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JMBM C limate Change Group

CLIM A TE C H A N GE LITIG A TIO N SU MM ARY

By Malcolm C . We iss and Ian M . Forrest

This summary provides an overview of some of the more relevant on-going litigation concerning climate change and global warming issues in the United States.1 The main focus of the memorandum is California, but law suits in other states are discussed to help provide relevant context. The memorandum first provides an overview of a significant U.S. Supreme Court decision relating to greenhouse gas (“GHG”) emissions. The memorandum then focuses on litigation in the California State courts and U.S. District courts. Finally, contemplated and threatened litigation in California is discussed.

1 The cases discussed below are not all the currently pending global warming law suits, but summarize most of the more important ones. As with any review of a rapidly changing area of law, as cases are resolved, new laws are enacted, and new issues are raised, the "lay of the land" changes. Also, unresolved matters become clearer over time. Please consider this article as an overview snapshot of current conditions and understand that those conditions change on a daily basis. For advice or consultation on the issues discussed herein or how climate change may impact your plans or project, please contact the authors.

“Petitioners have made a persuasive showing that there is a growing consensus on the issue [of Climate Change] that has caused state environmental agencies to give it closer attention. As the projected effects of climate change become clearer and can be related to specific sites, there is little doubt that those effects will have to be factored into the analysis of many projects under [the California Environmental Quality Act].”

- Natural Resources Defense Council v. The Reclamation Board of the Resources Agency, 06CS-01228 (Sacramento County Super. Ct., filed 2006)

C limate Change Li t igat ion Summary Page 2 of 25



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I. UNITED STATES SUPREME COURT

A. Massachusetts, et al., v. Environmental Protection Agency, et al., 549 U.S. ___ (2007)

This case is important because it resolved the issue of whether Carbon Dioxide ("CO2") is a "pollutant" and whether the United States EPA ("EPA") can or should regulate CO2 emissions. Twelve States, three cities, an American territory and numerous environmental organizations (“Petitioners”) brought suit over the EPA's assertion that: (1) it does not have the authority to regulate motor vehicle emissions of CO2 and other GHGs under the Clean Air Act ("CAA"); and (2) even if it did, it would choose not exercise its authority at that time. The lower court assumed that the EPA did have the statutory authority to regulate GHGs under the CAA, but went on to find that the EPA had properly declined to exercise that authority.

Review by the U.S. Supreme Court was granted on June 26, 2006 and the decision was rendered on April 2, 2007. The decision has been heralded as one of the most significant environmental decisions in the Court's history.

1. Standing

The Court first addressed the critical threshold issue of standing2, concluding that the construction of the CAA was appropriate for federal court legislation and that Congress had expressly authorized this type of challenge to EPA action. Standing requires a litigant demonstrate: (1) a concrete and particularized injury that is either actual or imminent; (2) the injury is fairly traceable to the defendant; and (3) that a favorable decision will likely redress that injury. According to the Court, because Massachusetts is a sovereign state and owner of land alleged to be affected, it occupies a special position and interest in the litigation and should be granted “special solicitude” in the standing analysis.3

2 Standing is a legal term of art used as shorthand to denote one's ability to demonstrate sufficient connection to and harm from a law or challenged action. Standing is based on the Constitutional requirement that courts only hear "actual cases and controversies." The U.S. Supreme Court has stated, “In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues.” Warth v. Seldin, 422 U.S. 490, 498 (1975).3 Chief Justice Robert’s dissent (joined by Thomas, Alito, and Scalia) would have rejected petitioner’s challenges as non-justiciable. In particular, the Chief Justice disagreed with the “special solicitude” granted Massachusetts. The Chief Justice went on to assert that: (1) the very nature of concrete and particularized injury is inconsistent with the very concept of global warming given that it is a global phenomenon; (2) the timelines of the global warming effects are too drawn out to constitute an imminent threat; (3) causation is questionable given that the CAA only effects GHG emissions from new cars – only a tiny fraction of the global GHG emissions; and (4) redressability is equally (continued…)




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The Court then evaluated the injury, causation, and redressability of the harms associated with the EPA’s refusal to regulate GHGs. The Court noted that the harms associated with global warming include, among other things, rising sea levels, severe and irreversible changes to natural ecosystems, and increasing the spread of diseases and ferocity of weather events. The fact that climate change risks are widely shared, does not minimize Massachusetts’ interest in the outcome of the litigation.

With regard to causation, the Court found that EPA’s refusal to regulate GHG emissions contributes to Massachusetts’ injuries. The EPA did not dispute the causal connection between man-made GHG emissions and global warming. The Court rejected the assertion that EPA regulation of GHGs would be of marginal benefit given the foreseen increases in GHG emissions from developing nations such as India and China. First, regulatory efforts, even if tentative, do not preclude federal court jurisdiction. Second, reducing GHG emissions from U.S. automobiles would constitute a meaningful reduction of GHG emissions by any standard. While regulating U.S. motor-vehicle emissions may not reverse global warming, it does not follow that federal courts lack jurisdiction to decide whether the EPA has a duty to take steps to slow or reduce it.

2. GHG Emissions are air pollutants under the CAA

Turning to the merits of EPA’s refusal to regulate GHG emissions, the Court noted that while the refusal to initiate enforcement proceedings is not ordinarily subject to judicial review, EPA’s decision may be reviewed if it is found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Putting EPA’s stated rationales to the test, the Court found that GHGs fit easily within the “unambiguous” CAA definition of “air pollutant” which includes “any air pollution agent…, including any physical chemical…substance…emitted into…the ambient air….” (See 42 U.S.C. § 7602(g)).

3. EPA refused to regulate GHG emissions for illegitimate reasons

The Court then considered the alternative basis for EPA’s decision, namely that the EPA would exercise its “judgment” not to regulate GHG emissions even if within its regulatory reach via the CAA. The Court found that EPA’s position lacks merit: “the statutory use of the word ‘judgment’ is not a roving license to ignore the statutory text.” While the CAA conditions EPA action on the EPA Director’s formulation of a “judgment,” (42 U.S.C. § 7521(a)(1)), that judgment must relate to whether an air pollutant causes or contributes to air pollution which may reasonably be anticipated to endanger public health or welfare. (42 U.S.C. §7601(a)(1)). Thus, under the CAA, the EPA may avoid promulgating regulations only if: (1) it

questionable given that the majority of the predicted GHG emissions will come from outside the U.S. and thus will not likely address the problems Massachusetts will face.




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concludes that GHGs do not contribute to climate change; or (2) a reasonable explanation is provided as to why EPA cannot or will not exercise its discretion to regulate GHGs.

