Pre Trial Motion in Poet LLC vs.California Air Resources Board/CEQA| Trellis.Law

On October 30, 2015 a Trial Materials was filed involving a dispute between Lyons, James M., Poet Llc, and California Air Resources Board, Corey, Richard, for 02 Unlimited - Writ of Mandate in the District Court of Fresno County.

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E-FILED
9/7/2016
WANGER JONES HELSLEY PC FRESNO COUNTY SUPERIOR COURT
265 E. River Park Circle, Suite 310 By: C. Cogburn, Deputy
Fresno, California 93720
Telephone: (559) 233-4800
Facsimile: (559) 233-9330

Timothy Jones #119841
John P. Kinsey #215916
Dylan J. Crosby #299536

Attorneys for: Petitioners and Plaintiffs POET, LLC and James M. Lyons

SUPERIOR COURT OF CALIFORNIA, COUNTY OF FRESNO

CENTRAL DIVISION
10
11 POET, LLC; JAMES M. LYONS Case No. 15 CE CG 03380
12 Petitioners and Plaintiffs, PETITIONERS’ OPENING BRIEF
13
Vv.
14
CALIFORNIA AIR RESOURCES
15 BOARD; RICHARD COREY, in his
16 official capacity as Executive Officer of
the California Air Resources Board; LORI
17 ANDREONL, in her official capacity as a
Manager of the California Air Resources
18 Board; and ELLEN PETER, in her official
capacity as Chief Counsel of the California Judge: Hon, James Petrucelli
19
Air Resources Board,
20 Writ of Petition/Complaint Filed:
Respondents and Defendants. October 30, 2015
21 a

22 Mt
23 MI

24 Mt
25 Ml
26 Mt
27 Mt
28 Mt

{7011/3E1400652143.DOC}
on
PETITIONERS’ OPENING BRIEF
TABLE OF CONTENTS

INTRODUCTION

IL FACTUAL & PROCEDURAL BACKGROUND

A The Original LCFS Regulation

B Unintended Consequences of the Original LCFS Regulation

The Court of Appeals Invalidates CARB’s Environmental
Document

CARB’s Development of the ADF Regulation as aaa
for the LCFS Regulation.
10
CARB’s Functional Equivalent Document Ignores
11 the Increased Emissions Caused By the Original LCFS
12 Regulation, and Instead Includes those Emissions in
the Baseline Conditions
13
Il ARGUMENT
1
A Standard of Review Under CEQA
15

16 1 Certified Regulatory Programs Under CEQA 10
17 2 Standard of Review 12
18
Respondents Violated CEQA By Failing to Analyze the
19 Significant, Continuing Increases in NOx Emissions Caused By
the LCFS Regulation Adopted in 2009 13
20
1 Although the Original LCFS Regulation Caused a Significant
21
Increase in NOx, Respondents Declined to Analyze or
22 Mitigate the Significant NOx Emissions Created By the
Original LCFS Regulation, and Instead Included Those
23 Increased NOx Emissions in the Environmental Baseline is
24
Because the “Whole of the Project” Includes Both the
25 Original LCFS Regulation and the Readopted LCFS
Regulation, CARB Cannot Avoid Analysis of the
26 Original LCFS’s Regulation’s Negative Environmental Effects 15
27
28

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PETITIONERS’ OPENING BRIEF
TABLE OF CONTENTS
(Continued)

Regardless of Whether the “Re-Adopted” LCFS Regulation
Is A “New” Project Under CEQA, Respondents Were Still
Required to Analyze the Effects of the Original LCFS
Regulation Under a Cumulative Impacts Analysis 17

Respondents’ Approach Would Result in the
Impermissible Piecemealing of Environmental Review 17

Respondents Failed to Identify Adequate Mitigation to Reduce
the Significant NOx Emissions Caused By the Increased Use
of BioDiesel Resulting from the Readopted LCFS Regulation 18

1 The ADF Regulation Is Not Adequate Mitigation for the
10 Readopted LCFS Regulation’s Increases in NOx Emissions 19
11
Respondents Cannot Rely Upon the Use of DTBP as
12 Mitigation to Reduce NOx Emissions Because DTBP Has
Not Been Approved By U.S. EPA at the Concentration
13 Levels Contemplated Under the ADF Regulation............. 21
14
The ADF Regulation Is Inadequate to Mitigate the Readopted
15 LCFS Regulation’s Increases in NOx Emissions Because it
Erroneously Presumes Lower Biodiesel Blends Will Not
16 Generate NOx Emissions........... armed
17
Respondents Failed to Analyze Increased NOx
18 Emissions Associated with New Technology Diesel Engines.......24

