California Climate Policies Continue To Survive Legal Challenges

Photographer: David McNew/Getty Images

Diesel trucks pass windmills along the 10 freeway near Banning, California. Close

Diesel trucks pass windmills along the 10 freeway near Banning, California.

Photographer: David McNew/Getty Images

Diesel trucks pass windmills along the 10 freeway near Banning, California.

Bloomberg BNA —Lawsuits challenging California's climate policies have yet to delay implementation of the programs, attorneys involved in the various cases said March 26.

“The California Air Resources Board is batting about 1,000,’’ Tom McHenry, a partner at Gibson, Dunn and Crutcher in Los Angeles, said during a presentation on the status of legal actions the state still faces eight years after enacting the Global Warming Solutions Act of 2006 (A.B. 32).

McHenry represents the Climate Action Reserve, one of several groups intervening in the litigation on behalf of the state.

CARB has prevailed, so far, on the substantive challenges to A.B. 32, the state's greenhouse gas emissions cap-and-trade program, and the low-carbon fuel standard, largely because the broad language in the statutes and the courts' deference to the agency in implementing the programs, attorneys said at a workshop held in advance of the opening of the Climate Action Reserve's Navigating the American Carbon World conference in San Francisco.

Plaintiffs in some of the cases are challenging the decisions favoring CARB, so their outcome and the final effects of the lawsuits remain unknown, the attorneys said.

Gavin McCabe, the state's supervising deputy attorney general who is representing CARB in climate litigation, said plaintiffs challenging the low-carbon fuel standard have asked the U.S. Supreme Court to consider whether the program violates the U.S. Constitution by discriminating against out-of-state fuel producers.

Dormant Commerce Clause

In 2013, the U.S. Court of Appeals for the Ninth Circuit reversed a district court that had found the fuel standard designed to cut the carbon intensity of transportation fuels 10 percent by 2020 ran afoul of the Constitution's dormant commerce clause.

A key issue in the Ninth Circuit case is CARB's methodology for determining the lifecycle emissions of the various transportation fuels, McCabe said.

In a separate state case challenging the fuel standard, the California Court of Appeal largely upheld the rule but found CARB made procedural errors in adopting the standard.

CARB has launched the effort to reopen the fuel standard rulemaking, but that process could take a year or longer, McCabe said.

The low-carbon fuel standard is an important “tool” to help California achieve its climate goals and “break the stranglehold the petroleum industry has on our transportation systems,” according to Erica Morehouse, an attorney with the Environmental Defense Fund, another group intervening on state's behalf.

Two other lawsuits that allege CARB's auction of allowances for the cap-and-trade program is an illegal tax are working their way through the appeals process, the attorneys said.

Last year, a California Superior Court decline to hear arguments by the California Chamber of Commerce and other industry groups that the state lacked authority to auction the greenhouse gas emissions allowances.

Future Litigation

McHenry said future challenges to California's climate policies could be in response to how the state decides to spend the cap-and-trade auction proceeds and whether those decisions are consistent with law that requires the revenue to be used to further goals of A.B. 32.

The outcome of the Environmental Protection Agency's greenhouse gas emissions tailoring rule case could spur interest in state and regional emissions trading programs if the Supreme Court rules in the agency's favor, William M. Sloan of Morrison & Foerster LLP's San Francisco office said.

The Supreme Court heard oral arguments in the tailoring rule case in February.

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