Climate change legislation and regulations (and possibly litigation) will be the most important environmental law trend in the next decade. California passed the first state legislation, Assembly Bill No. 32, to cap and reduce greenhouse gases in 2006. AB 32 by itself will have little direct effect on industry, but it sets in motion a planning and regulatory process that will eventually affect every business that uses energy -- electricity, any type of vehicle besides a bicycle, even potentially a leaf blower. Surprisingly, many lawyers I know, even environmental lawyers, have not read the statute. It's a short, easy read, and here's what it provides in a nutshell:
AB 32 adds a new Division 25.5 to the Health & Safety Code, starting at Section 38500. Part 1, Sections 38500 to 38505, contains a short title (the "California Global Warming Solutions Act of 2006"), findings and declarations, and definitions. The Act defines greenhouse gases to include not only carbon dioxide and methane, but also nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
Part 2, Section 38530, authorizes the State Air Resources Board to adopt regulations requiring the reporting and verification of greenhouse gas emissions. The regulations may apply to all "greenhouse gas emissions sources," and the State Board has discretion to determine which sources are significant enough to be regulated. Thus, the statute ducks the question of whether greenhouse gas regulations should apply to sources at the level of leaf blowers and lawn mowers, or just to large industrial users. The statute does require, however, that the State Board "[a]ccount for all electricity consumed in the state."
Part 3, Sections 38550 and 38551, requires the State Board to determine the state's level of greenhouse gas emissions in 1990, set that level as a target for emissions in 2020, and continue reductions after 2020.
Part 4, Sections 38560 to 38565, sets forth the tools that the State Board may use to reduce greenhouse gas emissions. First, the State Board's regulations must be designed to "achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions from sources or categories of sources." Second, subject to that standard, the State Board shall publish a list by June 30, 2007 -- three months from now -- of "early action" measures that can be implemented in regulations to be adopted by January 1, 2010. Third, by January 1, 2009, the State Board shall prepare a "scoping plan," which will be updated every five years, to reduce greenhouse gas emissions. Fourth, by January 1, 2011, The State Board shall adopt regulations, which will become effective January 1, 2012, to achieve the plan. The Act includes principles to guide the Board in developing regulations (minimizing costs and maximizing benefits), and in particular AB 32 requires in Part 5, Section 38570, that the State Board consider a cap-and-trade emissions system.
Parts 6 and 7 contain enforcement and miscellaneous provisions; the Board is empowered to mpose fees on greenhouse gas sources, and there is an escape clause that allows the Governor to postpone deadlines set by the State Board in one-year increments. There's more detail, but that's the gist of it.
Here in summary is the time-table:
- June 30, 2007: Identification of early action measures
- January 1, 2009: State Board to prepare scoping plan
- January 1, 2010: Early action measure regulations to be adopted
- January 1, 2011: Adopt regulations to achieve scoping plan
- January 1, 2012: Regulations become effective
Some companies have already begun to incorporate greenhouse gas planning into their business decision-making, but most businesses seem to think this process will happen to someone else. It's possible that some small businesses may not be much affected, but every large business should be following the regulatory process and identifying those key strategic business decisions that may be affected by greenhouse gas emissions regulations. If you're in environmental law, especially if you work in California, this is likely to be your new job.
