Nos. C075930 and C075954
COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT
CALIFORNIA CHAMBER OF COMMERCE et al., Plaintiffs and Appellants, v. CALIFORNIA AIR RESOURCES BOARD et al., Defendants and Respondents. NATIONAL ASSOCIATION OF MANUFACTURERS, Intervener and Appellant, ENVIRONMENTAL DEFENSE FUND et al., Interveners and Respondents. MORNING STAR PACKING COMPANY et al., Plaintiffs and Appellants, v. CALIFORNIA AIR RESOURCES BOARD et al., Defendants and Respondents. ENVIRONMENTAL DEFENSE FUND et al., Interveners and Respondents.
Appeal from Judgment Entered in Favor of Respondents Hon. Timothy Frawley, Judge, Sacramento County Sup. Court Case Nos. 34-2012-80001313 and 34-2013-80001464
APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF IN SUPPORT OF RESPONDENTS; PROPOSED BRIEF OF DALLAS BURTRAW, LAWRENCE GOULDER, BILL SHOBE, ET AL. AS AMICUS CURIAE
Eric Biber, State Bar No. 218440 UC Berkeley School of Law Berkeley, California 94720-7200 Telephone: (510) 643-5674 Facsimile: 510-643-2673 Email: [email protected] Counsel for Amicus Curiae
Table of Contents TABLE OF AUTHORITIES ...... ii APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF AND STATEMENT OF INTERESTS OF AMICUS CURIAE ...... 1 AMICUS CURIAE BRIEF ...... 3 Introduction ...... 3 I. Using a Cap-and-trade System with an Auction Component was a Well- Established Design for the Reduction of Atmospheric Emissions including Greenhouse Gases when AB 32 was Passed...... 4 II. Auction Systems of Allowance Distribution Promote Equity, Economic Efficiency, and Environmental Goals...... 9 1. Auction Distribution Systems Promote Equity for Both the Public and Regulated Firms ...... 10 2. Auction Distribution Systems Ensure Economic Efficiency ...... 14 3. Auction Distribution Systems Augment Environmental Goals ...... 15 III. The Use of a Reserve Price in Allowance Distribution Improves Auction Outcomes and Promotes Innovation in Reducing Emissions ...... 16 CONCLUSION ...... 17 APPENDIX ...... 19
i
TABLE OF AUTHORITIES STATE CASES
Communities for a Better Environment v. South Coast Air Quality Management Dist. (2010) 48 Cal.4th 310 12
STATE STATUTES
California Global Warming Solutions Act of 2006 passim
Cal. Health & Safety Code § 38500 et seq. (West 2014) passim
OTHER AUTHORITIES
Athey et al., Comparing open and Sealed Bid Auctions: Evidence from Timber Auctions (2011) 126 The Q. J. of Economics 207 7
Binmore and Klemperer, The Biggest Auction Ever: the Sale of the British 3G Telecom Licenses (2002) 112 Economic J. 74 passim
Böhringer et al., Alternative CO2 abatement strategies for the European Union, in Climate Change, Transport and Environmental Policy (Braden & Proost edits.,1998) 6
Burtraw and Palmer, Compensation Rules for Climate Policy in the Electricity Sector (2008) 27 J. of Policy Analysis and Management 819 11
Burtraw and Sekar, Two World Views on Carbon Revenues (2014) 4 J. of Environmental Studies and Sciences 110 9
Burtraw et al. Price Discovery in Emissions Permit Auctions in Experiments on Energy, the Environment, and Sustainability, (Isaac & Norton edits., 2011), in Series: Research in Experimental Economics,14 15
Burtraw et al., A Symmetric Safety Valve (2010) 38 Energy Policy 4921 passim
Burtraw et al., Allocation of CO2 Emission Allowances in the Regional Greenhouse Gas Cap-and-Trade Program (June 2005) RFF Discussion Paper 4, 6
ii CO2 Auctions, Regional Greenhouse Gas Initiative
Cramton and Kerr, Tradeable Carbon Permit Auctions: How and Why to Auction Not Grandfather (2002) 30 Energy Policy 333 5,16
Dixit and Pindyck, Investment Under Uncertainty (1994) 16
Ellerman and Buchner, The European Union Emissions Trading Scheme: Origins, Allocation, and Early Results (2007) 1 Rev. Environmental Economics Policy 66 5,7
Ellerman et al., Markets for Clean Air: The U.S. Acid Rain Program (2000) 14, 15
Fell, EU-ETS and Nordic Electricity: A CVAR Analysis (2010) 31 Energy J. 1 14,15
Fischer et al., Instrument Choice for Environmental Protection When Technological Innovation is Endogenous (2003) 45 J. of Environmental Economics and Management 523 16
Goeree et al., An Experimental Study of Auction Versus Grandfathering to Assign Pollution Permits (2009) 8 J. of the European Economic Assn. 514 passim
Goulder et al., Impacts of Alternative Emissions Allowance Allocation Methods Under a Federal Cap-and-Trade Program (2010) 60 J. of Environmental Economics and Management 161 11
Hahn, Market Power and Transferable Property Rights (1984) 99 The Q. J. of Economics 753 15
Haile and Tamer, Inference with an Incomplete Model of English Auctions (2000)
Haile et al., Nonparametric Tests for Common Values at First-Price Sealed-Bid Auctions (2003)
iii
Hausker, The Politics and Economics of Auction Design in the Market for Sulfur Dioxide Pollution (1992) 11 J. of Policy Analysis and Management 553 13
Hendricks et al., Empirical Implications of Equilibrium Bidding in First-Price, Symmetric, Common Value Auctions (2003) 70 Rev. of Economic Studies 115 7
Hepburn et al., Auctioning of EU ETS phase II allowances: how and why? (2006) 6 Climate Policy 137 7
Holt et al., Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative (2007) passim
Holt et al., Teaching Opportunity Cost in an Emissions Permit Experiment (2010) 9 Internat. Rev. of Economics Education 34 5,12
Jensen and Rasmussen, Allocation of CO2 Emissions Permits: A General Equilibrium Analysis of Policy Instruments (2000) 40 J. of Environmental Economics & Management 111 5
Kwerel and Rosston, An Insiders’ View of FCC Spectrum Auctions (2000) 17 J. of Reg. Economics 253 8
Lise et al., The Impact of the EU ETS on Prices, Profits and Emissions in the Power Sector: Simulation Results with the COMPETES EU20 Model (2010) 47 Environmental & Resource Economics 23 11
Martin et al., Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme (2014) 104 American Economic Rev. 2482 13
McMillan, Selling Spectrum Rights (1994) 8 J. of Economic Perspectives 145 Member States look to deal with windfall profits, Carbon Market Europe, Point Carbon (October 14, 2005) 8
Parry et al., Fiscal Interactions and the Costs of Pollution Control from Electricity (2005) 36 RAND J. of Economics 849 5
iv
Parry et al., When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets (1999) 37 J. of Environmental Economics and Management 52 5
Porter et al., The design, testing and implementation of Virginia’s NOx allowance auction (2009) 69 J. of Economic Behavior & Organization 190 5
Sijm et al., CO2 cost pass-through and windfall profits in the power sector (2006) 6 Climate Policy 49 12
Sopher and Mansell, The World’s Carbon Markets: A Case Study Guide to Emissions Trading (2013)
Stavins, What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading (1998) 12 The J. of Economic Perspectives 69 6
Veith et al., Capital market response to emission rights returns: Evidence from the European Power Sector (2009) 31 Energy Economics 605 11
Wrake et al., Opportunity Costs for Free Allocations of Emissions Permits: An Experimental Analysis (2010) 46 Environmental & Resource Economics 332 10,12,12
v APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF AND STATEMENT OF INTERESTS OF AMICUS CURIAE
TO THE HONORABLE JUSTICES OF THE CALIFORNIA COURT OF APPEAL, THIRD APPELLATE DISTRICT: Pursuant to Rule 8.200(c) of the California Rules of Court, the amici respectfully request leave to file the accompanying brief in this proceeding in support of respondents and interveners, California Air Resources Board and Environmental Defense Fund, et al.1 The amici in this case are a group of seventeen leading economists who teach and write in the field of environmental economics and who are among the most respected scholars focusing on the economics of market-based pollution control regulatory systems. Amici have an interest in seeing that the Court is informed on the prevalence and benefits of using auctions to distribute tradable permits for reducing carbon emissions in cap-and-trade regimes. Amici wish to assist the Court in properly interpreting the California Global Warming Solutions Act of 2006 (AB 32) by presenting the predominance of auctions in the economics literature, describing their advantages over free distribution, and demonstrating that these advantages were known at the time of AB 32’s passage. The appendix to this brief summarizes the amici’s qualifications and affiliations. Amici file this brief solely as individuals and not on behalf of the institutions with which they are affiliated.
