Energy Companies Want AB 32 Variance Process

By Published On: March 27, 2009

Well before implementation, some energy companies and producers want a variance procedure established under state greenhouse gas reduction rules. The California Air Resources Board is writing the rules under the state’s climate protection law AB 32. “You will need a variance mechanism,” said Robert Wyman, Latham & Watkins attorney, “a quasi adjudicatory body.” Wyman, who represents a coalition of companies in California on AB 32 issues, made his recommendation at a March 23 Air Board meeting, where staff members outlined how they intend to enforce emissions reductions under a carbon cap-and-trade program they are developing. Air Board staff members were mum about Wyman’s suggestion. The attorney said the state Air Board should develop a variance process for companies based on procedures used at some of the state’s local air pollution control agencies. In those agencies, administrative law panels, often called hearing boards, weigh pleas for variances from emissions control standards due to circumstances sometimes beyond the control of the companies involved. In the power industry, uncertainty over when transmission lines are permitted and ultimately built could prevent deliveries of green power needed to offset power from polluting fossil fuel plants. Los Angeles Department of Water & Power is not expecting its Green Path transmission line to go into service until 2019, said Leilani Johnson Kowal, legislative and regulatory affairs manager for the muni. That’s one year before AB 32’s first major emission reduction deadline. She called completion of the line--which is being built to move 800 MW of geothermal, wind, and other renewable energy from the Imperial Valley into the department’s service territory--”critical” to greenhouse gas emissions reductions. However, the project has gone slower than initially thought due in part to stiff opposition in the desert communities through which it would run (Circuit, March 13, 2009). Droughts also affect power industry emissions, noted Kevin Kennedy, Air Board climate change program evaluation branch chief. They can reduce hydropower output, requiring utilities to tap more fossil fuel energy. Power industry greenhouse gas emissions in California can swing up and down between dry and wet years as much as 20 percent, he said. Air Board staff explained it plans to enforce emissions limits under the carbon cap-and-trade program using the existing state health and safety code. The code outlines escalating penalties for violating state emissions standards based on numerous factors, such as willfulness, intent, and degree of harm. Administrative penalties assessed by the Air Board begin as low as $500 per offense, but can range as high as $25,000. Court-ordered civil and criminal penalties can range up to a million dollars and six to 12 months in jail. Frank Harris, Southern California Edison environmental economics manager, urged the Air Board to use any penalty money it collects under the statute to advance AB 32 programs, not for other purposes.

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