California’s cap-and-trade program likely can’t survive in its current form after 2020 without a two-thirds vote of the legislature to reauthorize it. That’s because a central feature of the program involves auctioning allowances to pollute, which courts are likely to consider to be a “fee” that requires two-thirds approval of the legislature under 2010’s voter-approved Prop 26.
With that high hurdle, advocates have been scrambling to get the needed votes. Despite having a Democratic super-majority in both houses of the legislature, a number of key Democrats are opposed to (or at least skeptical of) cap and trade, because they fear the program allows polluters to continue polluting disproportionately in “environmental justice” communities — predominantly low-income communities of color.
So advocates have had to seek a bipartisan two-thirds solution, which requires oil-and-gas industry support. And that means major concessions to the fossil fuel industry.
But at the same time, the fossil fuel industry has lost leverage. The passage last year of SB 32, to extend the greenhouse gas reduction goals from 2020 to 2030, and AB 197, which allows for direct command-and-control regulation of polluting facilities, has put their back against the proverbial wall. And they recently lost their lawsuit challenging the legitimacy of the current auction mechanism. Industry would rather have the more “flexible” cap-and-trade system now, where they can seek reductions in the most economically efficient manner.
So there are some industry concessions and some environmental wins in the apparent consensus bills unveiled on Monday. First, AB 398 would officially extend the cap-and-trade program to 2030. In a big win for industry, the legislation would prevent local air districts in California from imposing their own limits on greenhouse gas emissions from sources already covered under cap and trade. As the San Francisco Chronicle describes, it would “effectively kill long-running efforts by Bay Area air quality regulators to place hard limits on emissions of carbon dioxide and other heat-trapping gases from local oil refineries.”
In another win for industry, the bill puts a ceiling on the price of allowances (permits to emit one metric ton of greenhouse gases under the cap). To date, allowance prices have typically hovered at or near the current price floor. Consider the ceiling a gift to industry by giving them a maximum penalty they’d have to face for polluting.
But in a concession from industry, the bill would reduce the use of “offsets” (projects outside of the capped facilities that help reduce greenhouse gases) and require that half of them occur in California or have a direct environmental impact on the state. The use of offsets weaken the sale of allowances by giving industry a cheaper out, so this is good news for the integrity of allowances.
Finally, the bill would prioritize the kind of state programs that could receive funding from the auction proceeds. The money must first go to efforts to control toxic air pollution from mobile or stationary sources like factories and refineries, second to low-carbon transportation projects, and third to sustainable agriculture programs.
This last provision is potentially a mixed bag on impacts, since it doesn’t necessarily track the highest emitting sources. But it may allow continued funding for high speed rail, which is on financial life support and at this point is only propped up by cap-and-trade proceeds. The governor doesn’t want to see the project die, which was part of his motivation for getting the auction reauthorized.
Meanwhile, AB 167 is a must-pass companion bill would require stricter air pollution monitoring around industrial facilities and tougher penalties for violating pollution regulations. This measure allows environmental justice advocates to claim some victory be securing the promise of direct emissions reductions from nearby polluters.
A number of environmental groups are not happy with the concessions, although the bill has received support from the likes of Environmental Defense Fund and tepidly from billionaire environmental activist Tom Steyer.
For my part, I think it’s an okay but not great deal. It’s probably worth continuing the state’s cap-and-trade program, if nothing else to try to prove the concept in case it can be workable in other states and nationally. And the auction proceeds provide some useful funding for everything from weatherization to transit to low-income housing.
Meanwhile, the state still retains a lot of authority over polluters via SB 32 and the state implementation of the Clean Air Act, and multiple complementary policies are still needed and remain in effect to reduce greenhouse gas emissions, such as the renewable energy, energy storage, energy efficiency, and electric vehicle mandates.
The vote could come as soon as Thursday, so stay tuned for the results.
UPDATE: The vote was just postponed to Monday, which could mean they’re having trouble getting the needed votes.
