Environmental Law Review Syndicate

ELRS Post: Week of December 21, 2020

This week’s post, Introducing a Voluntary Extended Producer Responsibility Scheme for the New Plastics Economy, was written by Hannah Yang, a third-year student at New York University School of Law and an Articles Editor of the New York University Environmental Law Journal. Read the post here.

A Blooming Problem: How Florida Could Address the Causes and Effects of Red Tide

By John Niedzwiecki, Senior Editor, Georgetown Environmental Law Review

This post is part of the Environmental Law Review Syndicate. Read the original here and leave a comment.

I. An algae bloom in the Gulf of Mexico is wreaking havoc on Florida’s economy and environment. An effective state and local response can help provide a solution.

Florida’s southwest coast, once a haven to wildlife and tourists alike, is experiencing one of the worst red tides in recent memory. Red tides, harmful algae blooms (“HABs”) which often have a red hue which affect both inland and coastal waterways, are common occurrences in Florida, but they have increased in both intensity and frequency in recent years. This blog post will discuss the problems that red tides pose to communities in Florida and the legal structures that could help provide a solution to this growing problem.

First, this blog post will discuss the background of red tides in Florida, including their historical occurrence, effect on local economies, and effect on wildlife and the environment. Second, the blog will review the natural and man-made factors that contribute to the development of red tides in Florida. Finally, I will discuss the potential legal responses to red tide. Although this blog post limits the discussion of red tides to Florida, it is important to note that red tides are not limited to Florida, and HABs occur around the world.

Red tides in Florida present a large-scale, fast-changing environmental problem. The red tide currently impacting the state is having a dramatic effect on both the state’s economy, plant life and wildlife. It is likely that, in the future, state and local governments across the country will have a larger role in finding solutions to environmental problems that are not contained to one community or state. By finding a solution to the problem of red tides in the legal system, it is possible that Floridians, and people watching in other states, can see how activism on the local level can bring about positive change that impacts individuals, businesses, and communities.

II. Red tides are a relatively common occurrence in Florida historically, and they have strong impacts on the state’s economy and environment.

Before discussing the presence of red tides in Florida, it is important to define what red tides are and how they affect the environments that they touch. “Red tide” is a term generally used “to describe many different kinds of harmful algal blooms” and can be a variety of colors, including “brown, blue, green, yellow, and more.”[1]Algal blooms are “higher-than-normal concentrations of algae [which include] toxic or nuisance algal species that may pose a serious and recurrent threat to human health, wildlife, marine ecosystems, fisheries, coastal aesthetics, and economy.”[2]

In Florida, red tides typically involve one of the most harmful species of HABs, the karenia brevis. Karenia brevis produces “neurotoxins that cause damage to nerve cells or tissues [and] kill large numbers of fish, birds, and other marine mammals.”[3] Shellfish that consume Karenia brevis become poisonous to human consumers, and people can inhale toxins released into the air by seaspray, which cause symptoms including “itchy and watery eyes, wheezing, shortness of breath, coughing, and chest tightness.”[4] Red tides are a frequent occurrence in Florida and “appear off the state’s coast almost every year.”[5] Red tides have been “documented…along Florida’s Gulf Coast since the 1840s.”[6] The ongoing red tide has been present for over 10 months, the longest duration of a red tide since 2006.[7]

Red tides in Florida have had strong social and cultural effects on local communities throughout the state. HABs, in general, can lead to “loss of recreational and commercial opportunities, disruption of…cultural practices, conflict among resource users, loss of community identity tied to using coastal resources, and social stress in affected families and communities.”[8] In Florida, red tides can mean additional stress for communities that depend on the coast both for leisure and work, and individuals have fewer opportunities to meet with other people that share their interests, which builds community bonds. For example, recreational fishers lose the chance to fish together when beaches are closed.

Red tides also have deep impacts on the economies of localities across Florida. The presence of red tides can disrupt the ability of individuals to go to work and causes an increase in the use of medical resources, because “respiratory and gastrointestinal illnesses increase during red tides” and can cause up to a 54% increase in hospital admissions for coastal residents.[9]Red tides have the unfortunate effect of depressing tourism, because beaches become “strewn…with the stinking carcasses of fish, eels, porpoises, turtles, manatees.”[10]Nationwide, HABs cost “at least $82 million per year including lost income for fisheries, lost recreational opportunities, decreased business in tourism industries, public health costs of illness, and expenses for monitoring and management.”[11]While it is difficult to estimate exactly how much of an impact red tides have on Florida’s economy every year, red tides have a significant impact on the livelihoods of individuals and communities across the state.

Finally, red tides can negatively impact the wildlife and environment across very large areas of the state. In the current red tide, “almost 300 sea turtles have been found dead since January [2018]” in just four Florida counties south of Tampa, and a biologist at the Florida Fish and Wildlife Conservation Commission noted that “he believed that a majority of the turtle deaths were attributable to the red tide.”[12]Additionally, the “number of manatee deaths…this year [as of August had] already exceeded the total for all of 2017” with 554 deaths in 2018 compared to 538 total in 2017.[13]The pattern of rising death rates has been observed for other threatened species across the state, and while it is difficult to attribute the new deaths entirely to the presence of red tide, the two correlate.

III. Scientific research is split on the causes of red tides, but both natural and man-made factors can contribute to the development of red tides.

There are several natural factors that contribute to the growth of red tides. The FloridaDepartment of Health reports that red tides develop “when biology (the organisms), chemistry (natural or man-made nutrients for growth), and physics (concentrating and transport mechanisms) interact to produce the algal bloom.”[14]Without all three factors present, a red tide will not develop. In addition, scientists have discovered that “oceanic and estuarine circulation and river flow greatly influence the…combined physical (e.g., currents, upwellings, etc.) – the chemical (e.g., salinity, nutrients, etc.) factors of the systems.”[15]If the factors that contribute to red tide have the ability to travel and interact with each other, the change of a red tide developing rise much higher.

The organisms chemistry, and physics that can cause red tides existed before humans developed Florida, but man-made factors can also contribute to the development and growth of red tides. Humans contribute to red tides by increasing the amount of nutrients in the ecosystem, development, increasing the surface temperature of the Gulf of Mexico, and rolling back environmental protections. The “dumping of fertilizer and human waste” into Florida’s waters contributes to red tides, because the “excess nutrients” give the organisms even more energy to grow than what is naturally present in the ecosystem.[16] Fertilizers, along with human and animal wastes, contain large amounts of nutrients that help the algae grow much faster than they otherwise would. As Florida continues to grow its population and its industrial base develops, the problem of excess man-made nutrients in the environment will likely only get worse. In the past few decades, Florida’s “landscape and the flow of water has been radically altered by agriculture, canals, ditches, dikes, levees, and the sprawling housing developments that have sprouted as the state’s population has boomed.”[17]This development has contributed to the rise of red tides, because the wetlands that previously flowered runoff into aquifers or estuaries now “rushes rapidly, unfiltered, into rivers and bays and into the gulf, typically loaded with agricultural nutrients.”[18]

While climate change’s effects on red tides and the rising of sea temperatures is still uncertain, it appears that “the incidences of red tides…have increased since the 1950s and1960s [and] climate change could be a factor [because] warmer waters…are congenial to growth.”[19]As the effects of climate change become more pronounced in the decades to come, researchers will have more data to see if there is a connection between ride tides and rising water temperatures.

Politically, it appears that governments, at all levels, have been unable to respond effectively to the problem. Some political groups in Florida blame GovernorRick Scott “for weakening the state’s water quality requirements and monitoring Scott blames Sen. Bill Nelson…for not doing something before now to stop” red tides.[20]At the very least, it looks like political actors in both parties have been unable or unwilling to cooperate across different levels of government or across the aisle to come up with a solution. The political gridlock does not appear to be coming to an end any time soon, but there are several potential solutions to the problem of red tide.

IV. There are several potential legal responses to red tide in Florida. State and local governments can and should take an active role in fighting the effects of red tide.

Lawmakers can take action to limit the growth of red tides by encouraging scientific breakthroughs, improving coordination among governments, researchers, and businesses, and tightening fertilizer ordinances. The responsibility for addressing the problems caused by red tides has fallen on the Florida’s state and local governments. The legal system could provide a solution to the red tide problem by supporting scientific solutions, encouraging coordination of mitigation activity across governments, and enacting stricter fertilizer ordinances. Finding scientific responses to red tides are complex because scientists are uncertain of “what effects [the methods] could have on the ecosystem,”[21]and because the geographic extent of the red tides covers “hundreds to thousands of square kilometers of shelf waters and extending down to 50.”[22] The state and local governments could support the effort that scientists are making by providing scientists researching the problem with additional funding, expertise, and data.

In general, coordination and information-sharing on red tides is improving among governments, private parties, and scientists, but there is still much work to be done. While “some of the [current] coordination is formal, most of it consists of informal regional partnerships with common interests.”[23]Florida should formalize the coordination system among localities across the state. If each locality was able to look at the data available from other areas in the state and responses were coordinated across large regions, there would likely be an overall more effective response. Localities and the state as a whole only stand to gain from deeper coordination, but only the state legislature and governor can create the legal structures that are necessary. It was possible for Florida to respond to the threat of hurricanes by developing state-wide emergency response plans, and it should be no different for red tides and other environmental problems.

Finally, the legal system in Florida can respond to the threat of red tides by developing stricter fertilizer ordinances that would deprive the ecosystem of the man-made nutrients that contribute to the growth of red tides. While simply depriving waterways of man-made nutrients will not be enough to stop all red tides, researchers argue that it could help slow down the growth of red tide.[24]However, current restrictions on fertilizers “differ as to type and extent” which limits their effectiveness and make it difficult for individuals and businesses to comply with the laws.[25]By creating a uniform standard that applied throughout the state, lawmakers could “lower the costs of compliance” while ensuring that firms in the fertilizer industry are not “geographically disadvantaged.”[26]While some argue that having a single, uniform standard would lead to an overall weaker set of ordinances, it is likely that having at least some standard statewide that all organizations comply with would have an impact on red tides.[27]

V. Conclusion: The legal system can rise to meet the red tide threat.

Red tides are a problem that threatens the cultural life, economy, and environment of Florida. While red tides have impacted Florida’s coastlines since at least the mid-1800s, recent red tides have grown in strength, duration, and frequency, and as the climate changes, it is likely that red tides will change as well. Researchers have found that while both natural or man-made factors can create red tides, the legal system can respond to this growing problem. If the legal system supports the work of scientists, improves coordination amongst stakeholders, and creates stricter fertilizer ordinances, it is possible that communities throughout the state can respond in an effective way to red tides. Scientists and lawmakers certainly do not have all the answers to the problem of red tides, but by taking firm action today, Florida can become a more environmentally resilient state that leads the way as other states face their own environmental problems.


[1] The Red Tide Control & Mitigation Program, Report to Stakeholders 4 (2010).

[2] Id. at 4.

[3] Id. at 5.

[4] Id.

[5] Tryggvi Adalbjornsson and Melissa Gomez, A Toxic Tide is Killing Florida Wildlife, N.Y. Times, July 30, 2018, https://www.nytimes.com/2018/07/30/climate/florida-red-tide-algae.html.

[6] Florida Dept. of Health, Frequently Asked Questions: Red Tide 1 (2014).

[7]Adalbjornsson, supra note 5.

[8] Lorraine Backer, Impacts of Florida red tides on coastal communities, 8 Harmful Algae 618, 620-21 (2009).

[9] Michael Nedelman, Florida’s Toxic Algae Problem: ‘Red tide’ and ‘green slime’, CNN (Aug. 18, 2018), https://www.cnn.com/2018/08/16/health/toxic-algae-bloom-health/index.html.

[10] Joel Achenbach, Kate Furby, and Alex Horton, Florida declares a state of emergency as red tide kills animals and disrupts tourism, The Wash. Post, Aug. 14, 2018, https://www.washingtonpost.com/news/speaking-of-science/wp/2018/08/14/red-tide-algaes-deadly-trail-of-marine-animals-has-triggered-a-state-of-emergency-in-florida/?noredirect=on.

[11] E.B. Jewett, et al., Interagency Working Group on Harmful Algal Blooms, Hypoxia, and Human Health of the Joint Subcommittee on Ocean Science and Technology, Harmful Algal Bloom Management and Response: Assessment and Plan 1 (2008).

[12] Adalbjornsson, supra note 5.

[13] Craig Pittman, More manatees have died in Florida so far this year than in all of 2017. Here’s why, Tampa Bay Times, Aug. 21, 2018, https://www.tampabay.com/news/environment/wildlife/Red-Tide-s-continuing-toll-The-554-dead-manatees-in-2018-already-surpasses-last-year-s-total-_171056483.

[14] Florida Dept. of Health, supra note 6, at 1.

[15] Kevin Sellner, et al., Harmful Algal Blooms: Causes, Impacts and Detection, 30 J. of Industrial Microbiology & Biotechnology 383, 386 (2003).

[16] Nedelman, supra note 9.

[17] Achenbach, supra note 10.

[18] Id.

[19] Id.

[20] Pittman, supra note 13.

[21] Achenbach, supra note 10.

[22] Karen Steidinger, Historical perspective on Karenia brevis red tide research in the Gulf of Mexico, 8 Harmful Algae 549, 556 (2009).

[23] Jewett, supra note 11, at 3.

[24] Barbara Kirkpatrick, et al., Human responses to Florida red tides: Policy awareness and adherence to local fertilizer ordinances, 493 Science of the Total Environment 898, 898-909.

[25] Kirkpatrick, supra note 24, at 903.

[26] Id.

[27] Id.

Conduit for Peace in the Middle East: An Analysis of the Red Sea – Dead Sea Water Conveyance Project

By Sarah L. Fine

Sarah Fine is a J.D. candidate at Lewis & Clark Law School and an Online Journal Editor of Environmental Law.

This post is part of the Environmental Law Review Syndicate.


As the old saying goes, whiskey is for drinking—water is for fighting over.

I. Introduction

The mythic Dead Sea—the highly salinated, low-altitude lake of international interest and importance—is drying up.[1] Although the Jordan Rift Valley, where the Dead Sea is located, is known for frequent droughts, the decline of the Dead Sea is primarily due to human intervention—namely, the diversion of the Jordan River, the main lake source which feeds the Dead Sea,[2] to provide potable water to increasing populations.[3] A water level drop of one meter per year has led the surface area to decrease from 960 km2 to 620 km2 in the last fifty years.[4] Today, the rate of decline is only increasing, giving rise to “extensive environmental degradation and damage to industry and infrastructure and . . . substantial intangible impacts and costs,” with an estimated direct cost to government and industry to be “some $2.9 billion over the next 60 years.”[5]

Despite the lack of stability between the Dead Sea’s three bordering entities—the State of Israel, the Hashemite Kingdom of Jordan, and the Palestinian Authority—a series of agreements between the groups have sought to address the problem of the disappearing Dead Sea alongside the problem of access to potable water.[6] Facilitated by the World Bank Group, the Red Sea­–Dead Sea Water Conveyance Study investigated the feasibility of reversing the environmental degradation of the Dead Sea by transferring seawater from the Red Sea. By introducing desalination into the transfer process, the hope of the three parties is that the Red Sea­–Dead Sea Water Conveyance will address the environmental degradation of the Dead Sea and the lack of affordable energy and drinking water in the Jordan Rift Valley, while increasing political goodwill and cooperation between the parties.[7]

II. Issues Sought to Be Addressed

The Dead Sea—neither dead, nor a sea—supports a wide variety of microfauna and macrofauna at the lowest point on the Earth’s surface.[8] As the lowest point on Earth, the Dead Sea acts as “the water seismograph of the region . . . express[ing] the nonsustainable use of fresh water.”[9] Since the 1960s, the surface area of the Dead Sea has declined by one-third,[10] resulting in increased incidence of dust storms, “losses of freshwater springs, river bed erosion, and occurrence of over one thousand sinkholes.”[11] The sinkholes occur because

[t]he retreat of the water (which is almost 10 times saltier than the ocean’s) has allowed fresh groundwater to well up and dissolve the layer of salt within the land’s subsurface. Underground cavities form and eventually trigger collapses. . . . The deepest pit could fit an eight-story building. . . . Today’s sinkholes, located almost exclusively on the sea’s Israeli side, first appeared in the early 1980s. . . . According to Eli Raz, a geology consultant who has tracked the problem almost since it began, more than 4,000 sinkholes now pockmark the land.[12]

The decline of the Dead Sea water level also disrupted the water tables; the low level of groundwater has “allow[ed] seawater intrusion,”[13] contaminating an aquifer in the Gaza Strip.[14]

There are multiple causes of the Dead Sea water level decline. The Jordan River’s flow into the Dead Sea has been most significantly impacted by diversion to satisfy increasing water consumption in Israel, Jordan, and Syria, driven by rapidly growing populations.[15] In addition, the large evaporation-based chemical industries in Israel and Jordan consume a significant amount of raw Dead Sea water, further contributing to the water level decline.[16] Further, as this is all occurring in desert nations, the problems of water scarcity will be only “exacerbated by the anticipated negative climate change scenarios” over time.[17]

A. Water Resources by Region

1. Hashemite Kingdom of Jordan

The Hashemite Kingdom of Jordan, once a relatively water-rich nation, is now “the third most water insecure country in the world.”[18] Jordan, which has rationed water since the 1980s, found itself in 2013 in a full-blown water crisis—having integrated into their population nearly 1.4 million people seeking refuge from the Syrian Civil War.[19]

In 2008, Jordan implemented a water strategy expected to protect its water needs until at least 2022.[20] This strategy centered on the building of the Disi aquifer, which opened in 2013 and pumps 100 million cubic meters of water per year.[21] However, this strategy also relied upon pre-Syrian crisis population assessments. In a 2014 study, Jordan determined that the new $1.1 billion aquifer could only support the population through 2016.[22] According to Jordan’s Ministry of Water and Irrigation, water needs will exceed resources by more than 26% by 2025.[23]

To address its water crisis, in 2014 Jordan enacted “Water Wise Women” with funding from Germany’s Agency for International Cooperation (GIZ), a program which trains women to be plumbers and community outreach representatives.

