includes flowcharts that address CARB’s “threshold concepts” for industrial projects and for residential and commercial projects.  The PDSP also states that that the staff is working on a proposal for an interim approach for thresholds for transportation projects.  CARB proposes, for example, a significance threshold of 7,000 metric tons of CO2e/year.  For Projects that go over that amount, an EIR would have to be prepared and “all feasible GHG mitigation measures implemented.”

CARB has identified a few questions to solicit public comment, but notes that the “list is not exhaustive.”

  • Will the recommended approaches have any unintended consequences, for example, encouraging the piecemealing of projects?
  • As set out in the attachments to the Staff Proposal, staff proposes to define certain performance standards (e.g., for energy efficiency) by referencing or compiling lists from existing local, State or national standards.  For some sub-sources of GHG emissions (e.g., construction, transportation, waste), ARB staff has not identified reference standards.  How should the performance standards for these sub-sources be defined?
  • Are any of the industrial, residential, or commercial project types eligible for categorical exemptions likely to contribute more significantly to climate change than staff’s preliminary analysis indicates?
  • For residential and commercial projects, staff has proposed that the GHG emissions of some projects that meet GHG performance standards might under some circumstances still be considered cumulatively considerable and therefore significant.  What types of projects might still have climate change-related impacts?

As noted above, since these thresholds of significance will affect the conduct of EIRs for projects subject to CEQA, such as airport development projects and Airport Land Use Compatibility Plans, participation in the setting of these standards is critical.

As part of the California Air Resources Board’s (CARB) “Climate Change Proposed Scoping Plan,” the Board, on October 24, 2008, released its Preliminary Draft Staff Proposal on recommended approaches for setting Interim significance thresholds for greenhouse gases under the California Environmental Quality Act (CEQA).  Since these thresholds of significance will affect the conduct of EIRs for projects subject to CEQA, such as airport development projects and Airport Land Use Compatibility Plans, participation in the setting of these standards is critical.

California law provides that climate change is an environmental effect subject to the CEQA.  Lead agencies, such as Airport Land Use Commissions, are therefore obligated to determine whether a project’s climate change-related effects may be significant, thereby requiring preparation of an Environmental Impact Report and to impose feasible mitigation to substantially lessen any significant effects.

CARB is specifically requesting participation from the public stakeholders and local lead agencies.  The Preliminary Draft Staff Proposal suggests a “sector approach” due to the fact that “(1) some sectors contribute more substantially to the problem, and therefore should have a greater obligation for emissions reductions, and (2) looking forward, there are differing levels of emissions reductions expected from different sectors in or to meet California’s climate objectives.”

The PDSP includes flowcharts that address CARB’s “threshold concepts” for industrial projects and for residential and commercial projects.  The PDSP also states that that the staff is working on a proposal for an interim approach for thresholds for transportation projects.  CARB proposes, for example, a significance threshold of 7,000 metric tons of CO2e/year.  For Projects that go over that amount, an EIR would have to be prepared and “all feasible GHG mitigation measures implemented.”

CARB has identified a few questions to solicit public comment, but notes that the “list is not exhaustive.”

  • Will the recommended approaches have any unintended consequences, for example, encouraging the piecemealing of projects?
  • As set out in the attachments to the Staff Proposal, staff proposes to define certain performance standards (e.g., for energy efficiency) by referencing or compiling lists from existing local, State or national standards.  For some sub-sources of GHG emissions (e.g., construction, transportation, waste), ARB staff has not identified reference standards.  How should the performance standards for these sub-sources be defined?
  • Are any of the industrial, residential, or commercial project types eligible for categorical exemptions likely to contribute more significantly to climate change than staff’s preliminary analysis indicates?
  • For residential and commercial projects, staff has proposed that the GHG emissions of some projects that meet GHG performance standards might under some circumstances still be considered cumulatively considerable and therefore significant.  What types of projects might still have climate change-related impacts?

As noted above, since these thresholds of significance will affect the conduct of EIRs for projects subject to CEQA, such as airport development projects and Airport Land Use Compatibility Plans, participation in the setting of these standards is critical.

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