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MCLE Self Study
By Belynda Reck
      Edited by Barbara Kate Repa
     
      Environmental Regulation
      California's Global-Warming Battle
      California has long been in the vanguard of environmental regulation and litigation. One recent high-profile battle being fought in the state's legislature and courts—a battle with significant impact far beyond California's borders—concerns the aggressive attempt to regulate emissions of greenhouse gases, particularly those caused by automobiles. This multipronged attack on global warming has already spawned a spate of litigation, and much more is likely to follow.
     
      Federal Regulation Attempts
      Although it is receiving much media attention lately, global warming is hardly a new issue. As recently set forth in elegant detail in the U.S. Supreme Court's opinion in Massachusetts v. EPA (127 S. Ct. 1438 (2007)), the federal government has been investigating the impact of human-produced carbon-dioxide emissions on climate change for decades.
      In 1978, Congress passed the National Climate Program Act. (92 Stat. § 601.) Following that act's edict to establish a program to "assist the nation and the world" to respond to "man-induced climate processes," President Carter charged the National Research Council with investigating global warming. The council responded with alarm, specifically targeting carbon dioxide as a greenhouse gas: "If carbon dioxide continues to increase, the study group finds no reason to doubt that climate changes will result and no reason to believe that these changes will be negligible. ... A wait-and-see policy may mean waiting until it is too late." (National Academy of Sciences, Climate Research Board, Carbon Dioxide and Climate: A Scientific Assessment, p. vii, Washington, D.C. (1979).)
      In 1987, the Global Climate Protection Act was enacted, directing the Environmental Protection Agency (EPA) to propose to Congress a "coordinated national policy on global climate change." (101 Stat. 1407, § 1103(b).)
      The United States was not alone in recognizing the potential dangers. In 1992, 153 other nations joined in signing the United Nations Framework Convention on Climate Change (UNFCCC), a nonbinding agreement to reduce greenhouse gases. (See S. Treaty Doc. No. 102—38, Art. 2, p. 5 (1992).) The U.S. Senate unanimously ratified the treaty. Five years later, the UNFCCC signatories met again in Kyoto, Japan, and formulated the Kyoto Protocol, which established mandatory targets for industrialized nations to reduce greenhouse-gas emissions but exempted heavy-polluting developing nations such as China and India from meeting those targets.
      This disparity had already prompted a unanimous Senate resolution that the United States should not enter into the Kyoto Protocol—and following that, President Clinton never offered the Kyoto Protocol for ratification. (See S. Res. 98, 105th Cong., 1st Sess. (July 25, 1997).)
      To date, the federal government has not developed any regulation mandating reductions in greenhouse-gas emissions, preferring voluntary measures and cooperative agreements.
     
      California's Regulatory Reaction
      Facing both a perception that the federal government is not adequately addressing global warming and its potentially devastating impact on the state, California passed legislation mandating reductions in greenhouse gases and filed nuisance lawsuits against the auto industry, which it perceived as one of the biggest greenhouse-gas emitters.
      In a highly unusual move, Gov. Arnold Schwarzenegger and British prime minister Tony Blair signed an agreement in 2006 committing their governments to coordinate their efforts at reducing greenhouse-gas emissions. In the words of the media-savvy Schwarzenegger: "California will not wait for our federal government to take strong action on global warming. ... California has a responsibility and a profound role to play to protect not only our environment, but to be a world leader on this issue as well." (See Gov. Schwarzenegger Press Release, July 31, 2006, at gov.ca.gov/index. php/press-release/2770.) However, that agreement is a symbolic statement and not a binding legal promise.
      Recent studies document that California's worries about global warming may be well founded. In August 2006, Schwarzenegger's Climate Action Team, made up of representatives from several state agencies, released a report summarizing 17 scientific studies that examined the impact of climate change on California. (California Climate Change Center, "Our Changing Climate: Assessing the Risks to California," July 2006.) The report examined the consequences of three scenarios: low, medium, and high emissions. It predicted that, at the higher emissions levels, the Sierra snowpack could decrease by up to 90 percent and sea levels could rise 22 to 35 inches.
      In response, the California Legislature stepped up to the plate and swung for the fences, passing the Global Warming Solutions Act of 2006. (Cal. Health &. Safety Code §§ 38500—599.) This legislation authorized the California Air Resources Board (CARB) to establish standards for reducing the state's greenhouse-gas emissions 25 percent by 2020. The "market-based" program allows sources emitting fewer greenhouse gases than permitted under their individual emissions caps to sell their excess emissions credits to sources emitting excessive greenhouse gases.
      It was not California's first time at bat against global warming. In 2002, the state passed legislation to regulate greenhouse-gas emissions from automobiles and trucks. The Pavley Law, otherwise known as the California Climate Law or the Global Warming Rule, authorized CARB to promulgate regulations to reduce greenhouse-gas emissions from passenger cars and light trucks sold in the state. (See Cal. Health & Safety Code § 43018.5.) In 2004, CARB responded by adopting regulations that require cars built in 2009 or later to achieve declining greenhouse-gas emissions. (See 13 Cal. Code Regs. § 1961; California Air Resources Board, Climate Change Emission Control Regulations, Fact Sheet (December 10, 2004).)
      The California Climate Law and the corresponding CARB regulations setting tailpipe-emissions standards have their fans. In fact, several other states—including Connecticut, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington—have either adopted or plan to adopt similar regulations. (See Justin R. Pidot, "Global Warming in the Courts: An Overview of Current Litigation and Common Legal Issues," Georgetown Environmental Law & Policy Institute (2006).)
     