Dated: May 15, 2015
By: ______Eric Biber UC Berkeley School of Law
1 UC Berkeley School of Law students Shampa Panda and Niran Somasundaram contributed significantly to this brief through the Environmental Law Practice Project.
1 Counsel for Amici Dallas Burtraw, et al.
Pursuant to California Rules of Court, Rule 8.200, subd. (c)(3), amicus declares that this brief was entirely drafted by counsel for the amici and no party or counsel for a party in a pending case authored the proposed amicus brief in whole or in part, or made any monetary contribution intended to fund its preparation. (See Cal. Rules of Court, rule 8.200(c).) Dated: May 15, 2015
By: ______Eric Biber UC Berkeley School of Law Counsel for Amici Dallas Burtraw, et al.
2 AMICUS CURIAE BRIEF Introduction Industry groups (referred to herein as plaintiffs) are challenging the California Air Resources Board’s decision to include an auction component in the cap-and-trade system for greenhouse gas emissions established under AB 32, the California Global Warming Solutions Act. However, as demonstrated below, the prevailing view in the field of economics is that using an auction to distribute emission allowances advances values of equity, economic efficiency and environmental efficacy. Allowing only free distribution of allowances, as plaintiffs urge, would seriously undercut these policy goals. AB 32 uses “design” and “distribution” as terms of art, which should be understood to allow the implementation of an auction system to allocate pollution permits. Auctioning allows for significant policy benefits including promoting transparency in the emissions trading market by establishing a known price and ensuring equity between new and incumbent firms. Auctions also avoid the possibility of windfall profits for emitters, who receive pollution allowances for free yet charge consumers for their value. Designing a cap-and-trade system with an auction component is a favored choice for pollution mitigation, as evidenced by examples of successful prominent emissions trading regimes from the United States and abroad. Polluting firms do not have a preexisting right to use the atmosphere as a free repository for their industrial emissions. Having an auction component of California’s cap-and-trade system advances goals of equity, efficiency, and environmental benefits.
3
I. Using a Cap-and-trade System with an Auction Component was a Well-Established Design for the Reduction of Atmospheric Emissions including Greenhouse Gases when AB 32 was Passed.
A necessary component of any cap-and-trade system is a determination as to how to distribute the permits. There are two main ways to distribute permits: (1) give the permits away for free, or (2) sell the permits through an auction. (AR C:1858.)2 The plaintiffs concede that AB 32 gives the California Air Resources Board (ARB) the authority to create a cap-and-trade system to allocate carbon emission permits. However, they incorrectly argue that ARB is limited to giving away all of the permits. (See, e.g. Appellant’s’ Opening Brief (Morning Star) at 44; Appellants’ Opening Brief (California Chamber of Commerce) at 13; Opening Brief of Appellant the National Association of Manufacturers at 18.) AB 32 authorized ARB to consider the use of market-based approaches (Health & Safety Code Section 38570) including the creation of a cap-and-trade system, which given the understanding among economists at the time, must be understood to include a potential role for an auction component for allocating permits. Economists understand the statutory language of AB 32, specifically “design” and “distribution,” to be terms of art and interpret them to encompass the option of implementing an auction to allocate permits in the cap-and-trade system. (Health & Safety Code Section 38562(b)(1) [ARB can “design the regulations, including distribution of emissions allowances where appropriate”].)3
2 The Administrative Record is divided into parts A through I. Citations to the record are in the format, “lparbl:[Bates number].” Citations to the Addendum to the record are indicated by the prefix “Add. A” or “Add. B” in place of the part. 3 Burtraw et al., Allocation of CO2 Emission Allowances in the Regional Greenhouse Gas Cap-and-Trade Program (June 2005) RFF Discussion Paper (uses the word “distribute” as a term covering various allocation mechanisms.)
4 Economists understand auctions are an integral component of allowance distribution and advocate it as preferable to free distribution.4 “Perhaps no aspect of allowance allocation is of more interest to economists – and more advocated by them – than auctioning.”5 Well before the enactment of AB 32, the idea of auctions as a potentially advantageous means of distributing allowances in cap-and-trade programs was widely discussed in the academic literature and in applied policy design discussions.6 At the time when AB 32 was being considered and debated, numerous published papers advocated the use of auctions for “distributing” or “allocating” emission allowances.7 There are many instances of an auction of tradable permits being used for major pollution mitigation initiatives before the 2006 passage of AB 32. Examples
4 See Cramton and Kerr, Tradeable Carbon Permit Auctions: How and Why to Auction Not Grandfather (2002) 30 Energy Policy 333; Goeree et al., An Experimental Study of Auction Versus Grandfathering to Assign Pollution Permits (2009) 8 J. of the European Economic Assn. 514; Hepburn et al., Auctioning of EU ETS phase II allowances: how and why? (2006) 6 Climate Policy 137–160; Holt et al., Teaching Opportunity Cost in an Emissions Permit Experiment (2010) 9 Internat. Review of Economics Education 34. 5 Ellerman and Buchner, The European Union Emissions Trading Scheme: Origins, Allocation, and Early Results (2007) 1 Rev. Environmental Economics Policy 66, 73. 6 Cramton and Kerr. Tradeable Carbon Permit Auctions: How and Why to Auction Not Grandfather (2002) 30 Energy Policy 333; Parry et al., When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets (1999) 37 J. of Environmental Economics and Management 52; Parry et al., Fiscal Interactions and the Costs of Pollution Control from Electricity (2005) 36 RAND J. of Economics 849. 7 Cramton and Kerr. Tradeable Carbon Permit Auctions: How and Why to Auction Not Grandfather (2002) 30 Energy Policy 333; Parry et al., Fiscal Interactions and the Costs of Pollution Control from Electricity (2005) 36 RAND J. of Economics 849; Jensen and Rasmussen, Allocation of CO2 Emissions Permits: A General Equilibrium Analysis of Policy Instruments (2000) 40 J. of Environmental Economics & Management 111.
