Poet, LLC v. Cal. Air Res. Bd., F064045

Decision Date15 July 2013
Docket NumberF064045
Citation218 Cal.App.4th 681,160 Cal.Rptr.3d 69
Parties POET, LLC et al., Plaintiffs and Appellants, v. CALIFORNIA AIR RESOURCES BOARD et al., Defendants and Respondents.
CourtCalifornia Court of Appeals Court of Appeals

Wanger Jones Helsley, Timothy Jones, Fresno, John P. Kinsey, and Daren A. Stemwedel for Plaintiffs and Appellants.

Kamala D. Harris, Attorney General, Kathleen A. Kenealy, Senior Assistant Attorney General, Robert W. Bryne, Gavin G. McCabe, Supervising Deputy Attorneys General, Mark W. Poole, David A. Zonana, and M. Elaine Meckenstock, Deputy Attorneys General, for Defendants and Respondents.

Kahn, Soares, & Conway, Louis A. Brown, and Joshua J. Bettencourt, Hanford, for National Biodiesel Board and California Biodiesel Alliance as Amici Curiae on behalf of Defendants and Respondents.

Shute, Mihaly & Weinberger, Matthew D. Zinn, San Francisco; Timothy J. O'Connor; and Matthew Vespa for American Lung Association in California, Coalition for Clean Air, Conservation Law Foundation, Environmental Defense Fund, and Sierra Club Environmental Law Program as Amici Curiae on behalf of Defendants and Respondents.

J. Nathan Jensen for Clean Energy as Amicus Curiae on behalf of Defendants and Respondents.

Judi K. Mosley for Pacific Gas and Electric Company as Amicus Curiae on behalf of Defendants and Respondents.

OPINION

Franson, J.

INTRODUCTION

As part of developing solutions to global warming, the California Legislature adopted the California Global Warming Solutions Act of 2006 (the Act; Health & Saf. Code, § 38500 et seq. ) and established the first comprehensive greenhouse gas regulatory program in the United States. The California State Air Resources Board (ARB) is the state agency charged with regulating the sources of emissions of greenhouse gases that cause global warming. The goal of the Act is to reduce greenhouse gas emissions to 1990 levels by 2020, by regulation to establish a statewide cap on greenhouse gas emissions beginning in 2012. California's single largest source of greenhouse gas emissions, which include carbon dioxide and other carbon compounds, is the fuel used for transportation. To reduce the emissions from transportation, ARB adopted a number of regulations, including the low carbon fuel standards (LCFS) regulations that require the reduction of the carbon content of transportation fuels sold, supplied or offered for sale in California.

ARB's task of creating the LCFS regulations was complex and presented many questions of science, economics and law. ARB's proposed regulations were required to meet substantive requirements of the Act, procedural requirements for rulemaking in California's Administrative Procedure Act (APA; Gov. Code, § 11340 et seq. ), and substantive and procedural requirements in the California Environmental Quality Act (CEQA; Pub. Resources Code, § 21000 et seq. ). Furthermore, the Act required the LCFS regulations, as well as other greenhouse gas measures, to be in place by January 1, 2010. In sum, ARB was given a difficult task and the pressure of a statutory deadline.

ARB's efforts to complete the LCFS regulations on time satisfied a vast majority of the applicable legal requirements, but ran afoul of several procedural requirements imposed by CEQA and the APA. While these procedural violations are not trivial, they do not require us to automatically discard the existing LCFS regulations and order ARB to restart the complex rulemaking process anew. The statutes in question allow courts to tailor the remedy to the circumstances of each case and, therefore, we may consider the public interests affected by setting aside the LCFS regulations. Those public interests include adverse environmental impacts and, in particular, whether suspending the LCFS regulations would result in more environmental harm than allowing them to remain in effect pending the completion of ARB's corrective action. Because of the potential adverse environmental impacts, as well as other disruptions, we will allow the LCFS regulations to remain operative while ARB complies with the procedural requirements it failed to satisfy. In other words, we will avoid the irony of violations of an environmental protection statute being used to set aside a regulation that restricts the release of pollutants into the environment.

Summary of Legal Issues and Our Conclusions

POET, LLC, and James M. Lyons (plaintiffs) have challenged the LCFS regulations on the grounds that ARB violated the APA and CEQA during the adoption process. Plaintiffs contend ARB violated the APA by excluding from the rulemaking file made available to the public certain e-mails from consultants. The e-mails concerned the computer model ARB used to calculate the indirect carbon emissions attributable to ethanol due to land use changes caused by the increased demand for the crops used to produce ethanol. Assigning ethanol a higher carbon content based on indirect land use change is controversial because many uncertainties affect the estimates for the land use changes and the carbon emissions resulting from those changes. Also, ethanol is the only biofuel given an increased carbon rating based on land use changes.