      All Those Opposed
      Not surprisingly, however, California's tailpipe-emission regulations also have critics. For example, a number of car dealers and manufacturers recently sued to restrain CARB from enforcing the regulations. They argue that federal regulation under the Clean Air Act and the Energy Policy and Conservation Act (EPCA) preempt these regulations. (Central Valley Chrysler-Jeep v. Witherspoon, 2007 U.S. Dist. LEXIS 3002.)
      The Clean Air Act generally preempts state regulation of motor vehicle emissions. Section 209(a) states: "No State or any political subdivision thereof shall adopt or attempt to enforce any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines subject to this part." (42 U.S.C. § 7543(a); see also, Engine Mfrs. Ass'n v. South Coast Air Quality Mgmt. Dist., 541 U.S. 246, 253 (2004).)
      However, California is currently unique among the states with respect to the legislation's application. It alone has the right to request and be granted a waiver by the EPA to impose standards more stringent than those imposed by the Clean Air Act if certain enumerated criteria are met. (See 42 U.S.C. § 7543(b); 72 Fed. Reg. 21260—61 (April 30, 2007).)
      By letter dated December 21, 2005, California exercised its right and requested a waiver, which the EPA originally did not grant, perhaps in part because the agency had concluded that it did not have authority to regulate greenhouse gases from automobiles under the Clean Air Act. However, the U.S. Supreme Court in Massachusetts rejected that reasoning. On April 30, 2007, the EPA announced the opportunity for public hearing and written comment on CARB's request for a waiver of preemption as to its tailpipe-emission regulations.
      A bit of background on Massachusetts: On October 20, 1999, a group of 19 private organizations filed a rulemaking petition requesting that the EPA regulate greenhouse-gas emissions from new motor vehicles under the Clean Air Act. On September 8, 2003, the EPA denied the petition, concluding that it did not have the authority to regulate motor vehicle emissions of carbon dioxide and other greenhouse gases under the act. (68 Fed. Reg. 52922.) The petitioners, joined by various cities, territories, and states—including California—disagreed and filed a lawsuit against the EPA. The D.C. Circuit, without deciding the issue of authority, held that, assuming the EPA did have authority under the Clean Air Act, it had properly exercised its discretion under section 202(a)(1) in denying the petition. (415 F.3d 50 (2005).)
      After deciding that at least Massachusetts had standing to bring the case, the U.S. Supreme Court held, in a 54 opinion, that the EPA does have the power pursuant to the federal Clean Air Act to regulate carbon dioxide and other greenhouse-gas emissions from new motor vehicles, and that the agency improperly considered factors outside the scope of the statute in denying the rulemaking petition. In short, the Court found that the EPA must ground its reasons for action or inaction in the statute, not on "impermissible considerations." (127 S. Ct. at 1460—61.)
      Thus, if the EPA grants the waiver to California, the Clean Air Act may provide no further impediment to implementing the state's tailpipe-emission regulations. Shortly after the Supreme Court issued the Massachusetts holding, Governor Schwarzenegger announced that California planned to sue the federal government within six months if the state was not allowed to implement its emission regulations.
     