5 in the United States prior to the passage of AB 32 include sulfur dioxide (SO2) emissions trading under the 1990 amendments to the federal Clean Air Act and a state nitrogen oxide (NOx) program.
The 1990 amendments to the federal Clean Air Act established a SO2 cap-and- trade allowance program to cut SO2 emissions. Widely considered to be an extremely effective cap-and-trade pollution mitigation scheme, the SO2 allowance program included an auction component in addition to the private market for 8 tradable SO2 permits.
In 2004, Virginia implemented a cap-and-trade program to regulate NOx emissions and used an auction to allocate approximately eight percent of the NOx 9 permits to new sources of NOx emissions. Virginia’s decision to auction a portion of its NOx allowances was noted in the policy literature at least as early as 2005 and presentations on the auction were made at industry and academic conferences on emission trading starting in 2004.10 While California legislators were debating AB 32, policymakers were discussing the inclusion of auctions in the Regional Greenhouse Gas Initiative (RGGI) among the northeastern states of the United States and in the European Union Emission Trading System (EU ETS).11 In both cases, auctions were ultimately chosen as the primary distribution mechanism. RGGI was the first cap-and-trade program in the United States established to reduce greenhouse gas emissions. Although it was formally implemented after the
8 Stavins, What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading (1998) 12 The J. of Economic Perspectives 69. 9 Porter et al., The design, testing and implementation of Virginia’s NOx allowance auction (2009) 69 J. of Economic Behavior & Organization 190. 10 Burtraw et al., Allocation of CO2 Emission Allowances in the Regional Greenhouse Gas Cap-and-Trade Program (June 2005) RFF Discussion Paper. 11 Ibid.; Böhringer et al., Alternative CO2 abatement strategies for the European Union, in Climate Change, Transport and Environmental Policy (Braden & Proost edits., 1998) pp. 16–47.
6 2006 passage of AB 32, policy discussions as early as 2005 included auctions as a key component of RGGI market design. The first auction in the initiative took place in 2008 and now RGGI’s member states allocate nearly all of the available 12 carbon dioxide (CO2) allowances through an auction system. The United Kingdom Emissions Trading Scheme, the voluntary precursor to the European Union Emission Trading Scheme, was established in 2002 and used auctions to set the initial emission reduction targets for firms.13 The first phase of the current European Union Emission Trading Scheme was started in 2005 and included an auction component with the stipulation that member states could auction 5% of permits in the first phase and up to 10% of permits in the second phase, which started in 2008.14 In addition to the prevalence of auctions in the air pollutant context, they are also the default mechanism for distributing public resources in areas as diverse as the distribution of portions of the broadcast spectrum and assorted natural resources on public lands.15
12 Holt et al., Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative (2007); CO2 Auctions, Regional Greenhouse Gas Initiative
7 In the United States, the Federal Communications Commission provides a direct precedent for the shift from free distribution of resources by regulators to an auction. Prior to the 1990s, the use of electromagnetic spectrum in the U.S. was allocated by regulation.16 Since that time, auctions have become the primary mechanism for allocating the spectrum.17 This shift from regulatory distribution to a distribution using an auction for the electromagnetic spectrum occurred well before AB 32 was drafted. Other countries also use an auction to allocate telecom permits that were previously distributed by regulation. For example, Britain uses an auction to allocate telecom permits to the entities that can use them most valuably.18 In contrast to these widespread examples of auctions being used to distribute public resources, plaintiffs argue that the auction forces private entities to pay for a carbon emission permit to pollute. Plaintiffs claim that firms are already authorized to pollute for free. (See Appellant’s’ Opening Brief (Morning Star) at 19.) This belief is mistaken. In all of the jurisdictions of which we are aware, emitters do not have a right to use the atmosphere as a repository of industrial emissions. Emitters that have used the atmosphere for waste disposal have had limited permission to use the publicly owned resource, but have never had “ownership” of the atmosphere like that of a protected property interest. (See Communities for a Better Environment v. South Coast Air Quality Management Dist. (2010) 48 Cal.4th 310, 324 [there is “no vested right to pollute the air at any
2015); Haile and Tamer, Inference with an Incomplete Model of English Auctions (2000)
8 particular level” (emphasis in original)]; see also Respondent’s Response Brief (Environmental Defense Fund) at 24). The plaintiff’s argument for the free distribution of emissions allowances to firms depends on an implicit premise that the emitting firms, rather than the public, own the atmospheric resource.19 Like any other property that the public owns, the state may decide whether selling or granting the asset to users will maximize its net value to the public. The same argument applies to allowances or to an acre of publicly owned real estate. Ultimately, the distribution of the value of the atmosphere as a publicly owned asset into the economy is a policy decision because the resource is held in common.20 As we discuss below, decisions of how this value is distributed can affect the efficacy and fairness of the policy.
II. Auction Systems of Allowance Distribution Promote Equity, Economic Efficiency, and Environmental Goals.
All cap-and-trade programs, including the one created by AB 32, create an allowance system to reduce regulatory costs by establishing and distributing emission allowances. In doing so, cap-and-trade programs create new assets with substantial economic value. Any governing body designing such a system must consider how to properly and efficiently distribute these new assets in the economy. Auctions are the distribution mechanism recommended by many leading
19 Burtraw and Sekar, Two World Views on Carbon Revenues (2014) 4 J. of Environmental Studies and Sciences 110. 20 Plaintiffs argue that ARB should have returned the proceeds of the auction to the plaintiffs (the so-called “revenue-neutral auction”; see National Association of Manufacturers Reply Br. at 7-8, 15 n.5, 31). At the heart of this argument is the claim that any fees plaintiffs pay for the right to emit pollution into the atmosphere should be returned to them. Plaintiffs’ argument assumes that the plaintiffs have the right to emit pollution into the atmosphere: Since they have the right to pollute, any fees they pay for that right should be returned to them. But industries do not have the right to harvest timber or extract oil and gas from public lands, or to use the broadcast spectrum. Accordingly, we do not refund the proceeds from those auctions to industry either. The same principle applies in this case.
9 economists for three main reasons: (1) auction systems are more equitable, (2) auction systems are more economically efficient and (3) auction systems augment the environmental benefits that cap-and-trade programs seek to achieve.
