The California Court of Appeal last week reversed a lower court decision that would have indefinitely delayed the development by Newhall Land and Farming Company of 21,308 residential units, 629 acres of mixed use development, 67 acres of commercial use, 249 acres of business park, and 1,014 acres of open space in northwestern Los Angeles County over the next 25-30 years (“Project”).  The lower court’s decision had originally granted the Petition for Writ of Mandate brought by, among others, the Center for Biological Diversity (“Respondents”), challenging, among other actions by the California Department of Fish and Wildlife (“DFW”) (“Appellant”), the revised Joint Federal/State Environmental Impact Statement/Environmental Impact Report (“EIS/EIR”) for the Project.

While the Appellate Court’s 112 page decision addressed numerous causes of action brought by Respondents in the trial court, one of the most unique and far reaching was its disposition of Respondents’ claim that the EIS/EIR’s baseline for assessing the cumulative impacts of the Project’s Greenhouse Gas (“GHG”) emissions is a procedural issue properly evaluated under the “failure to proceed in a manner required by law” standard, applicable to procedural actions, and that, employing the correct standard, the EIS/EIR’s analysis was predicated on an illusory baseline.  In a decision that is likely to be adopted in the adjudication of other California Environmental Quality Act (“CEQA”) actions challenging the evolving state and federal GHG standards, the Appellate Court firmly disagreed. 
 


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A recent poll of registered voters in California concerning the new State “Cap and Trade” auction program, initiated Wednesday, November 14, 2012, and aimed at reducing greenhouse gas (“GHG”) emissions found strong public support for the program.  As set forth in more detail in the Aviation & Airport Development Law News blog of November 13, 2012, the Cap and Trade program assigns “caps” to carbon emissions (euphemistically called “allowances”) for various industries, including utilities and refineries.  It then allows those companies who have not used the full allotment of allowances to sell their unused allowances to companies that have expended their own allowances.  Effectively, the program would create industry-wide caps on emissions, with flexibility within industry groups as to the way in which to utilize the allowances within the constraint of the caps.  The political significance of the Cap and Trade program as one of the first of its kind in the nation goes well beyond the simplicity of its procedure. 


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Once again taking a forefront position in innovative environmental programs, California, for good or ill, is poised to launch the first of its kind and scope in the nation greenhouse gas (“GHG”) emissions trading system (“Cap and Trade”). 

On November 14, 2012, the California Air Resources Board (“CARB”) will hold an auction mandated by California’s 2006 “Climate Change” law, AB32, in which pollution permits (“Allowances”) will be bartered to more than 350 businesses, including utilities and refineries.  The concept behind Cap and Trade is that polluters must either cut carbon emissions to the level of a specific emission cap placed on individual types of pollutants by AB32, or buy allowances for each metric ton of carbon discharged over cap limits from other companies whose emissions did not reach cap levels.  Through the Cap and Trade program, excess carbon polluters can achieve up to 8% of emissions reductions needed. 
 


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On March 27, 2012, the Environmental Protection Agency (“EPA”) proposed a Carbon Pollution Standard for New Power Plants (“Carbon Standard”), setting national limits on the amount of carbon pollution power plants built in the future can emit.  The rules are a reaction to the United States Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007), in which, among other things, the Supreme Court held that greenhouse gases, including carbon dioxide (“CO2”) are air pollutants under the Clean Air Act.  EPA was charged by the court with issuing an “endangerment finding,” i.e., a determination that greenhouse gases threaten public health and welfare which was issued on December 15, 2009. 

Immediately upon their initial promulgation, the Carbon Standard generated more contention than power plants generate greenhouse gases.  The Wall Street Journal charged, in an article entitled “Killing Coal,” that “because the putative ‘regulatory impact’ would be zero, there are also no benefits.”  It went on to say that, because the rule would apply not only to new plants but also to every plant upgrade or modification in existing facilities; and because the technology required to meet the standard is still speculative, the EPA’s real goal must be to put a stop to the use of coal in electricity generating. 