Each group of “Water Wise Women” goes through eight different levels of training run by a German expert from GIZ and supervised by program alumni. The levels include: eradicating water leakage, harnessing technology, reducing water usage in the household, and improving hygiene. Each trained woman is expected to disseminate the technology and information within their community, and to reach out to at least 20–25 other women. They are given funding for travel for this outreach, and at the end of the course, each participant receives a box of tools.[24]

The program has trained more than three hundred women plumbers in fifteen locations across the Kingdom.[25] In those areas, Jordan’s Ministry for Water and Irrigation found “there has been a 30–40% reduction in household water consumption.”[26]

In March of 2017, the Kingdom’s first desalination plant opened in Aqaba.[27] This plant doubled Jordan’s potable water supply, providing five million cubic meters of potable water per year. In spite of these efforts, in December of 2017, the Economist reported that Jordan could provide only 15% of the threshold the World Bank defined as “water scarcity.”[28]

In early 2018, the Jordanian government partnered with another community group to promote conservation: college students. In a partnership with students at Princess Sumaya University for Technology, Jordan’s Ministry of Water and Irrigation launched a game application in February of 2018 to raise water conservation awareness among the general public.[29] In the style of Chutes and Ladders, the game entertains players while educating them about water rationing and water waste.[30]

2. State of Israel

In 2008, after a decade-long drought, “its worst in at least 900 years,” Israel was running out of water.[31] But a few years of rain, combined with new, highly efficient preservation and desalination technology, put Israel in a vastly different position: by 2014, rather than experiencing water scarcity, it suddenly had a surplus.[32] Today, Israel leads the world in water reclamation: “87% of its wastewater is purified and reused for agriculture. For reference, Singapore, second on the list, reclaims some 35% of its sewage water, and most countries . . . reclaim less than 10% of their water.” [33] In support of this innovative water treatment system is a wholistic approach of water conservation, using “low-flow toilets and showerheads . . . installed nationwide” and an agricultural system powered by drip irrigation.[34]

The most significant change has been Israel’s newest source of freshwater: desalinated seawater.[35] Even as the world’s leader in water conservation, “Israel still needed about 1.9 billion cubic meters . . . of freshwater per year and was getting just 1.4 billion cubic meters . . . from natural sources.”[36] Desalination, or desal, was once considered a method of “last resort” due to its expense and inefficiency.[37] But a breakthrough innovation by Israel’s Zuckerburg Institute for Water Research changed that:

Desal works by pushing saltwater into membranes containing microscopic pores. The water gets through, while the larger salt molecules are left behind. Microorganisms in seawater quickly colonize the membranes and block the pores, and controlling them requires periodic costly and chemical-intensive cleaning. But [the Institute] developed a chemical-free system using porous lava stone to capture the microorganisms before they reach the membranes. . . . Israel now gets 55 percent of its domestic water from desalination.[38]

Israel’s Mediterranean coast is now home to five desalination plants, producing “roughly 550 million cubic meters per year” of potable water.[39] By 2025, “the Israel Water Authority plan[s] to establish another [plant] in Western Galilee and another four large facilities along the coast.”[40]

Today, as the nation faces its fifth consecutive drought year, Israel is no longer in a state of water surplus and has resumed water rationing.[41] This demonstrates the continued incentive Israel has for participating in the water conveyance project apart from concerns for the Dead Sea.

3. Palestinian Authority: West Bank & Gaza Strip

The 1995 Oslo II Accords, an interim resolution meant to be revised within five years, granted Palestinian Authority jurisdiction over 40% of the West Bank, with Israel retaining control over Area C.[42] To “deal with all water and sewage related issues in the West Bank,” Oslo II established a Joint Water Committee (JWC).[43]

Oslo II also established the amount of water Israel is required to “make available to the Palestinians during the interim period a total quantity of 28.6 mcm/year,” based on a joint estimate of the “future needs of the Palestinians in the West Bank [as] between 70–80 mcm/year.”[44] B’Tselem, the Israeli Information Center for Human Rights in the Occupied Territories, reported in 2016 that because the “Palestinian population of the West Bank has nearly doubled . . . the Palestinian Authority (PA) is forced to purchase from Mekorot [the Israeli state-owned water distribution company] an amount two and [a] half times greater than [those] set out in the accords.”[45]

The World Health Organization recommends a minimum water consumption of one hundred liters per capita per day.[46] In 2014, the Palestinian Water Authority reported an average Palestinian water consumption of seventy-nine liters per capita per day.[47] B’Tselem reported that while this figure is reflective of Palestinians who are hooked up to the water grid, the figure for Palestinians who are not is much lower, an estimated twenty to fifty liters per capita per day.[48]

A significant component to the Palestinian Authority’s water scarcity is the extensive damage to the Gaza Strip’s water and wastewater infrastructure during the Second Intifada from 2000–2005.[49] In order to restore access to water and wastewater services to the area, the World Bank engaged in the Gaza Emergency Water Project, which closed in January 2012.[50] This project completed:

Drilling of more than 50 water production wells with small pumping capacity (new wells or replacement of existing polluted wells); Supply of chemicals and dosing pumps and chlorination of 99.7 percent of water supply; Replacement of more than 30,000 meters of old service connections and old asbestos main pipes, and installation of 15,000 domestic meters and 20 public meters; Monitoring program established for wastewater plants; [and] Emergency response plan established following the rupture of the temporary effluent basin at Beit Lahia wastewater treatment plant.[51]

Historically, the water source for the Gaza Strip has been an underlying coastal aquifer.[52] Complicating matters further, in 2012, the United Nations Country Team reported that, due to declining groundwater levels and resultant seawater infiltrates, the aquifer could become unusable as early as 2016, with the damage irreversible by 2020.[53]

Due to the Gaza Strip’s location on the Mediterranean coast, combined with the newly reduced cost of desalination, other sources of water have become possible. In January 2017, with contributions by UNICEF and the European Union, Gaza opened a significant seawater desalination plant in Deir al Balah.[54] This plant initially produced 6,000 cubic meters of desalinated water per day (or 2.19 million cubic meters per year), and has a projected target of approximately 20,000 cubic meters per day by 2020 (or 7.3 million cubic meters per year).[55]

The 1995 water allocation agreement in Oslo II was updated in July 2017 in the bilateral water agreement between Israel and the Palestinian Authority.[56] This agreement increased the amount Israel agreed to allocate to the Palestinian Authority from 28.6 million cubic meters per year to 32 million cubic meters of water per year.[57]

B. Lateral Water Agreements

While the possibility of an inter-basin transfer from the Red Sea to the Dead Sea has been studied in many forms since the mid-1800s, the significant Dead Sea water level decline in the last fifty years and wide-spread potable water scarcity led to an agreement in the 1994 Jordan–Israel Peace Treaty (joined by the Palestinian Authority) to consider a water conveyance to “save” the Dead Sea.[58] This treaty built on the water-sharing agreements in the Oslo I Accord in 1993[59] and was reinforced by Oslo II Accord.[60] In the 1994 treaty, the water conveyance was described as “The Two Seas Canal or the Peace Conduit.” [61] From the beginning, it was not only meant to provide 850 million cubic meters of potable water to Jordan, Israel, and Palestine,[62] but was also intended to be “a symbol of peace and cooperation in the Middle East.”[63]

In 2005, the Palestinian Authority, Israel, and Jordan (“the Beneficiary Parties”) signed a joint letter requesting that the World Bank “coordinate donor financing and manage the implementation of the Study Program.”[64] From the beginning, there was a “general consensus on the need to restore the Dead Sea, but opinions on how to achieve this objective var[ied].”[65] The resultant “Red Sea–Dead Sea Water Conveyance Study Program” was therefore multi-faceted, consisting of five main studies: a Feasibility Study, an Environmental and Social Assessment, a Study of Alternatives “examin[ing] other options available to the Beneficiary Parties to address the degradation of the Dead Sea and the production of additional potable water by means other than the identified water conveyance option,” a Red Sea Modelling Study, and a Dead Sea Modeling Study.[66]

As the various studies progressed, the Beneficiary Parties and the World Bank made a series of bilateral and trilateral agreements in negotiations to continue the project. First, in 2011, two Palestinian civil society organizations, Stop the Wall Campaign and the Palestinian Farmers Union, as well as the Global Initiative for Economic, Social and Cultural Rights, representing residents of the West Bank, filed a Request for Inspection of the Study Program.[67] This Request stated that West Bank residents “rely on ground water resources that are put at risk by the decline of the Dead Sea and which do not appear to be effectively addressed by the . . . Program,” and identified flaws in the Study Program Terms of Reference which “would result in inadequate and incomplete Environmental Social Assessments.”[68] Then, in 2013, all three Beneficiary Parties signed a “milestone regional cooperation agreement,” in the form of a Memorandum of Understanding, outlining “three major regional water sharing initiatives” to be pursued by the parties.[69] At this stage, the initiatives included:

the development of a desalination plant in Aqaba at the head of the Red Sea, where the water produced will be shared between Israel and Jordan; increased releases of water by Israel from Lake Tiberias for use in Jordan; and the sale of about 20–30 million m3/year of desalinated water from Mekorot (the Israeli water utility) to the Palestinian Water Authority for use in the West Bank. In addition, a pipeline from the desalination plant at Aqaba would convey brine to the Dead Sea to study the effects of mixing the brine with Dead Sea water.[70]

In 2015, Israel and Jordan signed a bilateral water cooperation agreement to further the project. Pursuant to this agreement, the two parties agreed to “share the potable water produced by a future desalination plant in Aqaba, from which salty brines will be piped to the Dead Sea. In return for its portion . . . Israel will be doubling its sales of Lake Kinneret (Sea of Galilee) water to Jordan.”[71] As the proposed pipeline would “lie[] entirely in Jordanian territory,”[72] in 2016, Jordan and the World Bank entered into a “Country Partnership Framework” to fund the pipeline.[73]

In 2017, Israel and the Palestinian Authority signed a bilateral agreement allocating thirty-two million cubic meters of water to the Palestinian Authority to be split, twenty-two million cubic meters to the West Bank, and ten million cubic meters to the Gaza Strip.[74] Recall that the 2013 trilateral Memorandum of Understanding included an agreement for Israel to sell “about 20–30 million m3/year of desalinated water . . . to the Palestinian Water Authority for use in the West Bank.”[75]

Today, the future of the water project is uncertain.[76] Just as the Dead Sea is “the water seismograph of the region,”[77] the water conveyance project is the region’s political seismograph.

III. The Water Conveyance

The proposed water conveyance seeks to address the environmental degradation of the Dead Sea and the lack of affordable energy and drinking water in the Jordan Rift Valley, while increasing political goodwill and cooperation between the parties. As a “three birds with one stone” approach, “[o]n paper, Red–Dead looks as elegant as it is ambitious—a simple solution for a huge environmental crisis that includes jobs, infrastructure, and profits.”[78] It is planned that with one conveyance, all three issues would be addressed:

A hydroelectric plant would be built, generating energy; desalination plants would pump out drinking water; and the reject brine, the by-product of the desalination process, would replenish the Dead Sea like a hose filling a swimming pool. The Israelis and Jordanians would share responsibility for building, maintaining, and operating the system. Thus, water, a historic cause of anxiety, contention, and even war in the region, becomes a conduit for economic and social cooperation.[79]

Taking into account the technological, political, and financial complexity of the water conveyance, the Study Program examined the numerous impacts and effectiveness of the proposal over many years.

The objective of the Red Sea–Dead Sea Water Conveyance Project Study Program was to “investigate the feasibility of the concept as a solution to the decline of the Dead Sea water level” and was originally intended to be completed by 2010.[80] In order to get the full picture, the environmental impacts—both earthly and social—were studied.[81] A study of alternatives was also made, informed by a chemical industry analysis study.[82] Once these were completed, the Feasibility Study was finalized and published.

The Feasibility Study, completed in 2014, evaluated “six potential project configurations . . . based on three alternative conveyance systems.”[83] It considered estimated capital costs, whole lifecycle net present costs, environmental impacts during construction and operation, and the effect on the microbiome of mixing Red Sea and Dead Sea waters.[84] Based on a “weighted multi-criteria assessment process,” the Feasibility Study concluded that a “pipeline conveyance combined with a high level desalination plant is the recommended optimum solution.”[85] In reaching this conclusion, the Study Program explored multiple limitations and potential adverse effects of the conveyance plan, and in so doing introduced a number of safeguards and mitigation factors to address the myriad needs of the three Beneficiary Parties.[86]

There is one factor not addressed in the 2014 Study Program findings: the impact of large-scale use of desalination plants—something only beginning to be studied in Israel, where desalinated water has recently become the majority source of potable water. While the quality of the water produced in desalination is high, it is also “devoid of some key minerals found in normal water, like magnesium,” as the mineral is removed in the reverse-osmosis process alongside other salts.[87] Use of desalinated water in agriculture has therefore been shown to require an increased need for fertilizer. In addition, long-term consumption of desalinated water has also been linked to “an elevated mortality risk of myocardial infarction”—i.e., heart attacks. It is theorized that this can be alleviated by the addition of magnesium to the treated water, which must be considered when implementing wide-spread use.

IV. Conclusion

Having adequately addressed the multi-faceted concerns of all three Beneficiary Parties, by all accounts the Red Sea–Dead Sea Water Conveyance Project will break ground in the coming year.[88] In the two decades since the 1994 Jordan-Israel Peace Treaty and the 1993 and 1995 Oslo Accords, the political dynamics between the Dead Sea’s three bordering entities has remained complex, if not outright violent.[89] And yet, the inevitability of the Dead Sea’s decline, the inevitability of climate change, and the continued water scarcity in the entire Jordan River Basin has inexorably tied these parties together just as strongly as any treaty.

If the water conveyance project can be the region’s political seismograph, perhaps peace in the Middle East is closer than we think.

[1] The surface area of the Dead Sea has shrunk by at least one-third since 1960; the water level falls at “an alarming pace of 0.8 to 1.2 meters per year.” World Bank Grp., Red Sea – Dead Sea Water Conveyance Study Program: Overview – Updated January 2013, at 1 (2013), http://siteresources.worldbank.org/EXTREDSEADEADSEA/Resources/Overview_RDS_Jan_2013.pdf?resourceurlname=Overview_RDS_Jan_2013.pdf%26.

[2] Stephen C. McCaffrey, The Shrinking Dead Sea and the Red–Dead Canal: A Sisyphean Tale?, 19 Pac. McGeorge Global Bus. & Dev. L.J. 259, 260 (2006).

[3] Envtl. Res. Mgmt. et al., Red Sea-Dead Sea Water Conveyance Study Environmental and Social Assessment: Preliminary Scoping Report 13, 16 (2008).

[4] Coyne et Bellier et al., Red Sea – Dead Sea Water Conveyance Study Program Feasibility Study: Final Feasibility Study Report Summary 1 (2014).

[5] Id.

[6] The Dead Sea is “roughly bisected from the north to the south by the border between Jordan on the eastern side, and Palestine (the West Bank) and Israel on the western side, placing it in the middle of some of the most hotly-contested land on earth.” See McCaffrey, supra note 2, at 259, 260 n.4. Likely as a result, many of the document and agreements which comprise the Red Sea­–Dead Sea Water Conveyance are confidential.

[7] See World Bank Grp., supra note 1, at 2.

[8] Regarding microfauna: “In 2009, a marine biologist from Germany’s Max Planck Institute for Marine Microbiology discovered new species of green sulfur bacteria, cyanobacteria, and diatoms [in the Dead Sea]. Found within sediments nourished by underwater springs, these microorganisms have metabolisms allowing them to adapt to extreme changes in salinity.” Todd Pitock, Could Water from the Red Sea Help Revive the Dead Sea?, Nat. Resources Def. Council (Jan. 23, 2017), https://www.nrdc.org/onearth/could-water-red-sea-help-revive-dead-sea. Regarding macrofauna:

Located off the Dead Sea’s northwestern shore, the nature reserve is the world’s lowest in altitude, and its wetlands are the only place on the planet where rare blue and Dead Sea killifish coexist. The landscape’s altered hydrology is putting them at risk as well as causing the springs on the Dead Sea floor to migrate eastward.

Id.

[9] Michael Beyth, Water Crisis in Israel, in Water: Histories, Cultures, Ecologies 171, 174 (Marnie Leybourne & Andrea Gaynor eds., 2006).

[10] See World Bank Grp., supra note 1, at 1.

[11] World Bank Grp., Red Sea – Dead Sea Water Conveyance Study Program: Background Note – October 2010, at 1 (2010), http://siteresources.worldbank.org/INTREDSEADEADSEA/Resources/Background_Note_October_2010.pdf; see Envlt. Res. Mgmt. et al., supra note 3, at 4.

[12] Pitock, supra note 8.

[13] Natan Odenheimer, Israel – A Regional Water Superpower, Jerusalem Post (May 13, 2017), http://www.jpost.com/printarticle.aspx?id=484996.

[14] Stephen C. McCaffrey, Water Scarcity and Security Issues in the Middle East, 108 Am. Soc’y Int’l L. Proc. 297, 299.

[15] John Anthony Allan et al., Study of Alternatives: Final Report, Executive Summary and Main Report (2014).

[16] Id.

[17] Id. at 35.

[18] MercyCorps, Tapped Out: Water Scarcity and the Refugee Pressures in Jordan 12 (2014).

[19] Id. at 4–5.

[20] Id. at 14.

[21] Id.

[22] Id.

[23] Jordan’s Water Wise Women, Al Jazeera (May 17, 2017), http://www.aljazeera.com/programmes/earthrise/2017/05/jordan-water-wise-women-170516110004513.html.