      Additional Preemption Claims
      The Clean Air Act is only one piece of the preemption puzzle. Opponents of state regulation of greenhouse-gas emissions argue that California's legislation regulating such emissions from cars is also preempted by federal fuel economy standards for new vehicles issued exclusively by the Department of Transportation (DOT) under the EPCA and by the federal government's right to enter into foreign policy regarding greenhouse-gas regulation.
      Although the U.S. Supreme Court noted an overlap between the DOT's enforcement of the EPCA and the EPA's enforcement of the Clean Air Act, it nevertheless found that the EPA could not "shirk its environmental responsibilities" merely because "DOT sets mileage standards." The Court further found that "there is no reason to think the two agencies cannot both administer their obligations and yet avoid inconsistency." However, the Court did not foreclose the possibility that the EPA might promulgate a particular regulation that poses an "irreconcilable conflict" with the EPCA's regulatory scheme. In fact, the Court noted that state regulation might well be preempted. (127 S. Ct. at 1462.)
      As for any preemption argument based on foreign policy—that California's regulation of greenhouse-gas emissions encroaches on the federal government's powers to make policy with foreign governments—the Massachusetts v. EPA decision did not clearly rule on the issue. The opinion provides that: "while the President has broad authority in foreign affairs, that authority does not extend to the refusal to execute domestic laws." (127 S. Ct. at 1463.) However, the decision also provides: "When a State enters the Union, it surrenders certain sovereign prerogatives. Massachusetts cannot invade Rhode Island to force reductions in greenhouse-gas emissions, it cannot negotiate an emissions treaty with China or India, and in some circumstances the exercise of its police powers to reduce in-state motor-vehicle emissions might well be pre-empted. ... These sovereign prerogatives are now lodged in the Federal Government." (127 S. Ct. at 1454.)
      Preemption and other arguments are also at issue in another action making its way through the California courts—a nuisance suit filed by the state against six motor vehicle manufacturers for contributing to global warning, including Chrysler, Ford, General Motors, Honda North American, Nissan North America, and Toyota North America. (California v. General Motors Corp., No. C06-05755 (2006).) California alleges that it should be compensated for past and future global warming—related damages associated with the 289 million metric tons of carbon dioxide allegedly released annually by the vehicles the defendants produce.
      Interestingly, both sides hailed the Massachusetts decision as dispositive of the claims at issue—in their favor.
      Yet another series of global-warming lawsuits centers on the National Environmental Policy Act (NEPA) and California's "little NEPA," the California Environmental Quality Act (CEQA). In these actions, the claimants argue that the federal government (referencing NEPA) and state governments (referencing CEQA) have failed to evaluate and publicly disclose the effect on global warming of their actions as required.
      In Natural Resources Defense Council v. Reclamation Board (No. C06-01228 (August 18, 2006)), four environmental organizations filed suit against the California Reclamation Board for its approval of a residential development that would require constructing new levees in the San Joaquin Delta. The plaintiffs contend that the Environmental Impact Report prepared by the board fails to comply with CEQA because the report does not consider the future effect of global warming on the project's environmental impact.
      Unless the federal government identifies a comprehensive national strategy for addressing global warming, lawsuits seeking clarification will be wending through the lower courts and courts of appeal for the foreseeable future. Indeed, without a comprehensive national strategy, American industry can look forward to additional global-warming lawsuits from multiple quarters (such as the Mississippi suit by Katrina victims against oil and coal companies for their alleged contributions to global warming) and a patchwork quilt of regulations.
      This piecemeal approach will create legal inconsistencies and, worse, may not result in meaningful greenhouse-gas reductions. Perhaps for these reasons, several big businesses joined with environmental groups to form the U.S. Climate Action Partnership, which in January 2007 urged Congress to require limits on greenhouse gases tied to global warming.
      The Bush administration took a step in that direction on May 14, 2007, issuing an executive order directing federal agencies "to take the first steps toward regulations that would cut gasoline consumption and greenhouse-gas emissions from motor vehicles" and to "complete this process by the end of 2008." (May 14, 2007, Fact Sheet, "Twenty in Ten: Strengthening Energy Security and Addressing Climate Change," p. 1.)
     
      Belynda Reck (breck@hunton.com) is a partner with Hunton & Williams in Los Angeles, focusing on environmental litigation. She thanks Catherine Allen, also at Hunton & Williams, for her assistance in preparing this article.
     
      Certification
      The Daily Journal Corp., publisher of California Lawyer, has been approved by the State Bar of California as a continuing legal education provider. This self-study activity qualifies for Minimum Continuing Legal Education credit in the amount of one hour of general credit.
     
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