1. Auction Distribution Systems Promote Equity for Both the Public and Regulated Firms
Auction distribution systems promote equity for the public by preventing windfall profits for emitting firms and promote fairness among emitting firms by creating a more equitable mechanism for firms to amass permits. Auctions also enable the cap-and-trade program to address distributional impacts across the population as directed by the statutory language of AB 32 and subsequent legislation. Firms receive windfall profits from a regulatory program when the increase in revenue for regulated firms is greater than the actual costs that are associated with the regulatory program.21 In the context of a cap-and-trade system, this would mean that the increase in revenue to emitting firms is greater than the cost they incur to obtain allowances. Even if a firm receives permits for free, a firm has a choice between using the permit to cover its own emissions, or selling the permit to another firm to cover that firm’s emissions. If the firm uses the permit instead of selling it, the firm incurs an opportunity cost equal to the price that an allowance would have sold for on the market. Since the firm’s prices are based partly on the opportunity cost of using emission allowances (as opposed to the actual cost the firm incurred to obtain the allowance),22 a system that freely allocates allowances with a high
21 Cramton and Kerr. Tradeable Carbon Permit Auctions: How and Why to Auction Not Grandfather (2002) 30 Energy Policy 333; Binmore and Klemperer, The Biggest Auction Ever: The Sale of the British 3G Telecom Licenses (2002) 112 Economic J. 74, 78. 22 Goeree et al., An Experimental Study of Auction Versus Grandfathering to Assign Pollution Permits (2009) 8 J. of the European Economic Assn. 514; Wrake
10 market value will increase the prices charged by the firm, and therefore the firm’s revenue, even though the firm did not pay to obtain the allowance. 23 Another way of understanding this point is that environmental allowances have an economic value. Once an environmental allowance is created, allowance ownership will represent a substantial asset on the books of the owner. Allowance owners may choose to either use them or sell them at the going market price. Hence, a firm’s value will directly increase by the value of any allowances that it obtains for free.24 Advocates of free distribution argue that free distribution is necessary to compensate regulated firms for the increased costs of regulatory compliance. However, analysis of power markets operating in other cap-and-trade systems shows that a significant part of those costs is passed through to power prices.25 More generally freely allocating all of the permits would almost certainly overcompensate nearly all regulated firms while failing to compensate those firm’s customers who actually bear most of the cost burden of the regulatory system.26
et al., Opportunity Costs for Free Allocations of Emissions Permits: An Experimental Analysis (2010) 46 Environmental & Resource Economics 331. 23 Prevention of windfall profits cannot be achieved through an auction in which all auction proceeds are returned to auction participants. Such a system would leave the regulated firms in the same financial position as they would have had under free distribution. 24 Veith et al., Capital market response to emission rights returns: Evidence from the European Power Sector (2009) 31 Energy Economics 605 (showing that firm value is increased with free distribution allowing for windfall profits by overcompensating for costs). 25 Lise et al., The Impact of the EU ETS on Prices, Profits and Emissions in the Power Sector: Simulation Results with the COMPETES EU20 Model (2010) 47 Environmental & Resource Economics 23, 42; Fell, EU-ETS and Nordic Electricity: A CVAR Analysis (2010) 31 Energy J. 1, 2. 26 See Burtraw and Palmer, Compensation Rules for Climate Policy in the Electricity Sector (2008) 27 J. of Policy Analysis and Management 819; Goulder et al., Impacts of Alternative Emissions Allowance Allocation Methods Under a
11 Experimental studies have provided further evidence of consumers paying for the opportunity costs of permits under free distribution systems (AR:B37_EACC_Allocating Emissions_2010 at 12).27 These costs are levied upon customers through the implementation of higher prices; in fact free distribution may even lead to higher permit prices than an auction (AR:B37_EACC_AllocatingEmissions_2010 at 12).28 The result from free distribution in these experiments was a large increase in the profit of the emitting firms, who are able to charge customers for allowances they received for free. Early experience in the EU ETS provides a textbook example of windfall profits occurring in the real-world practice of emissions trading.29 Government reports and academic studies examining phase 1 and phase 2 of the EU ETS found that firms in Germany, The Netherlands, and Belgium amassed billions of Euros in windfall profits under the free distribution system.30 The clear evidence of these
Federal Cap-and-Trade Program (2010) 60 J. of Environmental Economics and Management 161. 27 Goeree et al., An Experimental Study of Auction Versus Grandfathering to Assign Pollution Permits (2009) 8 J. of the European Economic Assn. 514; Holt et al., Teaching Opportunity Cost in an Emissions Permit Experiment (2010) 9 Internat. Rev. of Economics Education 34; Wrake et al., Opportunity Costs for Free Allocations of Emissions Permits: An Experimental Analysis (2010) 46 Environmental & Resource Economics 331. 28 Goeree et al., An Experimental Study of Auction Versus Grandfathering to Assign Pollution Permits (2009) 8 J. of the European Economic Assn. 514. 29 Windfall profits had emerged as a central concern in the EU ETS in the first year of the program in 2005, well before California’s adoption of AB32. See for example: Member States look to deal with windfall profits, Carbon Market Europe, Point Carbon (October 14, 2005) p. 6. 30 Sijm et al., CO2 cost pass-through and windfall profits in the power sector (2006) 6 Climate Policy 49, 67 (explaining that for wholesale power markets in Germany and The Netherlands, utility customers actually pay between 60-100% of the opportunity cost of freely allocated permits); Wrake et al., Opportunity Costs for Free Allocations of Emissions Permits: An Experimental Analysis (2010) 46 Environmental & Resource Economics 332, 332 (estimating that Belgian firms
12 windfall profits due to free distribution of emissions allowances (estimated between 5.3-7.7 Billion Euros31) led the EU to move electricity producers to begin a transition to a 100 percent auction-based distribution for the third phase of the emissions trading program.32 From the standpoint of regulated firms, auctions are desirable because auction systems create equity of opportunity for all firms, regardless of size or influence, to obtain emission allowances. (See AR:B37_EACC_AllocatingEmissions_2010 at 15.) Under free distribution systems firms receive permits only to the extent to which they meet eligibility criteria set by the regulatory agency. Without an auction, firms that could not meet these criteria would have to rely on the open market to purchase allowances, introducing a barrier to entry that may be compounded if the market for allowances is not competitive or liquid.33 Auctions allow these firms to efficiently acquire allowances by bidding on them from the source, the regulatory agency.34 Compared to free distribution systems that distribute permits only to firms that
received 1.2 billion Euros in profits between 2005 and 2007 generated by charging consumers for emissions permits that had been allocated for free). 31 Sijm et al., CO2 cost pass-through and windfall profits in the power sector (2006) 6 Climate Policy 49, 63. See Martin et al., Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme (2014) 104 American Economic Rev. 2482. 32 Goeree et al., An Experimental Study of Auction Versus Grandfathering to Assign Pollution Permits (2009) 8 J. of the European Economic Assn. 514. Eastern Europe still has the option of free distribution, but there is a schedule for the transition of the industry to an auction. 33 A market is liquid if it is easy to buy a good in the market without major changes in the price of the good. Illiquid markets make it difficult for sellers to sell goods and buyers to buy goods. 34 Hausker, The Politics and Economics of Auction Design in the Market for Sulfur Dioxide Pollution (1992) 11 J. of Policy Analysis and Management 553, 559.