[24] Odette Chalaby, Jordan Is Solving Its Water Crisis by Training Women as Plumbers, Apolitical (Nov. 3, 2017), https://apolitical.co/solution_article/jordan-solving-water-crisis-training-women-plumbers/.

[25] Id.

[26] Id.

[27] Jordan’s First Water Desalination Plant Opens in Aqaba, Jordan Times (Mar. 18, 2017), http://www.jordantimes.com/news/local/jordan%E2%80%99s-first-water-desalination-plant-opens-aqaba.

[28] Diplomatic Drought: Jordan’s Water Crisis Is Made Worse by a Feud with Israel, Economist (Dec. 2, 2017), https://www.economist.com/news/middle-east-and-africa/21731844-thirsty-kingdom-can-ill-afford-fall-out-its-neighbour-jordans-water.

[29] Ministry Launches Water Conservation Awareness Game, Jordan Times (Feb. 19, 2018), http://www.jordantimes.com/news/local/ministry-launches-water-conservation-awareness-game.

[30] Id.

[31] “Israel’s largest source of freshwater, the Sea of Galilee, had dropped to within inches of the ‘black line’ at which irreversible salt infiltration would flood the lake and ruin it forever.” Rowan Jacobsen, How a New Source of Water Is Helping Reduce Conflict in the Middle East, Ensia (July 19, 2016), https://ensia.com/features/water-desalination-middle-east/.

[32] Id.; Julia Pyper, Israel Is Creating a Water Surplus Using Desalination, E&E News: Climatewire (Feb. 7, 2014), https://www.eenews.net/stories/1059994202.

[33] See Odenheimer, supra note 13.

[34] See Jacobsen, supra note 31.

[35] Id.

[36] Id.

[37] Id.

[38] Id.

[39] Brett Walton, Israel’s Mediterranean Desalination Plants Shift Regional Water Balance, Circle Blue (July 25, 2016), http://www.circleofblue.org/2016/middle-east/israels-mediterranean-desalination-plants-shift-regional-water-balance/.

[40] Zafrir Rinat, Desalination Problems Begin to Rise to the Surface in Israel, Haaretz (Feb. 6, 2017), https://www.haaretz.com/israel-news/.premium-desalination-problems-begin-to-rise-to-the-surface-in-israel-1.5494726.

[41] Hagai Amit, Dry, Dry Again: After Several Wet Years, the Big Drought Is Back Again in Israel, Haaretz (Jan. 19, 2018), https://www.haaretz.com/israel-news/.premium-after-several-wet-years-the-big-drought-is-back-in-israel-1.5746445.

[42] World Bank, West Bank and Gaza: Assessment of Restrictions on Palestinian Water Sector Development 5–6 (2009).

[43] Id. at 5. In their 2009 report, the World Bank criticized the JWC as an “[in]effective mechanism for facilitating sector investment.” Id. at 47 & n.77.

[44] Israeli-Palestinian Interim Agreement on the West Bank and the Gaza Strip, Isr.-Palestine, Sept. 28, 1995, U.N. Doc. A/51/889.

[45] Summer 2016 – Israel Cut Back on the Already Inadequate Water Supply to Palestinians, B’TSELEM (Sept. 27, 2016), https://www.btselem.org/video/201609_water_salem#full.

[46] Id.

[47] Id.

[48] Id.

[49] Gaza Emergency Water Project, World Bank (Apr. 29, 2013), http://www.worldbank.org/en/results/2013/04/29/gaza-emergency-water-project.

[50] Id.

[51] Id.

[52] United Nations Country Team, Gaza in 2020: A Liveable Place? 11 (2012).

[53] Id.

[54] Largest Seawater Desalination Plant Opened in Gaza, U.N. Off. Coordination Humanitarian Aff. (Mar. 11, 2017), https://www.ochaopt.org/content/largest-seawater-desalination-plant-opened-gaza.

[55] Id.

[56] Press Release, White House, Donald J. Trump Administration Welcomes Israeli-Palestinian Deal to Implement the Red–Dead Water Agreement (July 1, 2017), https://www.whitehouse.gov/briefings-statements/donald-j-trump-administration-welcomes-israeli-palestinian-deal-implement-red-dead-water-agreement/.

[57] Id.; see also Israeli-Palestinian Interim Agreement on the West Bank and the Gaza Strip, supra note 44.

[58] See World Bank Grp., supra note 11, at 1–2.

[59] Declaration of Principles on Interim Self-Government Arrangements, Isr.-Palestine, Sept. 13, 1993, U.N. Doc. A/48/486.

[60] See Israeli-Palestinian Interim Agreement on the West Bank and the Gaza Strip, supra note 44, at Annex III art. 40.

[61] Saad Merayyan & Salwa Mrayyan, Jordan’s Water Resources: Increased Demand with Unreliable Supply, 3 Computational Water Energy & Envtl. Engineering 48, 49 (2014).

[62] Id.

[63] World Bank Grp., Red Sea – Dead Sea Water Conveyance Concept Feasibility Study and Environmental and Social Assessment: Information Note – July 2007, at 3 (2007), http://siteresources.worldbank.org/MENAEXT/Resources/RDS_Background_Note_V050707.pdf?resourceurlname=RDS_Background_Note_V050707.pdf.

[64] Id. at 5.

[65] World Bank Grp., supra note 63, at 2.

[66] World Bank Grp., Red Sea-Dead Sea Water Conveyance Study Program: Questions and Answer Sheet 1 (2011), http://siteresources.worldbank.org/INTREDSEADEADSEA/Resources/RDSQ&A13Dec2011_final.pdf.

[67] Memorandum from Roberto Lenton, Chairperson, Inspection Panel, World Bank, to President of the International Bank for Reconstruction and Development and the International Development Association (Oct. 20, 2011), http://documents.worldbank.org/curated/en/510341468184139751/pdf/651110IPNR0Box000INSP0SECM201100008.pdf.

[68] Id.

[69] Press Release, World Bank, Senior Israeli, Jordanian and Palestinian Representatives Sign Milestone Water Sharing Agreement (Dec. 9, 2013), http://www.worldbank.org/en/news/press-release/2013/12/09/senior-israel-jordanian-palestinian-representatives-water-sharing-agreement.

[70] Id.

[71] Sharon Udasin, Israeli, Jordanian Officials Signing Historic Agreement on Water Trade, Jerusalem Post (Feb. 26, 2015), http://www.jpost.com/Israel-News/New-Tech/Israeli-Jordanian-officials-signing-historic-agreement-on-water-trade-392312.

[72] See World Bank Grp., supra note 11, at 2.

[73] See generally Int’l Bank for Reconstruction & Dev. et al., Country Partnership Framework for Hashemite Kingdom of Jordan for the Period FY17–FY22 (2016).

[74] See Press Release, White House, supra note 56; Dalia Hatuqa, Water Deal Tightens Israel’s Control Over Palestinians, Al Jazeera (Aug. 1, 2017), http://www.aljazeera.com/indepth/features/2017/07/water-deal-tightens-israel-control-palestinians-170730144424989.html.

[75] See Press Release, World Bank, supra note 69 (emphasis added).

[76] In November of 2017, Israeli media reported that Israel was refusing to further participate in the project until it was allowed to reopen its embassy in Amman. In February of 2018, Israeli and Jordanian media reported that “Jordan is committed to implementing the . . . Project despite repeated Israeli signals that it was withdrawing from the regional scheme.” Hana Namrouqa, Jordan to Go Ahead with Red-Dead Water Project Despite Israel Withdrawal, Jerusalem Post (Feb. 12, 2018), http://www.jpost.com/Arab-Israeli-Conflict/Jordan-to-go-ahead-with-Red-Sea-Dead-Sea-project-542417. In late January, after six months of shut down and diplomatic dispute, the Israeli embassy began the process of gradually reopening; in early February, a Jordan government official reported they had not yet been notified of the naming of a new ambassador. Mohammad Ghazal, Jordan Says ‘Not Officially Notified’ of New Israeli Ambassador, Jordan Times (Feb. 8, 2018), http://www.jordantimes.com/news/local/jordan-says-not-officially-notified%E2%80%99-new-israeli-ambassador.

[77] See Beyth, supra note 9.

[78] See Pitock, supra note 8.

[79] Id.

[80] See World Bank Grp., supra note 63, at 4.

[81] See generally Envtl. Res. Mgmt. et al., Red Sea-Dead Sea Water Conveyance Study Environmental and Social Assessment: Final Environmental and Social Assessment (ESA) Report – Executive Summary (2014); Tahal Grp. & Geological Survey of Isr. & Assocs., Dead Sea Study: Final Report (2011); Thetis SpA et al., Red Sea Study: Draft Final Report (2013).

[82] See generally Vladimir Zbranek, Chemical Industry Analysis Study: Final Report (2013); Allan et al., supra, note 15.

[83] See Coyne et Bellier et al., supra note 4, at 82.

[84] Id. at 82–83.

[85] Id. at 83.

[86] See Envtl. Res. Mgmt. et al., supra note 81, at 4, 9, 34.

[87] Rinat, supra note 40.

[88] See supra note 76 and accompanying text.

[89] See supra note 49 and accompanying text.

Mitigating Greenhouse Gas Emissions in the Northeast and Mid-Atlantic Transportation Sector: A Cap-and-Invest Approach

By James D. Flynn

James Flynn is an LL.M. candidate at New York University School of Law and the graduate editor of the NYU Environmental Law Journal.

This post is part of the Environmental Law Review Syndicate.


I. Introduction

In recent years, states in New England and the mid-Atlantic region have made significant progress in reducing climate change-inducing greenhouse gas (GHG) emissions from the electricity generation sector.[1] Several factors–including the effects of the economic recession, shifts in energy markets from coal to natural gas and renewable energy sources, and carbon pollution mitigation and clean energy programs like renewable portfolio standards–have been identified as principal drivers of these reductions.[2] Another is the Regional Greenhouse Gas Initiative (RGGI), a cooperative effort among nine northeastern and mid-Atlantic states to reduce carbon dioxide (CO2) emissions from the power sector.[3] RGGI employs a cap-and-invest approach in which the participating states set a regionally uniform, decreasing cap on CO2 emissions from covered power plants, periodically auction off emission allowances, and invest auction proceeds in other programs including end-use energy efficiency, renewable energy, greenhouse gas abatement, and direct customer electric bill assistance.[4] One study estimates that CO2 emissions in the RGGI region would have been approximately 24 percent higher in 2015 but for the program, which took effect in 2009.[5] At the same time, it is estimated that through 2015, RGGI generated approximately $2.9 million in net economic benefits,[6] and that the investment of RGGI allowance auction proceeds in 2015 alone will return $2.31 billion in lifetime energy bill savings for consumers.[7]

Over approximately the same period of time, however, CO2 emissions from the transportation sector in RGGI states have remained relatively level or have increased. Transportation accounts for 44 percent total CO2 emissions in the region, more than any other sector.[8] Each RGGI member state has adopted a long-term GHG reduction goal, set by statute or executive order, or in climate- or energy-related plans, “generally consistent with achieving an 80 percent reduction of GHG emissions by 2050 from 1990 levels.”[9] Most states’ goals do not include sector-specific emission targets, but because transportation is the largest source of emissions in the region, shifting to a cleaner transportation system is a “critical component of the action needed to meet economy-wide goals and to avoid further catastrophic harms of climate change.”[10] RGGI states already employ a variety of policy mechanisms aimed at decarbonizing transportation,[11] but have been considering whether to employ a cap-and-invest approach similar to RGGI or California’s multi-sector cap-and-invest program, which includes the state’s transportation sector.[12]

This paper first discusses the mechanics of RGGI and California’s cap-and-invest program generally, including how auction proceeds are invested. It then discusses the potential to use a cap-and-invest approach to mitigate GHG emissions from transportation in the Northeast and mid-Atlantic and addresses two key policy considerations: the type of fuels to be covered and the point of regulation. It concludes that, if properly designed, a cap-and-invest approach could achieve significant GHG reductions from transportation in the region and generate substantial funds for other GHG mitigation and climate change adaptation initiatives.

II. The Cap-and-Invest Model

Cap-and-trade programs generally operate as follows.[13] The government sets an overall emissions target–the cap–and determines which facilities will be covered. Emission allowances, each generally equal to one ton of emissions, are periodically auctioned or distributed without cost—or both—to covered facilities.[14] The total number of allowances is equivalent to the cap number, which decreases over time.[15] A market is created in which covered facilities may purchase or sell allowances from other covered facilities. Covered facilities are required to hold enough allowances to cover their emissions at the end of a compliance period, which may range from one to three years.[16] If a facility lacks sufficient allowances, it will be assessed a monetary penalty in addition to having to purchase enough allowances to cover the shortfall.

This market-based approach provides covered facilities three options: (1) they may reduce their emissions to meet the number of allowances they purchase or receive; (2) they may purchase additional allowances on the market and emit more; or (3) they may reduce their emissions below the allowances they hold and sell the remainder on the market.[17] The advantage of cap-and-trade programs is that facilities that can reduce their emissions more cost-effectively will do so, while those that face higher emissions reduction costs will purchase additional allowances at auction or on the market.[18] Accordingly, cap-and-trade schemes provide firms with flexibility to design cost-effective, tailored emissions plans, and the regulator achieves its policy objective by means of the overall emissions cap.[19] “Cap-and-invest” refers to cap-and-trade programs that invest their proceeds into other policy initiatives intended to address the pollutant or its effects.

a. RGGI

RGGI is the first market-based regulatory program in the United States designed to reduce GHG emissions.[20] It is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions from the electricity generation sector.[21] RGGI is composed of individual CO2 budget trading programs implemented in each participating state. Through independent regulations, each state’s CO2 budget trading program limits emissions of CO2 from electric power plants with the capacity to generate 25 megawatts or more (some 164 facilities), issues CO2 allowances, and establishes participation in regional CO2 allowance auctions.[22]

RGGI began with discussions among the governors of seven New England and mid-Atlantic states, which led to a 2005 Memorandum of Understanding that outlined the program.[23] In 2008, the RGGI states issued a Model Rule that participating states could use as guidance to establish and implement their individual programs.[24] RGGI’s designers expected the initial program might be expanded in the future by covering other emission sources, sectors, GHGs, or states.[25] CO2 emissions from covered facilities in RGGI states account for approximately 20 percent of GHG emissions in the region.[26]

At the end of each three-year compliance period, covered facilities must surrender one allowance for each ton of CO2 emissions generated during the period.[27] Covered facilities are permitted to bank an unlimited number of emission allowances for future use.[28] Over 90 percent of allowances are distributed through periodic auctions, and a reserve price sets a price floor for allowances.[29] RGGI employs a “cost containment reserve” that allows for additional allowances to be auctioned if certain price thresholds are met.[30] In limited circumstances, covered facilities may also submit offsets, which are measurable reductions, avoidances, or sequestrations of emissions from non-covered sources, in lieu of emission allowances.[31] The RGGI states agreed that each would use at least 25 percent of its individual auction proceeds “for a consumer benefit or strategic energy purpose.”[32]

Member states invest the proceeds from allowance auctions in a variety of consumer benefit programs at scale.[33] In October 2017, RGGI, Inc. (the corporate entity that administers RGGI) released a report that tracks the investment of RGGI auction proceeds in 2015 and the benefits of these investments throughout the region.[34] The report estimates that “[t]he lifetime effects of these investments are projected to save 28 million MMBtu of fossil fuel energy and 9 million MWh of electricity, avoiding the release of 5.3 million short tons [4.8 million metric tons] of carbon pollution.”[35] The report also notes that “RGGI investments in 2015 are estimated to return $2.31 billion in lifetime energy bill savings to more than 161,000 households and 6,000 businesses which participated in programs funded by RGGI investments, and to 1.5 million households and over 37,000 businesses which received direct bill assistance.”[36] RGGI states have discretion as to how they invest RGGI proceeds.

The report breaks down these investments into four categories. Energy efficiency makes up 64 percent of investments. Funded programs are expected to return $1.3 billion in lifetime energy bill savings to over 141,000 participating households and 5,700 regional businesses.[37] Clean and renewable energy makes up 16 percent of investments, and investments in these technologies are expected to return $785.8 million in lifetime energy bill savings to 19,600 participating households and 122 regional businesses.[38] Greenhouse gas abatement makes up 4 percent of investments and are expected to avoid the release of 636,000 short tons of CO2.[39] Finally, direct bill assistance makes up 10 percent of investments accounting for $40.4 million in bill credits and assistance to consumers.[40] One independent report notes that while RGGI states each have their own unique auction revenue investment programs, “[o]verall, greater than 60 percent of proceeds are invested to improve end-use energy efficiency and to accelerate the deployment of renewable energy technologies,”[41] which far exceeds the 25 percent investment “for a consumer benefit or strategic energy purpose” required by the Model Rule.