Joe Mathews usually writes insightful columns about California’s economic and environmental challenges. But he whiffed in yesterday’s piece in the San Francisco Chronicle extolling the virtues of the notorious “high desert corridor” freeway project in Southern California.
I’ve discussed the project briefly before, but it’s basically a gold-plated freeway. It’s hardly different than any other that Southern Californians have been building for over a half-century now, all of which have combined to create the region’s current sprawl, traffic, and air quality problems.
This particular freeway would connect Palmdale with Apple Valley in the ecologically sensitive high desert north of urban Los Angeles, just over the San Gabriel Mountains formed by the San Andreas Fault (see map above and below). It would run about 63 miles, in a three-to-six-lane configuration. That route is currently served by a slow-going, mostly two-lane highway through cities like Lancaster, Adelanto, Victorville, and Hesperia.
In terms of its environmental impacts, the freeway would allow those cities along the route and any new ones off the new freeway offramps to sprawl unobstructed over these desert sensitive lands. The end result will be a continued spread of the urban megalopolis over the desert.
So why is this freeway gold-plated? The project includes space for high-speed rail, an energy transmission line, and even a bicycle lanes in parts. Importantly, it would allow high speed rail (and many cars) to travel easily from Interstate 5 near the Grapevine to the San Joaquin Valley across the desert to Interstate 15 in Victorville and Apple Valley, en route to Las Vegas.
Despite the sprawl risk, Joe Mathews seems to be enamored of the project in part because of this rail connection. But also because of the potential for easier goods movement:
Today, international trade is slowed in the L.A. Basin by the dense traffic in the seaports and on the streets. Advocates of the corridor say it could become a new “inland international port,” with logistics facilities, rail and local airports tied close together to move cargo. Such a port would allow the logistics industry to expand beyond the basin, bringing more jobs to the desert for local residents and shortening their commutes.
At the same time, the project could take traffic off of Los Angeles’ roads, while providing infrastructure to encourage more green technology and transportation. (On the less green side, supporters believe manufacturers will flock to the High Desert Corridor, because it is outside the basin and its air regulation.)
Mathews never once mentions the obvious concern with building yet another Southern California freeway: more inducement to build car-oriented sprawl, which leads directly to the exact challenges crippling Los Angeles: crushing traffic, poor air quality, and lack of open space. Not to mention a harsh quality of life spent car commuting all day. And any temporary alleviation of traffic in urban Los Angeles to the south will just induce more driving, as we’ve seen happen over and over again.
For this reason, environmental groups like Climate Resolve oppose the project. They note that the environmental review on the project failed to account for this sprawl inducement. Instead, the state’s transportation agency simply assumed in the environmental review documentation that this exurban growth will happen anyway. Conveniently, with that baseline in mind, this freeway (they argue) will in fact lessen traffic.
The story of Los Angeles should by now be obvious to everyone, especially Mathews: freeways don’t work at promoting smart land use, and they don’t alleviate traffic. They create more of it. And they crush a region’s environment, mobility, and quality of life in the meantime.
This project, with the exception of the needed high speed rail connection, should be stopped immediately, and Los Angeles leaders should ensure no more funding goes to support it.
Rather than reading Mathews’ column on it, we’d be better served reading Einstein: the definition of insanity is doing the same thing over and over again and expecting a different result.
The California Chamber of Commerce has just lost its case against the state’s cap-and-trade auction, with the news from the Los Angeles Times that the California Supreme Court has refused to hear an appeal from the state appellate court. This means the auction mechanism in the cap-and-trade program is valid at least through 2020.
As we’ve covered on this blog before (most recently with Ann’s post from last fall, which links to our other posts), industry plaintiffs had argued that the auction represented a tax that required two-thirds approval of the legislature, under Proposition 13. But the auction isn’t like a tax, the courts have now consistently and definitively ruled, allowing the current mechanism to continue through 2020.