According to the Court, the EPA did neither, but instead, asserted policy rationales as to why it cannot regulate GHGs: (1) interference with voluntary executive branch programs already designed to address global warming; (2) regulating GHGs may impair the Executive’s ability to negotiate with key developing nations to reduce GHG emissions; and (3) curtailing motor-vehicle emissions would result in a inefficient, piecemeal approach to addressing climate change. In the Court’s view, these policy rationales had nothing to do with whether GHGs contribute to global warming. Nor did these rationales amount to a “reasoned justification” for declining to form a scientific judgment. If the alleged scientific uncertainty surrounding global warming is so profound, the Court noted, the EPA must state as much. Having ignored the permissible statutory basis for refusing to promulgate regulations, EPA’s refusal to regulate GHG emissions is therefore “arbitrary, capricious, or otherwise, not in accordance with law.” (42 U.S.C. 7607(d)(9)).4

The Court remanded the case for further proceedings consistent with its opinion.

4. Effects of the Court’s decision

This decision will require the EPA to revisit: (1) whether and how to regulate GHG emissions; and (2) whether to allow individual states to do so. On April 3, 2007, the EPA announced that it was reactivating a long-pending request from the California Air Resources Board ("ARB") to obtain a waiver under section 209 of the CAA that would permit California to regulate vehicular GHG emissions of under California Assembly Bill 1493 (2002)(codified at California Health & Safety Code § 43018.5). If permitted to regulate tailpipe emissions, ARB’s early action measures may be more evenly distributed between the manufacturing, energy, and automobile sectors. Foreshadowing this possibility, immediately after the Massachusetts decision, automakers called for an “economy-wide” approach to global warming, cautioning that no single industry could bear the burden alone. However, California's perception is that EPA is continuing to drag its feet on issuing the requested waiver. Governor Schwarzenegger has threatened to file suit in October of 2007 if the EPA has not granted the waiver.

4 Justice Antonin Scalia’s dissent (joined by Thomas, Alito, and Roberts) concurred with Chief Justice Robert’s dissent, and attacked the Court’s decision on the merits. First, Justice Scalia asserted that the EPA Administrator reasonably supported its exercise of discretion and refusal to regulate GHG emissions and had adequately asserted its lack of endangerment finding. Second, Justice Scalia asserted GHG emissions are not “air pollution agents” and therefore, are not regulated under the CAA.




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The ruling that EPA has the authority to regulate GHG emissions from motor vehicles may allow environmentalists, states and other plaintiffs to resume litigation seeking CO2emission curbs from stationary sources.

Finally, this decision may spur federal action to develop a viable approach to climate change. For example, immediately after the decision, Senate energy committee chairman Jeff Bingaman (D-NM) reiterated a long-standing call for the Bush administration to join Congress in developing a national GHG program. Both industry and environmentalists alike may now turn to Congress for action as all parties may prefer the predictability of a national, economy-wide approach.

5. Remaining Questions

The EPA may still decide not to regulate GHG emissions (at least during the term of the current administration). However, the EPA will need to make a reasoned justification for so doing.

Also, the Court’s opinion did not address one of the principle arguments of the automobile industry: that the preemption5 provision in the Energy Policy and Conservation Act (“EPCA”) denies states the ability to adopt separate fuel economy standards. Because there is allegedly no technology to control CO2 from the tailpipe, the only mechanism available to reduce GHG emissions is through increased fuel efficiency. Thus, the automobile industry argument goes, states are preempted from regulating GHG emissions.

II. CALIFORNIA STATE LITIGATION

A. Center for Biological Diversity v. City of Banning, RIC460967 (Riverside County Super. Ct., filed Nov. 21, 2006) - Consolidated under Highland Springs Conference and Training Center v. City of Banning, RIC460950 on May 7, 2007.

The Center for Biological Diversity ("CBD") filed suit to block the development of the “Black Bench” project in Banning, California. The suit seeks to overturn the Banning City Council’s approval of Black Bench, alleging that the City’s environmental reviews did not consider the effects of the increased GHG emissions as a result of the project’s new homes and

5 Preemption generally refers to the displacement of a state law by a federal law. The Supremacy Clause (Article VI, section 2) of the U.S. Constitution states that the Constitution and other federal laws are the “supreme Law of the Land.” Thus, when there is a conflict between a state law and federal law, the federal law trumps--or "preempts"--the state law.




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increased traffic. The lawsuit has sought a stay of the project’s development pending a more complete environmental review.

The CBD alleged that GHGs contribute to global warming, which in turn results in problems such as diminished snowpack, rising sea levels, and increased incidence of health ailments. The case is the first believed to test whether the California Environmental Quality Act ("CEQA") requires cities and counties to consider GHG emissions in deciding whether or not a development may proceed. CEQA requires that any discretionary approvals of development projects be subject to environmental review. Approval by local governmental entities of such projects should take into account ways to “mitigate or avoid the significant effects on the environment.”

The administrative record was prepared and served by the City of Banning on March 14, 2007. On March 29, 2007 Defendant’s motion to consolidate four related cases6

against the City of Banning challenging the project was granted.

On April 13, 2007, SCC/Black Bench, LLC ("SCC") filed its Answer to the suit, asserting generally that SCC and the City of Banning complied with all applicable laws, rules, and regulations, including CEQA, with respect to the project and the entitlements. In an interview given at the time the suit was filed, the City's attorney alleged that not only was the environmental review adequate, but that CEQA does not require GHG consideration in project approvals.

On May 7, 2007, all parties agreed that petitioners would file their statements of issues by May 17, 2007 and respondents by June 7, 2007. Petitioners agreed to file their opening briefs by July 3, 2007. Hearing in the case is set for November 30, 2007.

B. Natural Resources Defense Council v. The Reclamation Board of the Resources Agency, 06CS-01228 (Sacramento County Super. Ct., filed 2006)

The Natural Resources Defense Council (“NRDC”) filed suit to block California’s issuance of permits for the proposed River Islands project. This is an action under CEQA in which the NRDC is seeking to compel the Reclamation Board to rescind two construction permits for a project which will convert approximately 5,000 acres of agricultural land in Lathrop, California to urban use. Specifically, the River Islands project would include up to 11,000 houses and 5 million square feet of office space on an island in the Sacramento-San

6 Cases related to Center for Biological Diversity v. City of Banning (RIC460967) are Banning Bench Community of Interest, Inc. v. City of Banning, et al. (RIC461069, filed Nov. 22, 2006), Cherry Valley Pass Acres And Neighbors et al. v. City of Banning (RIC461035, Nov. 22, 2006), and Highland Springs Conference And Training Center v. City of Banning (RIC460950, Nov. 22, 2006).




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Joaquin Delta (the "Delta"). The NRDC alleged, among other things, that the effects of climate change upon the Delta, including rising water levels that could threaten levees protecting the development, were "new information" under Public Resources Code 21166, requiring consideration and recirculation of the environmental impact report (“EIR”) for the project.

This suit illustrates the two manners in which a wide range of development projects may be challenged under CEQA or NEPA. Specifically, plaintiff's allege that regulators must assess climate change impacts upon proposed projects, i.e., the magnitude of risks from sea level changes, increased flooding, and even invasive or destructive species to the project itself, etc. In addition, regulators must assess the projected impacts upon climate change from proposed development projects, i.e., how much GHG emissions are likely to result from the project’s construction and use and how are those emissions likely to impact global warming.

