Latham's Clean Energy Law Report

Air Regulators Tackle Trucking at Southern California Warehouses

By Latham & Watkins LLP on Posted in California, Environmental Regulation

A local air district approved a rule requiring warehouses to adopt clean technologies or pay a mitigation fee.

By Joshua T. Bledsoe and Jennifer Garlock

At a contentious board hearing on May 7, 2021, the South Coast Air Quality Management District (SCAQMD) approved a first-in-the-nation rule to regulate trucking emissions from warehouses by a 9-4 vote. Rule 2305, the Warehouse Indirect Source Rule (ISR), establishes the Warehouse Actions and Investments to Reduce Emissions (WAIRE) Program to reduce emissions associated with warehouse activity. The WAIRE Program essentially requires warehouse operators to take actions to electrify warehouse activities and the trucks that visit warehouses in order to reduce nitrogen oxides (NOx) and diesel particulate matter (DPM) emissions. As previewed in a 2019 Latham blog post, despite the warehouse sector’s limited control over the types of trucks servicing its facilities (warehouses generally do not own or operate trucking fleets), the ISR imposes obligations on warehouses to indirectly reduce trucking emissions. The WAIRE Program applies to warehouses with more than 100,000 square feet of warehouse space in a single building, and will phase in over three years based on warehouse size, with the largest warehouses (i.e., more than 250,000 square feet) having the earliest compliance period. Continue Reading

TCI Program Established to Reduce Carbon Emissions From Transportation

By Latham & Watkins LLP on Posted in California, Energy regulatory, Environmental Regulation

The program will include a multi-jurisdictional cap-and-invest program and aims to address environmental justice and equity concerns.

By Jean-Philippe Brisson, Joshua T. Bledsoe, Benjamin Einhouse, and Brian McCall

On December 21, 2020, the Governors of Massachusetts, Rhode Island, and Connecticut, as well as the Mayor of the District of Columbia, announced that their respective jurisdictions would establish the Transportation & Climate Initiative Program (TCI-P) and released a memorandum of understanding (MOU) describing the agreed-upon principles for adoption and implementation of the TCI-P. While not part of the MOU, the states of New York, New Jersey, Delaware, Maryland, Virginia, Vermont, Pennsylvania, and North Carolina released a statement signaling their desire to work with the states party to the MOU and the Transportation & Climate Initiative (TCI) in general. On March 1, 2021, the TCI released draft Model Rules for public review. Once finalized, the Model Rules are intended to be adapted for use by each TCI-P signatory jurisdiction via state-specific rulemaking processes. Continue Reading

CEQA Case Report: 2020 Year in Review

By Latham & Watkins LLP on Posted in California, CEQA, Environmental Litigation, Environmental Regulation

Public agencies prevailed in 68% of CEQA cases analyzed.

By James L. Arnone, Daniel P. Brunton, Nikki Buffa, Marc T. Campopiano, and Winston P. Stromberg

Latham & Watkins is pleased to present its fourth annual CEQA Case Report. Throughout 2020 Latham lawyers reviewed each of the 34 California Environmental Quality Act (CEQA) appellate cases, whether published or unpublished. Below is a compilation of the information distilled from that annual review and a discussion of the patterns that emerged. Latham’s webcast discussing this publication and the key CEQA cases and trends of 2020 is available here. Continue Reading

4 Things to Know About CARB’s Clean Miles Standard

By Latham & Watkins LLP on Posted in California, Environmental Regulation

The novel regulation aims to reduce GHG emissions from ride-sharing vehicles in California.

By Joshua T. Bledsoe and Jen Garlock

The California Air Resources Board (CARB) is developing the Clean Miles Standard, a regulation to reduce greenhouse gas (GHG) emissions from ride-sharing vehicles and encourage broader adoption of zero-emission vehicles (ZEV), pursuant to Senate Bill (SB) 1014.

The regulation will include two primary requirements related to: (1) increasing the percentage of total miles driven by ride-sharing companies using ZEVs, and (2) reducing GHG emissions per passenger mile traveled.

CARB staff have rolled out the regulatory concept in a series of public workshops this year, and presented updated targets at a workshop on November 19, 2020.

The COVID-19 pandemic has impacted development of the targets, since prior assumptions about ride-sharing are in flux and the regulatory timeline has been delayed.

This Client Alert details the top four things to know about this first-in-the-nation regulation.

California to Require 100% Zero-Emission Passenger Vehicle Sales by 2035

By Latham & Watkins LLP on Posted in California, Environmental Regulation

The Governor has issued an Executive Order with sweeping implications for the oil and gas industry and others.