Whether or not RGGI has been successful is the subject of debate. As designed, it applies only to CO2 and only to emissions from some 164 power plants with the capacity to generate twenty-five megawatts or more.[42] Since CO2 accounts for only 20 percent of total GHG emissions in the RGGI states, and electricity generation accounts a fraction of total CO2 emissions, RGGI’s potential is limited.[43] The Congressional Research Service has thus described the initiative’s contribution to global GHG reductions to be “arguably negligible.”[44] In addition, RGGI significantly overestimated emissions from member states for its first compliance period and set an initial emissions cap that was actually above realized emissions levels.[45] This limited participation in the program and allowed participating facilities to bank substantial amounts of unused allowances. After the 2012 program review, RGGI lowered the cap by 45 percent between 2014 and 2020.[46] And after the most recent review in 2016, RGGI lowered the cap by an additional 30 percent between 2020 and 2030.[47] The extent to which these adjustments will hasten emissions reductions to be seen. On the other hand, several studies have shown that the combination of the price signal created by RGGI and the investment of allowance auction proceeds in other environmental programs has been the dominant driver of the recent emissions decline in the region.[48]

b. California’s Cap-and-Invest Program

In 2006, California enacted its landmark climate change law, the Global Warming Solutions Act, also known as AB (“assembly bill”) 32.[49] The statute established an aggressive goal of reducing GHG emissions to 1990 levels by 2020, and an 80 percent reduction from 1990 levels by 2050, across multiple sectors of the state’s economy.[50] AB 32 directed the California Air Resources Board (CARB), the state’s air pollution regulator, to implement a cap-and-trade program, which went into effect in 2013.[51]

According to CARB, the program, which covers approximately 450 entities, “sets a statewide limit on sources responsible for 85 percent of California’s greenhouse gas emissions, and establishes a price signal needed to drive long-term investment in cleaner fuels and more efficient use of energy.”[52] It is “designed to provide covered entities the flexibility to seek out and implement the lowest-cost options to reduce emissions.”[53] The 2013 cap was set at about 2 percent below the emissions level forecast for 2012, declines an additional 2 percent in 2014, and declines 3 percent annually from 2015 to 2020.[54]

Unlike RGGI, California’s program distributes free allocations of emission allowances earlier in the program, but those allocations decrease over time as the program transitions to an auction process.[55] The allocation for most industrial sectors is set at approximately 90 percent of average emissions and is updated annually based on each facility’s production.[56] Electrical distribution and natural gas facilities receive free allowances on the condition that the value of allowances must be used to benefit ratepayers and achieve GHG emission reductions.[57] The allocation for electrical distribution utilities is set at about 90 percent of average emissions, and for natural gas utilities, is based on natural gas supplied in 2011 to non-covered entities.[58] The program includes cost containment measures and allows for the banking of allowances, has a three-year compliance period with an annual obligation to surrender 30 percent of their previous year’s emissions, and allows for offsets of up to 8 percent of a facility’s compliance obligation.[59] AB 32 also employs a substantial penalty mechanism for facilities that fail to meet their compliance obligations: “If the compliance deadline is missed or there is a shortfall, four allowances must be provided for every ton of emissions that was not covered in time.”[60]

California’s cap-and-trade program became linked with Québec’s cap-and-trade system on January 1, 2014 and became linked with Ontario’s cap-and-trade program on January 1, 2018.[61] All allowances issued by the California, Québec, and Ontario programs before and after the linkage can be used for compliance interchangeably across jurisdictions.[62] The three jurisdictions also hold joint allowance auctions.

On January 1, 2015, suppliers of transportation fuels, including gasoline and diesel fuel, became covered under the program.[63] A fuel supplier is defined as “a supplier of petroleum products, a supplier of biomass-derived transportation fuels, a supplier of natural gas including operators of interstate and intrastate pipelines, a supplier of liquefied natural gas, or a supplier of liquefied petroleum gas.”[64] All fuel suppliers that deliver or import 10,000 metric tons or more of annual CO2 equivalent emissions are subject to a reporting requirement, but only suppliers that reach a 25,000 metric ton threshold are covered by the cap-and-trade program.[65]

Proceeds from the allowance auctions are deposited in the state’s Greenhouse Gas Reduction Fund and are appropriated by the state legislature for “investing in projects that reduce carbon pollution in California, including investments to benefit disadvantaged communities, recycling, and sustainable transit.”[66] As of 2017, some $3.4 billion had been appropriated to state agencies implementing GHG emission reduction programs and projects, collectively referred to as the California Climate Investments.[67] Of that amount, $1.2 billion has been expended on projects “expected to reduce GHG emissions by over 15 million metric tons of carbon dioxide equivalent.”[68]

III. Applying a Cap-and-Invest Approach to Northeast and Mid-Atlantic Transportation Sector

Under business-as-usual trends, carbon emissions in RGGI states will be 23 percent below the 1990 baseline in 2030.[69] These states must achieve much deeper emissions reductions across multiple economic sectors in order to achieve their “greenhouse gas emission reduction targets for 2030 that range from 35 to 45 percent, centered around a 40 percent reduction from 1990 levels.”[70] Since transportation represents the largest share of GHG emissions in the RGGI states, that sector should be a primary focus of policymakers’ attention.

One study finds that the levels of emissions reductions necessary to meet the GHG reduction goals of the states in the region could be accomplished “through a suite of clean transportation policies” including financial incentives for the purchase of clean vehicles, such as electric and hybrid light-duty vehicles and natural gas powered heavy-duty vehicles; investments in public transit expansion including bus rapid transit, light rail, and heavy rail; promotion of compact land use; investment in bicycle infrastructure; support for travel demand management strategies; investment in system operations efficiency technologies; and investment in infrastructure to support rail and short-sea freight shipping.[71]

One potential mechanism for achieving the levels of reductions necessary for the RGGI states to meet their targets “would be to implement a transportation pricing policy, which could both achieve GHG reductions and generate proceeds that could be used to fund clean and resilient transportation solutions.”[72] For example, “carbon-content-based fees, mileage-based user fees, and motor-fuel taxes” could “generate an average of $1.5 billion to $6 billion annually in the region.”[73] A mid-range pricing policy that generated approximately $3 billion annually “would create a price signal that would promote alternatives to single-occupancy vehicle travel and result in modest additional emission reductions. It would also raise a cumulative $41 billion to $46 billion for the region during 2015-2030.”[74] Proceeds from such a pricing policy would offset projected declines from existing state and federal gasoline taxes and could be used to fund other clean transportation initiatives.[75]

A hypothetical regional cap-and-invest program for vehicle emissions might be structured as follows. Member states would establish a mandatory regional cap on GHG emissions from the combustion of fossil transportation fuels calculated using volumetric fuel data and fuel emission factors available from the Environmental Protection Agency.[76] The cap would decline over time. States would auction allowances equal to the cap and establish an entity like RGGI, Inc. to administer the program, auction platform, and allowance market.[77] Regulated entities would achieve compliance by purchasing allowances at auction or from other market participants, and possibly with offsets earned from reductions in other aspects of their operations.[78] As with RGGI, individual member states would commit to invest a percentage of their auction proceeds into other initiatives aimed at reducing GHG emissions, including from transportation, and could retain the discretion to decide individually how to allocate those funds.[79]

Because power plants are stationary and relatively few in number, their GHG emissions can be regulated directly, i.e., at the stack. Vehicles, however, are mobile and far more numerous. To regulate the emissions from every fossil fuel powered vehicle at the tailpipe would entail a substantial and possibly prohibitive administrative burden, and would likely be politically unpalatable. An alternative is to use transportation fuel as the point of regulation. Determining which types of fuels and which entities in the fuel supply chain to cover under the cap-and-invest program will be critical.

Transportation fuels that could be covered include gasoline, on-road and off-road diesels, aviation fuels, natural gas, propane/butane, and marine fuels.[80] Considering both the volume of each type of fuel consumed and the comparative emissions resulting from its consumption, the program should cover, at a minimum, gasoline and on-road diesel, which account for approximately 85 percent of carbon emissions from transportation in the region.[81] Other fuels may make up too small a portion of total emissions to justify the additional technical and regulatory burden of covering them.[82] In addition, because all states in the region currently require reporting on gasoline and on-road diesel, the most straightforward approach would be to regulate those fuels. Covering other fuels would require at least some states that do not already require reporting of these fuels to establish new reporting requirements.[83]

Another key design choice is the point of regulation: which entities within the transportation fuel supply chain should be subject to the regulatory obligation to hold sufficient allowances. Because all states in the region have existing reporting and enforcement mechanisms for gasoline and on-road diesel (and many also tax off-road diesel and aviation fuel), one option would be to regulate existing state points of taxation for these fuels.[84] However, state points of taxation are not uniform throughout the region. They can include many different types of entities in the supply chain and in some states the point of taxation is different for different fuels.[85] State regulations also differ with respect to what actions by covered entities trigger the reporting requirement.[86] Many states have points of regulation low in the supply chain, such as entities that purchase fuel from the terminal rack and distribute it to retailers.[87] Thus, while using existing state points of taxation to regulate transportation fuels would make use of existing state regulatory mechanisms, it would also require regulating over one thousand entities across the region, many of which are smaller distributors.[88]

Another possible point of regulation would be one that is as far upstream as possible, i.e., entities that refine fuel in the region for use in the region, and those that import fuel into the region for use in the region.[89] This would include refineries, and for fuels refined outside the region, the first importers into the region.[90] Eight refineries in the region and an unknown number of first importers, including foreign suppliers and suppliers from U.S. states outside the region, would be subject to regulation.[91] This option would require reporting of the destination of all fuel produced in or that enters the region to ensure that a fuel to be used outside the region is not inadvertently covered.[92] While the Energy Information Administration (EIA) and the Environmental Protection Agency generally require destination data from refiners and importers into the U.S. and from interstate suppliers, the agencies do not publicly disclose this data.[93] Thus, regulating refiners and importers would likely cover many fewer entities as compared to existing state points of taxation, most of which would be large petroleum companies.[94] However, because only three states in the region have refineries within their borders, and because importers are not systematically tracked throughout the region, accounting for fuels that are transported through states to prevent double-counting would likely require the establishment of new regional reporting requirements that would include points of origin and destination.[95]

A third possible point of regulation would be entities known as prime suppliers, defined by the EIA as “suppliers who produce, import, or transport product across state boundaries and local marketing areas and sell to local distributors, local retailers, or end-users.”[96] For the region, this includes approximately 30 refiners, other producers of finished fuel, interstate resellers and retailers, and importers.[97] EIA requires these entities to report the amount of fuel, including gasoline, diesel, and aviation fuel, sold or transferred for end use by state on a monthly basis.[98] Although EIA does not publicly provide disaggregated prime supplier data because of statutory privacy restrictions, organizations may enter into data-sharing arrangements with EIA to obtain individual prime supplier data.[99] Thus, while the prime supplier group would include a larger number of regulated entities than importers and refiners, it would provide a consistent definition of a point of regulation already understood by the regulated entities.[100] Regulating prime suppliers, most of which are higher in the supply chain than existing state points of taxation, would also relieve most smaller entities of compliance obligations.[101]

IV. Conclusion

States in states in New England and the mid-Atlantic region must make much deeper emissions reductions in the transportation sector in order to meet their overall GHG emission reduction targets. Recognizing this reality, representatives from Connecticut, Delaware, Maryland, Massachusetts, New York, Rhode Island, Vermont, and Washington, D.C., at the 2017 Conference of the Parties to the United Nations Framework Convention on Climate Change, signed a joint statement affirming their commitment to reducing GHG emissions from the transportation sector. In that statement, they identified “market-based carbon mitigation strategies” as potential pathways to achieving needed emissions reductions.[102]

Despite its early struggles, the cap-and-invest approach to mitigating emissions in the northeast and mid-Atlantic electricity generation sector has achieved, at a minimum, some emissions reductions, substantial investment in other GHG mitigation efforts, and overall net benefits within the region. California has achieved substantial GHG emissions reductions across multiple sectors, including transportation, and has invested substantial sums in a suite of other green programs. These examples demonstrate the potential of using a cap-and-invest approach to accomplish environmentally and economically sound policy objectives, both within the RGGI region and in the context of transportation. If properly structured, such an approach could achieve significant emissions reductions in the region and raise substantial funds for other GHG mitigation and climate change adaptation initiatives.

How would a cap-and-invest approach to transportation emissions be structured? The fundamental aspects of RGGI and California’s cap-and-invest program are similar in most respects. California occupies a unique position in federal regulation of automobile emissions and had the benefit of constructing a program applicable only to itself, although its program is now linked with programs in other jurisdictions. RGGI already covers much of the Northeast and mid-Atlantic region, could be expanded to include other sectors of those states’ economies, including transportation, and could be linked with the California-Québec-Ontario cap-and-invest system to create a larger and more efficient allowance market.

Owing to the practical differences between directly regulating emissions from power plants and indirectly regulating transportation emissions by fuel type and supply chain point, the mechanics of using a cap-and-invest approach to mitigate transportation emissions, especially across jurisdictions, poses some potentially challenging design issues. The program should cover, at a minimum, gasoline and on-road diesel. Identifying the appropriate point of regulation will require policymakers to consider a host of technical, administrative, and policy issues. Existing state points of taxation are numerous and vary by jurisdiction and by fuel type within jurisdictions. Upstream refiners and importers are far fewer in number but regulating these entities would likely require the development of new regional reporting mechanisms that might make this option administratively undesirable. While the prime suppliers group is larger in number than refiners and importers, regulating prime suppliers would provide a consistent state-based definition of a point of regulation already understood by the regulated entities, and would not subject most smaller entities to compliance obligations.

[1] See Energy Information Administration, State Carbon Dioxide Emissions Data (last visited Feb. 10, 2018), https://www.eia.gov/environment/emissions/state/.

[2] See Gabe Pacyniak, et al., Reducing Greenhouse Gas Emissions from Transportation: Opportunities in the Northeast and Mid-Atlantic, Georgetown Climate Center 8 (2015), http://www.georgetownclimate.org/files/report/GCC-Reducing_GHG_Emissions_from_Transportation-11.24.15.pdf.

[3] Regional Greenhouse Gas Initiative, Welcome (last visited Feb. 10, 2018), https://www.rggi.org.

[4] Regional Greenhouse Gas Initiative, RGGI Benefits (last visited Feb. 10, 2018), https://www.rggi.org/investments/proceeds-investments.

[5] Brian C. Murray and Peter T. Maniloff, Why have greenhouse emissions in RGGI states declined? An econometric attribution to economic, energy market, and policy factors, Energy Economics 51, 588 (2015).

[6] See Paul J. Hibbard, et al., The Economic Impacts of the Regional Greenhouse Gas Initiative on Nine Northeast and Mid-Atlantic States, Analysis Group 5 (July 14, 2015), http://www.analysisgroup.com/uploadedfiles/content/insights/publishing/analysis_group_rggi_report_july_2015.pdf; Ceres, The Regional Greenhouse Gas Initiative: A Fact Sheet (2015), https://www.ceres.org/sites/default/files/Fact%20Sheets%20or%20misc%20files/RGGI%20Fact%20Sheet.pdf.

[7] Regional Greenhouse Gas Initiative, The Investment of RGGI Proceeds in 2015 3 (Oct. 2017), https://www.rggi.org/sites/default/files/Uploads/Proceeds/RGGI_Proceeds_Report_2015.pdf.

[8] See Energy Information Administration, supra note 1; Gerald B. Silverman and Adrianne Appel, Northeast States Hit the Brakes on Carbon Emissions From Cars, BNA (Oct. 16, 2017), https://www.bna.com/northeast-states-hit-n73014470981/.

[9] Pacyniak, supra note 2.

[10] Id.

[11] See Gabe Pacyniak, et al., Reducing Greenhouse Gas Emissions from Transportation: Opportunities in the Northeast and Mid-Atlantic, Appendix 3: State GHG Reduction Goals in the TCI Region, Georgetown Climate Center 4-13 (2015), http://www.georgetownclimate.org/files/report/Apndx3_TCIStateEnergyClimateGoals-Nov2015-v2_1.pdf.

[12] See, e.g., Center for Climate and Energy Solutions, California Cap and Trade (last visited Feb. 10, 2018), https://www.c2es.org/content/california-cap-and-trade/.

[13] See Joel B. Eisen, et al., Energy, Economics and the Environment 326 (4th ed. 2015).

[14] Id.

[15] Id.

[16] See id.

[17] Id.

[18] See id.

[19] See id.

[20] See Regional Greenhouse Gas Initiative, supra note 3.

[21] See id.

[22] Regional Greenhouse Gas Initiative, Program Design (last visited Feb. 10, 2018), https://www.rggi.org/program-overview-and-design/elements.

[23] Regional Greenhouse Gas Initiative, A Brief History of RGGI (last visited Feb. 10, 2018), https://www.rggi.org/program-overview-and-design/design-archive.

[24] Id.

[25] Jonathan L. Ramseur, The Regional Greenhouse Gas Initiative: Lessons Learned and Issues for Congress,

Congressional Research Service 3 (May 16, 2017), https://fas.org/sgp/crs/misc/R41836.pdf.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Id.

[31] Id. at 4.

[32] Id. at 3.

[33] See Brian M. Jones, Christopher Van Atten, and Kaley Bangston, A Pioneering Approach to Carbon Markets: How the Northeast States Redefined Cap and Trade for the Benefit of Consumers, M.J. Bradley & Associates 4 (Feb. 2017), http://www.mjbradley.com/sites/default/files/rggimarkets02-15-2017.pdf.

[34] Regional Greenhouse Gas Initiative, The Investment of RGGI Proceeds in 2015 (Oct. 2017), https://www.rggi.org/sites/default/files/Uploads/Proceeds/RGGI_Proceeds_Report_2015.pdf.

[35] Id. at 3.

[36] Id.

[37] Id.

[38] Id.

[39] Id.

[40] Id.

[41] Jones, supra note 33.

[42] Id.

[43] See id. at 3.

[44] Id. at 17.

[45] Id. at 4.

[46] Regional Greenhouse Gas Initiative, Elements of RGGI (last visited Feb. 10, 2018), https://www.rggi.org/program-overview-and-design/elements.

[47] Regional Greenhouse Gas Initiative, Summary of RGGI Model Rule Updates 1 (Dec. 19, 2017), https://www.rggi.org/program-overview-and-design/elements.

[48] See Murray, supra note 5 at 25-26; Man-Keun Kim and Taehoo Kim, Estimating impact of regional greenhouse gas initiative on coal to gas switching using synthetic control methods, Energy Economics 59, 334 (2016).

[49] California Air Resources Board, Assembly Bill 32 Overview (last visited Feb. 10, 2018), https://www.arb.ca.gov/cc/ab32/ab32.htm.