A petition for hearing on writ of mandate was granted on March 9, 2007. On April 27, 2007, without reaching the merits, the court rejected Petitioner's CEQA based claims. In order for "new information" to trigger recirculation of an amended EIR, substantial information, which was not known or could not be known at the time the EIR was certified, must show one or more significant effects not previously discussed or which will be substantially more severe than discussed in the EIR. In this case, the alleged new information pertained to climate change conditions in the Delta region, particularly projections regarding more frequent and more severe flood episodes, as cited in documents and statements from the California Department of Water Resources, the CalEPA Climate Action Team, and the U.S. Environmental Protection Agency.

The court first noted that the concept that climate change is occurring and will have an impact on the hydrology of the Delta in general, and on the frequency and severity of flood episodes in particular, is not "new information." Rather, such information was known to petitioners, the public at large, and presumably to California public agencies as well, prior to the date of the EIR. Second, even assuming the scientific and political consensus regarding climate change effects has grown significantly since mid-2005, petitioners have not presented any real new information that has emerged regarding the specific effects that are to be expected in the area of the Delta where this project is being built. Petitioner's citations primarily contain generalized information regarding the potential effects of climate change on the State or the Delta region as a whole, or projections that relate to other areas of the Delta with conditions that differ significantly from those at the project site, rather than projections that are specific to the project site itself.

However, the court underscored the narrow nature of the ruling, specifically noting its decision was not meant to imply that potential changes in climate are not a proper subject for consideration under CEQA. "Petitioners have made a persuasive showing that there is a growing consensus on the issue that has caused state environmental agencies to give it closer




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attention. As the projected effects of climate change become clearer and can be related to specific sites, there is little doubt that those effects will have to be factored into the analysis of many projects under CEQA."

C. Center for Biological Diversity, et al. v. City of Desert Hot Springs, et al., Case No. RIC464585 (filed January 24, 2007)

The Center for Biological Diversity (“CBD”) and Sierra Club filed a petition forwrit of mandate7 against the City of Desert Hot Springs challenging the approval of the Palmwood Specific Plan and Palmwood Outparcels development project, proposing the addition of 6,800 residents and 2,694 homes upon 1,926 acres of currently undeveloped open space. CBD alleges, among other things, that Desert Hot Springs did not properly study the project's effects in its environmental review, specifically that it contained no analysis of GHG emissions and global warming impacts resulting from the construction of the project and addition of approximately 61,000 average daily vehicle trips.

On March 13, 2007 a status hearing was held in the case and on June 9, 2007, the case was transferred to the Indio branch of the Riverside Superior court.

D. Center for Biological Diversity, et al. v. County of San Bernardino, et al., Case No. BCVBS09950 (filed March 29, 2007)

The CBD and HelpHinkley.org filed a petition for writ of mandate against San Bernardino County and Nursery Products, LLP challenging the approval of an open-air sludge facility to be located near the town of Hinkley, California. CBD alleges the San Bernardino County did not properly study the project's effects in its environmental review, specifically that it failed to adequately analyze GHG emissions. Moreover, CBD alleges the facility’s planned used of older technology to compost waste will result in excessive GHG emissions (methane and CO2) which could be reduced or eliminated using newer, alternative technologies. San Bernardino County is expected to respond that GHG emissions from the sludge will be offset by actually reducing emissions from truck trips that would normally haul the waste out of state and reducing methane which would otherwise be produced by if the wastes were deposited in a landfill. The suit is considered to be a test case of whether officials need to talk about GHGs in environmental documents prepared pursuant to CEQA and whether these emissions must be mitigated.

On May 21, 2007, settlement meetings were held by the parties. On June 22, 2007 a request and order regarding hearing dates and briefing schedules was received and remains under review.

7 A writ of mandamus is issued by a superior court to compel a government officer to perform mandatory or purely ministerial duties (of a non-discretionary and public nature) correctly.




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E. The People v. County of San Bernardino, Case No. CIVSS700329 - (filed April 12, 2007)

On April 12, 2007, California’s Attorney General (“AG”) filed a writ of mandate against the County of San Bernardino for allegedly failing to adequately address climate change in a CEQA document evaluating San Bernardino County’s general plan. The suit may clarify the question of whether agencies and developers must thoroughly analyze the GHG impacts of planned projects.

The AG asserts that the enactment of California Assembly Bill 32, the Global Warming Solutions Act of 2006 ("AB 32") makes CEQA consideration of GHG emissions mandatory. Specifically, following the passage of AB 32, San Bernardino County must analyze the GHG effects of its general plan, cumulative effects of the General Plan, and then identify and adopt all feasible mitigation measures to minimize San Bernardino County’s effect on global warming. As implied by the AG’s suit, a cursory explanation in a general plan asserting that a local government or developer “will conform with AB 32” will not likely be acceptable.

San Bernardino County may argue that because the ARB has not yet developed a standard for GHG emissions, the issue cannot yet be addressed in CEQA documents. Alternatively, San Bernardino County has stated its General Plan addresses GHG emissions indirectly by adequately mitigating for air quality impacts. The General Plan asserts “it is clear that the issue of [GHG] reductions extends well beyond the scope of local government actions incorporated in general plans” and that the “goals and policies already incorporated” into the General Plan address GHG impacts from vehicle trips.

On June 26, 2007, the court held a status hearing on the petition for writ of mandate, determining all CEQA matters are to be heard before Judge Alvarez in Department S33 and setting a further status conference before the same judge for October 11, 2007.

F. American Canyon Community United for Responsible Growth v. City of American Canyon, Case No. 26-27462 (Napa County Superior court)

On July 10, 2003, a developer applied for land use approvals for a hotel, multi-family residences with a park, and retail space development to be developed in two phases of approximately 20 acres each. Eventually approved, appellant filed a petition for writ of mandate in the superior court seeking revocation of the City's approvals. The appellant prevailed, the City complied with the writ and re-approved the project after certifying an addendum to the previously certified mitigated negative declaration ("MND"). Appellants challenged the addendum, among other things, for failing to analyze the project's impacts on climate change.




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On May 27, 2007, the court ruled that opponents of a proposed Wal-Mart could not challenge the project by alleging Napa County inadequately analyzed GHG impacts in an addendum to the EIR it had performed. Noting petitioners seemed to suggest the adoption of AB 32 should trigger further environmental review, the court noted it "fail[ed] to see how a mere legislative mandate for the creation of regulations could have triggered review" and did "not agree that [AB 32] is the type of new information contemplated by [Public Resources Code] section 21166."

