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Challenging CARB 1 - Poet Files Lawsuit in California

By Todd Neeley
DTN Staff Reporter
OMAHA (DTN) -- The nation's largest ethanol producer filed a lawsuit against the California Air Resources Board, accusing it of ignoring key documents that could have influenced its decision on a new state low-carbon fuel standard.
At stake: CARB introduced that standard that could make it difficult for the U.S. industry to access what is a growing 1-billion-gallon ethanol market in California, as the LCFS classifies corn ethanol as a higher-carbon fuel.
Many ethanol-producing states sell ethanol to the California market, and ethanol plants generally add value to the price of corn. In Nebraska, for example, the Nebraska Corn Board said that 27 percent of Nebraska ethanol is shipped to California.
Sioux Falls, S.D.-based ethanol producer Poet LLC filed the lawsuit Dec. 23, 2009, as a result of a public information request made with CARB in August 2009 by ethanol advocacy group Growth Energy.
The request turned up more than 1,800 pages of documents that have not been made part of the rulemaking file on the case, according to Growth Energy CEO Tom Buis and Growth Energy Communications Director Chris Thorne.
California law requires agencies like CARB to include in rulemaking files "all data and other factual information, any studies or reports, and written comments submitted to the agency in connection with the adoption, amendment, or repeal of the regulation."
That also includes "all data and other factual information, technical, theoretical, and empirical studies or reports, if any, on which the agency is relying in the adoption, amendment, or repeal of a regulation, including any cost impact estimates."
Poet, a member of Growth Energy, asked the Superior Court of California, County of Fresno Central Division, to set aside the law that penalizes corn-based ethanol for so-called international indirect land use change. International indirect land use change is the notion that expanded corn acres in the U.S. from ethanol lead to farmers in other countries making changes in how they use their land.
Poet argues that CARB didn't respond to numerous public comments, has left many relevant documents out of the rulemaking file and the state's new low-carbon fuel standard will lead to increased greenhouse gas emissions.
The lawsuit names CARB Executive Officer James N. Goldstene, CARB Manager Lori Andreoni and Ellen Peter, chief counsel of CARB, as defendants.
"CARB violated its own rules, ignored comments that presented significant environmental concerns and gave only conclusory and insufficient responses to the comments it chose to consider," the lawsuit stated. "The result was a decision-making process that was uninformed and unsupported by the evidence that was before the agency."
According to information from the clerk's office at the Fresno court, CARB had not yet filed a response to the lawsuit as of Jan. 25.
CARB spokesman Stanley Young confirmed that the 1,800 pages were released as part of the Public Records Act request, but the pages are not considered part of the rulemaking file.
According to California regulations, an agency like CARB has to specifically identify in the initial statement of reasons, and include in the rulemaking record, any material it uses to draft a regulation.
Damien Schiff, a staff attorney with the Pacific Legal Foundation in Sacramento, Calif., said information available through the public records act in California is separate from what is made part of a public rulemaking file.
Just because documents made available in a public information request are not in a rulemaking file "isn't a red flag," he said.
However, Schiff said, it's a "different issue" if documents were used to draft a rule, but are not in a rulemaking file.
"It would depend on if the information was significant," he said, "then it could be seriously prejudicial."
To explain what is meant by significant, a source familiar with the California regulations who spoke to DTN on background, said that if CARB staff held a lunch meeting with outside consultants who helped draft the regulations, an expense report from that meeting wouldn't need to be made part of the rulemaking file.
However, the source said any documents regarding technical issues related to rulemaking are a different story.
Emails provided to Growth Energy that are not in the rulemaking file show CARB officials and outside consultants hammering out technical details related to economic models used to calculate ethanol's carbon emissions for indirect land use change.
According to a Nov. 20, 2009, letter from Growth Energy to CARB, the board initially provided about 70 documents on Oct. 26, 2009. That includes emails between staff scientists and others at CARB, and outside hired consultants who helped CARB work with the models.
The lawsuit said that the documents showed that "persons familiar with the CARB staff's analysis, including some of the CARB staff's own consultants, admitted errors and uncertainties in that analysis that were not made known to the public."