19 Respondents Violated CEQA By Failing to Analyze and
20 Mitigate the Significant Environmental Effects that Would.
Result from the Readopted LCFS Regulation, and Adequately
21 Respond to Comments Identifying Those Issues 26
22 1 Respondents Failed to Fully Analyze the Fact that the
Readopted LCFS Regulation Would Result in the
23
Construction Of New Facilities, or Mitigate the
24 Potential Impacts Associated With the Construction and
Operation of Such New Facilities 26
25
Respondents Failed to Analyze Environmental Impacts
26
Associated With “Fuel Shuffling” ............ 31
27
Respondents Failed to Analyze Whether Increased Biodiesel
28 Usage Would Increase Emissions in Criteria Pollutants Other
Than NOX... 34
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PETITIONERS’ OPENING BRIEF
TABLE OF CONTENTS
(Continued)

Respondents Failed to Consider and Analyze Reasonable,
Feasible Alternatives to the Readopted LCFS Regulation 35

1 Respondents Should Have Considered Growth Energy’s
Cap & Trade Alternative as a “Project Alternative” Under
the EA 36

Respondents also Violated CEQA By Failing to Consider
Growth Energy’s Alternative to the ADF Regulation 38

Respondents’ Approval of the Readopted LCFS Regulation Is
Unlawful Under AB 32 Because it Increases Criteria Pollutant
10 Emissions 40

11 Respondents Failed to Perform an Adequate “Peer Review” of the
Readopted LCFS Regulation, as Required Under Section 57004
12 4]
of the Health & Safety Code
13
1 The “Peer Reviewers” Did Not Review Critical “Scientific
14 Portions” of the Readopted LCFS Regulation 42
15 The Peer Reviewers Were Notof Qualified Under
©
16 Section 57004... 43

17 CARB’s Peer Review Was also Inadequate Because
CARB’s Peer Reviewers Plainly Did Not Understand.
18 Basic Aspects of The Readopted LCFS Regulation
19
Respondents’ Ignored the Public’s Comments Regarding
20 the Adequacy of the Peer Reviews 45

21 Respondents Were Required to Recirculate the ISOR for
22 Public Review Because it Subsequently Made Numerous
Substantial Changes to the Regulation 46
23
Respondents Violated the APA By Failing to Maintain an
24 Adequate Rulemaking File 48
2
Iv CONCLUSION 50
26
27
28

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PETITIONERS’ OPENING BRIEF
TABLE OF AUTHORITIES

STATE CASES

Alliance of Small Emitters/Metals Indus. v, South Coast Air Quality Mgmt. Dist.
(1997) 60 Cal.App.4th 55, 66 26

Anderson First Coalition y, City of Anderson
(2005) 130 Cal.App.4th 1173, 1186 20, 22, 26

Bakersfield Citizens for Local Control v, City of Bakersfield
(2004) 124 Cal.App.4th 1184, 1220 [*BCLC”] 12, 26

Berkeley Keep Jets Over the Bay Comm. vy. Board of Port Comm'rs
(2001) 91 Cal.App.4th 1344, 1358 18
10
Calif, Building Indus, Assoc. v. San iene Malley sir Pollution Contr. Dist.
1 (2009) 178 Cal.App.4th 120, 126..
12
Californians for Native Salmon & Steelhead Ass'n v.aes at oa
13 (1990) 221 Cal.App.3d 1419... 10
14 City of Arcadia v. SWRCB
15 (2006) 135 Cal.App.4th 1392, 1421 9,10, 11,12

16 City of Long Beach v. Los Angeles Uni, Sch. Dist.
(2009) 176 Cal.App.4th 889, 920 39
17
City of Marina v. Bd. of Trustees of the Calif. State Univ.
18
(2006) 39 Cal.4th 341, 359-50 31
19
City of Santee v. County of San Diego
20 (1989) 214 Cal.App.3d 1438, 1450 16,17
21
Citizens for Open Govt. v. City of Lodi
22 (2012) 205 Cal. App.4th 296, 322 al

23 Citizens of Goleta Valley v. Bd. of Supers.
24
(1990) 52 Cal.3d 553, 568 26, 28

25 Communities For A Better Environment v. South Coast Air Quality Management Dist.
(2010) 48 Cal.4th 310, 315 16
26
Communities for a Better Environment v, City of Richmond
27
(2010) 184 Cal.App.4th 70, 95 19, 21, 22, 23, 25
28

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ees
PETITIONERS’ OPENING BRIEF
TABLE OF AUTHORITIES
(Continued)
STATE CASES

Envt'l Council of Sacramento v. City of Sacramento
(2006) 142 Cal.App.4th 1018, 1039... 30

Envt'l Protection Info. Ctr. v. Johnson
(1985) 170 Cal.App.3d 604, 616 vss iraanmwlOy LT