III. FEDERAL DISTRICT COURT

A. California

1. Central Valley Chrysler-Jeep, et al., v. Witherspoon, Civ. No. 04-CV-06663 AWI NEW (E.D.C.A., Sep. 26, 2006)

On December 7, 2004, nine automakers and the Association of International Auto Manufacturers (“Jeep”) sued ARB to block the implementation of AB 1493. Jeep alleged that ARB’s actions were preempted by: (1) the EPCA; (2) section 209(a) of the CAA (“§ 209(a)”); (3) the foreign policy and affairs powers of the Federal Government; and furthermore violated (4) the Dormant Commerce Clause; and (5) the Sherman Antitrust Act.8 The court dismissed Jeep’s claims of Dormant Commerce Clause and Sherman Act violations, finding the claims without merit or insufficiently stated.

With regard to the EPCA however, the court noted that the National Highway Transportation Safety Administration (“NHTSA”), the federal agency charged with implementing the EPCA and its accompanying CAFE standards, explicitly asserted that AB 1493 would disrupt its implementation of the CAFE program. As such, the court found that Jeep had sufficiently stated its claim under the EPCA. Similarly, § 209(a) provides that a State may not enforce any standard relating to the control of emissions from new motor vehicles regulated under the CAA. While the EPA has asserted that it lacks authority to regulate GHGs under the

8 Cases challenging the ability of other states to adopt California’s GHG emissions regulations have been filed in Rhode Island (Association of International Automobile Manufacturers v. W. Michael Sullivan, Civ. No. 1:06-cv-00069-T-LDA (filed Feb. 13, 2006)) and Vermont (Green Mountain Chrysler-Plymouth-Dodge Jeep, et al. v. George Crombie, et al, Case No. 2:05-CV-302 (filed on Nov. 18, 2005)). In these cases, plaintiffs have sought to enjoin the States from implementing and enforcing California’s regulations relating to the emissions from motor vehicles of CO2, methane, nitris oxide, and hydroflourocarbons. Again, EPCA and CAA preemption is at the crux of the debate. In the Vermont case, following the ruling in Massachusetts v. EPA, Judge William Sessions allowed the automobile industry to continue to make their preemption arguments, declining a request from Vermont attorneys to dismiss the industry suit and noting the court should create a full record of the contested issues which will assist the appellate court’s expected review of any lower court ruling. The Vermont case proceeded to trial April 10, 2007 and concluded on or about May 16, 2007. No decision has been issued.




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CAA (an argument the U.S. Supreme court rejected, see Massachusetts v. EPA above), the EPA must affirmatively waive § 209(a) preemption, which it has not done. Accordingly, because the EPA has not issued a § 209(a) waiver, the court found that Jeep had properly stated its claim under the CAA. Finally, the court found that AB 1493, by unilaterally reducing GHG emissions, potentially undercuts the Executive’s ability to pursue international agreements. Thus, Jeep had also sufficiently stated a claim for preemption based upon the President’s prerogative over foreign policy.

Under a January 12, 2007 order, the court issued a stay pending decision in Massachusetts v. EPA. At California’s request, the court held a further status conference on June 18, 2007. California asserted its position that the Massachusetts decision, in conjunction with the arguments Defendants have already made, resolves the case in California’s favor. California requested the court decide the currently pending motions for summary judgment and for summary adjudication. A hearing for the pending motions has been set for October 22, 2007.

2. People of the State of California v. General Motors Corporation, et al., Civ No. 3:06-CV-05755-MJJ (N.D.C.A.)

On September 20, 2006 California Attorney General Bill Lockyer filed a public nuisance lawsuit in the Northern District of California against General Motors, Toyota, Ford, Honda, Chrysler and Nissan seeking compensation for alleged damage to the state caused by emissions from their cars and trucks. The complaint alleges that the GHG emissions of these six defendants’ cars and trucks have created or contributed to a public nuisance – global warming. California alleges the impacts of global warming have caused it substantial injury and it has spent millions of dollars studying, planning, monitoring and responding to these impacts, such as reduced snow-pack, coastal and beach erosion, increased ozone pollution, sea water intrusion into drinking water supplies, increased wildfire risks, prolonged heat waves, and impacts on endangered species such as salmon.

The complaint asks the court to hold each defendant jointly and severally liable9

for damages and to enter a judgment for “all future monetary expenses and damages as may be incurred by California in connection with the nuisance of global warming.”

Automobile industry briefs filed on April 3, 2007 claim the ruling in the Massachusetts decision bolsters their argument that a California nuisance suit against the industry should be dismissed because California’s claims raise political questions that must be resolved by the executive and legislative branches of government. Automakers also argued that

9 Joint and several liability means that each defendant is liable up to the full amount of the claim. A party which pays in full can then pursue the other parties for their respective shares of the liability.




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the federal authority to regulate CO2 preempts common law claims seeking damages for impacts of global warming and therefore, such claims are improper.

California filed its supplemental brief on April 13, 2007, arguing the Massachusetts decision demonstrates that California is entitled to seek a remedy in federal court for damages caused by global warming, that California has reasonably selected this set of defendants, and that its claim fits into the well-established paradigm of public nuisance. Rejecting the assertion that California is making the decision of whether to regulate GHGs under the CAA ahead of federal policymakers, California asserted that it is asking the court to determine whether California is entitled to damages for harm it has suffered and that this question was inherently justiciable. The automobile industry’s “laundry list” of reasons why the court should not exercise jurisdiction over California’s public nuisance claim fails, as in the Massachusetts decision, because policy rationales do not provide a basis to ignore domestic law (in this case, the federal common law of public nuisance).

Finally, California asserted that its nuisance claim is not preempted by federal regulations. While the Massachusetts decision may prod the EPA to address global warming in a manner that provides the State with a meaningful remedy for harms related to future GHG emissions, until that comes to pass, California asserted that the court must apply the federal common law to California’s claim.

The initial case management conference was recently reset from June 5, 2007 to August 7, 2007.

3. Friends of the Earth, Inc., et al. v. Mosbacher, et al., Civ. No. 3:02-CV-04106-JSW (N.D.C.A.)

In August 2002, Friends of the Earth, Greenpeace, and the Cities of Oakland, Santa Monica and Arcata, California, as well as Boulder, Colorado (collectively “FOE”) filed suit in the U.S. District court in San Francisco on behalf of their members and citizens who are victims of global warming. The suit alleged that two U.S. government agencies, the Export Import Bank (Ex-Im) and the Overseas Private Investment Corporation (OPIC), illegally provided over $32 billion in financing and insurance for oil fields, pipelines and coal-fired power plants over the past ten years without assessing their contribution to global warming and their impact on the U.S. environment as required under the National Environmental Policy Act ("NEPA").

NEPA requires all federal agencies to conduct an environmental assessment of programs and project-specific decisions having a significant effect on the human environment. According to the complaint, OPIC and Ex-Im refused to review the contribution of their programs and fossil fuel projects to global warming. Involved in this suit are a North Carolina




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couple who fear their retirement property will be lost to storm surges, erosion and the rising sea level; maple syrup producers in Vermont who believe their business will be ruined as maple trees disappear from the area; and a marine biologist whose life’s work is in jeopardy because the coral reefs he has spent a lifetime studying and enjoying are disappearing at an alarming rate due to bleaching from rising ocean temperatures.