13 have historically emitted pollution, auctions have the added benefit of treating new and existing firms the same.35 Auctions also enable the regulatory program to address broader concerns about distributional outcomes, concerns expressed in the statutory language of AB 32 and subsequent legislation enacted in 2012. AB 32 requires that any implementing regulatory program be equitable and minimize impacts on low- income communities (Health & Safety Code Section 38562(b)(1) & (2)). Auctions enable the distribution of value created by the introduction of the trading program to be allocated to advance equity, as reflected in SB 535 which mandates that 25% of the money collected from the auction or sale of allowances be directed to projects that both reduce greenhouse gas emissions and provide benefits to disadvantaged communities. AB 1532 allows for the use of auction proceeds to invest in energy efficiency improvements. These goals can only be accomplished with an auction; they are incompatible with the idea of free distribution of allowances to regulated parties. They are also incompatible with an auction in which all auction proceeds are returned to regulated parties.
2. Auction Distribution Systems Ensure Economic Efficiency
If markets functioned perfectly and covered all emitters in all economies, the method of distribution of allowances to firms should not matter.36 Regulators could distribute the allowances in an arbitrary way, and the owners could buy and sell them until those who value them the most would have them (thus achieving economic efficiency, meaning generally that resources are allocated to their highest valued use). If markets do not function well, then the initial distribution
35 Ellerman et al., Markets for Clean Air: The U.S. Acid Rain Program (2000) pp. 8-9 (explaining that a motivation for the auction of Title IV allowances was to ensure access to allowances for new investors). 36 Specifically, a perfectly functioning market in this context would mean that the market is perfectly competitive, and there were low costs for transactions between participants in the market.
14 may matter, and a regulatory body would expect to get more efficient outcomes from an auction-based distribution relative to free distribution. This result is supported by both theoretical and experimental studies of emission markets.37 In the case of the California cap and trade program, where there are a few very large incumbent firms, there may be considerable efficiency gains from auctioning allowances relative to distributing them all for free.38 Auctions further contribute to an efficient market by accelerating the discovery of a market-clearing price,39 which is valuable at the start of the market or if there is any change in market fundamentals such as fuel prices. This contribution was evident at the outset of the SO2 cap-and-trade program where the auction prices played an important role in launching the permit trading market by helping regulated parties determine what the market prices were for permits.40
3. Auction Distribution Systems Augment Environmental Goals
Auctions play an important role in augmenting the environmental goals of a cap and trade system. By setting a price for emissions, the auctioning of allowances encourages larger firms to invest in innovation of pollution abatement
37 Hahn, Market Power and Transferable Property Rights (1984) 99 The Q. J. of Economics 753, 753-54; Goeree et al., An Experimental Study of Auction Versus Grandfathering to Assign Pollution Permits (2009) 8 J. of the European Economic Assn. 514. 38 Goeree et al., An Experimental Study of Auction Versus Grandfathering to Assign Pollution Permits (2009) 8 J. of the European Economic Assn. 514. 39 The market-clearing price is the price for which all sellers are willing and able to pay to receive goods in a market, and all buyers are willing and able to sell their goods. In other words, it is the point at which the willingness to pay of the buyer is equal to the willingness to accept of the seller. 40 Ellerman et al., Markets for Clean Air: The U.S. Acid Rain Program (2000) pp. 8-9; Burtraw et al. Price Discovery in Emissions Permit Auctions in Experiments on Energy, the Environment, and Sustainability, (Isaac & Norton edits., 2011), in Series: Research in Experimental Economics, 14: pp.11-36.
15 technology; free distribution does not provide the same kind of incentive to innovate.41
III. The Use of a Reserve Price in Allowance Distribution Improves Auction Outcomes and Promotes Innovation in Reducing Emissions
ARB’s decision to provide for a reserve price is also in accord with the widely accepted thinking of economists. (A reserve price is an auction price below which the seller chooses to retain ownership of an item rather than sell it.) When designing CO2 allowance markets, economists understand that a reserve price - a common feature of many auction designs- protects against auction price volatility and preserves incentives to innovate. Price volatility is an important concern in allowance markets. Because there is a fixed supply of emissions allowances, the price of allowances will be more volatile than traditional goods where supply can respond to price.42 Historically, prices in environmental allowance regimes have been surprisingly volatile.43 Price volatility can reduce the incentives for firms to invest in research in or adoption of carbon abatement or non-carbon technology because additional price risk provides an incentive to delay irreversible investments.44 For example, steep price falls occurred in the EU ETS Phase 1 allowance program and the United States SO2
41 Fischer et al., Instrument Choice for Environmental Protection When Technological Innovation is Endogenous (2003) 45 J. of Environmental Economics and Management 523, 532; see Cramton and Kerr, Tradeable Carbon Permit Auctions: How and Why to Auction Not Grandfather (2002) 30 Energy Policy 333. 42 Holt et al., Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative (2007) p. 54. 43 Burtraw et al., A Symmetric Safety Valve (2010) 38 Energy Policy 4921, 4925. 44 Holt et al., Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative (2007) p. 54; Burtraw et al., A Symmetric Safety Valve (2010) 38 Energy Policy 4921, 4931; Dixit and Pindyck, Investment Under Uncertainty (1994).
16 allowance program, thereby reducing incentives for emission reduction.45 Accordingly, most economists would agree that reducing investment risk by reducing excess allowance price volatility is beneficial for both the carbon market and the electricity market, and that a credible reserve price is one of the most important aspects of auction design because it reduces excess price volatility.46 Establishing a reserve price for auctions is also important in the event that an auction has too few bidders. Limited potential buyers can result in artificially low prices for allowances and inaccurate signals about the true market price for allowances. Reserve prices are a common feature of auctions. The FCC has utilized reserve prices for its 700MHz spectrum auction.47 Reserve prices are also commonly used in standard auctions for art, wine, and other valuable commodities.48 They are an element of all three North American carbon trading programs (California, Quebec and RGGI).
CONCLUSION
AB 32 gave CARB the authority to create a cap and trade system to reduce greenhouse gas emissions. A necessary component of that authority was CARB’s decision as to how to distribute carbon emission permits. There are two widely accepted mechanisms of distribution: (1) to distribute the allowances to firms for free and (2) to sell the permits to firms through an auction. As explained above,
45 Burtraw et al., A Symmetric Safety Valve (2010) 38 Energy Policy 4921, 4922- 25; Binmore and Klemperer, The Biggest Auction Ever: The Sale of the British 3G Telecom Licenses (2002) 112 Economic J. 74. 46 Burtraw et al., A Symmetric Safety Valve (2010) 38 Energy Policy 4921, 4931; Holt et al., Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative (2007) pp. 54-57. 47 Holt et al., Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative (2007) p. 56. 48 Ibid.
