ClimateIntel.com

In a much-awaited release, the EPA published Administrator Stephen Johnson’s formal rationale for denying California’s waiver application under Section 209(b) of the Clean Air Act on Friday, February 29.

“I have concluded that section 209(b) was intended to allow California to promulgate state standards applicable to emissions from new motor vehicles to address pollution problems that are local or regional. I do not believe section 209(b)(1)(B) was intended to allow California to promulgate state standards for emissions from new motor vehicles designed to address global climate change problems; nor, in the alternative, do I believe that the effects of climate change in California are compelling and extraordinary compared to the effects in the rest of the country.” (emphasis added)

The decision indicates that California could not meet its statutory burden, primarily as a result of the global - rather than local - nature of climate change. All of California’s previous waiver applications focused on local effects of air pollution (e.g., attempts to reduce smog); with greenhouse gas emissions, however, the location of the emissions source is irrelevant to the impact on the increase in the atmospheric concentration of carbon dioxide.

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At its public hearing on December 6, 2007, the California Air Resources Board (CARB) approved a regulation to reduce emissions from diesel auxiliary engines on ocean-going vessels while at berth. The regulation will require operators of vessels meeting specified criteria to turn off their auxiliary engines for most of their stay in port or, alternatively, to demonstrate specific fleet-wide emission reductions.

The approved regulation is subject to certain modifications that were suggested by staff at the Board hearing. On February 22, 2008, CARB met with the affected industry, the ports, and other interested stakeholders to discuss the modified regulation. Stakeholders will have 15 days to submit comments on the modified language.

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On February 14, 2008, the California Air Resources Board’s Economic and Technology Advancement Advisory Committee (ETAAC) released its final recommendations regarding proposed technologies and policies for reducing greenhouse gas emissions in California. Pursuant to the California Global Warming Solutions Act of 2006 (AB 32), ETAAC is required to advise CARB regarding “activities that will facilitate investment in and implementation of technological research and development opportunities.” The recommendations were developed through a year-long public participation process and input from California’s technology community. ETAAC approved the final report on February 11, 2008.

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A federal judge has authorized a settlement agreement between the South Coast Air Quality Management District (AQMD) and diesel engine makers after seven years of litigation. The agreement allows the regional air district to continue enforcing its clean fleet rules. AQMD’s clean fleet rules, adopted in 2000 and 2001, require fleet operators of 15 or more vehicles to purchase clean-fueled vehicles, such as ones operating on natural gas, when they replace or add vehicles to their fleet. The Engine Manufacturers Association and the Western States Petroleum Association had challenged the rules claiming that they were preempted by the federal Clean Air Act.

The effect of the parties’ agreement is that AQMD’s clean fleet rules will continue to apply to all fleets owned by state and local governments, as well as private companies that are under contract to, or operating under, an exclusive license or a franchise with state or local governments. The rules will not apply to fleets owned by the federal government or to fleets owned by private companies not under contract to state and local governments.

AQMD has been enforcing the rules since 2005. In 2007, AQMD reported that the rules had resulted in the purchase of more than 6,000 low-emitting vehicles.

In October 2007, the California Air Resources Board adopted the Forest Sector Protocols. The Protocols, which originally were created by the California Climate Action Registry, detail how to measure the amount of carbon that can be stored in a forest. This measurement process is necessary in order to properly certify and verify that emissions reductions actually occur.

Once verified, the credits can be sold in either voluntary markets to individuals or businesses, or in compliance markets, as part of a comprehensive cap-and-trade system designed to reduce greenhouse gas emissions. California is in the process of establishing a cap-and-trade system within the State, as required by the Global Warming Solutions Act of 2006 (also known as AB32).

Last week saw the first sale of emission reduction credits under the Forest Sector Protocols. Natsource Asset Management purchased 60,000 tons of carbon dioxide emissions reductions for an undisclosed price. The theory behind the investment is that the credits will increase in value once the cap-and-trade system begins operating, providing a return for the project’s investors.

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It is a busy week on Capital Hill for climate change policy, with three major hearings scheduled in a two-day period and the potential of more to come:

On Wednesday, the House Select Committee on Energy Independence and Global Warming held a hearing to explore the potential role of auctioning tradable pollution allowances under a cap-and-trade system to reduce global warming pollution, rather than allocating them based on historic emissions or other criteria. The issue of how emissions allowances are allocated is of significant importance to regulated entities.

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For years, California ports have provided substantial benefits to the local, regional, and national economy. These benefits have not come without costs. The ships, trucks, trains, and other diesel-powered equipment at these ports are major sources of air pollution, including greenhouse gas emissions. To limit these emissions and the associated health risks, several multi-billion dollar plans have emerged to “clean up” the ports.

At the local level, the Ports of Los Angeles and Long Beach, which taken together move more than $260 billion a year in trade, have developed an aggressive strategy to significantly reduce air pollution from port-related sources. Pursuant to the Clean Air Action Plan, the Ports propose to eliminate “dirty” diesel trucks from their cargo terminals within five years by helping to finance a new generation of clean or retrofitted vehicles.

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The U.S. Environmental Protection Agency announced this evening that it has rejected California’s application for a waiver under Section 209(b) of the Clean Air Act.

On a media teleconference, EPA Administrator Stephen L. Johnson indicated that California “does not meet the compelling and extraordinary conditions needed to grant a waiver of pre-emption for motor vehicle emissions standards.”  Administrator Johnson cited the national standard of 35 miles per gallon by 2020 signed into law today as part of the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007 as a major reason for denying the waiver application.  In addition, Johnson indicated that the problem of global warming is not exclusive to California, and that it is better to have a “clear national solution to a clear global problem.”

Project sponsors in California increasingly have become concerned about how to evaluate the potential climate impacts of their proposed projects under the California Environmental Quality Act (CEQA). AB 32, which seeks to reduce greenhouse gas emissions in California by an estimated 30% by the year 2020, has led some parties to contend that government agencies must take into account the potential climate impacts of the projects they approve, even if the projects contribute as little as “one molecule” of greenhouse gas.

Under CEQA, state and local agencies must evaluate and disclose the significant environmental impacts of proposed projects, and must adopt feasible measures to mitigate those impacts. These requirements place project sponsors and California agencies in a difficult position, because there is no regulatory guidance on how to evaluate an individual project’s contribution to climate change, much less how to determine whether a project’s potential contribution to climate change is “significant.” Until such guidance is developed (see recent efforts by Office of Planning and Research), agencies are faced with the dilemma of either (a) concluding that climate change is too speculative for evaluation and facing potential litigation from environmental advocacy groups and the California Attorney General, or (b) developing an ad hoc methodology for evaluating a project’s contribution to climate change, which may lead to unnecessary and costly environmental impact analysis and mitigation requirements.

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A federal court in California today issued a major ruling in the battle between states and the auto industry over who has the authority to regulate emissions from motor vehicles.

In Central Valley Chrysler-Jeep v. Goldstone, Judge Ishii of the Federal District Court for the Central District of California ordered that California may properly enact emissions regulations that are more strict than the federal fuel economy standards. The Plaintiffs, led by the Association of International Automobile Manufacturers, had argued that such regulations were pre-empted by federal law, specifically the Energy Policy and Conservation Act (EPCA). (more…)