After 2020, the auction may be subject to a different legal analysis under 2010’s voter-approved Proposition 26, which legally converted many “fees” to taxes and therefore extended the reach of the two-thirds bar. AB 32, the law that authorized the cap-and-trade program, passed in 2006 and therefore wasn’t subject to Proposition 26, which came later. Since AB 32 authorized the program specifically through 2020, it can now continue at least through that year without needing two-thirds vote in the legislature or facing further court challenges.
This is a significant win for the state for two reasons: first, it allows the auction to continue, which is a crucial feature for distributing allowances to pollute under the cap. It holds businesses economically accountable for on-site emissions reductions, rather than allowing them to get allowances for free (although there may be other, more convoluted ways that they could purchase auctions and avoid court challenges). Perhaps more importantly from a political perspective, the auction generates proceeds for the state that have been used to fund everything from high speed rail to transit and weatherization for low-income households.
Second, it means industry loses a bit of leverage to shape cap-and-trade going forward in the legislature, which is debating proposals to extend the program now. The case has loomed in the background on these debates, with industry potentially wielding it as a negotiation piece to extract concessions, implicitly if not explicitly. Coming on the heels of the passage of SB 32 and AB 197 last year, which directed more command-and-control type approaches to emissions reductions at regulated facilities, it represents another loss of leverage for industry going forward.
Meanwhile, cap-and-trade post-2020 debates are heating up at the Capitol, with the governor determined to extend the system before the August auction and solidify the program’s place through 2030, in part to ensure a continued revenue stream for high speed rail. Industry is now on board as well (although they’re trying to weaken the program as much as they can), as they’ve lost their fall back option of killing the auction completely in court and simultaneously face much more draconian command-and-control regulation if cap and trade doesn’t continue.
It makes me wonder what might have happened had the Obama Administration chose to use the Clean Air Act more aggressively back in 2009, which (if successful in court) would have made cap-and-trade at the federal level similarly more appealing for industry.
We’ll never know. But in the meantime, we can watch the political dynamic play out at the state level here in California, with one less card for industry to play at the negotiating table, courtesy of the state Supreme Court.
Perhaps a metaphor for their approach to innovation, Apple is fully embracing the sprawl office model of the past, while Google embraces the future with talks to build a downtown San Jose campus near rail.
Apple’s soon-to-open donut office.
The Apple “donut” campus (photo right), set to open soon in Cupertino, is a giant parking lot with an office building on top, no matter how many solar panels and EV charging stations the company boasts about adding. It was Steve Jobs’ last vanity project, and at heart it’s firmly of the decade he was born — the auto-oriented suburban office campus of the 1950s.
Meanwhile, Google looks to be following other advanced tech companies, like Amazon, LinkedIn, and Salesforce, by exploring options for a high-rise, infill mixed-use office right next to the future high speed rail stop and current Amtrak and Caltrain depot in downtown San Jose.
Silicon Valley is an an absolute housing and traffic crunch, due to those cities’ willingness to permit office sprawl but no accompanying housing. The choice by Apple will only reinforce that failed dynamic, while Google’s efforts show that the worker of tomorrow does not want to repeat the insanity.
Trump’s announcement yesterday that the U.S. will withdraw from the Paris climate agreement (although technically not for another three years or so) was a big victory for his die-hard political supporters. A significant percentage of Republican voters simply discount climate science and hate the idea of global cooperation to address it.
Why do they feel that way? There’s been a fair amount of research on the question, but the bottom line is that they must feel like climate policies and programs will have no benefit for them — and may instead drive up their costs and undermine their employment opportunities.
At the same time, the U.S. economy has experienced an uneven recovery since the last recession, which has essentially only benefited the urban, knowledge-based parts of the country while almost completely leaving behind the rest with stagnant or declining wages. And that’s where these Trump voters made their stand and determined the election last year.