EPIC y, Calif: Dept. of Forestry & Fire Prot.
(2008) 44 Cal.4th 459, 503 18

Fairview Neighbors v. County of Ventura
(1999) 70 Cal.App.4th 238, 242 21
10
Fed. of Hillside & Cyn. Ass'ns v. City of Los Angeles
1 (2000) 83 Cal.App.4th 1252, 1261 .. 20, 22

12 Gray v. County of Madera
(2008) 167 Cal.App.4th 1099, 1116 19,21, 23,25:
13
14 Habitat & Watershed Caretakers y. City of Santa Cruz
(2013) 213 Cal.App.4th 1277, 1304 38
15
Laupheimer v. Calif.
16 (1988) 200 Cal.App.3d 440, 461-66... 17
17
Laurel Heights Impr. Ass'n v, Regents of the Univ. of Calif.
18 (1988) 47 Cal.3d 376, 405 «oe. 26, 28, 33
19 Moss y. County of Humboldt
20 (2008) 162 Cal.App.4th 1041, 1055... 16

21 Mountain Lion Found. vy. Fish & Game Comm.
(1997) 16 Cal.4th 105, 134... 9, 10
22
Neighbors for Smart Rail v. Exposition Metro Line Constr. Auth.
23
(2013) 57 Cal.4th 439, 447 16, 21
24
NRDC v. City of Los Angeles
25 (2002) 103 Cal.App.4th 268, 271 10
26
Pfeiffer v. City of Sunnyvale
27 (2011) 200 Cal.App.4th 1552, 1568 12, 24, 33, 46

28 POET, LLC y. California Air Resources Board
(2013) 218 Cal. App.4th 681 esses serenves PASSLM
{7011/3E1/00652143,DOC}
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PETITIONERS’ OPENING BRIEF
TABLE OF AUTHORITIES
(Continued)
STATE CASES

Save Our Peninsula Comm. v. Monterey County Bd. of Supers.
(2001) 87 Cal.App.4th 99, 118 12

Sierra Club v, County of Napa
(2004) 121 Cal.App.4th 1490, 1497 12

Sierra Club vy. State Bd. of Forestry
(1994) 7 Cal.4th 1215, 1233 9, 10, 12

Stanislaus Nat'l Heritage Project v. County of Stanislaus
(1996) 48 Cal.App.4th 182, 195... okt
10
Sundstrom v, County of Mendocino
11 (1988) 202 Cal.App.3d 296, 311...
12
Tuolumne County Citizens for Responsible Growth, Inc. y. City of Sonora
13 (2007) 155 Cal.App.4th 1214, 1229 16
14 Uphold Our Heritage v. Town af Woodside
15
(2007) 147 Cal.App.4th 587, 601 40

16 Vineyard Area Citizens for Resp. Growth, Inc. v. City of Rancho Cordova
(2007) 40 Cal.4th 412, 428 16, 26
17
18 STATE STATUTES

19 Health & Saf. Code, § 38501 40
Health & Saf. Code, § 38562(b)(4).. 41
20 Health & Saf. Code, § 38570(b)(2).. ,29,
40, 41
21
Health & Saf. Code, § 43830.8. 48
Health& Saf. Code, § 57004 ... passim
2 Health & Saf. Code, § 57004(a).... 42
Health & Saf. Code, § 57004(a)(2).. 42, 43
23 Health & Saf. Code, § 57004(b) 43, 44
24
Health & Saf. Code, § 57004(c).... 44
Health & Saf. Code, § 57004(d) 41,43
25 Health & Saf. Code, § 104520.. 44
26 OWE GSES VERA BS cocci: casos sess jencnan nena a RRR RRR PR RET 50
Govt. Code, § 11346,.5(a)(16) 48,49
27 Govt. Code, § 11346.8(c) ne 46, 47
28 Govt, Code, § 11347.3, subds. (b)(6), (b)(7) .. 48, 49, 50

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PETITIONERS’ OPENING BRIEF
TABLE OF AUTHORITIES
(Continued)
STATE STATUTES