In an April 9, 2009, email exchange provided to DTN by Growth Energy, Purdue University agricultural economics professor Thomas W. Hertel expressed concern about how CARB was using the Global Trade, Assistance and Production model or GTAP. The model is used by CARB to calculate international indirect land use changes.
In the email, Hertel told CARB officials that the executive officer's use of the GTAP results prepared under his supervision or with his input was "rather arbitrary" and "much less defensible" than an alternative approach that Hertel supported.
Hertel told CARB officials that "if the board is serious about using GTAP analysis in its regulatory analysis, you need capable staff." He goes on to say that it "takes years to develop" the necessary expertise, so you "MUST hire some expertise in. You can't expect to retrain folks and be successful."
The Poet lawsuit said "the failure to include those comments in the public file in a timely manner was clearly prejudicial."
Growth Energy also requested copies of studies and other information that were attached to the emails. Then, on Nov. 3, 2009, CARB released nearly another 1,800 pages of documents to Growth Energy.
Prior to the approval of the LCFS, Growth Energy made known its concerns about the documents to CARB, in a 12-page letter that included a sample of the emails and information Growth Energy received.
In the letter, Growth Energy asked CARB to include the letter and documents in the final rule that was sent to the California Office of Administrative Law -- a clearinghouse for state regulations. In the letter, Growth Energy asked a number of questions about the documents CARB provided.
In addition, Growth Energy's letter said, "Other documents indicate there may have been a pattern of excluding from the rulemaking file comments that might have contradicted the staff's analysis."
When asked for comment about the letter and lawsuit, Young said, "We disagree with the statements in the Growth Energy letter, but since Poet and Growth Energy decided to take their issues to court, CARB will respond to the allegations in that forum."
Thorne said CARB has not responded to the letter.
The Poet lawsuit claims that because CARB underestimated greenhouse gas emissions from the increased use of electric cars, the new fuel standard will lead to increased GHG emissions and not reductions.
According to the lawsuit, a representative of a motor vehicle manufacturer told the board during an April 2009 public hearing that a University of California-Davis study said GHG emissions from electric cars should be higher than what CARB accounted for in the final regulation.
The study said those emissions would be 40 to 60 percent higher than CARB estimated. That point is reiterated in an April 21, 2009, email that includes the study in an attachment to CARB staff from UC Davis researcher Sonia Yeh.
"In the final environmental document, the executive officer did not acknowledge or address Dr. Yeh's comments, nor the receipt of the paper," the lawsuit said.
Todd Neeley can be reached at Copyright 2010 DTN/The Progressive Farmer - A Telvent brand. All rights reserved.
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Conflict Fuels Lawsuit by Ethanol Industry Against California Air Resources Board
By Todd Neeley
DTN Staff Reporter
OMAHA (DTN) -- In drafting the low-carbon fuel standard in California, the California Air Resources Board and U.S. ethanol industry officials went toe-to-toe on several issues.
Points of conflict stated by the two sides:
Ethanol industry:
Available economic models used by CARB to calculate international indirect land use change are limited and inaccurate. Dynamic economic models are needed to account for futures changes in land use.
The board opted to use the Global Trade, Assistance and Production, or GTAP, model developed at Purdue University. CARB has decided it would use available models until dynamic models are created.
Ethanol industry:
CARB should consider the indirect emissions of other fuels.
The board included no calculations for petroleum-based fuels in the final LCFS. CARB ruled that natural gas, hydrogen and electricity fuel pathways have zero indirect emissions.
Ethanol industry:
CARB should give more credit to expected improved corn yields in the emissions calculations for corn ethanol.
According to CARB's method for accounting for improved yields, if corn yields were doubled around the world, the land-use effect of corn ethanol would be reduced by only 50 percent. The ethanol industry contends the number should be much higher.
Ethanol industry:
Ethanol industry stakeholders did not get a fair public hearing on the proposed LCFS, as CARB didn't respond to numerous comments and information it received from the industry.
CARB spokesman Stanley Young told DTN that CARB believes it responded adequately.
Ethanol industry:
Animal feed that distillers grains replace have a significant effect on land use. The industry believes that the production of DGs should be included in CARB's land use sensitivity analysis.
The board believes the ethanol industry has failed to show that the inclusion of DGs in the model will have more than a modest effect on corn ethanol's emissions score.