On August 23, 2005, the court denied a motion for summary judgment filed by Defendants, finding, among other things, that Plaintiffs had standing to pursue their claims against OPIC and Ex-Im. The court also concluded that OPIC failed to demonstrate Congressional intent to exempt OPIC from NEPA. On April 14, 2006, the merits of the lawsuit were heard in U.S. District court for the Northern District of California.

On March 30, 2007, the court denied Plaintiff's motion for summary judgment and granted in part and denied in part Defendants’ motions for summary judgment, and set an April 27, 2007 conference in the case. The court concluded Defendants did not establish that they were exempt from NEPA requirements and that Plaintiffs’ claims did not improperly involve the extraterritorial application of NEPA. The court went on to find: (1) it was not precluded from determining whether the actions of the Defendants constituted “major federal actions” under NEPA; (2) Defendants do not have energy “programs” which would automatically qualify as major federal actions; and (3) based upon the record at hand, the court could not determine as a matter of law whether the individual OPIC/Ex-IM projects amounted to major federal actions and thus summary judgment was not proper.

On May 9, 2007, the court stayed certification of its order on summary judgment until June 6, 2007. The court then certified both the August 23, 2005 and the March 30, 2007 orders denying summary judgment for interlocutory appeal.10 The court further ordered that should either party apply to the United States court of Appeals for the Ninth Circuit for such an interlocutory appeal, all further action in these proceedings shall be stayed pending a decision by that court. A litigation status report by the parties was due the court on July 6, 2007.

B. D.C. Circuit

1. Coke Oven Environmental Task Force v. EPA, No. 06-1131 (D.C. Cir. filed Apr. 7, 2006)

Petitioners, including three environmental groups, ten states, and two cities, filed suit in D.C. Circuit court, asking EPA to enforce reductions in air pollution for new stationary sources. Included is a request to standardize the maximum permissible amount of GHG

10 An interlocutory appeal is an appeal of a ruling by a trial court that is made before the trial itself has concluded.




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emissions. As in Massachusetts v. EPA, the EPA asserted that it did not have the authority to regulate CO2 from the power plants in question and even if it did, it would decline to regulate CO2 emissions at this time. This case had been stayed pending the outcome of Massachusetts v. EPA.

On June 4, 2007, the court ordered the case to be held in abeyance pending further court order. Parties were directed to file motions to govern future proceedings on September 7, 2007. Given the ruling in the Massachusetts v. EPA, this case may be now ripe for a decision in favor of the Plaintiffs.

C. Mississippi

1. Comer v. Murphy Oil, 1:05-CV-00436-LG-RHW (S.D. Miss., filed Sept. 20, 2005)

Property owner Plaintiffs claim Defendants’ emission of GHGs directly led to global warming and intensified Hurricane Katrina. The third amended class action complaint was filed on April 19, 2006 and Plaintiffs subsequently requested leave to file a fourth amended complaint. Opposition to Plaintiffs’ suit has been considerable, with companies such as British Petroleum, Shell Oil Company, Chevron U.S.A. Inc., ExxonMobil Corporation, ConocoPhillips Company, Entergy Corp., Arch Coal, Inc., Alliance Resource Partners LP, Westmoreland Coal Co., Xcel Energy Inc., Cinergy Corp., Duke Energy Corp, The Dow Chemical Company, and EI DuPont de Nemours & Co. joining in, just to name a few.

On March 6, 2007 Entergy Corp. filed a Motion for Summary Judgment. On March 7, 2007 British Petroleum filed a motion to dismiss the third amended complaint. On June 15, 2007, issued numerous housecleaning orders, dismissing various pending motions, but no new substantive developments have occurred in this case.

D. New York

1. Connecticut v. American Electric Power Co., Inc. & Open Space Institute, et al. v. American Electric Power Co., Inc., 05-5104-cv (U.S. court of Appeals for the Second Circuit)

The States of Connecticut, New York, California, Iowa, New Jersey, Rhode Island, Vermont, and Wisconsin, the City of New York, and the Open Space Institute, among others, (collectively “Plaintiffs”) brought suit against American Electric Power Co., the Tennessee Valley Authority, the Southern Company, Xcel Energy Inc., and Cinergy Corporation (collectively “Defendants”) in the Southern District court of New York. Plaintiffs claimed nuisance under federal common law resulting from global warming. As alleged, Defendants collectively emit 650 million tons of CO2 annually, one-quarter of the U.S. electric power




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sector’s emissions. Plaintiffs sought a court order requiring the defendants to cap their CO2emissions and reduce them by a specified percentage each year.

Defendants moved to dismiss the complaint, alleging that the court lacked jurisdiction because: (1) Plaintiff’s had no standing to sue; and (2) Plaintiff’s failure to state a claim divested the court of jurisdiction. As alleged, Plaintiffs failed to state a claim because: (1) there is no federal common law cause of action to abate GHG emissions; (2) “separation of powers principles” precluded adjudication; and (3) Congress has displaced any federal common law cause of action to address global warming.

The court granted Defendant’s motion to dismiss, finding the issues presented by Plaintiffs were non-justiciable political questions. A ruling that a matter in controversy is a “political question” is a statement by a federal court declining to rule in a case because: (1) the U.S. Constitution has committed decision-making on this subject to another branch of the federal government; (2) there are inadequate standards for the court to apply; or (3) the court feels it is prudent not to interfere. Because there is a constitutional duty requiring Judges to refrain from resolving questions of public policy reserved for the elected political branches, the court granted Defendants’ motion to dismiss. The court noted that balancing the competing social and economic costs presented by GHG emission regulation would be impossible without an “initial policy determination” having first been made by Congress and the President. The court noted that while Congress has officially recognized the global warming phenomenon since 1978 with the advent of the “National Climate Program,” it has declined to impose any formal limits on such emissions. The scope and magnitude of the relief requested would have required the court to determine, among other things, the appropriate level of CO2 emissions, the appropriate percentage reduction to be imposed on Defendants, the implications upon ongoing U.S. negotiations with other countries, and assess and measure available alternative energy sources. As such, the court was unwilling to make these policy determinations.

Plaintiffs appealed that decision to the Second Circuit court of Appeals, which heard oral argument in June of 2006. On April 4, 2007, Defendants filed a document asserting the Massachusetts v. EPA decision supports Defendants’ arguments. On June 21, 2007, the court ordered that by July 2, 2007, the parties were to brief the court of regarding the effect of Massachusetts v. EPA on the issues presented in the case. In particular, the effect, if any, the Massachusetts v. EPA decision has on the analysis of the doctrine of preemption or whether appellants claims are displaced by Congressional legislation.