By Jean-Philippe Brisson, Joshua T. Bledsoe, Nikki Buffa, and Brian F. McCall

On September 23, 2020, California Governor Gavin Newsom signed Executive Order N-79-20, which will have sweeping implications for the oil and gas industry, automakers, low-carbon fuel producers, the logistics industry, and public transit agencies, among others (the Executive Order). Newsom announced the Executive Order against the backdrop of what he called “simultaneous crises,” none of which he argued is more impactful and forceful as the climate crisis. The press conference included Mary Nichols, Chair of the California Air Resources Board (CARB), standing before a small fleet of zero-emission vehicles.

In what will likely be viewed as the most far-reaching measure, the Executive Order requires all passenger vehicle sales starting in 2035 to have zero emissions — a mandate that essentially bans sales of new internal-combustion-powered passenger vehicles in California. As discussed below, the Executive Order raises several significant issues. Continue Reading

CARB Attempts to Contain LCFS Credit Prices

By Latham & Watkins LLP on Posted in California, Environmental Regulation

In recent LCFS amendments, CARB introduced a new price cap on all LCFS credit transfers and authorized limited future credit borrowing.

By Joshua T. Bledsoe, Brian F. McCall, and Kevin A. Homrighausen

On November 21, 2019, the California Air Resources Board (CARB) passed Resolution 19-27, approving several amendments to the Low Carbon Fuel Standard (LCFS) program designed to foster stability in the LCFS market and promote access to electric vehicle (EV) transportation for disadvantaged and low-income communities in California.

Concerns of Credit Price Run-up

The LCFS is a key pillar of California’s efforts to reduce greenhouse gas (GHG) emissions in the transportation sector. As discussed in previous posts, regulated entities must either: (1) ensure that fuels supplied in California meet annual, decreasing carbon intensity (CI) targets (e.g., by blending biofuels into gasoline and diesel); or (2) procure and surrender credits to CARB. Regulated entities can buy LCFS credits in the bilateral market or in the Credit Clearance Market (CCM), a CARB-administered market intended to supply cost-controlled credits in the event of a market shortage. The rulemaking appears to reflect CARB’s acknowledgment of long-held concerns in the LCFS market that deficit generation will outstrip credit generation, and the CCM will be unable to adequately cap credit prices. The steady advance of LCFS credit prices since the summer of 2017 is well documented in CARB’s Credit Transfer Activity Reports. The most recent LCFS amendments are intended to ensure that the CCM will continue functioning in the event of a credit shortage and to safeguard against a potential LCFS credit price run-up. Continue Reading

Air District Targets Southern California Logistics Industry

By Latham & Watkins LLP on Posted in California, CEQA, Environmental Regulation, Finance and project development, Permitting, Solar PV/Rooftop solar

A local air district is developing a rule that would require both existing and proposed warehouses to reduce trucking emissions or pay a mitigation fee.

By Joshua T. Bledsoe

The South Coast Air Quality Management District (SCAQMD or District) is developing a so-called Indirect Source Rule (ISR) that would require Southern California warehouses to reduce emissions associated with trucking activity and on-site equipment. Proposed Rule 2305, recently released by the District in discussion draft form, would establish the Warehouse Actions and Investments to Reduce Emissions (WAIRE) Program — which would apply to owners and operators of warehouses located in the South Coast Air Basin (Basin) with greater than 100,000 square feet of indoor space in a single building. If the SCAQMD’s development timeline holds, Proposed Rule 2305 will phase in on July 1, 2020. Continue Reading

EPA Will Not Require Financial Assurances From Electric Power Sector

By Latham & Watkins LLP on Posted in Energy regulatory

EPA’s decision to forego financial requirements will likely face opposition by eNGOs.

By Claudia M. O’Brien and Stacey L. VanBelleghem

On July 2, 2019, the US Environmental Protection Agency (EPA) published its proposed decision not to impose new financial responsibility requirements on the Electric Power Generation, Transmission, and Distribution industry under Section 108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), following nearly a decade of litigation, stakeholder input, and EPA assessment.

