On June 30, 2022, California Governor Gavin Newsom signed Assembly Bill 205 (“AB 205”), which, among various other things, expands the siting jurisdiction of the California Energy Commission (“CEC”) to include non-thermal generating facilities, such as solar and wind projects, with a capacity of 50 megawatts (MW) or more. The CEC’s siting jurisdiction was previously
Allison Smith focuses her practice in environmental and energy law. Her experience includes CEQA and land use litigation, conducting environmental due diligence, and permitting solar, wind, biomass, geothermal and gas-fired energy facilities. Allison also counsels companies on federal and state air quality and greenhouse gas regulations.
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On July 17, 2020, the U.S. District Court for the Eastern District of California rendered its decision in U.S. v. California (Case 2:19-cv-02142-WBS-EFB), upholding the agreement between California and the Canadian Province of Québec that links California and Québec’s respective cap-and-trade programs. In its opinion, the District Court rejected the federal government’s claim that the California-Québec agreement is preempted under the Foreign Affairs Doctrine. The District Court ruled earlier this year on the federal government’s other claims, finding that the agreement did not violate either the Treaty or Compact Clauses of the U.S. Constitution. With the decision on July 17, the California-Québec agreement will remain in place, allowing the two jurisdictions to continue to link their cap-and-trade programs. The federal government has not yet stated whether it will appeal the District Court’s decision.
Continue Reading U.S. District Court Upholds California’s Cap-and-Trade Agreement with Québec
On July 29, 2019, the Ninth Circuit Court of Appeals affirmed the lower court’s decision in Winding Creek Solar LLC v. Peterman et al., ruling that California’s feed-in tariff for small qualifying facilities (QFs), the Renewable Market Adjusting Tariff (ReMAT), violates the federal Public Utility Regulatory Policies Act (PURPA) (Ninth Circuit Case No. 17-17531). ReMAT provides small QFs of three megawatts (MW) or less with a standard contract for energy offtake, on a first-come, first-served basis. Under ReMAT, rates available to any given generator fluctuate based on the price the developers ahead in the contract queue will accept. The California investor-owned utilities must offer ReMAT contracts up to a program cap of 750 MW, which is proportionately split among the utilities, and then further divided across different types of generation, including baseload and peak/non-peak resources.
The Ninth Circuit ruled that ReMAT violated two tenets of PURPA. Under PURPA, subject to certain exemptions, utilities are required to buy at the avoided cost rate all the power produced by a QF. First, contrary to PURPA’s requirement that a utility buy all of a QF’s output, the Ninth Circuit found that ReMAT limits the amount of energy that utilities are required to purchase from QFs by placing caps on procurement. Second, ReMAT sets a market-based rate for energy from participating QFs, rather than a price based on the utilities’ avoided cost as required under PURPA.
Continue Reading Ninth Circuit Strikes Down California ReMAT in Winding Creek Solar Case
In a much-anticipated move, the U.S. Environmental Protection Agency (EPA) is proposing repeal of the Clean Power Plan (CPP). The draft proposed rule outlines EPA’s revised interpretation of its authority under Clean Air Act section 111(d) to regulate greenhouse gas (GHG) emissions from power plants only within the fenceline. EPA concludes in the proposed rule…
On July 25, 2017, California Governor Jerry Brown signed legislation extending the state’s cap-and-trade program through 2030. The signing ceremony for Assembly Bill (AB) 398 included former California Governor Arnold Schwarzenegger, who signed the first state statute authorizing cap-and-trade in 2006, AB 32. The ceremony cemented the deal that Governor Brown struck with California lawmakers, passing AB 398 with bi-partisan support and a two-thirds majority of the Legislature. In contrast to the passage of Senate Bill 32 in 2016, which extended California’s greenhouse gas reduction (GHG) targets through 2030 with the enactment of one simple sentence into statute, AB 398 stretched for pages. AB 398 provided many details to be incorporated into the cap-and-trade regulation by the California Air Resources Board (ARB), the agency in charge of implementing cap-and-trade, and laid out requirements to mitigate the impacts of GHG regulation on regulated industry and increase in-state benefits.
Among the more note-worthy provisions of AB 398 were (1) a price ceiling on cap-and-trade allowances, (2) limitations on the use of offsets, particularly from out-of-state projects, and (3) a continuation of previous allowance allocations to vulnerable industries. ARB will also report to the Legislature by the end of 2025 on statutory changes needed to reduce leakage, including a potential border carbon adjustment. Outside of the cap-and-trade regulation itself, the bill provides support to regulated entities with relief from sales and use taxes and prohibits local air districts from enacting additional GHG emissions reduction requirements.
