California Court of Appeals Finds Scoping Plan for Greenhouse Gas Reduction Compliant with AB 32

By: Kathleen Kline, Intern

On June 19, the California Court of Appeals upheld the Superior Court’s decision dismissing a challenge to the state Air Resources Board (CARB or Board) by environmental justice advocates.  Appellants, led by the Association of Irritated Residents (AIR), claimed the scoping plan CARB developed to reduce greenhouse gas emissions is inadequate.  The Global Warming Solutions Act of 2006, or AB 32, mandates a reduction in greenhouse gas emissions to 1990 levels by 2020, and in order to reach this goal the scoping plan was developed in 2009.  AIR’s criticisms of the plan concern the use of a cap-and-trade program as its main regulatory scheme.

Under cap-and-trade, a statewide limit on emissions is set, and emission allowances are divided and distributed among utilities, refineries, and other significant polluters, who can then make reductions in emissions themselves or purchase others’ allowances through the market.  Environmental justice advocates’ main concern with this scheme is that it allows larger industries to avoid reducing their emissions by purchasing additional credits and offsets, and that this would have a disproportionate impact on low-income communities located near these pollution sources.  These advocates asserted that other regulatory schemes should have been considered before the adoption of cap-and-trade, such as a tax on all carbon emissions, or a more consistent emissions limit, and that non-greenhouse gas pollutants should also be subject to regulation. 

AB 32 mandated that CARB develop its scoping plan in order to “achieve the maximum technologically feasible and cost-effective reductions in greenhouse gases” through regulation and market mechanisms.  Before implementing any scheme, the Board is required to assess the costs and benefits to the state’s economy, environment, and public health.  Particular concerns are equity between regulated entities and the impact on low-income communities.  Appellants argued that CARB ignored these requirements in developing the plan by failing to compare the expected cost-effectiveness of cap-and-trade with that of similar regulatory schemes or emissions limits.  Appellants believe that such comparisons would reveal cap-and-trade to be inefficient and less effective in controlling emissions than other schemes, such as a carbon tax.  CARB responded that available modeling tools are insufficient to properly compare regulatory or market-based approaches to GHG reduction; therefore, only rough comparisons are possible and the resulting plan is designed to be updated as further data becomes available.

AIR also claimed that CARB did not assess measures for the regulation of agricultural GHG emissions, and “limited its examination of air quality benefits to four sectors: electricity, fuel combustion, transportation fuels, and industry.”  This leaves the amount of emissions from other sectors unaddressed, and therefore increases the difficulty of reducing emissions statewide.  From an environmental justice standpoint, and also in the context of AB 32’s mandates, a disproportionate burden is placed on these four sectors if agriculture and other sources of GHG are not regulated.  CARB responded that the sectors it focused on account for roughly 85% of emissions; therefore, other sources are insignificant and its analyses conformed to the mandate.  AIR also faulted the Board’s analysis of emissions for being limited in its scope and “not including toxic air contaminants.”  Facilities producing high levels of GHG emissions also produce high levels of other pollutants, another major concern for low-income communities in industrial areas.  CARB again responded that its analysis was sufficient, as assessment of additional contaminants was not mandated.

The Court of Appeals upheld CARB’s plan in its entirety.  With respect to the appellants’ preference for techniques other than cap-and-trade, the court declared, “Even if other measures, such as inflexible emission limits or emission taxes might conceivably result in greater reductions, the Act does not call for maximum reductions without qualification, but for maximum reductions that are both feasible and cost-effective.  The record reflects that the Board went to exceptional lengths to obtain informed and scholarly input on the complex scientific and economic issues that bear on these critical qualifications.  While there are differences of opinion on many matters, AIR points to no recommendation in the plan, and no rejection of a suggested recommendation, for which substantial evidence was not presented and considered.”

Writing for a unanimous panel, Judge Pollak stated that AB 32 set ambitious goals for California, and these goals are necessarily challenging.  He noted that the scoping plan is an initial step in the emissions reduction process, to which alterations will be made periodically, and “it is hardly surprising that the scoping plan leaves some questions unanswered.”  Though incomplete, the plan was not found to be “arbitrary or capricious,” and was supported by an extensive record of technical studies and public consultation; thus, it was found compliant with AB 32.

This case highlights the difficulties of designing a fair, effective, efficient, and politically feasible scheme to reduce greenhouse gas emissions on a statewide scale.  Though it provides a strong outline and officially conforms to the statute’s requirements, it is likely that CARB’s scoping plan will be updated before the 2020 reduction goals are met.

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