Section 108(b) and EPA’s Path to This Decision

CERLCA imposes a joint and several liability scheme that holds certain entities (e.g., certain owners and operators, generators, arrangers, and transporters of hazardous substances) liable for the costs or damages associated with environmental remediation. Section 108(b) of CERCLA authorizes EPA[i] to develop regulations requiring owners or operators of certain “classes of facilities [to] establish and maintain evidence of financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances.” Section 108(b)(2) identifies factors to consider to determine the level of financial assurances necessary in light of the level of risk. These factors include:  “the payment experience of the [Hazardous Substance Superfund], commercial insurers, courts settlements and judgments, and voluntary claims satisfaction.” Continue Reading

CEQA Case Report: Understanding the Judicial Landscape for Development

By Latham & Watkins LLP on Posted in California, CEQA, Environmental Litigation, Environmental Regulation

2018 Year in Review: Public agencies prevailed in 65% of CEQA cases analyzed.

By James L. Arnone, Marc T. Campopiano, Christopher W. Garrett, and Lucinda Starrett

Over the course of 2018, Latham & Watkins lawyers reviewed all 57 California Environmental Quality Act (CEQA) cases, both published and unpublished, that came before California appellate courts. These cases covered a variety of CEQA documents and other topics. Below is a compilation of information from the review and a discussion of the patterns that emerged in these cases. Latham will continue to monitor CEQA cases in 2019, posting summaries to this blog.

The California Court of Appeal heard 55 CEQA cases, while the California Supreme Court heard one case: Sierra Club v. County of Fresno. This case concerned what constitutes sufficient detail in an environmental impact report (EIR) and has implications for the preparation of EIRs as well as judicial review of agency decisions certifying EIRs.

In addition to the 56 state cases, one federal CEQA case, AquAlliance v. U.S. Bureau of Reclamation, was heard by the Eastern District of California.

Of the 57 cases, 26 were published, 25 were unpublished, and six were partially published. Figure 1 (above) shows all 57 cases sorted by topic. The greatest number of cases (28 of the 57, or 49%) focused on EIRs. In 2017, only 43% of cases focused on EIRs. Attorneys’ Fees, Justiciability, and Other Procedures accounted for 16 cases. This category includes issues such as mootness, statutes of limitations, waiver, and res judicata. Nine cases focused on Exemptions and Exceptions. Two cases focused on Mitigated Negative Declarations and two cases focused on Supplemental Review.

Figure 2 (right) shows the distribution of cases heard among the six appellate districts as well as the public agency success in each district. The Sixth District was the only district in which the public agencies prevailed in all cases. In the Fifth District, public agencies had the least success, prevailing in only 29% of the cases.

Figure 3 (below) sorts cases by topic and includes additional information on whether the public agency prevailed in each kind of case. For the purposes of this summary, if the public agency lost on any issue, it was deemed not to have prevailed. Overall, public agencies prevailed in 37 of 57 cases, or 65% of the time, the same percentage as in 2017, and won in 68% of EIR cases, compared with 55% in 2017. By contrast, public agencies prevailed in only 56% of cases involving Attorneys’ Fees, Justiciability, and Other Procedures, compared with 67% in 2017.

Additionally, a suite of amendments to the CEQA Guidelines went into effect this year. The California Office of Administrative Law adopted amendments relating to several sections, including those affecting greenhouse gas impacts, baseline procedural requirements, and permissible mitigation deferral. More detail on these amendments can be found in this article, published on Latham’s Environment, Land & Resources blog. The final adopted text of these amendments is publicly available here.

Read the full CEQA Case Report Year in Review 2018.

Supreme Court Won’t Hear Challenge to Oregon’s LCFS Program

By Latham & Watkins LLP on Posted in Environmental Litigation

High Court’s action clears pathway for low-carbon fuel standard programs.

By Joshua T. Bledsoe, Kimberly D. Farbota, and Brian F. McCall

On May 13, 2019, the US Supreme Court denied certiorari in American Fuel & Petrochemical Manufacturers (AFPM), et al., v. O’Keeffe, et al (O’Keeffe), effectively affirming a US Court of Appeals for the Ninth Circuit decision that upheld the constitutionality of Oregon’s Clean Fuels Program (CFP). The CFP is modeled after, and operates according to, the same principles and general structure as California’s Low Carbon Fuel Standard (LCFS) program. Petitioners argued that Oregon’s CFP discriminates against out-of-state fuels in violation of the US Constitution’s Dormant Commerce Clause. Oregon argued that while a state may not regulate wholly out-of-state commerce, there is no constitutional bar to a state regulating its fuels market based on a product’s objectively measured contributions to in-state harms (i.e., regulating based on harm caused by a fuel’s carbon intensity).

With the Supreme Court’s refusal to hear the case, the Ninth Circuit’s September 2018 ruling that Oregon’s CFP does not unconstitutionally favor in-state fuels over out-of-state fuels stands. The denial of certiorari follows a 2014 refusal by the Supreme Court to review a Ninth Circuit decision in a similar case, commonly known as Rocky Mountain I, that upheld the constitutionality of California’s LCFS program under the same reasoning. Continue Reading

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