Natural Res. Def. Council, Inc. v. State Air Res. Bd.
| Decision Date | 10 April 2017 |
| Docket Number | F073340. |
| Citation | 10 Cal.App.5th 764 |
| Parties | NATURAL RESOURCES DEFENSE COUNCIL, INC., Intervener and Respondent. POET, LLC, et al., Plaintiffs and Appellants, v. STATE AIR RESOURCES BOARD et al., Defendants and Respondents |
| Court | California Court of Appeals Court of Appeals |
Wanger Jones Helsley, Timothy Jones , John P. Kinsey and Dylan J. Crosby for Plaintiffs and Appellants.
Xavier Becerra and Kamala D. Harris , Attorneys General, Robert W. Bryne , Assistant Attorney General, Gavin G. McCabe , M. Elaine Meckenstock , Melinda Piling and Myung J. Park , Deputy Attorneys General, for Defendants and Respondents.
Natural Resources Defense Council and David Pettit for Intervener and Respondent.
The California Global Warming Solutions Act of 2006 (Health & Saf. Code, § 38500 et seq.) established the first comprehensive greenhouse gas regulatory program in the United States. Its goal is to progressively reduce greenhouse gas emissions to 1990 levels by 2020. The State Air Resources Board (ARB) was charged with achieving this goal. One of its actions was promulgating the low carbon fuel standards (LCFS) regulations that are the subject of this litigation.
When ARB adopted the original LCFS regulations in 2009, it violated the California Environmental Quality Act (CEQA; Pub. Resources Code, § 21000 et seq.).1 In 2013, we identified those violations and directed the issuance of a writ of mandate compelling ARB to take corrective action. (POET, LLC v. State Air Resources Bd. (2013) 218 Cal.App.4th 681 (Poet I).) Now, we consider whether ARB's actions satisfied that writ and corrected one of its CEQA violations. The specific question presented is whether ARB's disclosures about the project's effects on biodiesel consumption, and the related increases in nitrogen oxide (NOx) emissions, satisfied paragraph 3 of the writ of mandate.
The writ provisions were drafted by this court. Therefore, we interpret paragraph 3 of the writ without deference to the trial court or ARB. We used the term "project" in paragraph 3 of the writ in the same way it is used in CEQA, the Guidelines2 and CEQA case law. Stated generally, "project" includes the whole of an activity directly undertaken by a public agency. More specifically, when the agency's activity involves a regulation (as compared to building a physical structure, such as a road or power plant), the whole of the activity constituting the "project" includes the enactment, implementation and enforcement of the regulation. Here, the "project" includes the whole of ARB's activity in promulgating and enforcing (1) the regulations originally adopted in 2009 and (2) the replacement regulations adopted in 2015 in response to the writ of mandate issued pursuant to Poet I.
Consequently, ARB's view that the "project" included only the regulations adopted in 2015 was wrong and explains why it incorrectly chose 2014 NOx emissions as the baseline. The proper baseline for a project normally is the conditions existing when the environmental review of the project is commenced. Here, ARB's review commenced before the regulations were first approved in 2009. Thus, ARB's use of 2014 NOx emissions as the baseline was improper and generated flawed results when that baseline was plugged into the formula for calculating environmental change. Specifically, NOx emissions in 2014 were higher than the NOx emissions prior to the 2009 approval of the LCFS regulations, which caused ARB's most recent calculations of the yearly changes in NOx emissions to be too low and thus misleading. ARB's flawed analysis of NOx emissions did not cure the CEQA violation identified in Poet I or comply with paragraph 3 of the writ.
Leaving the technical language of CEQA aside, the purpose of the writ was to provide the public and decision makers with information omitted from the original environmental disclosure documents in 2009. Thus, one way to evaluate ARB's attempt at compliance is to ask whether the revised environmental disclosure documents provided all of the information that would have been provided if the original documents had complied with CEQA. The answer is "no," ARB's revised documents did not provide that information. In contrast to ARB's revised documents, CEQA-compliant original documents would not have used a 2014 baseline and would have shown that NOx emissions in 2015 and later were larger than the baseline, not smaller. Accordingly, we conclude the writ should not have been discharged and the CEQA violation continues uncorrected.