The irony though is that climate policies and related investments have a huge potential to benefit these rural areas and compensate for the tectonic economic changes that have left them behind. Just take California’s San Joaquin Valley, a poor and economically challenged part of the state. Our recent Berkeley Law report with Next 10 and UC Berkeley’s Labor Center showed that California’s three major climate programs — cap-and-trade, renewable energy, and energy efficiency — boosted the San Joaquin Valley’s economy by more than $13 billion and created thousands of new jobs to date.
Or take high speed rail, which is a long-term effort to move people around the state on low-carbon electricity rather than petroleum-guzzling cars and airplanes. The Sacramento Bee editorial writers argued in support of the project precisely for its economic benefit to the San Joaquin Valley:
The $20 billion Central Valley to Silicon Valley leg won’t carry commuters until 2025, give or take. But once it does, the forgotten part of California that coastal residents fly over or zip past en route to Yosemite will become connected to the rest of the state and gain their share of California’s bounty. That’s not a boondoggle. That’s fair.
Nationally, a “deep decarbonization” strategy for the entire U.S., with its attendant investments in the electricity grid and vehicle electrification, could generate up to 2 million jobs by 2050, according to ICF International. Many of those jobs would happen in the economically challenged parts of the country that supported Trump and his decision yesterday.
So the solution to building more political support for climate change policies therefore rests within the solutions to combat climate change in the first place. But given recent events, that message is simply not coming across to the parts of the country that need to hear it.
The environmental policy news from Washington DC recently has not been great, to say the least. So it’s worth stopping to appreciate some recent wins.
First, in a surprising and close vote today, the U.S. Senate failed to overturn Obama administration regulations on methane emissions from fossil fuel extraction on public lands. Methane is one of the most harmful greenhouse gas pollutants, and this rule was critical to limiting those emissions.
Using the once-obscure Congressional Review Act, Congress could have not only wiped out the rule but also precluded the Bureau of Land Management from regulating in this area again. The oil and gas industry lost in the senate by one vote, with Sens. Susan Collins of Maine, Lindsey Graham of South Carolina and John McCain of Arizona the deciding votes (all Democrats voted against it).
Second, in the recent budget deal to keep the federal government funded through September, congressional negotiators saved the most important clean tech research agency, ARPA-E in the Department of Energy. As Utility Dive reported, ARPA-E actually received a $15 million boost instead of being eliminated, as the Trump administration had proposed.
Finally, the Caltrain electrification funding, which Congressional Republicans had held up because the electrification would one day get high speed rail to San Francisco, came through in the same budget deal with a partial amount of $100 million out of the original $647 million. It’s no guarantee that the rest of the dollars will be approved, but it’s a good sign.
So while the news can be gloomy on the environment, and there are a lot of battles still to come, it’s good to see common sense rule-making and investments still moving forward right now.
The California High Speed Rail Authority has been battered not just by Republicans in Congress but by the state’s primary environmental law, the California Environmental Quality Act (CEQA). The law requires environmental review of projects before they commence.
While that sounds sensible in concept, in practice CEQA has opened the authority up to lawsuits and delay from opponents up and down the route, from wealthy homeowners along the San Francisco peninsula to farmers along the San Joaquin Valley route who don’t want their properties bisected by the rail line.
The impact on the project from CEQA has been increased costs, delay, and in my view a less-effective route for the rail line (of course blame primarily rests on the politicians who gerrymandered the route in the first place, but due to CEQA it’s now impossible to correct the route without opening up the process all over again and inviting even more lawsuits).
While most people can agree that the agency should mitigate impacts where feasible and study these impacts in advance, CEQA lawsuits have instead served to drag out the high speed rail planning process and drive up costs. These effects undermine a project that is actually critical to long-term environmental goals, let alone economic goals related to mobility.
