California Air Resources Board

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By Michael Carroll, Marc Campopiano and Max Friedman

The California Energy Commission (CEC) has released an August 2015 report projecting local reliability shortfalls in the Los Angeles basin planning area as early as 2021. The deficits may require new natural gas power generation to maintain grid reliability.

This finding is part of the Integrated Energy Policy Report, a collaborative effort with the California Public Utilities Commission (CPUC), California Independent System Operator, and the California Air Resources Board.

The report recommends that the CPUC “[i]nclude in its 2016 [Long Term Procurement Plan (LTPP)] rulemaking an explicit focus on local capacity requirements. Further, the CPUC should not assume that such requirements in the intermediate period 5-8 years forward have been satisfied through decisions in the 2012 LTPP rulemaking and the procurement activities authorized by D.14-03-004.” This recommendation would represent a significant shift in the CPUC’s planning horizon because the 2016 LTPP is intended to evaluate the need for new power resources beginning in 2026, not as early as 2021. Now, it appears that new resources may be needed much faster than the CPUC had anticipated.

By Marc Campopiano and Max Friedman

On March 6, 2015, the California Office of Environmental Health Hazard Assessment (OEHHA) updated its Guidance Manual for Preparation of Health Risk Assessments (HRAs) for the purpose of better characterizing exposure risks to children from air toxics.  Using the new Guidance Manual, HRAs are expected to estimate risks that are two to five times greater than HRAs using the former methodology—even assuming no changes in air toxics exposure.  As a result, once the updated…

By Joshua Bledsoe, Michael Dreibelbis, Michele Leonelli, and Aron Potash

I. LCFS Readoption

The California Air Resources Board (“ARB”) is on the cusp of readopting the Low Carbon Fuel Standard (“LCFS”) regulation to remedy legal defects in the initial adoption process found by the California Court of Appeal on July 15, 2013.  In conjunction with the LCFS readoption, ARB is expected to propose significant changes to the program.  ARB staff has been vetting potential revisions via a series of workshops this year, and ARB plans to float a draft revised LCFS regulation next month.  The readoption process gained momentum this summer when the Supreme Court denied certiorari regarding the constitutionality of the program.  A new cost containment mechanism, an updated carbon intensity model, and a reanalysis of fuel availability are among the significant changes that could materially impact program participants, both obligated entities and opt-in fuel producers.

By JP Brisson, Joshua Bledsoe and Michael Dreibelbis

Today, the US Supreme Court denied certiorari regarding the constitutionality of California’s Low Carbon Fuel Standard (LCFS) in Rocky Mountain Farmers Union v. Corey.  The Court’s decision effectively affirms the Court of Appeals for the Ninth Circuit’s recent ruling that the LCFS does not facially violate the dormant Commerce Clause of the US Constitution.  Plaintiffs — including ethanol, farming, petrochemical, energy and trucking industry groups — had argued that the LCFS program’s “lifecycle analysis” impermissibly regulates beyond state lines and discriminates against ethanol and crude oil produced out-of-state, in violation of the dormant Commerce Clause.

By Michael J. Gergen, Jared W. Johnson, and David E. Pettit

On June 19, 2014, the Federal Energy Regulatory Commission (“FERC” or “Commission”) conditionally accepted revisions to the California Independent System Operator Corporation’s (“CAISO”) FERC Electric Tariff to implement the CAISO’s proposed Energy Imbalance Market (“EIM”) that will allow neighboring balancing area authorities (“BAAs”) in the western states to participate in the imbalance energy portion of the CAISO’s real-time market.  Energy imbalance services have long been required as an “ancillary service” under FERC’s open access regulations and pro forma open access transmission tariff (“OATT”).  In its proposal, the CAISO noted that the EIM was effectively an expansion of its existing real-time energy market allowing to take part in the EIM alongside entities already transacting within the CAISO.  PacifiCorp’s two BAAs will be the first to participate in the EIM, and in a concurrent order, FERC also conditionally accepted in large part corresponding revisions to PacifiCorp’s OATT.  NV Energy has also entered into an implementation agreement with the CAISO to join the EIM.  Although several market participants protested various aspects of the CAISO’s proposed design of the EIM, most of it was approved by FERC.  The CAISO plans to start the new EIM on October 1, 2014.    

By Joshua T. Bledsoe and Aron Potash

California’s low carbon fuel standard (LCFS), a core component of the state’s greenhouse gas (GHG) emission reduction strategy, likely will survive a legal challenge and remain in effect despite an appellate court’s order indicating that the regulation was improperly adopted.

The California Court of Appeal for the Fifth Appellate District issued a tentative disposition on June 3, 2013, in POET, LLC et al. v. Goldstene, et al. finding that the California Air Resources…

By Marc Campopiano and Tim Henderson

On March 11, 2013, the California Energy Commission (CEC) released a proposed Seventh Edition of the Renewables Portfolio Standard (RPS) Eligibility Guidebook (proposed Guidebook).  As we discussed in a previous blog entry, on March 28, 2012, the CEC suspended the RPS eligibility of power plants generating electricity using biomethane. 

In response to the passage of AB 2196, which created a pathway for using biomethane to generate RPS-eligible electricity, the proposed Guidebook would lift…

By Michael Dreibelbis, Eli Hopson, and Aron Potash

A California appellate court signaled on February 26, 2013, that it might find that California’s low carbon fuel standard (LCFS) was improperly adopted.  The court sent a request for supplemental briefing in POET, LLC et al. v. Goldstene, et al. indicating that the California Air Resources Board (CARB) may have violated the California Environmental Quality Act (CEQA) in adopting the LCFS.  Although the court has not yet issued its decision…

By Joshua T. Bledsoe, Tim B. Henderson, and Jared W. Johnson

Seeking to quell uncertainty surrounding the definition of resource shuffling ahead of the first cap-and-trade auction on November 14, 2012, the California Air Resources Board (“CARB”) passed a Resolution on October 18, 2012, requiring the Executive Officer to redefine resource shuffling and provide concrete examples.  CARB’s Resolution requires CARB Staff to issue proposed regulatory amendments by mid-2013 and release regulatory guidance consistent with the Resolution before the…

By Joshua T. Bledsoe, Tim B. Henderson, and Jared W. Johnson

With the first auction in California’s cap and trade program fast-approaching on November 14, 2012, the California Air Resources Board (“ARB”) recently suspended a much-discussed aspect of the program that requires first deliverers of electricity to attest that they have not engaged in “resource shuffling.”  Resource shuffling involves a seller of energy into California modifying its portfolio of sales so that lower or no-emission electricity is…