[50] Id.

[51] Id.

[52] Id.

[53] California Air Resources Board, Overview of ARB Emissions Trading Program 1 (last visited Feb. 10, 2018), https://www.arb.ca.gov/cc/capandtrade/guidance/cap_trade_overview.pdf.

[54] Id.

[55] Id.

[56] Id.

[57] Id.

[58] Id.

[59] Id. at 2.

[60] Id.

[61] California Air Resources Board, Facts About The Linked Cap-and-Trade Programs 1 (updated Dec. 1, 2017), https://www.arb.ca.gov/cc/capandtrade/linkage/linkage_fact_sheet.pdf.

[62] Id.

[63] California Air Resources Board, Information for Entities That Take Delivery of Fuel for Fuels Phased into the Cap- and-Trade Program Beginning on January 1, 2015 1 (last visited Feb. 10, 2018), https://www.arb.ca.gov/cc/capandtrade/guidance/faq_fuel_purchasers.pdf.

[64] Id. at 2.

[65] Id.

[66] California Air Resources Board, 2017 Report to the Legislature on California Climate Investments Using Cap-And-Trade Auction Proceeds i (2017), https://www.arb.ca.gov/cc/capandtrade/auctionproceeds/cci_annual_report_2017.pdf.

[67] Id.

[68] Id. at v.

[69] Elizabeth A. Stanton, et al., The RGGI Opportunity, Synapse Energy Economics, Inc. 3 (revised Feb. 5, 2016), http://www.synapse-energy.com/sites/default/files/The-RGGI-Opportunity.pdf. Notably, this study took into account the anticipated effect of the Clean Power Plan, which President Donald Trump and Environmental Protection Agency Administrator Scott Pruitt propose to repeal. See id. at 4.

[70] Id. at 2.

[71] Pacyniak, supra note 2 at 22. The Georgetown Climate Center serves as the facilitator for the Transportation Climate Initiative, which is “a collaboration of the agency heads of the transportation, energy, and environment agencies of 11 states and the District of Columbia, who in 2010 committed to work together to improve efficiency and reduce greenhouse gas emissions from the transportation sector throughout the northeast and mid-Atlantic region.” Id. at i.

[72] Id. at 25.

[73] Id.

[74] Id.

[75] Id. at 26-27.

[76] Drew Veysey, Gabe Pacyniak, and James Bradbury, Reducing Transportation Emissions in the Northeast and Mid-Atlantic: Fuel System Considerations, Georgetown Climate Center 7 (Nov. 13, 2017), http://www.georgetownclimate.org/files/report/GCC_TransportationFuelSystemConsiderations_Nov2017.pdf.

[77] Id.

[78] Id.

[79] See id.

[80] Id. at 9.

[81] See id. at 11-13.

[82] See id. at 33.

[83] Id. at 20.

[84] Id.

[85] Id. at 16.

[86] Id.

[87] Id. at 17.

[88] Id. at 33.

[89] Id. at 21.

[90] Id.

[91] Id.

[92] Id. at 22.

[93] Id.

[94] Id. at 33.

[95] Id.

[96] Id. at 24.

[97] Id.

[98] Id.

[99] Id. at 25.

[100] Id. at 33

[101] Id.

[102] See Transportation and Climate Initiative, Northeast and Mid-Atlantic States Seek Public Input As They Move Toward a Cleaner Transportation Future (Nov. 13, 2017), https://www.transportationandclimate.org/northeast-and-mid-atlantic-states-seek-public-input-they-move-toward-cleaner-transportation-future; Sierra Club, Northeast and Mid-Atlantic Governors Lauded for Announcement on Transportation and Climate, Press Release (Nov. 13, 2017), https://www.sierraclub.org/press-releases/2017/11/northeast-and-mid-atlantic-governors-lauded-for-announcement-transportation.

Opportunities to Address Climate Change in the Next Farm Bill

Sara Dewey,[1] Liz Hanson,[2] & Claire Horan[3]

This post is part of the Environmental Law Review Syndicate. Read the original here and leave a comment.


Introduction

The Farm Bill affects nearly every aspect of agriculture and forestry in the United States. Therefore, its next reauthorization offers an important opportunity to better manage the risks of climate change on farms, forests, and ranches by supporting resilience practices that also offer greenhouse gas (GHG) emission reductions.

Agriculture is vulnerable to the impacts of climate change, including rising temperatures, changes in rainfall and pest migration patterns, extreme weather events, and drought. In addition to being heavily affected by climate change, agriculture is also a significant contributor to climate change. Agricultural practices are responsible for about eight percent of U.S. GHG emissions.[4] Estimates of total food system emissions, which include the CO2 emissions from energy use and transportation, increase the agricultural industry’s proportion of U.S. GHG emissions to between 19 and 29 percent.[5]

To better align their practices with their long-term interests, farmers and ranchers can adopt practices that enhance their resilience, while also reducing GHG emissions, and increasing carbon sequestration. Many of these practices improve the long-term productivity and profitability of farms. For example, farmers are already adopting practices that reduce emissions or sequester carbon in the soil and in woody biomass while also improving productivity and resilience on their land.

This paper proposes a suite of practices that should be considered during the next authorization of the Farm Bill to improve on-farm efforts to adapt to and mitigate climate impacts. It is organized into four main sections. Part I provides background on the Farm Bill and the ways that the U.S. agricultural system contributes to GHG emissions. Part II provides an overview of opportunities for on-farm mitigation and adaptation. Many of the practices we recommend can reduce on-farm emissions and build a more resilient agricultural system. Part III identifies a set of metrics that we used to assess potential proposals. Lastly, Part IV summarizes how climate practices can be incorporated across titles and highlights three policy options.

I.                             Background

A.                         Agricultural Sources of GHG Emissions

Greenhouse gases trap heat in the atmosphere and contribute to increases in global temperatures. Although this a natural process, increased greenhouse gas emissions since the industrial revolution have increased atmospheric greenhouse gases to levels never before recorded. Agriculture, including raising crops and animals as well as resulting land use changes and farm equipment usage, is a source of three GHGs: methane (CH4), nitrous oxide (N2O), and carbon dioxide (CO2).[6]

Figure 1. GHG Profiles[7]

Globally, emissions from food systems are responsible for nearly a third of all GHG emissions.[8] Domestically, EPA’s Inventory of U.S. Greenhouse Gas Emissions and Sinks divides up agriculture-related emissions into different categories. N2O and CH4 emissions are categorized as “Agricultural,” and accounted for 8.3 percent of total greenhouse gas emissions in the United States in 2014.[9] In 2014, N2O emissions were 336 million metric tons of carbon dioxide equivalent (MMT CO2 Eq.); these emissions were caused primarily by soil management such as the use of synthetic fertilizers, tillage, and organic soil amendments.[10] Manure management, and biomass burning, also contribute to N2O emissions. CH4 emissions were 238 MMT CO2 Eq. and were produced by enteric fermentation during ruminant digestion (164 MMT CO2 Eq.), manure management (61 MMT CO2 Eq.), and the wetland cultivation of rice (12 MMT CO2 Eq.)[11]

CO2 emissions from agriculture-related land use changes and equipment usage are accounted for in the “Land Use, Land-Use Change, and Forestry” and the “Energy” categories, respectively. Estimates of total food system emissions, which include the CO2 emissions from energy use and transportation, increase the agricultural industry’s proportion of U.S. GHG emissions to between 19 and 29%.[12]

II.                         Strategies for Managing Climate Risk through Mitigation and Adaptation

Given agriculture’s contributions to GHG emissions that are contributing to climate change, which in turn affects agricultural productivity, it is appropriate to consider how climate change can be incorporated across the titles of the Farm Bill. The anticipated reauthorization in 2018 can play a critical role in addressing climate change in the United States by promoting practices that encourage mitigation and adaptation practices on farms.

Adopting new agricultural practices can be challenging, especially for small farmers or operations without access to large amounts of capital or information about adaptation opportunities. However, doing so will not only assist the U.S. farmers and ranchers confront shifting seasons, more severe storm events, new pests, drought, and other challenges,[13] it will also reduce the Farm Bill’s fiscal burden on taxpayers.[14] A number of land managers are already adopting strategies that not only reduce emissions or sequester carbon in the soil, but also have the important co-benefits of improving productivity and resilience.[15]

A.       Mitigation Measures

Land managers can mitigate GHG emissions by offsetting current emissions, sequestering carbon, and/or preventing future emissions.[16] Figure 2 describes these strategies and the practices to achieve them.

First, land managers can reduce the GHG emissions of their farming practices in a number of ways. Practices such as conservation tillage reduce soil disturbance, and prevent some erosion, which can lower soil carbon loss. Precision agriculture strategies can reduce fertilizer inputs on cropland, which in turn reduces GHG emissions from fertilizer production and application.[17] Reincorporating livestock manure onto cropland as well as improved management of liquid manure using anaerobic digesters or other on-farm technology can reduce methane emissions from livestock waste by capturing it rather than emitting it.[18]

Second, land managers can sequester additional carbon through on-farm practices. Soil carbon can be increased by incorporating cover crops, including legumes, into crop rotations, reducing tillage, and agroforestry practices.[19] In addition, planting perennial crops or incorporating trees into farms through alley cropping, hedgerows, and riparian forest buffers can lead to long-term sequestration of carbon in woody biomass.

Finally, land managers can take steps to avoid future emissions. The most critical way to avoid new on-farm emissions is to avoid land conversion, which releases carbon that was previously sequestered in the soil and in woody biomass.

Figure 2. Practices for agricultural greenhouse gas mitigation[20]

B.       Adaptation Measures

Adapting to a changing climate will require farmers, foresters, and ranchers to prepare for and respond to new risks, including extreme weather events, shifts in growing seasons, and different pests and plant diseases. Figure 3 provides an overview of the range of practices that farmers can undertake to adapt to climate change.

To make farming operations more resilient, farmers can enhance soil health, which will make agricultural systems better able to withstand extreme weather, drought, and erosion due to high winds or flooding.[21] Strategies for enhancing soil health include adjusting production inputs, timing of planting and soil amendments, cover crops, tillage, new crop species, and diversified crop rotations.[22]

Farmers can also take additional steps to make their farms more resilient to other climate risks. For example, to prepare for flooding, heavy rainfall, and other risks, farmers can implement resilient farm landscapes that include buffer strips and the return of marginal cropland to native vegetation. To prepare for new pests and diseases, farmers can diversify their crop selection and alter crop rotations. To adjust to changing seasons and a warming climate, farmers can plant different crops; crop scientists can also develop more heat- and drought-resistant crop varieties. Resilience planning is also important on the community level, as rural communities can ensure that new infrastructure investments supported by the Farm Bill, such as rural water and energy systems, are resilient to climate change effects.

Figure 3. Practices for agricultural adaptation to climate change[23]

C.       Opportunities for Complementary Mitigation and Adaptation

Importantly, many on-farm practices can help with both climate adaptation and mitigation.[24] For example, improving soil health not only mitigates climate change, it also makes farms more resilient and better able to withstand the shifting, and at times extreme, conditions of a changing climate. Efficient fertilizer application will reduce GHG emissions while enhancing soil resilience. Similarly, cover cropping, diversified crops, and other practices that stabilize the soil will reduce GHG emissions from the soil while building soil health. It is important to note that the efficiency of these on-farm practices will vary by region, impacting the ways they can and should be implemented.[25]

Mitigation and adaptation strategies for agricultural systems often require long-term planning to strengthen “climate-sensitive assets,” such as soil and water, over time and in changing conditions.[26] Developing better regionally specific agricultural climate and conservation practice adoption data is required for this long-term planning to be successful. From those baseline data, regional efforts will be critical to identify mitigation opportunities, develop strategic adaptation planning, and implement enhanced soil and livestock management practices.[27]

III.                     Metrics for Prioritizing Reform Proposals

As the summary above indicates, there are many actions that can promote climate change mitigation or adaptation in agriculture. In addition, changes can be made to every Title of the Farm Bill that would promote one or more of these mitigation and adaptation strategies. Given this complexity, the uncertainties associated with quantitative estimates of the mitigation potential of different strategies, and the qualitative differences between mitigation and adaptation as goals, we developed a range of qualitative metrics that we used to analyze potential reforms. In particular, we considered:

  • Potential magnitude of climate impact: Priority was given to proposals that had proven climate benefits, did not require significant additional research, and targeted the largest sources of agricultural GHG emissions.
  • Co-benefits: Priority was given to proposals that could increase resiliency or economic benefits of farms.
  • Equity: Priority was given to programs that could benefit small and large farms in all regions.
  • Scalability: Priority was given to proposals that seemed replicable and applicable to farms across the country or where Climate Hubs could facilitate regional diversity.
  • Enforceability/Administrability: Priority was given to proposals that could be tied in with or build upon existing requirements or programs in the Farm Bill.
  • Feasibility: Feasibility considerations included ease of implementation technically, economically, and politically. Because any legislative change will need to be passed in Congress, political feasibility was determined to be one of the most important considerations. Accordingly, we prioritized proposals that seemed, based on stakeholder engagement, suitable for the next Farm Bill, given competing interests for funding and stakeholder sentiment towards climate action.

An analysis of these metrics is included throughout our recommendations. However, these should be considered as only a first step. While we have attempted to target the largest sources of GHG emissions, more detailed proposals will be required before there can be precise estimates of the potential for emission reductions. The USDA’s COMET-Farm, an online farm and ranch GHG accounting tool, can likely facilitate this effort.[28] Similarly, determining the economic feasibility of specific reform proposals has been difficult because of taxpayer subsidization, the uncertainty of how appropriations may be allocated, and the varying degrees of stringency that reforms could encompass (e.g. mandate vs. incentive). Finally, while previous Farm Bill reauthorizations can serve as a guide, the ongoing transitions at U.S. federal agencies engaged in Farm Bill programs will likely have impacts on the political feasibility of proposals that cannot be appropriately assessed at this time. For these reasons, we recommend that additional research measure the climate impact of proposals, outline the benefits and co-benefits for farmers and the public, articulate the administrability of the program, and gather stakeholder input and support for proposals.

IV.                     Pathways for Addressing Climate Change in the Farm Bill

To determine how the Farm Bill could better address climate change, we first categorized the range of mitigation and adaptation practices identified in Figures 2 and 3, above, in terms of their potential applicability to the Farm Bill. We then examined how these practices mapped onto the current titles in the Farm Bill. Finally, we assessed how the upcoming Farm Bill could better incentivize these actions across titles, with an eye toward win-win practices with both mitigation and adaptation benefits.

Figure 4 contains the range of possibilities we identified for addressing climate mitigation and adaptation by title. To fully assess the impact of each of these policy options – and its interaction with other policies and programs –requires additional research and outreach to stakeholders affected. We discuss in more detail below a set of recommendations that best fit our metrics, indicated by bold font in this table.

Figure 4. Options for Addressing Climate Change by Farm Bill Title

All of these areas for reform have the potential to advance climate-ready agricultural practices through the Farm Bill. Many of these areas for reform also have wide-ranging benefits beyond climate change mitigation or adaptation such as enhancing on-farm productivity and more efficiently using taxpayer dollars. We elected to focus on three recommendations we judged to be particularly important based on the metrics we established in Part III).

  • Recommendation 1: Incorporate climate measures into crop insurance and conservation compliance to better manage on-farm climate risks under Title II (Conservation) and Title XI (Crop Insurance).
  • Recommendation 2: Ensure the best available science and research—including the outcome of pilot programs—are incorporated into Farm Bill programs; support dissemination of downscaled climate data through USDA regional offices and land grant universities to develop agricultural climate mitigation and adaptation capacity under Title VII.
  • Recommendation 3: Advance manure management collection and storage methods, as well as biogas development under Title IX to mitigate GHG contributions from livestock.

Recommendation 1: Incorporate Climate into Crop Insurance and Conservation Compliance

  1. Reform crop insurance to incentivize climate risk management and eliminate disincentives for adopting climate-friendly practices

Crop insurance, Title XI, makes government-subsidized crop insurance available to producers who purchase a policy covering losses in yield, crop revenue, or whole farm revenue. Farmers can select and combine several types of crop insurance policies: catastrophic coverage, “buy-up” coverage, and a supplemental coverage option for selected crops. USDA’s Risk Management Agency (RMA) sets insurance premium subsidy rates and develops specific contracts,[29] working with 18 insurance companies to administer the program.[30]

Crop insurance is deeply subsidized by the federal government, and it represents the single largest federal outlay in the farm safety net.[31] On average, taxpayers cover 62 percent of crop insurance premiums.[32] The insurance companies’ losses are reinsured by USDA, and the government also reimburses their administrative and operating costs.[33] The Congressional Budget Office anticipates that this program will cost taxpayers over $40 billion from 2016 to 2020.[34]

These subsidies disproportionately benefit large farms: while only about 15 percent of farms use crop insurance, insured farms account for 70 percent of U.S. cropland.[35] Small farmers struggle to utilize crop insurance because of the high administrative burden and challenges of insuring specialty crops.[36] In addition to clear equity concerns involving access to crop insurance, this situation is problematic from a climate perspective because larger farms are more likely to grow monocultures, which are both more vulnerable to pests and extreme weather events and can degrade soil health. Indeed, just four crops—corn, cotton, soybeans, and wheat—make up about 70 percent of total acres enrolled in crop insurance.[37]

The current loss coverage policies in the crop insurance program can discourage farmers from proactively reducing their risks by taking steps to enhance soil health and resilience. Because farmers with crop insurance are protected against losses incurred from impacts likely to increase with climate change, farmers may not be properly incentivized to respond to the changing conditions.[38] Some environmental organizations have even raised concerns that in response to the crop insurance transfer of risk, some farmers may be more willing to engage in unsustainable practices, such as aggressive expansion, irresponsible management, and use of marginal land.[39] In addition, farmers may make planting decisions based on the insurance program incentives rather than market-based signals.[40] In these ways, crop insurance can push farmers towards practices that pose risks to both their operations and taxpayer obligations.[41] It is therefore important that the crop insurance program better align farmers’ risk management incentives with the real and growing risks they face from climate change.