So it’s perhaps not surprising that the High Speed Rail Authority would love to escape the jurisdiction of CEQA. And that’s precisely the issue in today’s California Supreme Court argument in Friends of the Eel River v. North Coast Railroad Authority, Nos. S222472. This case actually involves a different rail line in California’s north coast, but the rail operator makes the same argument as the High Speed Rail Authority that CEQA doesn’t apply, due to federal rail law preemption of state law.
As my colleague Rick Frank summarized on Legal Planet:
This case raises the issue of whether federal law–specifically, the Interstate Commerce Commission Termination Act (ICCTA)–preempts the application of CEQA to a state-owned and funded rail line on California’s North Coast. Lower state courts have split on that issue, which has consequences far beyond the proposal to reactivate this previously dormant railroad line. For example, the same legal issue is raised in a federal case currently pending in the U.S. Court of Appeals for the Ninth Circuit involving California’s High Speed Rail Authority. In that federal appeal, the federal Surface Transportation Board–an obscure but important federal agency charged with implementing the ICCTA–notified the High Speed Rail Authority that it considers CEQA’s application to the planning and construction of California’s controversial High Speed Rail system to be preempted by the ICCTA. (Kings County v. Surface Transportation Board, Ninth Circuit No. 15-71780.) So the potential exists for conflicting rulings from the California Supreme Court and Ninth Circuit on the CEQA preemption question that would require the U.S. Supreme Court to resolve the issue. Additionally, the same preemption argument has regularly been made by oil and railroad companies who seek to ship crude oil by rail through California cities that oppose such oil shipments as unduly hazardous.
I listened to the oral argument today on-line (and I also had the opportunity to participate in a moot court last week for the plaintiffs). Based on the questions I heard from the justices, my guess is that the Supreme Court will find CEQA to be not preempted by federal law and therefore require the rail agency to enforce CEQA review.
But it’s a tough case. CEQA is open-ended by its nature, and the delays and mitigation measures that follow are likely to interfere with rail operations, which is precisely what federal law seeks to preempt. But it’s hard to imagine a state court voluntarily writing away its own state law. Instead, I would guess that the justices will frame the decision as allowing CEQA review in a limited fashion, given existing legal restraints from federal law.
But with the federal Ninth Circuit case pending on the same issue (this time explicitly involving high speed rail), we could very well end up with a split that will need to be resolved at the U.S. Supreme Court. So regardless of the outcome of this case, we’re likely to see more action to come on this question.
Pretty much everything boils down to land use, at one level or another. Certainly housing and office development is traditionally within that sphere, but so is energy development, when we think about siting new transmission lines or solar farms. Even electric vehicles involve permitting and siting public charging infrastructure.
Tonight on City Visions, KALW 91.7 FM, I’ll talk with Ken Alex, Governor Brown’s senior adviser and director of the Governor’s Office of Planning and Research (OPR), which helps the state set land use policy. We’ll talk transportation, housing policies, water, and climate change. And beyond local government matters, Ken also helps the state with its international climate efforts like the Under 2 MOU.
Tune in or stream at 7pm tonight, and please send in your questions or comments for Ken to address on the air.
UPDATE: audio available here.
Last week the California legislature did what many have been hoping for at the national level: pass an infrastructure bill. The issue was the state’s nearly $60 billion backlog in deferred maintenance for our transportation infrastructure.
But rather than deficit spend or raid other programs, the legislature took a politically brave step with SB 1 (Beall) of raising gas taxes and vehicle registration fees to pay for this work. It took a two-thirds super majority, which meant no room to spare on votes.
From an environmental perspective, the plan is good because it generally doesn’t pay for new capacity, just repairs and maintenance of existing infrastructure. The money will also help fund transit and bicycle and pedestrian infrastructure.
Environmentalists complained about a weakening of standards for truck drivers to retrofit or retire their dirtiest vehicles, but those impacts could potentially be blunted by tightening other environmental standards related to fuels and pollution limits. Some also objected to the new annual electric vehicle fee ($100) per year, which could discourage consumer adoption. But that fee seems relatively modest for vehicles that contribute to wear-and-tear on the roads.