17 auctions have been widely recommended by economists, and have been used in numerous allowance distribution schemes and in the sale of many other publicly owned assets. Economists advocate for auctions because auctions ensure equity for the public and for regulated firms, promote economically efficient allocation, and augment goals of environmental innovation. Economists also recommend the use of a reserve price component in auction design to prevent excess price volatility that could prevent the allowance market from achieving goals clearly stated in the statutory language. These principles were well understood before California enacted AB 32.
18 APPENDIX
Severin Borenstein E.T. Grether Professor of Business Administration and Public Policy at the Haas School of Business. He teaches courses in Energy & Environmental Markets, and is a Research Associate of the Energy Institute at Haas. He is also Director emeritus of the University of California Energy Institute and the Energy Institute at Haas. He received his A.B. from U.C. Berkeley and Ph.D. in Economics from M.I.T. His research focuses on business competition, strategy, and regulation. He has published extensively on the airline industry, the oil and gasoline industries, and electricity markets. Borenstein is also a research associate of the National Bureau of Economic Research in Cambridge, MA. He served on the Board of Governors of the California Power Exchange from 1997 to 2003. During 1999-2000, he was a member of the California Attorney General's Gasoline Price Task Force. In 2012-13, he served on the Emissions Market Assessment Committee, which advised the California Air Resources Board on the operation of California’s Cap and Trade market for greenhouse gases. Since 2014, he has been a member of the California Energy Commission’s Petroleum Market Advisory Committee. A list of his publications can be accessed at: http://faculty.haas.berkeley.edu/borenste/CV.pdf.
Dallas Burtraw, PhD., Senior Fellow, Resources for the Future. Dr. Burtraw holds a Ph.D. in economics and a master’s degree in public policy from the University of Michigan. Burtraw has written on electricity restructuring and competition, including economic deregulation and environmental regulations. His work focuses on incentive-based approaches for environmental regulation, especially tradable permit systems. He provided technical guidance in the design of the northeast Regional Greenhouse Gas Initiative and California’s cap and trade programs. He also has examined the cost-effectiveness of trading programs for
CO2 emissions trading in the EU. A list of his publications can be accessed at: http://www.rff.org/burtraw.
19
Peter Cramton, Professor of Economics at the University of Maryland. Since 1983, Dr. Cramton has conducted widely cited research on auction theory and practice. The main focus is the design of auctions for many related items. Applications include auctions for radio spectrum, electricity, financial securities, rough diamonds, pollution emissions, and timber. He has introduced innovative market designs in many industries. He has advised numerous governments on market design and has advised dozens of bidders in major auction markets. He received his B.S. in Engineering from Cornell University and his Ph.D. in Business from Stanford University. A list of his publications can be accessed at: http://www.cramton.umd.edu/cramton-list-of-publications.pdf
Carolyn Fischer, senior fellow at Resources for the Future and Marie Skłodowska–Curie Fellow of the European Commission, visiting at the Fondazione Eni Enrico Mattei (FEEM) in Venice, Italy. Her research focuses on policy mechanisms and modeling tools that cut across a variety of environmental and resource management issues. In the areas of climate change and energy policy, she has published articles on designing cap-and-trade programs, fuel economy standards, renewable portfolio standards, energy efficiency programs, technology policies, the Clean Development Mechanism, and the evaluation of international climate policy commitments. A recent focus of her research is the interplay between international trade and climate policy, options for avoiding carbon leakage, and the implications for energy-intensive, trade-exposed sectors. In areas of natural resources management, she has addressed issues of eco- certification, wildlife conservation, invasive species, and biotechnology, with particular emphasis on the opportunities and challenges posed by international trade. She received her PhD in economics from the University of Michigan. A list of her publications can be accessed at: http://www.rff.org/Documents/CV/RFF_CV_Fischer.pdf.
20
Meredith Fowlie, Associate Professor of Agriculture and Resource Economics at the University of California, Berkeley. Prior to joining UC Berkeley, she was an Assistant Professor of Economics and Public Policy at the University of Michigan. She received an MSc in Environmental Economics from Cornell University in 2000 and PhD in Environmental and Resource Economics from UC Berkeley in 2006. Her interests lie at the intersection of empirical industrial organization, environmental economics, and public policy. Much of her work involves positive, and some normative, analysis of policy interventions designed to reduce the environmental impacts of energy production and consumption. Her work on the electricity sector has emphasized interactions between electricity markets and emissions permit markets. She is a Faculty Research Fellow at the National Bureau of Economic Research in the Environmental and Energy Economics A list of her publications can be accessed at: A list of her publications can be accessed at: http://nature.berkeley.edu/~fowlie/CV.pdf.
Don Fullerton, Edward William and Jane Marr Gutgsell Endowed Professor in the Finance Department at the University of Illinois at Urbana- Champaign. He is Associate Director of the Institute of Government and Public Affairs, and he is Director of the National Bureau of Economic Research (NBER) research program on Environmental and Energy Economics. He teaches graduate courses in business and public policy, and his research includes distributional and efficiency effects of carbon pricing through taxation or cap-and-trade systems. He has a BA in Economics from Cornell University and a PhD in Economics from the University of California at Berkeley. From 1985 to 1987, he served in the U.S. Treasury Department as Deputy Assistant Secretary for Tax Analysis. A list of his publications can be accessed at: http://works.bepress.com/don_fullerton/
21 Lawrence H. Goulder, Shuzo Nishihara Professor in Environmental and Resource Economics at Stanford and Director of the Stanford Environmental and Energy Policy Analysis Center. Goulder's research examines the environmental and economic impacts of U.S. and international environmental policies, including policies to deal with climate change and pollution from power plants and automobiles. At Stanford he teaches undergraduate and graduate courses in environmental economics and policy, and co-organizes a weekly seminar in public and environmental economics. He graduated from Harvard College with an A.B. in philosophy and received his Ph.D. in Economics from Stanford. A list of his publications can be accessed at: http://web.stanford.edu/~goulder/
Cameron Hepburn, Professor of Environmental Economics at the University of Oxford. He is based at the Smith School and the Institute for New Economic Thinking at the Oxford Martin School, and is Professorial Research Fellow at the Grantham Research Institute at the London School of Economics. He has degrees in law and engineering from Melbourne and a PhD (DPhil) in economics from Oxford. He has published in the economics and philosophy peer-reviewed journals on the design of emissions markets, including on the allocation of tradable permits. His work has been referred to in publications such as the Economist and the Financial Times, and he has been interviewed on television and radio in various countries. He has provided advice on energy and environmental markets and policy to governments (e.g. UK, EU, China, Australia) and various international institutions around the world. A list of his publications can be accessed at: http://www.cameronhepburn.com/research/bytopic/all/
22 Charles Holt is the A. Willis Robertson Professor of Political Economy at the University of Virginia, where he also teaches in the Batten School of Leadership and Public Policy. He is the currently the director of the Experimental Economics Laboratory at Virginia. His publications include over a hundred articles in academic journals, focused on game theory, auctions, experimental economics, and the teaching of economics. He has written and edited several books on topics in experimental economics, and was a founding co-editor of the journal, Experimental Economics. He has previously served as President of the Economic Science Association, the Southern Economic Association, and the Society of Economic Educators. Much of his research pertains to auction design, e.g. for greenhouse gas allowances, spectrum licenses, auto license plates, and toxic banking assets. Other work includes measures of risk aversion and subjective beliefs, and studies of strategic behavior in games and bargaining, using a mix of theory and experiment. A list of his publications can be accessed at: http://economics.virginia.edu/sites/economics.virginia.edu/files/holtvitasept2013.p df
Charles D. Kolstad, Ph.D., Senior Fellow, Stanford University. Prof. Kolstad’s research focuses on the economics of environmental regulation, with an emphasis on greenhouse gases and climate change. He is a former director of the University of California Center for Energy and Environmental Economics, a past president of the Association of Environmental Economists, and a Coordinating Lead Author for the Intergovernmental Panel on Climate Change (IPCC), focusing on the economics of climate change. He has served on many advisory boards, including the US EPA Science Advisory Board’s Environmental Economics Committee. Prof. Kolstad is the author of a leading undergraduate textbook in environmental economics and, at Stanford, teaches environmental and natural resource economics. A list of his publications can be accessed at: www/colstad.org.