Govt, Code, § 11350

Pub: Resources Code, § 21000 .
Pub. Resources Code, § 21002 . 36
Pub Resources Code, § 21002.1(a). 30
Pub Resources Code, § 21002.1(b). 31
Pub Resources Code, § 21002.1(d). 16, 17
Pub Resources Code, § 21061 5 16, 30
Pub: Resources Code, § 21080.5(c). 10
Pub. Resources Code, § 21080.5(d)(2)(F) 10
Pub: Resources Code, § 21081.6(b). 20
10 Pub. Resources Code, § 21091 11
Pub: Resources Code, § 21100(b)(3) 19
ll Pub: Resources Code, §§ 21100-21154 10
Pub. Resources Code, § 21102.1(a). 19
12
Pub: Resources Code, § 21167 . 10
13 Pub. Resources Code, § 21168.5.. 12, 23, 25, 33
14 STATE REGULATIONS
15
1 C.CLR,, § 42 46, 47
16
17 Cal. Code Regs., § 60005(a) 11
17 17 Cal. Code Regs., § 60005(b) 36
18
17 Cal. Code Regs., § 60006. 11,39
17 Cal. Code Regs., § 60007. 11,46
19 17 Cal. Code Regs., § 60007(a) 46
17 Cal. Code Regs., § 93118(d)(19)
20
CEQA Guidelines, § 15088(c).. 2, 24, 25, 33, 46
21
CEQA Guidelines, § 15088(d).. vies2, 24,33
22 CEQA Guidelines, § 15125(a).. 8,15
CEQA Guidelines, § 15126.4 20
23 CEQA Guidelines, § 15126.6 39
CEQA Guidelines, § 15144... 26
24
CEQA Guidelines, § 15145... 26
25 CEQA Guidelines, § 15204... 36
CEQA Guidelines, § 15252(a)(2)(A) 11
26 CEQA Guidelines, § 15355(b).. 17
CEQA Guidelines, § 15378 . 8, 16, 17
27 CEQA Guidelines, § 21080.5 11
28

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PETITIONERS’ OPENING BRIEF
TABLE OF AUTHORITIES
1
(Continued)
2 FEDERAL REGULATION

3 75 Fed. Reg. 24409
4
MISCELLANEOUS

Kostka & Zischke, Practice Under Cal. Env. Quality Act
6 |] (2016 update) §§ 21.10, 21.14 at 1093, & 11.28 at 11-19]... sess LQ, 12, 26
7
8
9
10
W
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

{701 1/3E1400652143,DOC}
{701 1/3E1/00652143.D0C} viii

PETITIONERS’ OPENING BRIEF
I INTRODUCTION

This is the second proceeding involving Respondent the California Air Resources

Board’s (“CARB”) adoption of a Low Carbon Fuel Standard (“LCFS”) regulation (the
“Readopted LCFS Regulation”). The first proceeding resulted in the Court of Appeal’s
opinion in POET, LLC y, California Air Resources Board (2013) 218 Cal.App.4th 681, in

which the Court directed CARB to set-aside the original LCFS regulation because, infer alia,

CARB (i) approved the original LCFS regulation prior to completing its environmental review

process; (ii) CARB delegated its environmental review functions to a non-decisionmaker; (iii)

CARB impermissibly deferred mitigation to reduce NOx emissions; and (iv) CARB failed to
10 include relevant communications in the rulemaking file.

11 Petitioners have been forced to challenge CARB’s approval of the Readopted LCFS
12 Regulation and the ADF Regulation (collectively, the “LCFS/ADF Regulations”), because
13 CARB continues to avoid performing a candid and accurate evaluation of how CARB’s actions
14 will impact emissions of criteria pollutants in California, and in particular oxides of nitrogen
15 (“NOx”), a smog-forming pollutant of particular concern in the San Joaquin Valley. For
16 example, although CARB has previously conceded the LCFS regulation will have “little or no”
17 actual impact on greenhouse gas (“GHG”) emissions, the regulation has resulted in significant
18 increases in NOx emissions, which CARB refuses to fully analyze or mitigate.
19 In this proceeding, Petitioners seek a writ of mandate invalidating (i) the Readopted
20 LCFS Regulation; (ii) the Alternative Diesel Fuel Regulation (the “ADF Regulation”), which
21 CARB adopted to “mitigate” the impacts of the Readopted LCFS Regulation; and (iii) CARB’s
22 “functional equivalent” environmental document, called an Environmental Assessment (“EA”).
23 Petitioners seek this relief because Respondents have failed to fulfill their obligations under the
24 California Environmental Quality Act, Pub, Resources Code, § 21000, et seg. (“CEQA”); the
25 California Administrative Procedures Act, Govt. Code, § 11350, ef seg. (the “APA”); and other
26 applicable statutes and regulations. These violations include:
27 ° Although Respondents admit the original LCFS regulation increased NOx emissions
28 associated with the increased use of biodiesel, and the Readopted LCFS Regulation is a

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PETITIONERS’ OPENING BRIEF
continuation of the same regulation, Respondents not only failed to analyze these increased

NOx emissions in the EA, but included these increased emissions in the environmental

baseline. (See infra, § IIL.B.)