The primary criticisms of the plan boiled down to the following:
1) California should spend its existing dollars more efficiently. Republicans and even one Democrat took this approach, arguing that “Caltrans reforms” could save us an equivalent amount of money. However, none of them to my knowledge spelled out exactly how much money could be saved and how from these reforms. I also don’t know of any study that has attempted to quantify potential savings. As a result, this criticism struck me as ideological posturing, along the lines that eliminating foreign aid and welfare could help balance the federal budget, when those programs are a mere pittance compared to military and insurance spending.
2) California should devote high speed rail money to deferred maintenance instead of funding this unpopular train project. Democratic state senator Steve Glazer made this argument, which is uninformed and inaccurate. High speed rail is funded by state bond money, approved by the voters, that cannot legally be diverted to other uses. Additional federal dollars are also reserved solely for train projects. Some cap-and-trade auction proceeds are directed to high speed rail and could theoretically go to other transportation uses, but these are only a few billion dollars at this point, hardly anywhere close to the $60 billion we need. Plus, those funds should go to projects that reduce greenhouse gas emissions, which high speed rail will do once it’s built and operational, whereas highway investments have the opposite impact.
3) California should find the money from existing transportation revenues that are instead spent on the general fund or other non-transportation sources. I’m admittedly less familiar with how transportation revenues are spent in the state, and in concept I would support efforts to ensure that dollars collected from transportation go to transportation improvements. But the critics, to my knowledge, presented no hard numbers on how much could be redirected to address the funding needs. So it was hard to take this criticism too seriously.
4) Californians already are overtaxed on transportation. Not when it comes to the gas tax and spending for road maintenance. The existing state and federal gas taxes have not kept up with inflation, and as vehicles become more fuel efficient, the revenues will continue to fail to keep up with usage. In short, most drivers are actually getting a cheap ride when it comes to paying for their fair share of road repair, minus the bills they have to pay to repair their cars from hitting potholes.
Overall, it’s an important spending bill that should help the environment to some extent, while also providing a fiscal stimulus in rural communities through the repair work. Higher gas taxes could also marginally dissuade people from buying gas guzzlers, although the taxes are relatively minimal compared to the price of gasoline.
But don’t expect this kind of action at the federal level, barring unlikely bipartisan cooperation with the Trump administration. Because raising taxes and fees isn’t popular, and it takes courage to do so when the need is great. And that kind of courage and foresight is in short supply at the federal level.
The one area where political observers thought Democrats could work with Trump is on infrastructure spending. Even Governor Brown, who got a lot of attention for savaging Trump right after the election, submitted a wish-list of projects he was hoping would get federal support, particularly high speed rail.
Trump could certainly use a big legislative achievement, and most Republicans are unlikely to go along with infrastructure spending, either because it will increase the deficit or require tax increases. So he’d rely on working with Democrats.
But at the same time, Trump wants to fulfill his promise to build a border wall on the U.S. border with Mexico. And if he doesn’t get money to build it through other means, it’s likely he would include it in an infrastructure bill.
Not so fast, says Senate minority leader Chuck Schumer. In a letter to the senate majority leader, he warned against its inclusion in a budget bill or else it would risk a government shutdown, per Politico. And if it’s not in a budget bill, it may reappear in an infrastructure proposal.
Of course, a faster way to kill the wall might be to get some libertarian groups like the Pacific Legal Foundation to sue over the wall route, where it runs through private property. I know that’s an issue in state like Texas, where the wall would bisect some properties.
So far though, Trump seems like very much the political novice he claims to be, having campaigned on promises that are hard to achieve in practice. His unorthodox style got him an upset political win, but it remains to be seen if it’s actually going to work in the difficult process of getting major legislation passed. And the infrastructure bill seems like just one of those tests.