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IV. CONTEMPLATED LITIGATION

A. The People of the State of California v. … - Attorney General letters alleging insufficient environmental documentation

The AG has issued numerous comment letters alleging that environmental documents under CEQA prepared for projects throughout the State are inadequate.11 Specifically, the AG alleges the projects fail to address global warming impacts.

1. General Assertions

Generally, the AG:

Cites evidence of global warming impacts in California and California regulatory actions to address global warming (e.g., AB 32, Executive Order S-3-05).

Alleges an obligation to evaluate project impacts on global warming and to make a determination whether the impacts are significant. The AG notes GHG emissions may be cumulatively considerable even if they contribute only a small percentage to a very large environmental problem; the greater the environmental threat, the lower any threshold for significance of cumulative impacts should be. (See Communities for a Better Environment v. CA. Resources Agency, 103 Cal.App.4th 98, 120 (2002)).

Opposes the assertion that impacts cannot be determined due to lack of thresholds of significance (see Guidelines12 §§ 15064.7(a), 15064(b), 15064(h)(2)) or because they may be too speculative (see Guidelines § 15145).

Asserts that significant cumulative impacts will likely result from the implementation of the projects. The test for cumulative significant impact is not "one additional molecule," but rather by the "rule of reason." Project applicants should consider whether GHG emissions from the project are enough that, along with new emissions from other projects, the cumulative emissions could interfere with achieving the reductions required by AB 32. (See Communities for a Better Environment v. CA. Resources Agency, 103 Cal.App.4th at 119-120; Kings County Farm Bureau v. City of Hanford, 221 Cal.App.3d 692, 718 (1990); Los Angeles Unified School District v. City of Los Angeles, 58 Cal.App.4th 1019, 1025-26 (1997)).

11 On June 21, 2007, two dozen industry groups, including the California Chamber of Commerce, California Forestry Association, California Metals Coalition, and the California Building Industry Association sent a letter to Governor Schwarzenegger, Senate President Don Perata, and Assembly Speaker Fabian Nunez requesting legislative relief from ongoing CEQA challenges of projects in the absence of established standards under AB 32. 12 "Guidelines" refers to Title 14, California Code of Regulations, Chapter 3, Guidelines for the implementation of the California Environmental Quality Act.




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Asserts that if significant, feasible alternatives and mitigation measures to address those impacts under CEQA and/or NEPA are required. Approving projects without requiring feasible measures to reduce or avoid GHG emissions will make it more difficult to achieve the reductions required by AB 32, place a greater burden on other sources of emissions, and result in greater cost to achieve the required reductions.

For GHG emissions that cannot be avoided, asserts that mitigation could include the reduction of other existing GHG emissions sources, i.e., the purchase of emissions trading credits and offsets on the open market.

Another prevalent theme in the AG letters is that project impacts must be considered in the context of AB 32, which should "inform agency responsibilities regarding climate change." In this respect, the AG has apparently taken authority from the Environmental Checklist form for air quality impacts: could the project "conflict with or obstruct implementation of the applicable air quality plan," or, as implicitly modified in the climate change context: "could the project conflict with or obstruct implementation of AB 32"? Thus, "where a project's direct and indirect GHG-related effects, considered in the context of the existing and projected cumulative effects, may interfere with California's ability to achieve the GHG reduction requirements of [AB 32], the project's global warming-related impacts should be considered cumulatively significant."

2. Specific Projects

The letters then specifically reference the characteristics and alleged deficiencies in the environmental documentation for the specific projects. The AG has submitted comment letters on the following:

February 6, 2007, to the Office of Surface Mining Reclamation and Enforcement re Black Mesa Project Draft Environmental Impact Statement ("EIS"). The EIS included a cursory discussion of global warming trends, and while it contained no substantive analysis of GHG emissions, it concluded the emissions from the Project are "too small [an estimated 12 million tons per year] to allow calculation of any measurable impacts of the project on global climate change." The EIS concludes the project will not directly or indirectly impact global warming: GHG emissions for the project are "negligible when compared to total greenhouse gases produced in the United States." Disagreeing, the AG letter notes the EIS's analysis runs contrary to NEPA and without any scientific data to support the assertions, the public cannot adequately evaluate the EIS's assertions.

February 13, 2007, to Sacramento Area Council of Governments re Notice of Preparation ("NOP") for Draft Environmental Impact Report for the Metropolitan Transportation Plan ("MTP") for 2035. The NOP made no mention of global warming or GHG emissions. The AG identifies two strategies for reducing GHG emissions as identified in the Climate Action Team ("CAT") Report (CalEPA Mar. 2006): (1) improvements to transportation energy




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efficiency; and (2) smart land use/intelligent transportation ("CAT Strategies"). The AG also suggests mitigation measures such as infrastructure planning for the "California Hydrogen Highway Network," construction of electric vehicle charging facilities, transportation demand management measures, use of limestone or blended cement where possible, and adoption of funding priorities encouraging infill development.

April 26, 2007, to the Council of Fresno County Governments re Draft Environmental Impact Report For The 2007 Regional Transportation Plan. The Draft EIR describes increases in population, increases in vehicle miles traveled ("VMT"), and the authorization of $4.6 billion dollars in new road construction and transportation improvements, but did not discuss the impact of these projects on GHG emissions or goals of AB 32. In addition to the CAT strategies, the AG's letter goes on to suggest other mitigation measures, including improvements to and additional public transportation projects, oxidation catalysts and diesel particulate filters, energy efficient building materials and lighting technologies, impacts upon carbon sequestration capacity when trees are destroyed, and potential GHG reductions from other travel demand management measures.

May 2, 2007, to the San Joaquin Council of Governments re Draft Environmental Impact Report For The 2007 San Joaquin County Regional Transportation Plan. The Draft EIR describes increases in population, increases in vehicle miles traveled, and the authorization of $6.6 billion dollars in new road construction and transportation improvements but finds that these projects will not have a significant cumulative impact on global warming and therefore does not require feasible mitigation measures to reduce those emissions. The AG disagreed, noting the "GHG emissions must be considered cumulatively significant because of their potential…to prevent the state from achieving the GHG reductions required by AB 32." The strategies identified to mitigate the impacts are largely the same as those included in the April 26, 2007 letter to the Council of Fresno County Governments.

May 8, 2007, to Contra Costa County Planning Department re the ConocoPhillips Rodeo Refinery Expansion Project and Final Environmental Impact Report ("EIR"). The EIR contained a five-page section regarding GHG emissions, noting background information, international consensus regarding global warming, impacts in California, and that the facility will be subject to AB 32. The EIR goes on to quantify CO2 emissions, but does not consider other GHG emissions. The EIR concludes that absent established thresholds of significance, "it is not possible to draw conclusions about the significance of the…impacts on global warming…" and therefore, makes no significance finding and requires no mitigation measures. Finding error in this analysis, the AG asserts "even if there is no established threshold in law or regulation, lead agencies are obligated by CEQA to determine significance", and goes on to cite the requirements of AB 32 as a "point of reference." The AG asserts that because the refinery's impacts are "so large [approximately 1.2 million metric tons of CO2 annually] that its global warming impacts must be considered cumulatively significant." With regard to mitigation measures, this AG letter suggests considering: (1)




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developing solar or wind power at the facility to reduce the energy requirements; (2) discussing the proposed hydrogen plant in greater detail so that other mitigation measures may be proposed and at least the partial use of renewable energy; (3) reducing existing electricity use; and (4) adopting a prospective carbon sequestration plan (reforestation, purchasing offsets via cap and trade market systems, etc.)