One way to achieve this objective is through incentivizing or requiring farmers to undertake actions to improve soil management and promote soil health. Some specific changes to the crop insurance program that could promote these practices include:

  • Incorporating climate projections to account for changing growing seasons and planting dates.
  • Providing insurance premium rebates for farmers who voluntarily undertake beneficial practices.
  • Incentivizing improved soil management practices, diversified crops, and manure management.
  • Adjusting the length of policies to better reflect the value added from changes that improve long-term soil health.
  • Writing soil health requirements into insurance policies.

More generally, changes to the crop insurance program that reduce the magnitude of the subsidy offered to farmers, such as setting a dollar-per-acre cap, could reduce the moral hazard that current policies create.[42] The methodology used to set premiums could also be adjusted to be based more on the projected frequency and intensity of events such as droughts and floods rather than on backward-looking data. RMA has started to incorporate climate-related risk metrics into annual rates by weighting recent loss experience more heavily, thereby more accurately reflecting the risks that growers face. However, it is important to consider future risks from climate change as well.

Requirements of the crop insurance program that act as disincentives to climate-friendly farming practices should be updated to account for growing climate risks farmers face. For example, RMA has guidelines in place about the termination of cover crops, because of concerns that these crops will scavenge water from the commodity crops.[43] This requirement can act as a disincentive to farmers’ adoption of cover cropping, a practice that builds the soil and reduces runoff in the non-growing season.[44] The next Farm Bill could specify that there should be no specific termination requirements for cover crops.

Insurance policies may also serve to incentivize some environmentally harmful practices, such as early and excess fertilizer application and cultivation of environmentally sensitive land.[45] Because early application maximizes crops’ uptake of nitrogen, it can increase yield in the short term, but it contributes to nitrous oxide emissions, unhealthy soils that become less able to fix nitrogen and must rely increasingly on fertilizer, and polluted runoff. In addition, synthetic fertilizers, which are made from non-renewable materials, including petroleum and potash, are produced at a huge energy cost.[46] Some studies have suggested that crop insurance may incent some farmers to convert highly erodible or wetlands to farmland.[47] Therefore, the next Farm Bill could also indicate this type of practice is not required to be eligible for crop insurance. This change could be complemented by an increase in the length of insurance policies, as discussed above, because insurance companies would benefit from the longer-term improvements in soil health.

  1. Tie crop insurance to a new conservation compliance provision for building soil health for climate ready agriculture

Currently, in order to qualify for crop insurance, farmers must satisfy two conservation compliance requirements, the Wetland Conservation (“Swampbuster”) and Highly Erodible Land Conservation (“Sodbuster”) provisions.[48] These provisions ensure, respectively, that farmers do not convert a wetland or plant crops on highly erodible land or a previously converted wetland.[49] While these current conservation requirements are beneficial in addressing some climate impacts, adding a conservation compliance requirement directly targeted at climate-related practices would improve upon them.

With 70 percent of farmland in the crop insurance program, changes in conservation compliance through the next Farm Bill or through RMA’s policies can drive big climate change benefits. Under Title II, Congress could create an additional conservation compliance requirement for climate-friendly agricultural practices, which could either be required to obtain crop insurance or could make farmers eligible for rebates. The types of on-farm practices that could mitigate risk and enhance climate resilience include more precise irrigation and fertilizer application, reduced tillage of the soil, cover cropping, altering crop rotations, and building buffer strips and riparian buffers. Particularly beneficial practices for building resilient soil include cover cropping, diversified crop rotations, reducing tillage, and efficient irrigation.[50]

In addition, enforcement gaps have limited the success of the existing conservation compliance requirements. To make the mechanism effective, it will be important to establish simple and effective enforcement, for example by using remote sensing, and to ensure that Natural Resources Conservation Service (NRCS) offices have sufficient resources to carry out enforcement efforts.

First, these proposals could produce significant climate benefits from increasing soil health, in terms of both mitigation and adaptation. Reform of the crop insurance and conservation titles could also help address some of the equity issues that currently exist between small and large farms. Existing USDA programs, described in the next section, could help with scalability and administrability. Finally, in terms of feasibility, while any change may be difficult, our stakeholder engagement indicated that farmers are open to programs that target soil health, given the potential economic benefits to their farms. While the actual on-farm impacts will vary based on how the program is designed and constructed, building more resilient, healthy soil can help improve environmental outcomes and decrease the risk of crop loss.[51]

Recommendation 2: Ensure Best Available Science and Research Guides Farm Bill Programs

Agricultural practices that promote climate change mitigation and adaptation, including those described above, are often regionally specific in their implementation. For many new climate-ready practices to be included in conservation compliance or crop insurance, the USDA would need to account for this regional specificity. For example, the benefits of many of the on-farm practices that improve soil health, including more precise irrigation and fertilizer application, reduced tillage of the soil, and altering crop rotations, vary by region and soil type. In some areas, no-till methods may be infeasible; farmers who try to implement no-till in these areas would likely continue to till to some degree or after a short period of time, resulting in quick reversal of the achieved carbon sequestration benefits. Furthermore, the technical specificity of choosing among these practices and correctly implementing them requires guidance at a local level.

To address these types of knowledge gaps and to provide technical assistance to states and farmers, the USDA has created a range of programs, including Climate Hubs, which were established at public land-grant universities in 2014.[52] The Hubs deliver science-based knowledge, practical information, and program support for farmers to engage in “climate-informed decision-making” by farmers.[53]

Increasing funding in the 2018 Farm Bill in Title VII, the Research title, could solidify and expand USDA’s ability to administer and scale climate research and outreach efforts across all regions of the country. Additionally, creating systems to collect and analyze regional data on pilot programs and ensure best practices are adopted could assist long-term efforts to incorporate climate policies into Farm Bill programs.[54] For these reasons the Farm Bill should provide additional funding for climate research and monitoring, especially focused on regional resilience.

Recommendation 3: Address the Significant GHG Contributions of Livestock Management

Improving livestock management, especially manure management, is a significant opportunity for mitigating emissions of methane and achieving several co-benefits for the public and farmers. There is currently very little regulation of livestock manure management. Manure is sometimes stored—uncovered—in a single collection site, which causes the methane to be released directly into the atmosphere. In addition to being a major GHG emissions source, it can cause a range of considerable environmental harms.[55]

  1. Require improved manure management, including the covering of lagoons

First, the upcoming Farm Bill could address manure management collection and storage methods. Practices can be improved through actions such as allowing livestock to roam,[56] covering manure lagoons, flaring the methane produced, or producing biogas for use. Simply covering a manure lagoon results in significant decreases in methane emissions, as well as decreased odors. Flaring is the combustion of methane, which yields water and carbon dioxide. Although flaring still emits GHGs, carbon dioxide is a less potent GHG than methane.

The Farm Bill could promote these practices either through incentives or mandates in the Conservation or Crop Insurance titles. For example, the Farm Bill could mandate or incentivize farmers with a threshold number of cattle, swine, or poultry cover manure and flare the produced methane to be eligible for crop insurance. Such a mandate would have the greatest impact at Concentrated Animal Feeding Operations (CAFOs), which may also be better able to bear the high capital costs associated with biogas production.

  1. Pursue strategies to decrease methane emissions, including biogas and other on-farm renewable energy production

Second, the Energy Title could incentivize on-farm biogas. On farms, many different substrates may be used to produce biogas, including animal excrements (including that of cattle, swine, poultry,[57] and horse), food waste, milling by-products, and catch crops (such as clover grass on farms without livestock).[58] Farmers can realize substantial savings from biogas production, including through substituting biogas for other energy sources, through substituting digestate[59] for commercial fertilizers,[60] and by avoiding disposal and treatment of substrates (such as for waste-water treatment). Farmers may also be able to sell carbon offsets.[61] In addition, farmers producing biogas can avoid some of the worst problems with animal agriculture: farmers must do something with the manure, and its storage can produce strong odors,[62] unhealthy conditions for workers and families,[63] and pollution through runoff in the worst scenarios.[64]

Farmers have two main options for biogas use: (1) generation of electricity for on-site use or sale to the grid; and (2) direct use of biogas locally, either on-site or nearby.[65] Using the biogas to fuel a generator to produce electricity is considered the most profitable use for most farms.[66] Another use is to upgrade the biogas, then called biomethane, to be injected into the national natural gas pipeline network as a substitute for extracted natural gas.

Because farmers could benefit financially from on-farm use or the sale of biogas, the Farm Bill should continue and expand funding for the Rural Energy for America Program, which offers cost-sharing grants and loans for renewable energy improvements. [67] However, these programs are most likely to benefit large farms because anaerobic digesters are expensive and require a large and constant supply of substrate to produce a return on investment. We therefore suggest the Farm Bill also fund pilot programs to assist small farm communities to form cooperatives so that they are also able to utilize this technology and participate in the grant or loan program.

Even with the available grants and loans, farmers are still taking a substantial financial risk. USDA or land-grant universities should actively help communities or cooperatives with the planning and application process. Large farms or cooperatives who are unable or unwilling to operate and maintain anaerobic digesters themselves could hire a company to lease the equipment and manage the biogas production process.[68] USDA Rural Development Agencies could be a valuable liaison between biogas management companies and farmers.

CAFOs could be part of a voluntary program or required to use anaerobic digesters due to their greater contribution to climate change and other environmental harms. Because CAFOs are responsible for high levels of greenhouse gas emissions and because anaerobic digesters are economically feasible for large operations, there is reason to consider the benefits that could be achieved by requiring these practices for large CAFOs in the Farm Bill.

Livestock management is a critical area for addressing climate impacts, and biogas has the potential to be a win-win for farmers willing to invest in alternative energy production.

Conclusion

The U.S. agricultural system must evolve to mitigate climate change and adapt to the effects of a changing climate. Opportunities for climate change mitigation and adaptation exist across the Farm Bill titles, from bolstering climate resilient infrastructure in the Rural Development title to incentivizing sustainable forest management in the Forestry Title. Taking action on climate measures in the next Farm Bill reauthorization will help farmers better plan for changing conditions, protect taxpayers from increasing risks, and assist the United States in meeting its global climate commitments. The next Farm Bill should incorporate climate risk management provisions, and state and local actors should consider ways to support these efforts.


[1] J.D., Harvard Law School, Class of 2017.

[2] M.P.P. Candidate, Harvard Kennedy School, Class of 2018.

[3] J.D. Candidate, Harvard Law School, Class of 2018.

[4] EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2015, at ES-21 (2017).

[5] Research Program on Climate Change, Agriculture, and Food Safety, Food Emissions (2016), https://perma.cc/YYL8-YSPM.

[6] EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2014, at 5-1 (2016) [hereinafter EPA, Inventory], https://perma.cc/HQ9B-BJYP.

[7] EPA, Overview of Greenhouse Gas Emissions [hereinafter EPA, Overview], https://perma.cc/7WS6-JXQY. The two to three percent of emissions unaccounted for are fluorinated gases, which are synthesized during industrial processes. Id.

[8] Natasha Gilbert, One-third of our Greenhouse Gas Emissions Come from Agriculture, Nature (Oct. 31, 2012), https://perma.cc/2GF7-ASMM.

[9] EPA, Inventory, supra note 7, at 5-1.

[10] Id.

[11] Id.

[12] Research Program on Climate Change, Agriculture, and Food Safety, Food Emissions (2016), https://perma.cc/YYL8-YSPM.

[13] See U.S. Dep’t of Agric., USDA Agriculture Climate Change Adaptation Plan 9 (2014) [hereinafter USDA, Adaptation Plan], https://perma.cc/8SM9-5NDX; Louise Jackson & Susan Ellsworth, Scope of Agricultural Adaptation in the United States: The Need for Agricultural Adaptation, in The State of Adaptation in the United States (2012), https://perma.cc/HS57-K35T.

[14] For example, a recent report from the Office of Management and Budget and the Council of Economic Advisers estimates that the annual cost of the crop insurance program will increase by $4 billion per year in 2080 as a result of the impacts of climate change. OMB & CEA, Climate Change: The Fiscal Risks Facing the Federal Government 6 (Nov. 2016), https://perma.cc/4Y22-P85V; see also USDA, Adaptation Plan, supra note 14, at 9.

[15] U.S. Dep’t of Agric., Climate Change and Agriculture in the United States: Effects and Adaptation 126–27 (2013) [hereinafter USDA, Effects and Adaptation], https://perma.cc/QW8T-Y4RL.

[16] M. McLeod et al., Cost-Effectiveness of Greenhouse Gas Mitigation Measures for Agriculture: A Literature Review, OECD Food, Agriculture and Fisheries Papers, No. 89, at 26 (2015).

[17] Peter Lehner & Nathan Rosenberg, Legal Pathways to Carbon-Neutral Agriculture, 47 Envtl. L. Rep. 10,845, 10,849 (2018).

[18] Id. at 19–21.

[19] For a more detailed review of how carbon sequestration can be increased in agriculture, see Daniel Kane, Nat’l Sustainable Agric. Coal., Carbon Sequestration Potential on Agricultural Lands: A Review of Current Science and Available Practices (2015), https://perma.cc/R4WA-2PPK.

[20] Adapted from P. Smith et al., Greenhouse Gas Mitigation in Agriculture, Philosophical Transactions of the Royal Society B, 363, 789–813 (2008).

[21] Alexandra Bot & José Benites, Food & Agric. Org. Of the United Nations, FAO Soils Bulletin 80, The Importance of Soil Organic Matter: Key to Drought-Resistant Soil and Sustained Food and Production 19 (2005), https://perma.cc/6VE8-6KG7.

[22] USDA, Effects and Adaptation, supra note 16, at 123; see also Nat’l Sustainable Agric. Coal., Climate Change and Agriculture Recommendations for Farm Bill Conservation Program Implementation 2 (2014), https://perma.cc/2JKC-AXSY.

[23] While these practices may generally lead to better resilience on farms, adaptation practices are highly region-specific.

[24] USDA, Effects and Adaptation, supra note 16, at 126–27 (2013).

[25] For example, in the Central Valley of California, an adaptation plan that included integrated changes in crop mix and altered irrigation, fertilization, and tillage practices, was found to be most effective for managing climate risk. Id. Along with the USDA Climate Hubs, the following organizations have undertaken projects related to regional agricultural adaptation research and planning: California Healthy Soils Initiative; Wisconsin Initiative on Climate Change Impacts; Southeast Florida Regional Climate Change Compact; The Mid-Atlantic Water Program; U.S. Midwest Field Research Network for Climate Adaptation.

[26] Id. at 126.

[27] Id.

[28] See COMET-Farm, https://perma.cc/4GR3-DHJH.

[29] U.S. Dep’t of Agric., About the Risk Management Agency, https://perma.cc/N49E-KQ3H.

[30] Dennis A. Shields, Cong. Research Serv., Crop Insurance Provisions in the 2014 Farm Bill 3 (2015).

[31] Id.

[32] Id.

[33] Dennis Shields, Cong. Research Serv., Federal Crop Insurance: Background 2 (2015).

[34] Cong. Budget Office, March 2016 Baseline for Farm Programs (2016), https://perma.cc/896T-TUJ9; see also Heritage Found., Addressing Risk in Agriculture (2016).

[35] U.S. Dep’t of Agric., Structure and Finances of U.S. Farms: Family Farm Report, 2014 Edition 32–33 (2014), https://perma.cc/S9YP-P6CY.

[36] Generally, the more diverse or specialized crops and livestock a farmer produces, the harder it is to obtain insurance. These policies are not designed to support small producers and the policies are administratively complex and burdensome for small farmers, with high premiums for small farmers. On the one hand, if small farmers used yield-based or revenue-based insurance policies, those farmers would need to purchase insurance for each crop, which requires producing a significant volume of each single crop to justify the paperwork and setting up a contracted purchase price from a processor. On the other hand, whole farm insurance policies base policies on average adjusted gross revenue of the farm, regardless of the variety of products the farmer grows. This type of policy is more appropriate for diversified farmers, but may still be too cumbersome for small farms to participate. See Jeff Schahczenski, Nat’l Sustainable Agric. Info. Serv., Crop Insurance Options for Specialty, Diversified, and Organic Farmers (2012), https://perma.cc/64P6-CTRC; Nat’l Sustainable Agric. Coal., Have Access Improvements to the Federal Crop Insurance Program Gone Far Enough?, NSAC’s Blog (July 28, 2016), https://perma.cc/PT37-RNNL.

[37] Shields, Federal Crop Insurance: Background, supra note 35, at 1.

[38] Linda Prokopy et al., Farmers and Climate Change: A Cross-National Comparison of Beliefs and Risk Perceptions in High-Income Countries, 56 Envtl. Mgmt. 492, 497 (2015).

[39] Bruce Babcock, Environmental Working Group, Cutting Waste in the Crop Insurance Program 10 (2013).

[40] Id.

[41] C. O’Connor, NRDC Issue Paper 13-04-A, Soil Matters: How the Federal Crop Insurance Program Could Be Reformed to Encourage Low-risk Farming Methods with High-reward Environmental Outcomes (2013).

[42] See, e.g., Heritage Found., Addressing Risk in Agriculture (2016).

[43] NSAC, 10 Ways USDA Can Address Climate Change in 2016, NSAC’s Blog (Dec. 30, 2015), https://perma.cc/L5AZ-NAF5.

[44] See Practical Farmers of Iowa, Cover Crops, https://perma.cc/7GHL-NVXQ.