¢ Although Respondents adopted the ADF Regulation with the intent that it would help
avoid increases in NOx emissions from biodiesel, the ADF regulation does not represent
adequate mitigation under CEQA because it is based on mere “assumptions” about how the

regulated public will comply with the regulation, and nothing in the measure ensures
mitigation of NOx emissions will actually occur, (See infra, § IILC.1.)
° The ADF Regulation is not “feasible” or “effective” mitigation because it presumes a
10 fuel additive called di-tert butyl peroxide (‘DTBP”) will be used in biodiesel blends, even
11 though DTBP has not been approved for use by U.S. EPA in biodiesel blends at the levels
12 contemplated under the ADF Regulation. (See infra, § IILC.2.)
13 ° Respondents have failed to establish the “mitigation” contemplated by the ADF
14 Regulation is “effective,” as it is based upon assumptions concerning New Technology Diesel
15 Engines (“NTDEs”) and lower biodiesel blends that are erroneous and unsupported by the
16 record. (See infra, §§ III.C.3, III.C.4.)
17 e Although Respondents recognized in the EA that the LCFS Regulation would result in
18 “significant and unavoidable” impacts resulting from the construction of new facilities and the
19 expansion of existing facilities needed to produce the alternative fuels contemplated under the
20 LCFS Regulation — i.e., new processing plants for ethanol and biomethane, and expansions to
21 existing operations, (AR at LCFS-8536) — the EA makes no attempt to quantify those impacts,
22 or impose feasible mitigation that would ensure those impacts are avoided. (See infra, §
23 HL.D.1.)
24 e The EA avoids discussion of the negative environmental impacts associated with a
25 phenomenon called “fuel shuffling” (i.e., the fact that fuels not sold to the California market
26 would simply be re-routed to other states, thereby causing the same, if not greater, impacts),
ae even though CARB previously acknowledged “fuel shuffling” would occur. (See infra, §
28 ILL.D.2.)

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PETITIONERS’ OPENING BRIEF
° The EA fails to discuss whether increased use of biodiesel will increase emissions of

criteria pollutants other than NOx. (See infra, § TII.D.3.)
° The EA fails to analyze two reasonable, feasible alternatives proposed by members of

the public that would (i) meet most, if not all, of CARB’s project objectives, and (ii) reduce the

adverse environmental effects identified in the EA. (See infra, § III.E.)
° Because the LCFS/ADF Regulations would increase criteria pollutant emissions, they
are unlawful under AB 32, which makes clear that any “market-based compliance mechanism”
implemented by CARB — such as the LCFS regulation — must be designed “to prevent any

increase in the emissions of , , , criteria air pollutants.” (Health & Saf., § 38570(b)(2).) (See
10 infra, § TILF,)
11 ° Respondents failed to seek an adequate independent “peer review” of the all of the
12 “scientific portions” of the LCFS/ADF Regulations, as required under Section 57004 of the
13 Health & Safety Code, (See infra, § I11.G.)

14 . Respondents failed to provide another 45-day comment period on the LCFS/ADF
15 Regulations, even though Respondents made substantial changes to the originally proposed

16 regulations, including exemptions for certain biodiesels and the elimination of the Multimedia
17 process (which is designed to ensure new fuels will not result in increases in emissions). (See
18 infra, § III.H.)
19 ° Respondents failed to maintain an adequate rulemaking file by omitting critical
20 documents during the 45-day public review period under the APA, including documents
21 needed by the public to understand how CARB reached its conclusions. (See infra, § ILI.)
22 As a result of the foregoing, this Court should issue a writ of mandate invalidating the
23 LCFS/ADF Regulations pending full compliance with the law.

24 I. FACTUAL & PROCEDURAL BACKGROUND
25 A The Original LCFS Regulation
26 A detailed background regarding the original LCFS regulation is provided in POET,
27 supra, 681 Cal.App.4th at 699-707, Generally speaking, the LCFS regulation requires
28 companies marketing gasoline or Diesel fuel to gradually reduce the “carbon intensity” (or

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cis
PETITIONERS’ OPENING BRIEF
“CI”) of the pool of fuels they sell, by using one or more of several measures. (Jd. at 701.)
The original LCFS regulation required a 10 percent reduction in the Cl of the pool of
conventional fuels used in California by 2020. (Id. at 700, 701.)
The LCFS regulation does “not prohibit or require the use of any particular type of
fuel.” (POET, supra, 681 Cal.App.4th at 702.) Rather, regulated parties may “determine the

mix of fuels they would use to meet the annual standard. When a regulated party [comes] in

below the annual standard, credits [are] generated and [may] be sold to other regulated parties

or carried over to subsequent years.” (/d.)

To determine the Cl of a fuel, CARB staff uses a model called “CA-GREET.” Using
10 the CA-GREET model, CARB Staff measures the CI associated with a fuel’s “direct effects”

cL (i.e., the emissions associated with the use of a fuel), as well as “the indirect effects that may
2 result from the . . production of that fuel.” (/d. at 702.) CARB includes “indirect” GHG

13 emissions associated with “land use changes resulting from increased use of some crop-based

14 biofuels” in its calculation of the CI for regulated fuels. (/d. at 703.)