May 11, 2007, to the Yuba County Board of Supervisors re Yuba Highlands Environmental Impact Report. The EIR does not address GHG emissions and instead requires the developer submit an "emissions reduction plan" prior to groundbreaking. Denoting the project as a "particularly egregious example of sprawl," the AG notes: (1) "emissions" are not defined and do not specify climate change or global warming impacts; (2) many mitigation measures are outside of the developer's control (e.g., telecommute programs, alternate work schedules, etc.); and (3) other mitigation measures provide only marginal benefit (e.g., promoting bicycle trips) and are overly vague (e.g., "transit services plan" with no standards or mitigation measures).

Other letters by the AG address: (1) the Kern County Destination 2030 Regional Transportation Plan Draft EIR; (2) the Merced County Regional Transportation Plan, Proposed CEQA Determination; and (3) the planned issuance of a permit to a Bay Area refinery project to increase gasoline production by one million gallons.

3. Suggested methods of compliance

The AG suggests various sources of information and guidance documents in order to meet the requirements as asserted above.

a. Quantification of GHG emissions

With regard to the quantification of GHG emissions, the AG's office has suggested:

Using the ARB's UBREMIS (Urban Emissions Modeling program) to estimate increased VMT;

ARB's "Proposed Methodology to Model Carbon Dioxide Emissions and Estimate Fuel Economy" (2002);

ARB's EMFAC (Emissions Factors Modeling program) to calculate emission rates from on-road motor vehicles;

Caltrans' California Motor Vehicle Stock, Travel, and Fuel Forecast (MVSTAFF) which uses a macroeconomic approach to modeling statewide motor vehicle holdings, VMT, and total fuel consumption; and




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ARB's OFFROAD Model to estimate the contributions of emissions of various equipment types.

b. Evaluating benefits of climate change mitigation measures

With regard to feasible methods to avoid or reduce impacts, the AG has suggested the following models to evaluate mitigation benefits:

Center for Clean Air Policy, Transportation Emissions Guidebook, Emissions Calculator; CEC, The Energy Yardstick: Using PLACE3S to Create More Sustainable Communities; and Clean Air and Climate Protection Software (a joint project of State and Territorial Air

Pollution Program Administrators (STAPPA), the Association of Local Air Pollution Control Officials (ALAPCO), the International Council for Local Environmental Initiatives (ICLEI), and the EPA).

c. Mitigation measures to reduce GHG emissions

With regard to feasible mitigation measures, the AG has identified sources such as:

Leadership in Energy and Environmental Design (LEED) Green Building Standards published by the U.S. Green Building Council;

The ICLEI website and associated publications; CAT Report to Governor (March 2006); Caltrans' Climate Action Program; and Renewable Energy Sources To Supply Project's Needs, CEC's New Solar Homes Partnership.

4. Responses to AG comments

In a response to the AG's comments upon the Draft EIR for the San Joaquin County Regional Transportation Plan, the San Joaquin COG addressed the AG's comments, in part, making the following assertions:

It is recognized that climate change is a global phenomenon, but "it is not possible to determine what fraction of [a project's] emissions truly represents global increases. What is possible is to assess whether the project increases or decreases VMT in [the local area] compared with future cumulative conditions without the project."

"AB-32 reduction strategies are not yet formulated by CARB and not mandatory until 2010 (in part) to 2012 (in full), thus it is premature to assert that any project will hinder the success of AB-32…AB-32 explicitly acknowledges an interim period after adoption and prior




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mandatory implementation…during which implementation of GHG emissions reductions is voluntary. There is no evidence presented in the comment letter that GHG emissions in this interim period will necessarily make it impossible to meet the overall AB-32 reduction targets."

"Neither Executive Order S-3-05 nor AB-32 mention CEQA." "Climate change is…a global issue…which require[s] state, federal, and international

coordinated action to be effective...However, since the regulations implementing AB 32 do not exist at present, it is not feasible to evaluate such 'compliance' at this time without being speculative."

"Quantifying [GHG] emissions associated with construction on a project level is feasible [once] the project has been designed, and the level and duration of construction activity identified."

The Regional Transportation Plan ("RTP") "will not hinder the ability to meet AB-32 goals; instead, the RTP is expected to reduce GHG emissions compared with future cumulative conditions without the 2007 RTP13…[The] data in the current inventory does not support that off-road petroleum/construction natural gas related GHG emissions are a substantive part of the overall emissions inventory nor that further control is necessary to meet AB-32 goals."

"SJCOG respectfully disagrees with the comment's assertion that 'anything that produces alarge increase clearly could be considered an obstacle to complying with AB-32' because the comment has not defined what is 'large' and in what context…After completing the AB-32 required inventory, reduction strategy development, and regulation implementation, a sound basis can be cost-effectively apportioned among the various sectors of the economy. Thus, it is premature to state that 'anything that produces a large increase' will hinder AB-32 implementation."

"The AB-32 provisions for early credit for discrete actions will be taken in to consideration…however, AB-32 allows for such implementation to be voluntary until 2010 and does not mandate them before then."

Regarding the CAT Strategies, "[a]t present Caltrans has not issued the referenced Director'sPolicy on Climate Change and GHG emissions analysis nor any criteria related to its work…to include GHG emissions criteria…"

13 Resources identified in support of this assertion included: (1) CEC, Inventory of California Greenhouse Gas Emissions and Sink: 1990 - 2004, Staff Final Report, CEC-600-2006-013-SF, Dec. 2006; (2) USEPA, Greenhouse Gas Emissions from the U.S. Transportation Sector, 1990-2003, Office of Transportation and Air Quality, Mar. 2006; and (3) California EPA, Climate Action Team Proposed Early Actions to Mitigate Climate Change in California, April 20, 2007.




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B. Increased liability for groundwater contamination from underground storage of CO2

The EPA and Congress are currently considering potential carbon capture and storage technologies to reduce CO2 emissions into the atmosphere, processes sometimes referred to as "carbon sequestration." Some of these technologies involve storage of the CO2underground. However, the U.S. Supreme court's definition of CO2 as a "pollutant" under the CAA in Massachusetts v. EPA may undermine industry efforts to sequester CO2 under any future GHG control regime because defining CO2 as a "pollutant" or "waste" could impose huge environmental liabilities in the event groundwater is contaminated.