[45] USDA’s Economic Research Service found that “[l]ands brought into or retained in cultivation due to these crop insurance subsidy increases are, on average, less productive, more vulnerable to erosion […] then cultivated cropland overall. Based on nutrient application data, these lands are also associated with higher levels of potential nutrient losses per acre.” USDA Economic Research Service, Report Summary: Environmental Effects of Agricultural Land Use Change (Aug. 2006); see also Daniel Sumner and Carl Zulauf, The Conservation Crossroads in Agriculture: Insight from Leading Economists. Economic and Environmental Effects of Agricultural Insurance Programs, The Council on Food, Agricultural and Resource Economics (2012).

[46] See Stephanie Ogburn, The Dark Side of Nitrogen, Grist (Feb. 5, 2010), https://perma.cc/9J6E-ZD9J (“About one percent of the world’s annual energy consumption is used to produce ammonia, most of which becomes nitrogen fertilizer.”).

[47] See, e.g., Anne Weir and Craig Cox, Envtl. Working Grp., Crop Insurance: An Annual Disaster (2015).

[48] Sodbuster, 16 U.S.C. § 3811 et seq.; Swampbuster, 16 U.S.C. § 3821 et seq.

[49] See Nat. Res. Conservation Serv., U.S. Dep’t of Agric., Conservation Compliance Provisions, https://perma.cc/6V9X-URBP.

[50] Id. at 7.

[51] O’Connor, Soil Matters, supra note 43, at 7.

[52] U.S. Dep’t of Agric. Climate Hubs, Mission and Vision, https://perma.cc/T46E-CSBT.

[53] Id.

[54] The existing ARS LTAR system, which conducts longterm sustainability research, could be used to inform the regional best practices communicated in outreach efforts. See Agric. Research Serv., U.S. Dep’t of Agric., Long-Term Agroecosystem Research (LTAR) Network, https://perma.cc/6XRT-FBTC.

[55] For example, manure management practices can create a public nuisance for which neighbors have little recourse. In addition, runoff from agriculture is not adequately regulated under the Clean Water Act and results in pollution to the nation’s waterways. Every year a hypoxic zone, also called a dead zone, develops where the Mississippi River dumps pollution from Midwest livestock and fertilizers into the Gulf of Mexico. See Kyle Weldon & Elizabeth Rumley, Nat’l Agric. L. Ctr., States’ Right to Farm Statutes, https://perma.cc/Y8XA-KUBR; Ada Carr, This Year’s Gulf of Mexico “Dead Zone” Will Be the Size of Connecticut, Researchers Say, Weather.com (Jun. 15, 2016), https://perma.cc/36ZZ-NKY9.

[56] Farms where the cattle range freely do not release as much methane to the atmosphere because the less consolidated manure is more likely to be absorbed into the soil rather than anaerobically digested to produce methane.

[57] Using poultry manure as a substrate can be difficult because feathers and poultry litter can clog anaerobic digesters. See Donald L. Van Dyne & J. Alan Weber, Special Article, Biogas Production from Animal Manures: What Is the Potential?, Industrial Uses/IUS-4 20, 22 (Dec. 1994).

[58] SustainGas, Sustainable Biogas Production: A Handbook for Organic Farmers 38 (2013), https://perma.cc/8354-G3A4.

[59] Digestate is the solid that is left over after biogas has been produced. Digestate can be sold or used on farm as fertilizer. It smells better than manure, is free of harmful bacteria, and contains nitrogen in a form that is more bioavailable for crops.

[60] 40 organic farms in Germany, in a region without livestock, have found it worthwhile to cooperate in supplying and transporting clover grass up to 50 km to an AD because the digestate provides them with a flexible organic fertilizer. See SustainGas, supra note 60, at 28. They find that the digestate leads to higher quality for their food crops. Id. “Biogas has to serve food production via improved nutrient supply,” one farmer says. Id.

[61] If farmers can show that they have reduced their methane emissions, they may be able to sell the carbon offsets in exchanges such as the California GHG cap and trade market. See Cal. Air Resources Bd., Compliance Offset Protocol, Livestock Projects: Capturing and Destroying Methane from Manure Management Systems (2014), https://perma.cc/68EF-2SB9.

[62] The odor-reducing benefits are viewed as especially desirable for poultry and swine farms.

[63] Biogas plants dispose of waste and sewage, making conditions healthier. Not only does the anaerobic digestion process remove pathogens, but because biogas production requires collecting manure at a central location, some unhygienic conditions are avoided. See Julia Bramley, et al., Tufts Department of Urban & Environmental Policy & Planning, Agricultural Biogas in the United States: A Market Assessment 122 (2011), https://perma.cc/Z4ER-S4SD.

[64] Livestock manure generated at cattle yards and dairy farms can contaminate surface and ground water through runoff. Anaerobic digestion sanitizes the manure to a large extent, decreasing the risk of water contamination. Id.

[65] EPA, AgSTAR Handbook: A Manual for Developing Biogas Systems at Commercial Farms in the United States, 2d. ed. 2-5 (K.F. Roos et al. eds. Feb. 2004).

[66] Id. at. 3-1. For most farms, electricity comprises 70% to 100% of energy use. Id.

[67] U.S. Dep’t of Agric., Rural Energy for America Program Renewable Energy Systems & Energy Efficiency Improvement Loans & Grants, https://perma.cc/5LE3-2QRF.

[68] This model is frequently used for wind energy production. See Agric. Research Serv., U.S. Dep’t of Agric., Wind and Sun and Farm-Based Energy Sources, Agric. Res., Aug. 2006, https://perma.cc/ZBJ9-R74Q.

Soil Conservation in California: An analysis of the Healthy Soils Initiative

Danika Desai. Managing Editor, UCLA Journal of Environmental Law & Policy.

This post is part of the Environmental Law Review Syndicate


I.                             Introduction to California’s Soils

California is called the golden state, named for the gold trapped in the Sierra Nevada mountains that drew desperate men like flies. Later, when the dream of easy wealth dried up, those same men moved to California’s Central Valley and planted wheat—acres and acres of it;[1] a different kind of gold. It turned out that California’s true wealth was in its soils, not in its precious metals.[2]

How do those soils fare today? Agricultural production has long served as a proxy for soil health, but it is an inaccurate proxy. Because top soil takes hundreds of years to form,[3] and erodes faster than the lifespan of civilizations but slower than the human lifespan, it is not the most immediate limiting factor upon agriculture nor the most visible.[4] This is especially true in California, where a fluctuating water supply dictates what and how much farmers can grow.

Moreover, California’s agriculture still flourishes, at least superficially. California remains the leading agricultural production state in the nation in terms of both value and crop diversity.[5] The counties within the San Joaquin Valley produce more food than any other comparably sized region in the world.[6] No other state, or combination of states, matches California’s productivity per hectare.[7] Stunning achievements all, but the continuing productivity of California’s agricultural sector has more to do with the Green Revolution’s miraculous technological trifecta: chemical fertilizers, pesticides, and controlled water supply[8] than with the health of the State’s soils.

Indeed, California’s soils face many challenges. Soil erosion detrimentally affects some 8.8 million acres in California.[9] Nitrogen fertilizer, the tech-fix to boost crop productivity and grow food in unhealthy soils, creates excess nitrogen in the soil, which leaches into the State’s waters, polluting them.  About 419,000 tons of nitrogen leach into California’s groundwater each year, 88% of it from agricultural sources.[10] Most of that nitrogen accumulates there, and will remain there for millennia.[11] The nitrogen problem, like most problems, affects poor people first. Groundwater in Tulare Lake Basin and Salinas Valley regularly exceeds state and federal standards for nitrate levels in drinking water.[12] The roughly 200,000 people who depend on that water are therefore highly susceptible to nitrate exposure from their drinking water.[13]

The most serious challenge that California’s soils face, at least from an agricultural perspective, is salinization.  More than half of California’s irrigated cropland is affected by salinization; the Imperial Valley and the Western San Joaquin Valley are the most impacted regions. [14] A study from the University of California, Davis found that if salinization continues at its current rate until 2030, it could cost the State between 1 and 1.5 billion dollars.[15]  In the San Joaquin Valley, more than 80,000 hectares of irrigated lands have been retired from agriculture, partly to reduce the load of selenium reaching the San Joaquin River and other waterways.[16] 

Farmers, the California government, academics, even the informed citizenry are not unaware of these challenges. But most of the proffered solutions revolve around water. In fact, almost all state-based attempts to address soil degradation rely on water quality standards, rather than soil protective measures. [17] While there is a close nexus between water and soil, not all soil degradation can be solved through water standards. Recently, however, there has been a renewed interest in soil health, as demonstrated by the California Healthy Soils Initiative, passed by the California Legislature in 2016. This paper examines the Healthy Soils Initiative within the larger context of soil conservation programs on the state and federal level. Although the Healthy Soils Initiative is an exciting step forward within the realm of soil conservation, soil, as the long-neglected environmental resource, deserves more; a comprehensive soil management program is necessary to truly realize the potential of healthy soils in California.  

II.                         Healthy Soil as a Solution to a Multitude of Environmental Problems

The National Resources Conservation Service (NRCS) defines soil health as “the continued capacity of soil to function as a vital living ecosystem that sustains plants, animals, and humans.”[18] Attributes of healthy soils include a diverse population of beneficial organisms, high levels of decomposed organic matter, low levels of toxic compounds, adequate (rather than excessive) levels of nutrients, a sufficiently porous surface, and good tilth.[19]

The benefits of healthy soils are manifold; proper soil management has the potential not only to mitigate all the challenges described in the previous section, but also to mitigate seemingly unrelated environmental problems.  Healthy soils reduce nutrient leaching; more nutrients are recycled and can be used by crops again. This means that less nitrogen makes its way into groundwater and other waterways, preventing water pollution.[20] Healthy soil holds more water and releases less water to evaporation.[21] Thus, fields would not have to be over-irrigated, a major cause of salinization,[22] and would also be more resilient to drought conditions, an important quality in drought-prone California. Healthy soils also improve plant health and yields, have the potential to sequester and reduce greenhouse gases, reduces sediment erosion and dust, improve water and air quality, and can promote biodiversity and provide wildlife benefits.[23]

III.                     Policies and Laws for Soil Health

A.                         Federal Laws and Programs for Soil Health

Most of the soil management programs in the United States were born out of the Dust Bowl, which was set in the context of the Great Depression. Even today, vestiges from that era mark the way the US thinks about soil. For one, unlike air and water, soil does not have its own sweeping protective statute. There are several reasons for this including the fact that soil’s crisis moment occurred in the 1930s rather than the 1960s, at a time when federal power was not yet fully centralized. In addition, soil erosion is mostly invisible to the public, soil is often privately owned unlike air and water; soil degradation is incremental and therefore invisible, and it can be compensated in the short term with increasing applications of commercial fertilizer.[24] Furthermore, soil management techniques are considered land-use decisions, which are normally regulated at the local level, rather than at the state or federal level.[25] All of these factors are challenges for implementing soil management practices today, and posed bigger obstacles in the 1930s, when large-scale soil management programs were just beginning.

Even though the Dust Bowl was perhaps the largest environmental catastrophe the US had experienced, it was partially overshadowed by the concurrent catastrophe of the Great Depression. Then President Franklin Delano Roosevelt saw soil conservation programs as a politically acceptable way to provide much needed economic relief to farmers. [26] Thus soil conservation programs have always had a dual and sometimes contradictory purpose: to conserve soil and to subsidize farmers, with the stronger emphasis on increasing farm income and improving crop productivity.[27] The early soil conservation programs were not designed to decrease soil erosion as much as possible per dollar, and until the 1980s, subsidies were not linked at all to conservation practices.[28]

Still, though imperfect, the soil management infrastructure that was instituted then, is the framework for the soil management programs that exists today. The Soil Conservation Act of 1935 established the Soil Conservation Service (SCS), which made funding available to farmers who implemented conservation practices on their land.[29]  These conservation practices included crop rotation, cultivation on contours, seeding grass waterways, creating windbreaks, and the use of pastures.[30] Farmers were also paid to retire old farmland.[31] The new SCS also encouraged soil conservation districts to organize landowners to tackle soil conservation democratically on the local level, and established demonstration projects to exemplify and encourage conservation practices.[32] This led to the formation of Soil Conservation Districts—now called conservation districts—3,000 of which still exist today.[33]

In 1994, the SCS became the Natural Resources Conservation Service (NRCS) of the United States Department of Agriculture,[34] and it still provides funding to farmers who implement conservation practices on their land. In fact, many of the conservation measures eligible for funding also remain the same.[35] Currently, the NRCS administers two main programs to combat soil degradation: the swampbuster and sodbuster programs, which condition farm bill subsidies on the implementation of certain conservation practices on land if that land is either highly erodible or wetlands.[36]

B.                         Soil Programs and Policies at the State Level
1.                           History of Soil Conservation Programs in California

All of the methodologies used for soil conservation at the federal level exist in California on the state level as well. In 1938, California adopted a modified version of the federal Standard Soil Conservation Act, which organized land into soil districts by founding the Resource Conservation Commission (RCC) and the Division of Resource Conservation (DRC).[37]  The DRC’s authority was codified in the California Resource Code §§ 9400 et. seq. The DRC was responsible for creating a comprehensive statewide Soil Conservation Plan.[38] However, the last statewide Soil Conservation Plan seems to have been completed in 1987.[39] The chief of the DRC was also supposed to “advise with organized resource conservation districts as to plans and proposals relating to resource conservation activities, and, when such plans or proposals are presented to him, approve, disapprove, or suggest modifications of such plans or proposals.”[40]

While the Division of Resource Conservation was an incredibly active governmental organization, at one time having more than 40 employees, it was eliminated in the 1970s because legislators believed that its purpose was redundant and already performed at the federal level by the SCS or at the local level.[41]  Between the 1970s and today, there has been a long line of agency deaths and rebirths. The closest living relative to the Division of Resource Conservation today is the Division of Land Resource Protection (DLRP), housed in the California Department of Conservation. [42]

Although the DRC has been eliminated, the Soil Conservation Districts within California (now called Resource Conservation Districts or “RCDs”) are still active. The RCDs have four main goals: to control runoff, to prevent erosion, to build developments for the redistribution of water, and to improve land capabilities. [43]  Originally RCDs were supposed to be guided by the DRC.[44] Now that the DRC no longer exists, RCDs have no official governmental overseer. Rather, they have formed the California Association of Resource Conservation Districts. The power of RCDs was greatly curtailed with the passage of Prop 13, which placed restrictions on property taxation.[45]

Today, the DLRP, the hereditary organization of the DRC, is responsible for administering the Agricultural Land Mitigation Program, the Sustainable Agricultural Lands Conservation Program, the California Farmland Conservancy Program, the Williamson Act, and the Farmland Mapping and Monitoring Program.[46] The DLRP also provides technical assistance and grants to the RCDs.[47] Aside from the RCDs most of these programs do not address soil directly, but rather provide easements, either agricultural or conservation easements, so that land is not converted into a more intensive use such as urban and residential use, or used for resource extraction.

The California Department of Food and Agriculture (CDFA) also provides some soil management programs. In 1995, the California Legislature passed the Cannella Environmental Farming Act.[48] The Act, codified in The California Food and Agriculture Code §§ 560-568, required the CDFA to “shall establish and oversee an environmental farming program. The program shall provide incentives to farmers whose practices promote the well-being of ecosystems, air quality, and wildlife and their habitat.”[49] The Act also created the Scientific Advisory Panel on Environmental Farming to “advice and assist, federal, state, and local government on issues relating to air, water, and wildlife habitat” in the context of agriculture.[50]

Today the CFDA’s Office of Environmental Planning and Innovation, coordination with the Scientific Advisory Panel, oversees five programs: The Dairy Digester Research and Development Program, the State Water Efficiency Enhancement Program, the Office of Pesticide Consultation and Analysis, the Alternative Manure Management Practices, and most recently, the Healthy Soils Initiative Program.[51]

2.                           The Healthy Soils Initiative

The Healthy Soils Initiative (hereinafter “Initiative”) is a “is a collaboration of state agencies and departments, led by the California Department of Food and Agriculture, to promote the development of healthy soils.”[52] The program has five main goals: to protect and restore soil organic matter in California’s soils; to identify sustainable and integrated financing opportunities to facilitate healthy soils; to provide for research, education and technical support to facilitate healthy soils; to increase governmental efficiencies to enhance soil health on public and private lands; and to promote interagency coordination and collaboration to support soils and related state goals.[53]

In some ways, the Initiative is heavily modeled off of existing federal soil conservation programs like those administered by the NCRS. Like the NRCS’ sodbuster program, the Initiative provides funding to farmers who adopt an array of good soil management practices. [54] In fact, many of these practices are the same practices that the NRCS already subsidizes. In this way, the Initiative is merely a state supplement to an existing federal soil management scheme. However, the Initiative has added the practice of compost applications to the list of subsidized practices, something the NRCS does not yet cover. [55]   

Also, like early soil conservation programs, the Initiative is dedicating 40% of its overall funding, 3 million dollars, to demonstration projects.[56] Unlike the subsidies for general good soil management practices, the demonstration projects are more closely aimed at carbon sequestration. The demonstration project must “incorporate farm management practices that result in greenhouse gas benefits across all farming types with the intent to establish or promote healthy soils.”[57] The objective of the demonstration projects is to “demonstrate to the farmers and ranchers in California Agriculture that specific management practices sequester carbon, improve soil health and reduce atmospheric greenhouse gases.”[58] Although the soil health requirement is still incorporated into the demonstration project, the main goal seems to be successful carbon sequestration. Like the early soil conservation programs, then, the Initiative also has a dual purpose: mitigating climate change and promoting soil health.

