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Court Holds CARB’s Scoping Plan Complies with AB 32

Tuesday, June 26th, 2012

In Associated of Irritated Residents v. California Air Resources Board, (2012) ___ Cal.App.4th ___, the California Court of Appeal, First District, held that the California Air Resources Board (CARB) complied with the requirements of AB 32, the Global Warming Solutions Act, when it adopted its Climate Change Scoping Plan (Plan).

AB 32 requires, among other things, that CARB adopt a “scoping plan[,] as that term is understood by [CARB], for achieving the maximum technologically feasible and cost-effective reduction in greenhouse gas emissions from sources or categories of sources of greenhouse gases by 2020.” The Plan must identify and recommend emission reduction measures and alternatives, as well as evaluate total benefits to California’s economy, environment, and public health. The legislation also specifies that greenhouse gas emissions be reduced to 1990 levels by 2020, with the ultimate goal of reducing greenhouse gas emissions to 80% below 1990 levels by 2050. On May 7, 2009, CARB adopted a Plan designed to: (1) expand and strengthen existing energy efficiency programs and building and appliance standards, (2) achieve a statewide renewable energy mix of 33%, (3) implement a cap-and-trade program, (4) establish targets for transportation-related greenhouse gas emissions and incentives to meet those targets, (5) implement measures pursuant to existing state laws such as the low carbon fuel standard, and (6) create targeted fees to reduce greenhouse gas emissions.

The Association of Irritated Residents (AIR) believed CARB’s Plan did not satisfy AB 32’s requirements and initiated a lawsuit wherein the trial court ruled in favor of CARB. On appeal, the court reviewed CARB’s Plan for compliance with AB 32 under the abuse of discretion standard and addressed AIR’s arguments as follows.

The court first addressed AIR’s contention that AB 32’s Section 38561 requires CARB to adopt a Plan designed to achieve “maximum technologically feasible and cost effective reductions in greenhouse gas emissions” and that CARB failed to do so. AIR interpreted use of the word “maximum” to require CARB’s Plan to facilitate the greatest feasible greenhouse gas emissions reductions. In rejecting this contention, the court explained the Legislature intended that CARB create a Plan designed to achieve 1990 greenhouse gas emission levels by 2020 as a step toward achieving a longer-term climate goal of an 80% reduction below 1990 greenhouse gas emission levels by 2050. Thus, CARB’s Plan properly seeks to achieve 1990 greenhouse gas emission levels by 2020, and doing so is related to achieving the maximum reductions required by Section 38561. Moreover, in formulating the Plan, CARB extensively analyzed numerous measures to reduce greenhouse gas emissions as they related to achieving “maximum technologically feasible and cost effective reductions[.]” Through such analysis, CARB decided to adopt a cap-and-trade system, as well as numerous additional measures to achieve 1990 greenhouse gas emissions levels by 2020. Accordingly, CARB’s adoption of the Plan was supported by substantial evidence and could be neither arbitrary nor capricious with regard to the means chosen to satisfy AB 32’s goals.

Next, the court rejected AIR’s argument that CARB’s Plan failed to create and apply valid standard criteria for cost-effectiveness by which to compare alternative measures. As defined by AB 32’s Section 38505, cost-effectiveness is “the cost per unit of reduced emissions of greenhouse gasses adjusted for its global warming potential.” This definition does not provide criteria to assess cost effectiveness, nor does it define how costs are to be measured. Working with that definition, CARB considered four possible approaches for measuring cost-effectiveness, and ultimately adopted the “Cost of a Bundle of Strategies” approach. In the Plan, however, CARB explained in detail that a valid comparison of measures is not possible as limitations of modeling tools prevent a direct comparison of market-based measures (ie. cap-and-trade) with direct regulation measures (ie. technology forcing). As such, CARB did not directly compare certain measures in terms of cost-effectiveness because doing so would provide misleading results. The court was satisfied with CARB’s efforts to determine cost-effectiveness, and concluded those efforts were within the Legislature’s directive.

The last of AIR’s major claims was that the Plan did not do enough to reduce greenhouse gas emissions in the agricultural sector. Though the record indicated CARB extensively analyzed measures designed to reduce such emissions, the Plan only encourages capture of methane at dairies and plans to reassess the measure after five years. It goes on to explain the scientific knowledge and technology to reduce greenhouse gas emissions in the agriculture sector does not exist because 82% of the sector’s emissions result from complex biological processes. The court upheld this reasoning, finding that adopting premature mandates could be excessively costly and have environmental drawbacks.

Key Point:

CARB’s Plan is a first step toward achieving the maximum goal of reducing greenhouse gas emissions in California to 80% of the state’s 1990 emissions. The Plan reflects substantial technical analysis and scientific research with which the court was hesitant to interfere by substituting its own judgment over CARB’s.

Written By: Tina Thomas, Amy Higuera and Grant Taylor (law clerk)
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