15 B Unintended Consequences of the Original LCFS Regulation

16 Fuel Shuffling, The original LCFS regulation was intended to implement the

17 Legislature’s mandate in AB 32 to reduce GHG emissions to address the issue of global
18 warming. Nevertheless, CARB has previously admitted that implementation of the LCFS
19 regulation would have “little or no” impact on global emissions of carbon dioxide. CARB
20 Staff explained during the rulemaking for the original LCFS regulation that the likely impact of
21 the LCFS regulation would be that “fuel producers [would] ship lower-carbon fuels to areas
22 with [low-carbon fuel standards], while shipping higher-carbon fuels elsewhere. The end
23 result of this fuel ‘shuffling’ process is little or no net change in fuel carbon on a global scale.”
24 (AR at C58 [emphasis added].)! There is no environmental advantage to fuel shuffling; the
25
1 This brief includes references to three separate administrative proceedings. Citations to
26 the administrative records for the LCFS and ADF proceedings include a reference to the page
number, as well as a prefix to identify which proceeding is referenced. For example, page
at 77332 of the record for the LCFS proceeding is referred to as “AR at LCFS-77332.” The
record for the original LCFS regulation is located within a link on the Index of Administrative
28 Record, which is located at AR at LCFS-80715, Those citations are designated with a prefix
containing a single letter, such as “AR at C58.”
{701 1/3E1/00652143.DOC) {701 1/3E1/00652143.D0C} 4
a
PETITIONERS’ OPENING BRIEF
same fuels are still produced and consumed, and the same GHGs are still emitted from those

processes. Rather, because the original LCFS regulation encouraged the shipment of fuels to

alternative locations that are further from origin facilities, “fuel shuffling” has actually caused

emissions of GHGs to increase. (See, e.g., AR at LCFS-77332.)

Increased Criteria Pollutant Emissions. Although the LCFS regulation does not result

in any real benefit to GHG emissions due to “fuel shuffling,” the LCFS regulation has
significant negative effects on the environment resulting from increased criteria pollutant

emissions, including emissions of “NOx,” or oxides of nitrogen.

NOx is the most important smog-forming emissions from man-made sources in some
10 areas of California, including the San Joaquin Valley. Progress in reducing smog depends
11 largely upon reductions in NOx emissions, which are considered “major contributors to smog
12 formation and acid deposition.” (17 Cal. Code Regs., § 93118(d)(19).) NOx contributes to the

13 formation of ground-level ozone (smog) in the San Joaquin Valley. (Calif Building Indus.

14 Assoc. v. San Joaquin Valley Air Pollution Contr. Dist. (2009) 178 Cal.App.4th 120, 126.) The

15 San Joaquin air basin does not meet the federal ozone standard required under the Clean Air
16 Act; the area was recently designated by EPA as “extreme” non-attainment for ozone under the
as federal National Ambient Air Quality standards. (75 Fed. Reg. 24409.)
18 In 2009, while the rulemaking process was underway, one of CARB’s peer reviewers

19 explained that “biodiesel” (one of the alternative fuels that CARB postulated would reduce the
20 “CI” of diesel fuel sold in California), would actually increase NOx emissions: “studies in the

21 literature suggest that NOx emissions increase with the use of biodiesel versus petroleum-

22 based diesel.” (AR at D278.) Several members of the public identified the same issue. CARB

23 conceded that “NOx is of particular interest because biodiesel has been reported to increase
24 NOx emissions,” (POET, supra, 681 Cal.App.4th at 732); however, CARB did not analyze the

25 potential environmental impacts associated with increased biodiesel usage, instead “assum[ing]

26 that there will be no increase in the emissions of NOx.” (/d.) Rather, CARB pointed to its

27 contention that a future rulemaking would address NOx emissions from biodiesel, and its
28 speculation (without citation to evidence, or even an explanation of the methodologies and

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PETITIONERS’ OPENING BRIEF
objectives relied upon in reaching this conclusion) that future on-road engine technologies

would reduce criteria pollutant emissions. (Jd. at 732-33.)