Plaintiffs also contend ARB violated CEQA by (1) giving its "approval" to the regulations before the environmental review was complete, (2) splitting the authority to approve or disapprove the regulations from the responsibility of completing the environmental review, and (3) impermissibly deferring the analysis and formulation of mitigation measures for potential increases in the emission of nitrogen oxide (NOx) resulting from the increased use of biodiesel.

We conclude that plaintiffs' APA claim has merit because the e-mails contain "other factual information" that was "submitted to" ARB and thus are required to be included in ARB's rulemaking file.1

Analyzing the CEQA challenges under the independent standard of review, we conclude that ARB prematurely approved the LCFS regulations at its public hearing on April 23, 2009, well before it completed its environmental review. The CEQA guidelines mandate that approval of the LCFS regulations follow completion of the environmental review.2 We also conclude ARB violated CEQA by splitting the authority between ARB and its executive officer (Executive Officer) to approve the project from the responsibility for completing the environmental review. Finally, we conclude that ARB violated CEQA by deferring the formulation of mitigation measures for NOx emissions from biodiesel without committing to specific performance criteria for judging the efficacy of the future mitigation measures. As a result of this failure, ARB failed to qualify for the exception to the general rule prohibiting the deferral of the formulation of mitigation measures.

To remedy these CEQA and APA violations, we direct the trial court to issue a writ of mandate directing ARB to set aside its approval of the subject LCFS regulations while allowing the regulations to remain in effect pending ARB's taking action to comply with the statutes.

We therefore reverse the judgment.

FACTS
Initial Legislation

In 2006, the Legislature passed Assembly Bill No. 32 (2005–2006 Reg. Sess.) (Assembly Bill 32), which became the California Global Warming Solutions Act of 2006. Assembly Bill 32 is codified at Health and Safety Code sections 38500 through 38599 and requires California's statewide greenhouse gas emissions to be lowered to 1990 levels by 2020.3 ( Health & Saf.Code, § 38550.)

Assembly Bill 32 designated ARB as the state agency charged with monitoring and regulating the sources of emissions of greenhouse gases. ( Health & Saf.Code, § 38510.) Assembly Bill 32 directed ARB to take certain action, such as preparing a "scoping plan" to achieve maximum technologically feasible and cost-effective reduction in global warming, adopting measures that could be implemented quickly (i.e., "discrete early action"), and formulating other measures that would require more time to study and implement. Assembly Bill 32 also imposed timelines for these actions.

The requirements of Assembly Bill 32 relevant to this appeal concern (1) the scoping plan for reducing greenhouse gases and (2) discrete early action. The scoping plan, which addresses many measures besides the LCFS regulations, includes an overview of standards for lowering the carbon content of transportation fuel. Assembly Bill 32 required ARB to prepare and approve the scoping plan by January 1, 2009. ( Health & Saf.Code, § 38561, subd. (a).) The scoping plan was required to "identify and make recommendations on direct emission reduction measures, alternative compliance mechanisms, market-based compliance mechanisms, and potential monetary and nonmonetary incentives for sources and categories of sources that the [ARB] finds are necessary or desirable to facilitate the achievement of the maximum feasible and cost-effective reductions of greenhouse gas emissions by 2020."4 ( Health & Saf.Code, § 38561, subd. (b).)

The "discrete early action" provisions of Assembly Bill 32 are relevant because the regulations implementing standards for lowering the carbon content of fuel were early action measures. Assembly Bill 32 directed ARB, by June 30, 2007, to publish a list of the greenhouse gas emission reduction measures that would qualify as "discrete early action." ( Health & Saf.Code, § 38560.5, subd. (a).) Regulations implementing the discrete early actions were to be adopted by January 1, 2010. ( Health & Saf.Code, § 38560.5, subd. (b).) This is the deadline ARB attempted to meet in promulgating the regulations governing the carbon content of transportation fuels.

Low Carbon Fuel Standard (LCFS)

In January 2007, Governor Schwarzenegger issued Executive Order No. S-01-07 (Jan. 18, 2007), which (1) set a statewide goal of reducing the carbon intensity of California's transportation fuels by at least 10 percent by 2...

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