California voters rejected an oil industry-backed effort to squash the state's law mandating a large reduction in greenhouse gas emissions. Now, a lawsuit from a handful of environmental justice groups may accomplish what Big Oil could not.
Last November, California voters soundly rejected an oil industry-backed initiative that would have killed implementation of AB 32, the Global Warming Solutions Act, the Golden State's historic 2006 legislation to reduce greenhouse gas (GHG) emissions to 1990 levels by 2020. In an ironic twist of fate, a recent court ruling in a lawsuit brought by environmental justice groups may now succeed where Big Oil did not.
The ruling, which came on March 18th in a San Francisco Superior Court, said the California Air Resources Board (CARB) violated state law by not adequately considering alternatives to CARB's carbon emissions cap-and-trade program, the keystone of the most far reaching and comprehensive GHG-reduction effort in the nation. Judge Ernest Goldsmith specifically noted that CARB had not sufficiently considered a carbon tax system, which encourages polluters to reduce GHG emissions by assessing a fee on those outputs. In doing so, Goldsmith wrote, CARB was seeking "to create a fait accompli by premature establishment of a cap-and-trade program before alternatives can be exposed to public comment and properly evaluated."
It was a significant victory for the half dozen environmental justice organizations that filed the suit. Those groups contend that a cap-and-trade scheme will allow oil refineries and power plants - which are often located in low-income communities primarily comprised of people of color - to avoid reducing their GHG-emissions by simply buying credits or offsets for mitigation projects in other parts of the world.
It isn't clear, however, just how much of the omnibus AB 32 program will come to a halt. Jon Costantino, a former CARB manager who oversaw the agency's development of the AB 32 Scoping Plan that includes the cap-and-trade program, says the court's ruling was not clear in that regard. CARB spokesperson Stanley Young also notes that the agency has subsequently completed a 500-page environmental analysis of the cap-and-trade alternatives, which the court did not allow it to introduce. Young says CARB will use that analysis in its appeal.
"The court said CARB was good in most areas of AB 32," says Costantino, now a senior adviser at the Sacramento office of the law firm Manatt, Phelps & Phillips. "Which brings up two main questions: Did the judge really mean to stop all of AB 32 or just the cap-and-trade program, and will he accept the cap-and-trade analysis that CARB has already done?"
Negotiations between CARB officials and the litigants failed to produce a compromise they could take to the judge that would help answer the first question. The two sides tried to work out an agreement for what the ruling will cover, but the negotiations went nowhere. That led Caroline Farrell, Executive Director of the Center on Race, Poverty & the Environment, one of the plaintiffs, to issue a statement accusing CARB of "running AB 32 off a cliff."
Bill Gallegos, Executive Director of Communities for a Better Environment, another plaintiff, said each side will now submit their own writs to the court seeking to have the ruling interpreted to their own wishes. Which version Judge Goldsmith chooses, says Costantino, could have a profound impact on not only California, but possibly other states as well.
"These plaintiffs can possibly hold up all of AB 32, depending on what gets into the writ," he says.
Gallegos denies the groups want to block all of AB 32's tenets, insisting they only want to ensure that poor communities don't get short shrift in CARB's zeal to push the cap-and-trade plan forward. But Costantino notes that if the proceedings drag out past October, it could force CARB to re-open the plan to public comment. That, he says, would ensure California won't be ready to go with the cap-and-trade program on January 1st, 2012 as planned.
"If California doesn't start, there will definitely be a ripple effect across the country," he says.
But that effect already appears underway in several states. Only days after taking office in January, New Mexico Gov. Susana Martinez (R) fired all seven members of the state Environmental Improvement Board, which last November voted to enact a statewide cap on GHG-emissions and to allow the state to participate in the regional cap-and-trade program of the Western Climate Initiative (WCI), along with California.
The state Supreme Court, however, unanimously overruled Martinez's order to stop the state's records administrator from publishing the rules, including registering the cap-and-trade measure. Lawmakers also rejected bills this session designed to pull New Mexico out of the WCI and overturn or suspend other GHG regulations.
