Opinion on Prop. 23

Passing Proposition 23 would suspend California’s Global Warming Solution Act of 2006 (AB 32) by requiring that an unemployment rate of 5.5% or less be sustained for four consecutive quarters before AB 32 can be implemented. California has only managed to maintain four consecutive quarters of unemployment below 5.5% three times since 1976. Therefore, Proposition 23 severely restricts California’s regulatory authority to preserve and protect natural resources, the environment, and human health without proving a causal link between AB 32’s implementation and California’s current and future economy and employment.

Generally, AB 32 requires the reduction of greenhouse gas emissions to 1990 levels by 2020. Its suspension would prevent state agencies from proposing, promulgating, or adopting regulations to implement its provisions. However, since AB 32 passed nearly four years ago, the Air Resources Board (“ARB”) has already implemented–or is in the process of implementing–most of its requirements. The ARB has thus far:

•Adopted Mandatory Reporting Regulations; 2020 GHG Emission Limits; and rules/regs on low sulfur fuels, landfill methane gas, car refrigerants, semiconductor manufacturing, port operations, and tire pressure
•Adopted a Scoping Plan outlining 70 actions to reduce greenhouse gases
•Conducted Cost Benefit Analysis on the effects of implementing the scoping plan
•Developed Draft Market Mechanism for the regulation of a Cap-and-Trade Program
•Convened an Environmental Justice Advisory Committee
•Convened an Economic and Technical Advancement Advisory Committee
•Adopted an AB 32 Cost of Implementation Fee to fund the implementation of AB 32

•Approved Policy Statement on Credit for Early Action to ensure that early adopters are not later punished for not further decreasing their greenhouse gas emissions1

California has carefully implemented AB 32 and taken great care to manage the cost of regulating greenhouse gas emissions. The suspension of AB 32 clearly defeats years of policy and regulatory development and shows an aggressive dismissal of the investment made to reduce greenhouse gas emissions.

Additionally, a specific review of the effect of Proposition 23 shows that it will suspend the 46 actions found in ARB’s Scoping Plan that directly regulate greenhouse gases.2 The other 24 actions of the Scoping Plan would not be affected, nor would any other related action by another agency with independent authority or actions by the ARB with alternative statutory authority.3

The suspension of these 46 actions creates an obvious and targeted gap in the regulatory framework. This gap serves to benefit the proponents of Proposition 23, who include:

1. Valero Oil Company
2. Tesoro Oil Company
3. World Oil Corporation
4. California Trucking Association
5. Frontier Oil Corporation

These supporters simply do not want to internalize the external cost of the production of greenhouse gas emissions. However, this cost will be passed and spread across consumers and should not affect corporate bottom lines or shareholder returns. With constant increases in demand, the market price of oil (over $80 as of today) will adequately sustain the cost and profits of these companies. One must only look to the European Union’s regulation of greenhouse gases to find this to be true.

The defense of Proposition 23 (and subsequent suspension of AB 32) focuses on the potential for massive layoffs and the prevention of California’s economic recovery instead of the actual cost of compliance. This argument is speculative at best and pretends that the cost incurred by the industries affected by AB 32 will somehow prevent economic growth and recovery. The economic woes of California are from a real estate bubble, lax mortgage regulation, and a systemic failure of the financial system. The regulation of greenhouse gas emissions cannot be used as an obstacle to economic recovery when it has such a limited bearing on the much greater and real economic problems of California. Such a position seems even more at odds with reality when one of the few bright spots in the market today comes from the renewable energy sector.

In conclusion, Proposition 23 restricts the regulatory authority of California without providing a sufficient basis to lock the implementation of AB 32 to an unemployment rate of 5.5% or less. It will not stop the progression of California to a more sustainable and healthy means of producing energy, but it will benefit a select few industries. It will place an unfair burden on all other employers and people in California. It also segments the regulation and creates uncertainty. I believe this is why companies such as Pacific Gas and Electric–and both gubernatorial candidates–are opposed to Proposition 23. They want certainty and a healthier and more environmentally responsible California. I hope you agree. Please vote NO on Proposition 23.

ENDNOTES

1 Scott Anders, Proposition 23: An Analysis of Which Scoping Plan Measures Could Be Suspended and for How Long, USD LAW’S ENERGY POLICY INITIATIVES CENTER 4–5 (2010), http://www.sandiego.edu/epic/research_reports/documents/EPICProposition23PaperFINAL-1.pdf.
2 Id. at 8–10.
3 Id. at 11.

Additional Information:

Ethan Elkind et al., California at the Crossroads: Proposition 23, AB 32, and Climate Change, U.C. BERKELEY SCHOOL OF LAW’S CENTER FOR LAW, ENERGY & THE ENVIRONMENT (2010), http://www.law.berkeley.edu/files/CLEE-California_at_the_Crossroads.pdf.

For an unbiased overview of the initiative and major arguments for and against, please look at California Proposition 23 (2010), BALLOTPEDIA, http://www.ballotpedia.org/wiki/files/CLEE-California_at_the_Crossroads.pdf (last visited Oct. 25, 2010).

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