Industry leaders have complained that unless assurances are given that they will not face increased liability under hazardous waste control laws such as the Resource Conservation and Recovery Act ("RCRA") and Natural Resources Damages provisions contained in the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and the Clean Water Act ("CWA"), they are unlikely to test underground storage techniques essential to any future GHG emission control program. While the possibility of the classification of CO2 as a "hazardous waste" for RCRA purposes seems remote, when CO2 is mixed with water in sufficient quantities it forms carbonic acid, which may be sufficiently corrosive to be considered a "hazardous waste" for RCRA purposes.

Further regulatory clarification is necessary regarding conflicting classifications of CO2 in current regulations. For example, while the EPA is pursuing the regulation of CO2 as a "pollutant", the Bureau of Land Management currently classifies CO2 as a "commodity" for enhanced oil recovery ("EOR") operations. The classification of CO2 as a pollutant and possibility of increased liabilities threaten to terminate the use of EOR wells.

C. Center for Biological Diversity v. California's Northwest California Water Quality Control Board

On February 28, 2007, the CBD petitioned California's Northwest California Water Quality Control Board (WQCB) to add California ocean waters to the federal list of “Impaired Waters” due to “carbon dioxide pollution resulting in ocean acidification.” The environmental organization is filing the request with each WQCB with jurisdiction over waters of California. Specifically, the organization is seeking to “have all California ocean segments added to the CWA's 303(d) list as these waters are impaired for pH due to ocean acidification occurring as a result of past, ongoing, and projected absorption of anthropogenic carbon dioxide pollution.” Placing those waters on the list would require state and federal regulators to set aggregate pollution limits on pH in accordance with the water act’s total maximum daily load ("TMDL") program. In setting those TMDL limits, regulators may be forced to control carbon emissions.




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The petition marks an alternative strategy toward regulating CO2 emissions from power plants, cement kilns, oil refineries, and other industrial sources based upon the adverse effects of CO2 pollution on the ocean. CO2 pollution has allegedly lowered average ocean pH by 0.11 units, with a pH change of 0.5 units projected by the end of the century under current emission trajectories. These changes may allegedly have deleterious impacts on the entire ocean ecosystem.

The CBD will be submitting similar petitions to all other states that havejurisdiction under the CWA over ocean waters. Legal action under the Clean Water Act is also being prepared against some of the nation’s largest CO2 emitters for polluting activities that are contributing to ocean acidification.

D. Center for Biological Diversity v. City of Arcadia (The Shops at Santa Anita)

On May 1, 2007, the CBD wrote the City Council Members of the City of Arcadia regarding the final EIR prepared for The Shops at Santa Anita, requesting the City not approve the project based, in primary part, upon the project's alleged failure to account for GHG emissions and climate change. The CBD first alleges the EIR drastically underestimates the GHG emissions which would result from the project. Moreover, the CBD notes the EIR underestimates the percentage of emissions vis-à-vis California's total emissions by two orders of magnitude.

The EIR addresses GHG emissions and climate change impacts by asserting: (1) "At the present time, it is the SCAQMD's opinion that while an EIR can discuss possible global warming impacts, the impacts associated with general development projects should not be considered significant"; and (2) "Until the ARB establishes the [GHG] limits required by AB 32 and develops programs that can and should be implemented at the local level, it is the City's opinion that the issue of global warming impacts is currently the State's responsibility and is beyond the scope of the new EIR for a general development project." The CBD dismisses these statements as the basis for addressing GHG emissions and climate change in the EIR, asserting that the AQMD does not have the authority to assert that impacts should not be considered significant and the lack of established methodologies does not render an impact too speculative for analysis. The CBD also complains that once having concluded the impacts were not significant, the EIR omits serious consideration of project alternatives and/or mitigation measures.

The CBD suggests the analysis be based upon the recommendations to date of the CAT and ARB. Alternatively, the CBD proposed a "fair share" analysis in which California's net 1990 emission levels are divided equally among the 58 California counties (7 million metric tons a piece) and use this measure as a baseline to gauge the significance of the project's effects (The Shops for example would generate 13.5% of Los Angeles County's "fair share" of




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emissions). Making reference to the Stern Review of the Economics of Climate Change14, the CBD also asserts that the discussion of global warming must include an assessment of the project's impacts as measured by the economic cost of the project's emissions.

E. Center for Energy & Economic Development v. California

The Center for Energy & Economic Development (CEED), a national coalition of coal-producing companies and power generators, filed an application for rehearing of a GHG standard adopted in January by the CPUC. CEED asked California regulators to reconsider a recently adopted GHG performance standard for long-term energy contracts, a move that is seen as a precursor to litigation against California. The state GHG standard requires California and other “load-serving entities” to ensure that power they buy from generators through long-term contracts meets a standard of 1,100 pounds CO2 per megawatt hour. The standard is intended in part to prevent “leakage” of GHG emissions in neighboring states that do not have the standard and from which California imports significant amounts of electricity. The standard is also meant to serve as an interim measure until an enforceable load-based GHG emissions cap is operating in California.

CEED lawyers have argued the GHG standard violates several federal laws, including the commerce clause of the U.S. Constitution. They argue that the standard effectively precludes coal, oil, petroleum coke, waste fuel, and even older natural gas fueled generation from competition in the California energy markets. CEED attorneys have argued “no cost-effective technology exists to allow CO2 capture from flue gas streams and to store or sell the captured product” and go on too assert that current CO2 capture and sequestration technologies are highly energy intensive and to expensive to be commercially implemented. In addition, the proposed standard would make securing financing for the construction of new coal fired power plants in the entire region more difficult (the initial capital required to construct a power plant is typically secured with pre-construction contracts for the out put of the unit – limiting market breadth reduces financing opportunities.)

CPUC and environmental attorneys counter that the intent of the standard is to prod western coal-power companies to construct advanced technology plants that reduce CO2emissions to that standard and there is nothing preventing the coal industry from pursuing such technologies. For these, among other reasons, there is no violation of the commerce clause.

14 The Stern Review of the Economics of Climate Change, written by Sir Nicholas Stern, Head of the United Kingdom's Economic Service, details the economic consequences of continuing business as usual practices of current emission levels.




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Sources expect any number of coal-power companies to sue the CPUC over the GHG standard if and when the CPUC rejects a proposed long-term contract between a California utility or load serving entity and a power generator failing to meet the standard.

Malcolm C. Weiss ofJMBM | Jeffer, Mangels, Butler & Marmaro LLP1900 Avenue of the Stars, 7th FloorLos Angeles, California 90067(310) 712-6822 Direct(310) 203-0567 Fax(213) 422-5111 [email protected]

Ian Michael Forrest ofJMBM | Jeffer, Mangels, Butler & Marmaro LLP1900 Avenue of the Stars, 7th FloorLos Angeles, California 90067(310) 785-5389 Direct (310) 712-3380 [email protected]

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