Private Carbon Market Advisory Meetings Allegedly Unlawful

By Published On: April 12, 2007

A key panel created to advise regulators on establishing a carbon cap-and-trade market is deliberating behind closed doors in violation of the state constitution and case law, according to a First Amendment rights lawyer. The market expected to be produced from the committee’s recommendations is estimated to generate several billion dollars annually. The Market Advisory Committee was established by executive order after passage of California’s new climate change law, AB 32. Terry Francke, an attorney and executive director of Californians Aware, told Circuit April 12 that Proposition 59 passed by voters in 2004 “amended the California Constitution to create a fundamental right of access to meetings of public bodies and writings of public agencies and officials.” Francke also pointed to a 1993 appellate court decision affecting the advisory committee and public access to its deliberations. That court rejected an argument that because board members were not appointed directly by the decision maker–the school superintendent–the board could circumvent the state’s public meetings law. Bob Jenne, California Environmental Protection Agency attorney, said his agency concluded that the Market Advisory Committee was exempt from California’s open-meetings law, the Bagley-Keene Act, because of the way it was formed. That decision is based on a 1992 legal opinion by the California Attorney General that assessed what constitutes a committee created by executive order. While such committees are subject to open-meeting requirements, CalEPA determined that the market advisory panel did not fall within the executive committee parameters because it was not directly created by gubernatorial order. The Market Advisory Committee, conceived via executive order last October, directs the CalEPA secretary to create a committee to advise the California Air Resources Board on formulating a greenhouse gas cap-and-trade market. Using a market approach was not mandated in California law AB 32, which requires greenhouse gas cuts. The indirect creation of the committee, however, appears to be a distinction without a difference. “The executive order’s language is not discretionary,” Francke pointed out. Therefore, the governor is the controlling authority and the committee is subject to the state’s open-meetings law in accordance with the court decision Frazer v. Dixon Unified School District, he said. The Air Board is responsible for implementing AB 32, which seeks a 25 percent cut in carbon emissions by 2020. The board is one of the agencies within CalEPA. Creating a greenhouse gas cap-and-trade program is considered by many to be a critical strategy to curb carbon dioxide and other global warming gases. It is also potentially a multibillion-dollar program, development of which is of keen interest to state, federal, and international officials, agencies, and companies. A key issue for utilities, traders, clean technology investors, environmentalists, and consumer groups is whether carbon allowances under a state scheme are auctioned off, generating revenue for the state, or are given away to businesses for free. Another major issue is how the system may fit into other carbon-trading markets abroad and in the U.S. “There are no minutes of any of the meetings,” complained consumer advocate Lenny Goldberg, who has urged CalEPA officials to open to the public the Market Advisory Committee deliberations. “I want to know what people are saying.” “I am surprised and disappointed given the sensitivity and importance of their work,” V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies, said of the nonpublic meetings. Francke rejected CalEPA’s reliance on the 17-year-old attorney general opinion, which is not legally binding, to avoid the open-meetings law. “Whatever hairsplitting was involved in the older AG opinion, it is unlawful in view of a central provision of Prop. 59, codifying the common law principle that statutes supporting public access are to be read broadly, and those limiting public access are to be read narrowly,” Francke said. The Market Advisory Committee’s first meeting, held at the end of February, was open to the public. Since then, deliberations have been in private. Members of the Market Advisory Committee have discussed business via phone, and some went to Europe together to talk with officials and traders about the European Union’s two-year-old cap-and-trade system. Meanwhile, meetings held by two other advisory committees created by AB 32 have been open. Chamber of Commerce lobbyist Dominic DiMare was not troubled by the closed Market Advisory Committee meetings because its recommendation, due at the end of June, will be vetted in public. “Did I wish it were public? Yes, but I recognize they have a tight time frame, and the need for speed and efficiency,” DiMare said. Dan Skopec, CalEPA undersecretary, said most of the meetings were closed to allow uninhibited discussions involving “sensitive market information” from officials from the European Union, the U.S. EPA, and New York. Committee chair Winston Hickox explained that some committee members are public officials whose statements could affect the price of carbon if made in public. Hickox stressed that the committee was advisory but added that it was “trying to be more response to requests for more transparency.” This week, the advisory committee announced that it would open part of its April 17 and May 15 meetings to the public to allow for questions and answers only. However, no minutes of those or other meetings will be made available, according to the CalEPA spokesperson. Meanwhile, meetings held by the two other committees set up to advise regulators on how to carry out AB 32 are open to the public. For instance, compliance with the state’s open-meetings law was not an issue for the economics and technology panel, which will recommend new state incentives and subsidies to promote less polluting fuels. Likewise, the environmental justice panel meets in the open. It will advise the air board on how to prevent carbon-reduction strategies from adversely affecting poor areas and communities of color.

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