The second major issue in this appeal is how to remedy ARB's failure to comply with CEQA and the writ. Pursuant to our discretionary authority to fashion appellate relief, we reverse the order discharging the writ and remand for further proceedings under a modified writ. The modifications direct ARB to address NOx emissions from biodiesel in a manner that complies with CEQA, including the use of a proper baseline. As to the fate of the current version of the LCFS regulations, only the provisions addressing diesel fuel and its substitutes3 were affected by the flawed analysis of NOx emissions. Thus, the remainder of the LCFS regulations will be allowed to remain in effect. The provisions addressing diesel fuel and its substitutes appear, on balance, to provide environmental benefits that outweigh the potential adverse impacts and, therefore, we will not invalidate those provisions. Instead, the standards for diesel fuel and its substitutes in effect for 2017 shall remain the operative standards until the modified writ is discharged.
We therefore reverse the order discharging the writ and remand for further proceedings.
The goal of the LCFS regulations is to progressively reduce the greenhouse gas emissions from transportation fuels used in California. (Cal. Code Regs., tit. 17, § 95480.) The LCFS regulations use carbon intensity values to approximate the greenhouse gas emissions generated from all stages of producing, transporting and consuming a fuel — that is, the fuel's complete lifecycle. (Cal. Code Regs., tit. 17, § 95484 [].) Regulated parties must meet average carbon intensity requirements for the gasoline and diesel fuel they handle each calendar year. (Id., subd. (a).) Carbon intensity is stated as grams of carbon dioxide equivalent per megajoule. For example, the 2017 average carbon intensity requirement for diesel fuel and its substitutes is 98.44 grams of carbon dioxide equivalent per megajoule. (Id., subd. (c).) In contrast, the carbon intensity value assigned to conventional diesel, based on average crude oil and average refinery efficiencies, is 102.01 grams of carbon dioxide equivalent per megajoule. (Cal. Code Regs., tit. 17, § 95488, subd. (c) [lookup table].) Thus, a regulated party handling only conventional diesel fuel would not meet the carbon intensity requirement for 2017. That regulated party would need to handle diesel fuel and substitutes assigned a lower carbon intensity. For instance, some biodiesels are assigned carbon intensity values of 37.54 (animal fat feedstock) or 56.95 (plant oil feedstock).
Most providers of petroleum and biofuels in California are subject to the reporting and carbon intensity value requirements of the LCFS regulations. (Cal. Code Regs., tit. 17, §§ 95485 [demonstrating compliance], 95491 [reporting and recordkeeping].) Regulated parties file annual reports to show they have complied. The reports (1) calculate the average carbon intensity of the fuels handled by the regulated party and (2) determine the credits or deficits generated by comparing that average to the carbon intensity value set as the standard for that year. (Cal. Code Regs., tit. 17, § 95486 [].) If credits are generated, they can be deposited into an account maintained by ARB and, once banked, the credits may be (1) retained indefinitely, (2) retired to offset deficits and meet future compliance requirements, or (3) sold to other regulated parties. (Id., subd. (a)(1).) Transactions in carbon intensity credits are subject to public disclosure and other requirements. (Cal. Code Regs., tit. 17, § 95487.) ARB maintains a website reporting the monthly price and transaction volume of LCFS credits.
The history of the original LCFS regulations,4 from the enactment of the authorizing legislation in 2006 through April 2010, is described in the "FACTS" section of Poet I, supra, 218 Cal.App.4th at pages 699 through 707 and need not be repeated here. The original LCFS regulations became effective in 2010 and were set forth in sections 95480 through 95490 of title 17 of the California Code of Regulations.
In December 2009, plaintiffs POET, LLC, and James M. Lyons filed this litigation to challenge the LCFS regulations, alleging violations of CEQA and California's Administrative Procedure Act (APA; Gov. Code, § 11340 et seq.). In November 2011, the trial court denied plaintiffs' petition for writ of mandate and filed a judgment in favor of ARB. Plaintiffs appealed.
In May 2013, oral argument was held in the appeal. In June 2013, this court issued an order requesting input from counsel regarding the terms of the disposition and attached a tentative disposition. We asked counsel to make certain assumptions, including that certain CEQA violations had occurred and the LCFS regulations would be allowed to continue to operate. We stated our preference for a disposition "drafted so the superior court can take the language from the disposition and insert it into the peremptory writ of mandate" and asked counsel to take this into account when proposing changes or alternatives to the tentative disposition. Our order sought input on six topics of interest, including (1) maintaining the status quo and whether the 2014 standards should have been allowed to go into effect and (2) the framework for ARB's analysis of NOx...
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