Mariel Nanasi, Executive Director of New Energy Economy, a Santa Fe nonprofit that sued Martinez over her attempt to squash the GHG rules, lauded legislators' refusal to go along with Martinez's efforts, calling the governor's thinking "backward and reckless."
Things are a little more in question in New Hampshire, where the House recently approved HB 519, which would pull the state out of the Regional Greenhouse Gas Initiative (RGGI), a 10-state cap-and-trade program comprised of Northeastern and Mid-Atlantic states that impose a GHG-emissions cap on electric power plants. The vote came just weeks after the RGGI held its 11th quarterly auction of carbon dioxide allowances, which netted the states $83.4 million. Since 2008, the RGGI auctions have garnered over $860 million, about 65 percent of which has been used to support energy efficiency and renewable energy programs in the participating states. Critics, however, have also noted the propensity of states to divert some of their proceeds to General Fund needs.
The bill, which was favored by Republicans, passed with a veto-proof 251-108 tally almost exclusively along party lines. Although Republicans also hold a strong majority in the Senate, the bill's chances there are not quite as assured, says Bob Scott, Air Resources Division Director for the state Department of Environmental Services.
"It's only veto-proof in the Senate if all the Republicans do the same thing as in the House," he says.
That is anything but a given, considering that Senate Energy and Natural Resources Committee Chair Bob Odell and Senate President Peter Bragdon, both Republicans, co-sponsored the original legislation in 2008 that authorized the state to join the RGGI.
Cap-and-trade measures have sprung up in other states as well this year. According to State Net, in addition to New Mexico and New Hampshire, 17 states and Congress have introduced bills relating to cap-and-trade. At least seven states - Iowa, Maine, New Hampshire, New Mexico, Oregon, Minnesota and Washington - considered or are still considering bills intended to remove their state from participating in regional GHG-reduction initiatives like the RGGI, the WCI and the Midwest Greenhouse Gas Reduction Accord. A 2010 carryover measure (NJ AB 3147/SB 2250) is also pending in New Jersey.
Clint Woods, Energy, Environment and Agriculture Task Force Director for the American Legislative Exchange Council (ALEC), says those states used model legislation created by his group, which opposes cap-and-trade emissions regulation. Those measures either create resolutions urging their governors to withdraw or refrain from joining regional initiatives or overturn laws that codify the state's participation. Woods says it is unclear if any other states will follow suit this year, but he also notes the results of last November's elections may ultimately make it a moot point.
"Most of the Midwestern states changed to GOP governors who oppose being in the Midwest Greenhouse Gas Reduction Accord," he says. "It is likely to be that way in other states as well. It will be rejection by non-participation, basically letting cap-and-trade die a natural death."
Whether California's cap-and-trade program will suffer such a fate is yet to be determined. Costantino says it will be "weeks to months at minimum" before the court decides how broadly it wants to interpret its own ruling. If the court decides not to accept CARB's analysis, it will be a race to see if they can get a more acceptable plan approved before November.
Countless eyes across the country will undoubtedly be watching to see how that plays out. Many observers, for instance, doubt the WCI can survive without California and the massive carbon market it would bring to the compact. But Nanasi insists whatever happens in California won't derail New Mexico's plans.
"We really hope California's plan goes forward, and that we're able to link to it," she says. "But the New Mexico cap-and-trade program will go into effect in 2013 even if the WCI regional plan does not."
That may be easier said than done. Martinez has made it clear she intends to continue reviewing regulations she feels harm the state's economy and business climate. But Nanasi says she is confident lawmakers and the courts will continue to come down on the side of the state's GHG-reduction advocates.
"We've won in court and the Legislature for the last two or three years, and we intend to keep winning," she says. - By RICH EHISEN
In addition to cap-and-trade measures, states will spend a lot of time in 2011 weighing a wide spectrum of emissions legislation. According to State Net, 178 such bills have been introduced in statehouses so far this year, with 27 having made it through their House of origin.
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