In crafting the AB 398 deal, proponents of the bill wisely secured the votes necessary to pass the bill with a two-thirds majority and avoid the question whether cap-and-trade auctions post-2020 would be an unlawful tax under Proposition 26. The most recent cap-and-trade litigation in California Chamber of Commerce v. ARB and Morning Star Packing Co. v. ARB avoided this question, given that the original statute authorizing cap-and-trade, AB 32, was passed before Proposition 26 was voted in. Proponents also secured support from sources as disparate as the California Chamber of Commerce, California Manufacturers and Technology Association, Natural Resources Defense Council, and Environmental Defense Fund. Nevertheless, I would not rule out further judicial tangles on the implementation of AB 398 with amendments to the cap-and-trade regulation.
Continue Reading California Extends Cap-and-Trade Through 2030
Yesterday the California Supreme Court denied a petition for review of the cap-and-trade lawsuits brought by a coalition of business interests, headed by the California Chamber of Commerce and Morning Star Packing Company. The Court of Appeal decision issued in April 2017, which upheld the legality of California’s cap-and-trade auctions in the related cases California…
On May 19, 2017, the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC) held a joint en banc on customer and retail choice in California. In attendance were CPUC Commissioners Guzman Aceves, Randolph, Peterman, and President Picker. CEC Commissioners McAllister, Douglas, and Chair Weisenmiller attended.
The en banc was intended to address…
On Thursday, a 2-1 decision by the Third District Court of Appeal in Sacramento upheld California’s program to reduce carbon emissions. California’s controversial and signature cap-and-trade program creates a firm limit on carbon emissions and auctions allowances that permit companies to release greenhouse gases into the atmosphere. Covered entities are generally large emitters of greenhouse gases, who under the program must surrender emissions allowances or offset credits to cover their emissions, or face monetary penalties or other negative consequences. Auctions are a key component of how California expects to meet its targets to reduce emissions to 1990 levels by 2020, and 40 percent below 1990 levels by 2030.
Continue Reading California Court of Appeals Upholds California’s Cap-and-Trade Program
Yesterday, California’s Third District Court of Appeal heard oral argument in the related cases California Chamber of Commerce v. California Air Resources Board and Morning Star Packing Co. v. California Air Resources Board. The three-justice panel actively questioned both sides as lawyers for the State, the Chamber, Morning Star, and Environmental Defense Fund made…
Yesterday, Governor Jerry Brown signed Senate Bill (SB) 32 into law, extending and expanding California’s 10-year old greenhouse gas (GHG) emissions reductions mandate under Assembly Bill (AB) 32. SB 32 provides for a 40% reduction in GHG emissions from 1990 levels by 2030. This builds on AB 32’s existing mandate to reduce statewide emissions to 1990 levels by 2020. In negotiations to pass SB 32 in the final weeks of the state legislative session, the bill was trimmed to add only one sentence to existing statute, to insert the 2030 target. Left unaddressed was one question of the moment, can the cap and trade program authorized by AB 32 legally continue past 2020? The California Air Resources Board (ARB) has its own answer to the question, the subject of this earlier post. The courts will no doubt end up as the final arbiter. Whether post-2020 GHG emissions reductions are met through a cap and trade program or other screws and hammers in ARB’s toolbox, the 2030 target is now written into law, rather than just Executive Order B-30-15.
The vital component of the compromise to pass SB 32 was companion bill AB 197. AB 197 establishes legislative oversight of ARB’s actions to implement AB 32 and SB 32, by creating a Joint Legislative Committee on Climate Change Policies and adding two ex officio nonvoting members to the Board. AB 197 also puts a new twist on ARB’s broad authority to adopt rules and regulations to achieve emissions reductions. AB 32 requires ARB to achieve maximum technologically feasible and cost-effective emissions reductions from sources or categories of sources. AB 197 further requires ARB to prioritize direct emissions reductions, including from large stationary sources and mobile sources, when adopting rules and regulations to achieve reductions.
In addition to headliner SB 32, the Legislature passed one additional bill with direct emissions reduction mandates, SB 1383.Continue Reading California Continues Ambitious Regulation of Greenhouse Gas Emissions