23
Brian C. Murray, Director of Economic Analysis at Duke University’s Nicholas Institute for Environmental Policy Solutions, Research Professor of Environmental Economics at Duke’s Nicholas School of the Environment, and Fulbright Research Chair in Environment and Economy at University of Ottawa. Dr. Murray is widely recognized for his work on the economics of climate change policy. This includes the design of cap-and-trade policy elements to address cost containment and inclusion of offsets from traditionally uncapped sectors such as agriculture and forestry. Murray is among the original designers of the allowance price reserve approach for containing prices in carbon markets that was adopted by California and the Regional Greenhouse Gas Initiative (RGGI) cap-and-trade programs. He is providing counsel to the government of Ontario as it seeks to develop the cap and trade system it announced in 2015. Throughout his 25-year research career, he has produced many peer-reviewed publications on topics ranging from the design of market-based environmental policies and the effectiveness of renewable energy subsidies to the evaluation of programs to protect natural habitats such as forests, coastal and marine ecosystems. A list of his publications can be accessed at: http://nicholasinstitute.duke.edu/sites/default/files/cv/brian_murray_duke_cv_may _2015.pdf
Karen Palmer is a Senior Fellow and Research Director at Resources for the Future in Washington, DC. Dr. Palmer received her Ph.D. in economics from Boston College in 1990. Dr. Palmer specializes in the economics of environmental regulation and public utility regulation, particularly on issues at the intersection of air quality regulation and the electricity sector. Her work seeks to improve the design of incentive-based environmental and technology regulations that influence the electric utility sector. She has done research on the design of both the RGGI cap-and-trade program for CO2 emissions in the northeast and on
24 the design of the AB 32 cap-and-trade program in California. She is a co-author of the report, Auction Design for Selling CO2 Emissions Allowances under the Regional Greenhouse Gas Initiative. She has published two books on policy and market design in a restructured electricity sector. A list of her publications can be accessed at: http://www.rff.org/palmer.
John C.V. Pezzey, Ph.D., Senior Fellow, Fenner School of Environment and Society, Australian National University. Dr Pezzey holds a BA in mathematics from the University of Cambridge and a PhD in economics from the University of Bristol. Pezzey has written on the economics of sustainability, and on the efficiency and equity aspects of tradable pollution permits and pollution taxation. His work on the latter has focused on the parallels between free permits in carbon trading systems and thresholds in carbon taxation systems, and on the political economy of Australian carbon pricing policy. A list of his publications can be accessed at: https://researchers.anu.edu.au/researchers/pezzey-j-cv
William M. Shobe, J.D., Ph.D., Professor of Public Policy; University of Virginia. Dr. Shobe earned his law degree from Lewis & Clark Law School and his Ph.D. in economics from the University of Minnesota. He has taught undergraduate environmental economics, law and economics, property rights, and managerial economics as well as graduate level statistics, public policy, and environmental economics. He headed the Economic and Regulatory Analysis Division for the Commonwealth of Virginia where he evaluated state environmental regulatory policies, and in 2004 directed the design and implementation of the ground-breaking Virginia NOx Auction. He was part of the team of researchers who designed the allowance auctions for the Regional Greenhouse Gas Initiative, and he has undertaken experimental investigations of the California allowance market and the European Union Emission Trading
25 System. A list of his publications can be accessed at: http://people.virginia.edu/~wms5f/
Thomas Sterner, Professor of Environmental Economics, University of Gothenburg, Sweden. Prof. Sterner’s work is focused on the design of policy instruments to deal with resource and environmental problems. He established the Unit for Environmental Economics as a leading European centre for environmental economics that gives a unique PhD program in climate economics with students from developing countries. Sterner has published more than a dozen books and a hundred articles in refereed journals, mainly on environmental policy instruments with applications to energy, climate, industry, transport economics and resource management. Sterner is the recipient of the Myrdal Prize, past president for the European Association of Environmental and Resource Economists and Associate Editor of Environmental and Resource Economics. He is also a Fellow or researcher at Resources for the Future, The Beijer Institute, and Statistics Norway. With Gunnar Köhlin, he has founded the Environment for Development Initiative. During 2012 and 2013 he served as Visiting Chief Economist of the Environmental Defense Fund in New York. He has recently been elected as a guest professor at the Collège de France for 2015-16. He was also Coordinating Lead Author for the chapter on Policy Instruments in the 5th Assessment report of the IPCC. A list of his publications can be accessed at: http://economics.handels.gu.se/english/staff/professors/thomas_sterner
Peter J. Wilcoxen, Professor in the Department of Public Administration and International Affairs at Syracuse University's Maxwell School. Prof. Wilcoxen is a Nonresident Senior Fellow at the Brookings Institution, co-directs the Brookings Climate and Energy Economics Project, and is a member of the US Environmental Protection Agency’s Science Advisory Board. His research focuses on the design and analysis of environmental and energy policies,
26 especially those connected with national or international measures to address climate change. His work often involves the design, construction and use of large- scale intertemporal general equilibrium models such as IGEM, a model of the US economy that has been extensively used by the US EPA to analyze the impacts of the Clean Air Act and proposed climate legislation. He is the author or coauthor of more than 60 articles and three books including most recently Double Dividend: Environmental Taxes and Fiscal Reform in the United States, which examines the prospects for using carbon taxes to reduce climate change and improve efficiency of the tax system. He received his BA in physics from the University of Colorado and his AM and PhD in economics from Harvard University. He taught at the University of Texas at Austin prior to moving to Syracuse University. In addition, he has served as a Review Editor for the Intergovernmental Panel on Climate Change and has been a member of the US EPA's Environmental Economics Advisory Committee. Dr. Wilcoxen's research has been supported by the EPA, the National Science Foundation, the Department of Energy, and a range of foundations and private sector organizations. A list of his publications can be accessed at: http://wilcoxen.maxwell.insightworks.com/pages/795/wilcoxen.pdf.
