Wednesday, February 25, 2015
Court of Appeal Rejects Challenge to State ‘Cap-and-Trade’ Rules
By KENNETH OFGANG, Staff Writer
The First District Court of Appeal yesterday rejected a challenge by environmental groups to the “cap-and-trade” rules instituted by the California Air Resources Board.
Presiding Justice Ignacio Ruvolo, writing for Div. Four, agreed with San Francisco Superior Court Judge Ernest Goldsmith that the board acted within the broad discretion granted to it by AB 32, the California Global Warming Solutions Act of 2006, in adopting carbon offset protocols.
The statute requires the board to adopt rules and regulations to achieve the maximum “technologically feasible and cost effective” reductions in the emission of greenhouse gas from sources or categories of sources subject to regulation under the act. It authorizes the board to use a market-based, or cap-and-trade, mechanism to accomplish those reductions, but requires that any offset credits for voluntary reductions in greenhouse gas emissions be “in addition to” any reduction that is otherwise required by law or that would otherwise occur.
Citizens Climate Lobby and Our Children’s Earth Foundation filed a mandate petition in 2012, arguing that by adopting protocols, rather than issuing offsets on a case-by-case basis, the board violated the “additionality” requirement. By allowing polluters to claim credits without actually reducing emissions, the petitioners and others have argued, the protocols could be used to create a false appearance that emissions are actually being cut.
A number of energy companies and developers and providers of offset projects intervened in defense of the protocols. The Nature Conservancy, which helped develop the protocol for U.S. forest projects also filed an amicus curie brief in support of the Compliance Offset Protocols, filed amicus briefs in both the trial and appellate courts.
Goldsmith, in denying the petition, upheld the board’s authority to adopt the protocols and rejected the petitioners’ specific challenges to the protocols.
Ruvolo, writing yesterday for the Court of Appeal, said Our Children’s Earth Foundation, which appealed Goldsmith’s ruling, “failed to demonstrate that any action the Board took was arbitrary or capricious.”
In adopting the legislation, the presiding justice wrote, the Legislature could not have intended “that each and every GHG reduction used to generate an offset” be “additional.” Such an interpretation, he said, “refuses to account for the fact that it is virtually impossible to know what otherwise would have occurred in most cases.”
He went on to say:
“[W]e conclude that the Legislature delegated rule-making authority to the Board to establish a workable method of ensuring additionality with respect to offset credits accepted pursuant to a market-based compliance mechanism like the Cap-and-Trade program regulation at issue in this case.”
No Independent Review
Because administrative regulations enacted under legislatively delegated authority are reviewed for arbitrariness, capriciousness and/or irrationality, he said, the court was not required to independently evaluate the effectiveness of the protocols.
The regulations were the product of a process that “included soliciting input from the public, pertinent industries, and relevant experts,” and the board’s decision adopting the regulations and summarizing the evidence on which they were based runs more than 2,000 pages. Ruvolo noted.
The case is Our Children’s Earth Foundation v. California Air Resources Board, 15 S.O.S. 1082.
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