The EPA immediately fired back, characterizing the critique of the Carbon Standard in, among others, the Wall Street Journal, as examples of “fact free assault.”  Assistant Administrator Gina McCarthy pointed to the “example” that, in fact, “this standard only applies to new sources – that is power plants that will be constructed in the future.  This standard would never apply to existing power plants.”  Moreover, again pointing to the Wall Street Journal editorial, she stated “the proposed rule explicitly does not apply to facilities making such modifications.  In fact, EPA did not propose a standard for any modifications.”

The proposed Carbon Standard speaks for itself. 


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On October 20, 2011, the California Air Resources Board (“CARB”) adopted a new set of rules, called “cap-and-trade,” implementing the requirements of AB32, California’s groundbreaking climate change law. Enacted in 2006, AB32 requires reduction in carbon emissions, usually credited as the cause of “global warming,” to 1990 levels by the year 2020. The new cap-and-trade regulations will be implemented in phases, with the State’s largest emitters required to meet the caps beginning in 2013; and remaining emitters, collectively about 85%, required to begin compliance in 2015.


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A Federal Court has recently thrown open the door to potential civil challenges to both private and governmental sources of greenhouse gas emissions, based on the Federal common law of nuisance. For those who believe the Environmental Protection Agency (EPA) has acted too slowly in promulgating greenhouse gas regulation, civil actions are now possible at least in the Second Circuit. However, the Supreme Court may now scrutinize the Second Circuit’s decision. Based on a recent Fourth Circuit decision on a similar issue, the “Nine” may be tempted to follow in Moses’ footsteps and pare down the Second Circuit decision to apply only to greenhouse gas emissions from Federal projects.


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In the midst of much debate as to whether a threat of “global warming” and “global climate change” actually exists and, if it does, further debate as to whether wind-generated energy would reduce carbon-dioxide emissions sufficiently to have a measurable impact on global temperatures, one thing is certain – wind farms are here, and more

The Council on Environmental Quality, on February 18, 2010, proposed three substantive steps to “modernize and reinvigorate” the National Environmental Policy Act (NEPA). According to Nancy Sutley, the Chair of the White House-based CEQ, these measures “will assist Federal agencies to meet the goals of NEPA, enhance the quality of public involvement in governmental decisions relating to the environment, increase transparency and ease implementation.”

These three steps include when and how Federal agencies must consider greenhouse gas emissions and climate change in their proposed actions; clarifying appropriateness of “Findings of No Significant Impact” and specifying when there is a need to monitor environmental mitigation commitments; and clarifying use of categorical exclusions. The CEQ is requesting public comment on all three of the draft guidances.

The Effects of Climate Change and Greenhouse Gas Emissions Must be Considered in the NEPA Process

Perhaps the most critical element to this modernization of the NEPA process is the CEQ’s draft guidance on when and how Federal agencies must consider greenhouse gas emissions and climate change in their proposed actions. According to the CEQ:


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When the U.S. Environmental Protection Agency issued its final finding that emission of six greenhouse gases endangered the public’s health and the environment because of their effect on climate change, the business community wondered how it should respond to the news.  At first glance, there seems to be blinding maze of legal and policy issues that will affect business decisions.  Although far from clear, there is a way out of the maze – although businesses with significant greenhouse gas emissions should be prepared to tackle the important issues that the Endangerment Finding raises.

Businesses Need to Take a Deep Breath (Irony Intended)

The road to the endangerment finding began in 2007, when the U.S. Supreme Court decided in Massachusetts v. EPA that carbon dioxide and other greenhouse gases constituted “air pollutants” under the Clean Air Act.  To most savvy businessmen this was a clear signal to start planning how their businesses would cope with the establishment of limits on emission of greenhouse gases.  Although the Bush Administration EPA successfully sat on the issue, when the Obama Administration took office, most companies recognized that an endangerment finding would top the EPA’s list of major environmental actions.  Thus, EPA’s announcement this past April of its proposed finding and its announcement of the final endangerment finding should have come as no surprise to anyone who has been monitoring this issue.

The key thing for businesses to remember is that the endangerment finding by itself does not regulate the emission of greenhouse gases from any source, large or small.  That being said, it does have a direct impact on mobile sources (because of section 202(a) of the Clean Air Act), with the EPA planning on issuing its final “light-duty vehicle” greenhouse gas emissions rule some time in Spring 2010.


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