Comment Log Display

April 21, 2009


Ms. Mary Nichols, Chairman
California Air Resources Board
1001 I Street
Sacramento, CA  95814

Dear Ms. Nichols,

I am writing to express my concerns regarding an upcoming agenda
item involving the adoption of a regulation to implement the Low
Carbon Fuel Standard (LCFS).

The goal of reducing Green House Gas emissions is admirable, but I
am concerned that the proposed regulatory action as drafted will
have a significant and adverse impact on California’s economic
health.

As drafted, the regulatory action will seek to reduce emissions by
reducing the carbon intensity by an average of 10% by 2020 by
forcing producers of transportation fuels to lower their carbon
intensity each year.  An initial concern I have is an
acknowledgement that downstream retailers responsible for
distribution of transportation fuel may be held responsible for
carbon intensity of fuels they dispense and thereby be subject to
fines and other enforcement mechanisms.  Additionally, I have
concerns that holding retailers (whom may be unable to afford the
purchase of credits) responsible for meeting the LCFS will force
many small businesses to close rather than be subject to ARB
fines.

With respect to the purchasing of credits to come into compliance
with the proposed regulation, I have very strong concerns.  If
credits are not available or cost prohibitive, what remedies exist
on the part of fuel providers to come into compliance with the
proposed regulation?  Simply asserting that credits will be
available does not mean they will be affordable.  Additionally, I
am concerned that credits may be hoarded by certain producers to
artificially drive up the cost to other producers of transportation
fuels.

While I have serious policy concerns about adopting the proposed
regulation, I recognize that the ARB is required to adopt measures
to comply with Assembly Bill 32.  However, I believe that
additional work should be done to accurately determine the effects
this regulation will have on the economy.  

Staff of the ARB anticipated an increase in the number of ethanol,
biodiesel and renewable hydrocarbon production facilities to comply
with the LCFS requirements.  My concern is that while that
anticipation may be admirable, the current process to site and
build these facilities does not assure their completion.  My
understanding is that the California Environmental Quality Act
(CEQA) requires substantial work prior to the construction of many
of these proposed facilities, and I have little confidence that the
necessary permits will be granted in a timely manner to ensure
compliance with the proposed regulation.

I would like to suggest that any adopted regulation contain a
provision that if adequate capacity is not available to meet the
new LCFS standards, the requirements to comply be waived until such
capacity is available.

An additional concern I have about the proposed regulation is an
assertion that there will be no significant impact on businesses
for complying with this proposed regulation.  This assertion is
made even though an acknowledgement was made that additional annual
costs for a typical business would be slightly less than $1
million.  This amount may not seem like a significant figure to
some, but I assure you that this is a significant substantial
impact to businesses who are already struggling to stay afloat in
the current economy.

As a final note of concern, I would like to suggest that the ARB
reject any attempt to impose a new fee to provide revenue to
enforce this proposed regulation.  Asking businesses to pay even
more to fund the enforcement of the LCFS standards only adds insult
to injury.  I would suggest that if the proposed regulation is
sufficient to be implemented, then the costs of enforcement should
be borne within the existing budget of the Air Resources Board.

I appreciate the work staff has performed to draft regulations to
comply with AB 32.  Thank you for your attention to this matter,
and I appreciate the opportunity to share some of my thoughts and
concerns.

Sincerely,

//s//

MIMI WALTERS
California State Senator, 33rd District

CC:	Air Resources Board
	Governor Arnold Schwarzenegger