Legal Challenges To California GHG Regulatory Programs

Legal challenges to California's greenhouse gas ("GHG") regulatory programs continue to work their way through California and federal courts. With the most significant challenge facing possible review by the U.S. Supreme Court, two other challenges pending before the California Court of Appeal, and a fourth prompting CARB to redo part of its rulemaking, the long-term viability of California's latest efforts to curb GHG emissions is uncertain. GHG Emissions Allowances and Offset Credits. Under California's cap-and-trade program, covered operators of stationary sources of GHG emissions must surrender compliance instrumentsemissions allowances or offset creditsfor each ton of GHGs they emit. In Our Children's Earth Foundation v. CARB, No. CGC-12-519554 (S.F. Sup. Ct., March 8, 2013), two environmental groups are seeking a writ of mandate that would stop CARB, at least temporarily, from distributing any offset credits. The petitioners argue that CARB's methods of distributing credits violate the implementing statute by failing to ensure that only new or "additional" emissions reductions qualify for credits. The Superior Court rejected this challenge, holding that CARB acted within its statutory authority to implement the offset credit program. The petitioner's appeal is pending. In California Chamber of Commerce v. CARB, No. 34-2012-80001313 (Sac. Sup. Ct., Nov. 12, 2013) (consolidated with Morning Star Packing Company v. CARB), the petitioners challenge CARB's authority to sell GHG emissions allowances at auctions. They also argue that the auctions create a tax that was not authorized by a two-thirds vote in the legislature, as required by the California Constitution. The Superior Court rejected both challenges, holding that CARB acted within its delegated authority to design a system for distributing allowances, and that auction payments are valid regulatory fees that are not subject to the supermajority requirement. In early March 2014, the petitioners filed their appeals with the California Court of Appeal. Low Carbon Fuel Standard. The Low Carbon Fuel Standard ("LCFS") assigns "carbon intensity scores" to all transportation fuels used in California. A fuel's score is based on the GHG emissions it...