Cc. The Court of Appeals Invalidates CARB’s Environmental Document

Following CARB’s approval of the original LCFS regulation in November 2009,
Petitioners filed suit. Petitioners argued that CARB violated CEQA by (i) approving the
original LCFS regulation prior to completing environmental review, (ii) impermissibly

delegating environmental review authority to a non-decisionmaker — ie., the Executive

Officer; and (iii) deferring analysis and mitigation of NOx emissions associated with the

increased use of biodiesel associated with the regulation. Petitioners also sought relief under
10 the APA for CARB’s failure to include required documents in the rulemaking file. (Jd. at 708.)
ll After the superior court denied Petitioners’ writ petition, Petitioners appealed.
12 Following extensive briefing and oral argument, the Court of Appeal issued its decision in
13 POET, in which it found: (1) CARB “violated CEQA’s requirement that project approval must
14 occur after the agency has considered the environmental review documentation prepared to
15 satisfy CEQA,” (POET, supra, 218 Cal.App.4th at 726); (2) CARB “violated a fundamental
16 policy of CEQA when it gave the responsibility for completing the environmental review
17 process to the Executive Officer because he did not have the authority to approve or disapprove
18 the project,” (id. at 731); (3) CARB violated CEQA by moving “forward with the project's
19 activity—that is, [CARB] has implemented the LCFS regulations—without putting in place
20 any mitigation measures for the potential increase in NOx emissions resulting from the use of
21 biodiesel..” (id. at 740); and (4) CARB’s “omission of [certain] emails from the rulemaking file
22 was a violation of the APA.” (/d. at 754.) The Court of Appeal also allowed CARB to
23 maintain the status quo by “continuing to adhere to the LCFS regulations standards in effect
24 for 2013 until the corrective action is completed.” (Jd. at 767.)
25 This Court issued a Peremptory Writ of Mandate including the above terms on
26 February 10, 2014, (AR at ADF-9146,) Among other things, the Peremptory Writ directed
27 CARB to “address whether the [LCFS regulation] will have a significant adverse effect on the
28 environment as a result of increased NOx emissions . . . .” (Jd. at ADF-9147 4 3.)

{701 1/3E1/00652143.DOC) (7011/3E1/00652143.DOC} 6

PETITIONERS’ OPENING BRIEF
D. CARB’s Development of the ADF Regulation as Mitigation for the
LCES Regulation

After this Court issued its Peremptory Writ, Respondents began the process of
readopting the LCFS regulation. The Readopted LCFS Regulation generally has the same
form and substance as the original LCFS regulation. However, because the Court of Appeal in
POET found that Respondents “violated CEQA by improperly deferring the formulation of
mitigation measures for the increase in NOx emissions that might result from the increase[d]

use of biodiesel fuel caused by the LCFS regulations,” (POET, supra, 218 Cal.App.4th at 740),
Respondents were required to accompany the Readopted LCFS Regulation with “mitigation”

10 to avoid these impacts.

11 CARB’s proposed mitigation took the form of the ADF Regulation. (AR at LCFS-
12 8518 [“One of the fuels that the LCFS is expected to incentivize is biodiesel . . Any

13 additional NOx emissions that result from the increased use of biodiesel blends are required to

14 be mitigated by the Alternative Diesel Fuel regulation.”]; see also POET, supra, 218

15 Cal.App.4th at 732 [noting CARB’s assertion that it would initiate a rulemaking to adopt a
16 future regulation akin to the ADF Regulation].) To reduce NOx emissions associated with the
17 use of biodiesel under the LCFS Readopted Regulation, the ADF Regulation contemplates: (1)
18 the gradual displacement of biodiesel by “renewable diesel or other very high cetane diesel
19 fuels”; (2) the use of DTBP as an additive to certain biodiesel blends; and (3) the increased use

20 of NTDEs by industry, (AR at ADF-1356.)

21 E. CARB’s Functional Equivalent Document Ignores the Increased
Emissions Caused By the Original LCFS Regulation, and Instead
22 Includes those Emissions in the Baseline Conditions
23 Because the Court of Appeal in POET invalidated Respondents’ CEQA document for

24 the original LCFS regulation, CARB was also required to prepare a new “functional

25 equivalent” CEQA document for the LCFS/ADF Regulations. Instead of acting in accordance

26 with the Court of Appeal’s mandate, and engaging in a full accounting of the negative
27 consequences the LCFS regulation would have with respect to NOx emissions, CARB in its

28 subsequent environmental document instead sought to conceal these impacts.

{701 1/3E1/00652143. DOC} {701 1/3E1/00652143.DOC)} 7
=
PETITIONERS’ OPENING BRIEF
First, Respondents took the position that CARB would be “rescinding” the “existing”
LCFS regulation, and replacing the regulation with a “new” Readopted LCFS Regulation,
although the two are virtually identical in form and substance. Instead of analyzing the LCFS

regulation as a “whole,” (cf CEQA Guidelines, § 15378 [defining the term “Project” as “the

whole of the action”]), Respondents took the position that, because CARB was adopting a
“new” regulation, the baseline for environmental review was 2014 — i.e., the year in which

Respondents began the environmental review process for that “new” regulation. (AR at LCFS-
70121, -70176, ADF-23194; cf CEQA Guidelines, § 15125(a).)
Although Respondents have conceded the original LCFS regulation adopted in 2009
10 “resulted in an increase in NOx of about 1.2 tons per day (TPD),” (AR at LCFS-70176), by
1 choosing a 2014 baseline, Respondents contend they were not required to analyze or mitigate