Roberton C. Williams III, Ph.D., Professor of Agricultural and Resource Economics, University of Maryland, and Senior Fellow and Director of Academic Programs, Resources for the Future. Prof. Williams’s research focuses primarily on the effects of environmental regulation and how regulations can be designed to achieve particular goals. It covers broad theoretical questions such as how to measure the effects of environmental taxes and regulations on the economy as well as applied work on policy issues such as gasoline taxation and climate change policy. Before moving to Maryland, Williams was an Associate Professor of Economics at the University of Texas at Austin, and he has served as a Co-Editor of the Journal of Public Economics and the Journal of Environmental Economics and Management. He
27 holds a Ph.D. from Stanford University and an A.B. from Harvard College, both in economics. A list of his publications can be accessed at: http://www.arec.umd.edu/sites/default/files/_docs/cv/WilliamsCV_2015.pdf
Dated: May 15, 2015 Respectfully Submitted, Eric Biber
By: ______Eric Biber UC Berkeley School of Law Counsel for Amici Dallas Burtraw, et al.
28
CERTIFICATION OF WORD COUNT
I certify that the total word count of this brief, including footnotes, is 7,962 words, as determined by the word count of the Microsoft Word program on which this brief was prepared.
Dated: May 15, 2015 Respectfully Submitted, Eric Biber
By: ______Eric Biber UC Berkeley School of Law Counsel for Amici Dallas Burtraw, et al.
29 PROOF OF SERVICE
California Chamber of Commerce, et al. v. California Air Resources Board et al.
Morning Star Packing Company et al. v. California Air Resources Board et al.
Case Nos. C075930 & C075954
Court of Appeal, Third Appellate District
At the time of service, I was over 18 years of age and not a party to this action. I am employed in the City of Berkeley, County of Alameda, in the State of California, and I reside in the City and County of San Francisco, in the State of California. My business address is UC Berkeley School of Law, Berkeley, CA 94720.
On May 15, 2015, I served true copies of the following document(s) described as:
APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF IN SUPPORT OF RESPONDENTS; PROPOSED BRIEF OF AMICUS CURIAE Dallas Burtraw, et al. on the parties in this action as follows:
SEE ATTACHED SERVICE LIST
BY U.S. MAIL: I am readily familiar with the organization’s practice of collection and processing correspondence for U.S. Mail. It is deposited with the U.S. Mail on that same day in the ordinary course of business. I am aware that on motion of party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after deposit for mailing in affidavit.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Executed on May 15, 2015, at Berkeley, California.
Hailey Anderson
30
SERVICE LIST
California Chamber of Commerce, et al. v. California Air Resources Board et al. C075930 (Related Case C075954) Court of Appeal, Third Appellate District
Kamala D. Harris David A. Zonana Attorney General of California M. Elaine Meckenstock Gavin G. McCabe Bryant B. Cannon Supervising Deputy Attorney General Deputy Attorneys General Office of the Attorney General Office of the Attorney General 455 Golden Gate, Suite 11000 1515 Clay Street, 20th Floor San Francisco, CA 94102 P.O. Box 70550 Telephone: (415) 703-5500 Oakland, CA 94612 [email protected] Telephone: (510) 622-2145 Facsimile: (510) 622-2270 Attorneys for Defendants and [email protected] Respondents CALIFORNIA AIR RESOURCES Attorneys for Defendants and BOARD, et al. Respondents CALIFORNIA AIR RESOURCES BOARD, et al.
Robert E. Asperger James R. Parrinello Office of the State Attorney General Nielsen Merksamer Parrinello Gross & P.O. Box 944255 Leoni LLP 1300 I Street, Suite 125 2350 Kerner Blvd., Suite 250 Sacramento, CA 94244 San Rafael, CA 94901 Telephone: (916) 445-9555 Telephone: (415) 389-6800 [email protected] Facsimile: (415) 388-6874 [email protected] Attorneys for Defendants and Respondents Attorneys for Plaintiffs and Appellants CALIFORNIA AIR RESOURCES CALIFORNIA CHAMBER OF BOARD, et al COMMERCE, et al.
31 R.S. Radford Sean A. Commons Theodore Hadzi-Antich SIDLEY AUSTIN LLP Pacific Legal Foundation 555 West Fifth Street 930 G Street Los Angeles, CA 90013 Sacramento, CA 95814 Telephone: (213) 896-6010 Telephone: (916) 419-7111 Facsimile: (213) 896-6600 Facsimile: (916) 419-7747 [email protected] [email protected] [email protected] Attorneys for Inervenor and Appellant NATIONAL ASSOCIATION OF Attorneys for Plaintiffs and Appellants MANUFACTURERS MORNING STAR PACKING CO., ET AL.
Steven A. Merksamer Roger R. Martella, Jr. Richard D. Martland Paul J. Zidlicky Kurt R. Oneto Eric D. McArthur Nielsen Merksamer Parrinello Gross & Matthew D. Krueger Leoni LLP SIDLEY AUSTIN LLP 1415 L Street, Suite 250 1501 K Street NW Sacramento, CA 95814 Washington, D.C. 20005 Telephone: (916) 327-7852 Telephone: (202) 736-8000 Facsimile: (916) 327-2247 Facsimile: (202) 736-8711 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Attorneys for Plaintiffs and Appellants CALIFORNIA CHAMBER OF Attorneys for Intervenor and Appellant COMMERCE, et al. NATIONAL ASSOCIATION OF MANUFACTURERS
32 Erica Morehouse Martin Sean H. Donahue Timothy J. O’Connor Donahue & Goldberg, LLP ENVIRONMENTAL DEFENSE 2000 L St., NW Suite 808 FUND Washington, DC 20036 1107 9th St., Suite 1070 Telephone: (202) 277-7085 Sacramento, CA 95814 Email: [email protected] Telephone: (916) 492-4680 Facsimile: (916) 441-3142 Attorneys for Intervenor and Email: [email protected] Respondent Email: [email protected] ENVIRONMENTAL DEFENSE FUND Attorneys for Intervenor and Respondent ENVIRONMENTAL DEFENSE FUND
David Pettit Matthew D. Zinn Alexander J. Jackson Joseph D. Petta Natural Resources Defense Council Shute, Mihaly & Weinberger, LLP 1314 2nd Street 396 Hayes Street Santa Monica, CA 90401 San Francisco, CA 94102 Telephone: (310) 434-2300 Tel: (415) 552-7272 Facsimile: (310) 434-2399 [email protected] [email protected] [email protected] Attorneys for Interveners & Respondents Attorneys for Intervenor and ENVIRONMENTAL DEFENSE Respondent FUND NATURAL RESOURCES DEFENSE COUNCIL, INC.
CALIFORNIA SUPREME COURT SACRAMENTO COUNTY Clerk of the Court 350 McAllister SUPERIOR COURT Street Hon. Timothy M. Frawley San Francisco, CA 94102 720 Ninth Street Sacramento, CA 95815 Via E-Submission Via U.S. Mail only
33