12 those emissions. (AR at LCFS-70121 [asserting CARB’s environmental assessment
13 “addresses the potentially significant adverse environmental impacts resulting from
14 implementing the proposed LCFS . . regulation{] compared to existing conditions, which
1S: include existing compliance with the LCFS left in place by the Court at the 2013 regulatory
16 standards.”]; id. at LCFS-71416 [“In regards to biodiesel, determinations in the EA are based
17 on a comparison of the potential environmental consequences of the proposed regulations with
18 the existing regulatory setting and physical conditions in 2014... .”].) In other words, the
19 continuing increases in emissions caused by the original LCFS regulation have never been

20 fully analyzed or mitigated.

21 But CARB did not just fail to analyze and mitigate the increased NOx emissions caused
22 by the original LCFS regulation. Rather, CARB included the increased NOx emissions as part
23 of its emissions inventory in the “baseline” conditions for the “re-adopted” LCFS regulation.

24 (AR at LCFS-70121.) Because compliance under the original LCFS regulation resulted in

25 increased NOx emissions, (see, e.g., id. at LCFS-70176), and those increases in NOx emissions

26 will continue until at least 2021, (see id. at ADF-1302, LCFS-70176), Respondents’ usage ofa

27 2014 baseline not only allowed Respondents to shield the negative environmental
28 consequences of CARB’s actions from the public, but also erroneously claimed the effects of

{701 1/3E1/00652143,DOC} {701 1/3E1/00652143.DOC} 8

PETITIONERS’ OPENING BRIEF
the “re-adopted” LCFS regulation were “beneficial” compared to “existing conditions” (which
include the increased NOx emissions Respondents caused).

Interested parties recognized this issue early in the process, submitting comments

requesting that CARB analyze the impacts of both the existing LCFS regulation and the “re-

adopted” LCFS regulation. (AR at LCFS-79322 4 11.) Interested parties also raised various
arguments regarding numerous significant environmental issues that CARB Staff failed to
adequately address, including fuel shuffling. Interested parties also commented on the fact that
the ADF Regulation was inadequate mitigation to ensure the Readopted LCFS Regulation

would not result in increases in NOx emissions. (See, e.g., AR at ADF-8882 — ADF-8890.)

10 Undeterred, in September 2015, CARB proceeded with the re-adoption of the LCFS

11 regulation, causing Petitioners to file the instant Petition.”

12 I. ARGUMENT

13 A Standard of Review Under CEQA

14 “CEQA compels government first to identify the environmental effects of projects, and

15 then to mitigate those adverse effects through the imposition of feasible mitigation measures or
16 through the selection of feasible alternatives,” (Sierra Club v, State Bd. of Forestry (1994) 7
7 Cal.4th 1215, 1233.) CEQA mandates that public agencies “refrain from approving projects

18 with significant environmental effects if there are feasible alternatives or mitigation measures
19 that can substantially lessen or avoid those effects.” (City of Arcadia v, SWRCB (2006) 135
20 Cal.App.4th 1392, 1421 [citing Mountain Lion Found. v. Fish & Game Comm. (1997) 16

21 Cal.4th 105, 134].) “The CEQA process is intended to be a careful examination, fully open to

22 the public, of the environmental consequences of a given project, covering the entire project,

23 from start to finish. This examination is intended to provide the fullest information reasonably

24 available upon which the decision makers and the public they serve can rely in determining

2S.

26 2 On November 30, 2015, Respondents also filed a Return to the Peremptory Writ issued
27 by this Court in February 2014 in the matter of POET, LLC, et al. v. California Air Resources
Board, et al., Fresno County Superior Co

Case Info

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Petrucelli, James Track Judge’s New Case

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Document Filed Date

September 07, 2016

Case Filing Date

October 30, 2015

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Parties

California Air Resources Board Respondent
Corey, Richard Respondent
Jones, Timothy Attorneys for Plaintiffs
Lyons, James M. Petitioner
Meckenstock, Margaret E Attorneys for Defendants
Poet LLC Petitioner
Nicolas Cardella Attorneys for Plaintiffs
Janelle Smith Attorneys for Defendants
Myung Park Attorneys for Defendants
John Kinsey Attorneys for Plaintiffs
Dylan Crosby Attorneys for Plaintiffs
David Pettit Attorney
Mark Poole Attorney
Gavin McCabe Attorney
Lynn Haug Attorney
Christopher Campbell Attorney
Daniel Stein Attorney
Mark Waterman Attorney

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Trial Materials: Poet LLC vs.California Air Resources Board/CEQA

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