However, the Initiative also departs from previous soil conservation programs in one respect: the Initiative recognizes soil as an ecosystem and attempts to manage it that way. The Healthy Soils Action Plan states “[h]ealth of agricultural soil relates to its ability to build and retain adequate soil organic matter via the activity of plants and soil organisms. Adequate soil organic matter ensures the soil’s continued capacity to function as a vital living ecosystem with multiple benefits that sustains and produces food for plants, animals, and humans.”[59] This is an exciting step forward. One of the major critiques of previous soil conservation programs is that they “address soil quality in an after-the-fact manner, much as the first generation of air and water pollution laws focused on end-of-the-pipe pollution…Today, soil programs in the United States address erosion and contamination, but not nutrient loss and other fundamentals essential to sustainable soils. A new law inspired by an awareness of the ecological dimensions of soil policy would recognize the major role that healthy soils play.”[60] The Initiative does recognize this ecological dimension of soils, stating that soils can improve plant health and yields, increase water infiltration and retention, sequester and reduce greenhouse gases, reduce sediment erosion and dust, improve water and air quality, and improve biological diversity and wildlife habitat.[61] Consequently, the Initiative is a holistic approach to soil management, and has the potential to actually promote the production of healthy soils rather than solving just one isolated consequence (such as nutrient leaching) of unhealthy soils.

Moreover, unlike the soil conservation programs arising out of the Dust Bowl, the Initiative is not a welfare program in disguise. Instead, the primary goals of the Initiative are environmental, not economic: “The objective of this new Healthy Soils Program is to build soil carbon and reduce agricultural greenhouse gas (GHG) emissions.”[62] Governor Brown emphasized this goal again in his 2015-2016 proposed budget, stating, “as the leading agricultural state in the nation, it is important for California’s soils to be sustainable and resilient to climate change.” While sustainability has long been recognized as a need in US soil conservation programs (that is the whole point of reducing erosion), resilience implies an added dimension—it is not just ensuring that top soil exists for future generations, but that the quality of that soil is healthy and thriving in all its component parts.

3.                           Challenges for the Healthy Soil Initiative

The Initiative faces a few obstacles in reaching its goal of achieving healthy soil in California. First, although the Initiative is not a welfare program in disguise, like the early soil conservation programs, it too has a dual purpose: climate change mitigation and the promotion of healthy soils. While the Initiative itself makes much of the fact that these two goals align, this is not always the case. Second, and relatedly, the Initiative has limited funding—and that funding comes from the climate change fund, meaning it is in jeopardy if the program fails to help farmers and ranchers actually sequester carbon. Third, the Initiative’s success relies on the implementation at the local level, something that requires coordination with local agencies and existing organizations that provide technical assistance to California’s agricultural producers. This coordination, especially with the RCDs, could be strengthened.

a)                           The Initiatives’ Dual Purpose

As stated above, the Initiative has a dual purpose: to mitigate climate change and to promote healthy soils. Indeed, one of the main flaws of the federal soil conservation programs was the confusion of its purpose: soil erosion control or farmer welfare, which allowed the goal of increasing farm productivity and sustaining the financial stability of farmers to overtake the soil conservation goals. [63] Here, there is the possibility of the same.

While healthy soils have a range of positive benefits, carbon sequestration is not always one of them. For example, one indicator of healthy soils is the amount of organic matter the soil contains (i.e. the carbon content of the soil), and this has been touted as a climate change mitigation measure. However, while the addition of manure or crop residues to the soil is “an excellent means of improving soil physical, chemical, and biological conditions…it does not represent a transfer of [carbon] from atmosphere to soil.”[64] Instead, it can serve to move carbon from one soil to another, with no effect on atmospheric carbon.[65] Thus increasing the carbon content of soils has a climate change mitigation effect when that carbon would have otherwise been burned, but not if that carbon was going to return to the soil anyway.[66] In particular, carbon additions to grasslands (such as the application of compost to grasslands) will have almost no climate mitigation effect because there is very little contact between the manure and the grassland soils, so most of the carbon just returns to the atmosphere.[67]

Other practices, like no-till agriculture, which reduces the disturbance of surface soils and therefore more permanently stores carbon in the soil, may also not mitigate climate change in the long run because no-till sometimes increase nitrous oxide emissions from the soil, which is also a greenhouse gas.[68] Despite the questionable nature of these practices as climate change mitigation measures, the Initiative includes both (compost application to grasslands and no-till agriculture) as subsidized soil management practices.

Conversely, sometimes a practice might actually be good for mitigating climate change but bad for soil health. For example, burning straw rather than using it as mulch could mitigate climate change if it is used to replace fossil fuels as an energy source.[69] However, this would also decrease soil quality, as it removes carbon that would otherwise return to the soil, and releases it into the atmosphere.

The actual sequestration of carbon in soils “would require major changes in cropping systems or significant research.”[70] These practices include the use of agroforestry and intercropping, which increases the rate of input of organic matter to soils, using perennials in place of annual crops because perennials store more carbon than annuals, and breeding crops to have longer and deeper roots so that they can exude carbon into subsoils for more permanent storage.[71] However, currently these practices are not among those that the Initiative will subsidize.[72]  

Thus it is clear that some soil management practices improve both soil health and mitigate climate change (agroforestry, intercropping, the use of perennials, the use of plants with deep roots), some soil management practices improve soils but do not mitigate climate change (no-till), some practices mitigate climate change but are detrimental to soil health (burning straw), and some soil management practices do neither (compost application to grasslands). The Initiative will have to resolve these sometimes contradictory practices, and prioritize certain goals over others.

            Moreover, although the point of the Initiative may not be economic relief to farmers, crop productivity still features as a goal for the demonstration projects funded by the Initiative.[73] If carbon sequestration and soil health sometimes require different practices, it will be even more challenging to discover practices that not only sequester carbon and build healthy soils, but also improve crop yields. Indeed, the application of Nitrogen fertilizer, which is perhaps the single biggest contributor to the increase in yields following the Green Revolution, has a documented negative effect on carbon sequestration in soils because it decreases the soil microbial community and prevents plants from growing longer and deeper roots—both of which increase the soil’s potential to store carbon.[74]

b)                           The Initiative’s Funding

Another challenge the Initiative must grapple with is the available funding. Successful incentive and educational programs are highly dependent on funding. The CDFA has appropriated 7.5 million dollars for the Healthy Soils Program. Given the scope of the challenges facing California’s soils, this amount of money is not that much. For example, the USDA-NRCS has a fund of 19 million dollars to combat criteria air pollution from agricultural sources in the San Joaquin Valley alone,[75] a problem that could also be mitigated through the development of healthy soils.  

In addition, the Initiative is funded through the Greenhouse Gas Reduction Fund.[76] As discussed above, not all the practices embraced by the Initiative actually reduce greenhouse gasses. Moreover, the demonstration projects, which are supposed to “increase on-farm carbon sequestration, greenhouse gas reductions, increase water holding capacity and increase crop yields”[77] are funded for three years.[78] The last of the three years funded partially by the demonstration project itself and partially by the Initiative.[79]  Since changes in the carbon content of soil occur slowly,[80] it is unclear that a three-year demonstration project will actually yield relevant results. If, for example, the Initiative succeeds in improving soil quality but fails at mitigating climate change, will the program be deemed a success or a failure? Healthy soils have huge environmental benefits regardless of whether they also mitigate climate change or increase crop yields. Mixing multiple goals dilutes the Initiative’s effectiveness at protecting soil.   

c)                            The Initiative’s Collaboration with Existing Programs and Organizations.

American soil management is internationally recognized as successful, in large part because of farmer participation at the local level.[81] One key player in the local implementation of soil conservation practices in California are the RCDs. However, the Initiative is not using the RCDs to their fullest potential. In a comment letter on the Healthy Soils Program, the California Association of Resource Conservation Districts encouraged the Initiative to work with the RCDs, noting that “[c]ollaboration with existing NRCS and RCD programs and funding will be vital in order to ensure the practical applicability and longevity of [the Initiative],” and emphasizing that the RCDs’ rapport with landowners and communities are necessary to successfully implement  new management practices.[82] Likewise in another comment letter to the CDFA about the Initiative, the Center of Carbon Removal noted that the role of non-profits and NGOs to assist and coordinate with agricultural producers was not well-established in the Initiative: “avenues for non-profit and non-governmental actors to assist and coordinate with agriculturalists are not well established…Clarification on the avenues for nonprofit or academic partnership… offer an opportunity to increase the involvement of non-agriculturalists and ensure long term success of pilot projects.”[83] In addition, certain parts of the state have poor access to RCDs. The San Joaquin Valley, one of the regions most impacted by agricultural pollution and a region where very few farmers use conservation practices, has only one RCD for the entire Fresno County. [84] Since RCDs are key in providing technical assistance to agricultural producers, certain areas of the state (and perhaps the portions most in need of assistance) may not have the same kind of access to the resources that the Initiative provides.

This lack of coordination with local organizations is a symptom of a decentralized, bottom-up approach to tackling an environmental problem. With no single oversight organization addressing soil pollution, it is difficult to locate the organizations that have expertise, identify the areas in California most in need of help, and coordinate between different government-funded programs. This will make it difficult for the Initiative to fully deploy all the resources at its disposal in the most efficient way possible. This challenge is not new to soil regulation—soil conservation programs, largely because of the lack of a protective statute—has led to a “fragmented…program formed by laws enacted in a piecemeal fashion without forethought as to how activities interacted.”[85] The Initiative, in a certain sense, is another piecemeal attempt to address a systematic and pervasive problem—but one that diverges from previous efforts by recognizing soil as an ecosystem rather than an inert resource.

IV.                     Beyond the Healthy Soil Initiative

A.                         Using Existing Water Law to Prevent Soil Degradation

Currently, the way that states regulated soil, in the absence of a comprehensive statute, is through water laws. The Clean Water Act can be used to reduce nutrient run-off into waterways. If a waterbody is impaired, states can set Water Quality Standards that limit the amount of nutrients allowed in the water. The EPA even encourages states to use trading programs to encourage sources to leach fewer nutrients into waterways.[86] California currently has one of the most aggressive programs to curb erosion and sedimentation into rivers by strongly regulating forestry practices.[87] However, these controls only limit certain problems associated with soil degradation, like nutrient leaching or erosion into waterways. They cannot address the multifaceted challenges affecting soil health.

In addition, water regulatory bodies do not always feel that soil regulation is within their statutory mandate. For example, in 2016, the California Department of Water Resources and the State Water Resources Control Board received comments when implementing Executive Order B-37-16 to increase water conservation in the State. The Order required certain agricultural producers to develop An Agricultural Water Management Plan and use Efficient Water Management Practices.[88] Several organizations suggested that one Efficient Water Management Practice should be to develop healthy soils, as healthy soils retain more water content and require less irrigation.[89] However, this recommendation was not adopted. Evidently, soil health was outside the purview of the water regulatory agencies.

Scholars also have suggested using water quality as a means of protecting soil. In Achieving Sustainable Irrigation Requires Effective Management of Salts, Soil Salinity, and Shallow Groundwater, Wichelns and Qadir suggest that requiring farmers to pay a deposit related to the salt in their irrigation water would encourage farmers to utilize salt management programs on their farms. [90]  A farmer would have to pay the government an amount of money based on the load of salt he/she applied to the land.[91] The amount would be determined by a governmental agency and would vary depending on how much salt was present in the water during a certain season.[92]

Trading programs or pricing nutrient leakage are both good ideas, but both treat isolated consequences of unhealthy soils rather than attempting to promote healthy soils.  In other words, these kinds of trading systems are still fragmented—they can be used to mitigate nutrient leaching and salinization, two effects of unhealthy soils, but they cannot solve other aspects of soil degradation such as lackluster microbial communities, compaction, or decreased carbon content. For that, a comprehensive soil management program is necessary.

B.                         Creating New Legislation: a Comprehensive Soil Management Program

Although the Healthy Soils Initiative is an exciting step toward realizing the potential benefits of soil in California, it is not enough to realize healthy soils in by itself. Additional solutions are necessary, and ultimately, a comprehensive soil conservation program is necessary to manage soil in a way that promotes and sustains the integrity of soil quality in the state. Currently, soil is managed through a collection of programs and fragmented environmental laws. But soil deserves to be treated like the invaluable resource that it is. A comprehensive soil management program would have what other resources like air and water have, namely: an agency dedicated to soil management and a statute protecting a baseline of soil quality. Like the other major resources, soil should not have to depend only upon voluntary and incentive-based measures. Rather, like both water and air, there should be a mix of incentive and regulatory mechanisms to protect soil as a resource. Moreover, soil should be protected for its own sake—not as a means to increase crop productivity or as a means to sequester carbon, even though both those goals are important.

1.                           An agency dedicated to soil management

In California, air has the Air Resource Board and water has the State Water Resources Control Board, both administered by the California Environmental Protection Agency. Soil deserves a similar agency. This could be accomplished simply by resurrecting the Division of Resource Conservation, formerly in charge of the RCDs, and “administratively abolished” in the 1970s.[93] The defunct DRC already had a mandate to “consider the whole problem of soil conservation within the state, and…formulate, in cooperation with other state agencies, interested organizations, and citizens, a comprehensive resource conservation policy for the state.”[94] This mandate could be updated to incorporate some of the ecosystem approaches described in the Healthy Soils Initiative. Currently, however, no organization or person is carrying out that mandate, even though a comprehensive soil plan is exactly what is needed to actually realize healthy soils in California. This should be all the easier given the statutory framework already exists under California law.

If reinstating the DRC is too complicated, the Association of Resource Conservation Districts could be charged with creating the state-wide plan for soil conservation and management instead.[95] However, the Association would have to be funded appropriately and have a head appointed by the California Department of Conservation, in order to have unified leadership.  Whatever the implementing body, an integrated vision for the fate of California soils is necessary to avoid the piecemealed, gap-filled, inadequate soil protections that exist today.

2.                           A protective state statute for soil

Some scholars have suggested that in order to adequately protect soil as a natural resource, a statute designed to protect soil is necessary. In Farms, Their Environmental Harms, and Law, J.B. Ruhl suggests that while direct regulation may not be the best method for controlling most farm-related pollution (including soil erosion and nutrient leaching), regulatory approaches would be appropriate for the largest farms, that operate more like factories than traditional farms.[96] A soil protection statute could directly regulate these largest agricultural polluters without creating an impossible administrative burden by attempting to capture every farm in the state.

Likewise, in Our Sedimentation Boxes Runneth Over: Public Lands Soil Law as the Missing Link in Holistic Natural Resources Protection, Peter Lacy describes how a protective federal statute for soil on federal public lands could serve to protect soil and fill statutory gaps in other environmental regulation.[97] Based on soil conservation goals about the soil’s ability to regulate water flow, sustain plant and animal diversity, filter, buffer, immobilize, and detoxify pollutants, and cycle and store nutrients, Lacy suggest that the law could classify soil management areas needing differing levels of protection.[98] These designations would rely on local soil surveys. Like the designated use provisions in the federal Clean Water Act, the designated use of a soil management area would determine the level of protection needed to achieve the use of the soil in that area.[99]   Achievement of a certain level of soil protection could be monitored and enforced using objective metrics such as the levels of organic matter and nutrients in the soil, level of O-horizon disturbance, slope characteristics, and  physical, chemical, and biological properties within soil (like ph, microbial life, compaction, etc.).[100] Lacy argued that this would be possible because there is an extensive database of information available about soil properties from around the country; the federal government has been collecting this kind of information since 1895.[101] Indeed, the United States is a world leader in soil research and monitoring.[102] This extensive information database would provide the perfect springboard to create science-based legislation that could “be used to designate different levels of protection and management, set standards, assess proposed agency actions, and implement mitigation requirements.”[103]

Although both these suggestions were targeted at federal level rather than a state level, the current political reality makes new federal environmental legislation impossible. Meanwhile, California remains a leader in environmental issues not only in the United States, but around the world. California could be the first state to introduce comprehensive soil legislation, simultaneously bringing large farms into the environmental regulatory fold and achieving a holistic environmental regulatory program that protects more facets of the natural world.

V.                         Conclusion

We breathe air. We drink water. And we eat food, grown in soil. Yet soil regulation has fallen far behind other environmental protections in the United States. This is all the more surprising given that soil degradation may well be the oldest and most enduring environmental problem, plaguing ancient civilizations in the Middle East, Greece, Rome, and beyond.[104]  One can, after all, measure the lifespan of a civilization by how fast that civilization erodes its topsoil.[105] While the Healthy Soils Initiative is an exciting step forward, recognizing that soils are an ecosystem within themselves, and must be managed as such, a comprehensive soil management scheme is necessary to ensure true soil health in the state. In order to accomplish this, California should give soil its due: provide it with a statute of its own and an agency to administer that statute.


[1] Alan L. Olmstead and Paul W. Rhode, Evolution of California Agriculture 1850-2000, UNIVERSITY OF CALIFORNIA GIANNINI FOUNDATION OF AGRICULTURAL ECONOMICS DIVISION OF AGRICULTURE AND NATURAL RESOURCES 1, 2 (2003), https://s.giannini.ucop.edu/uploads/giannini_public/4e/a8/4ea8b9cc-df88-4146-b1ae-e5467736e104/escholarship_uc_item_9145n8m1.pdf.

[2]  For an example of how perfect California soils were for agriculture see George West, San Joaquin County Biographies, in A HISTORY OF THE SAN JOAQUINE VALLEY 526 (J.S. Slater ed., 1890) (stating “…the deep stratum of heavy, marly, sub-soil, overlaid by rich, black loam, with surface water enough to maintain a moist condition of the sub-soil without saturation—the vegetation being influenced by the warm summers of the San Joaquin Valley, tempered at that point by the inward flow of moist air which follows tide water to Stockton….Perfect maturity of large crops is attained…under these conditions, and the composition of the soil insures the qualities sought by connoisseurs”).

[3] David Montgomery, Soil erosion and Agricultural Sustainability, PROCEEDINGS OF THE NATIONAL ACADEMY OF SCIENCES OF THE UNITED STATES OF AMERICA 13268, 13270 (2008).

[4] D.S. Powlson et al., Soil Management in Relation to Sustainable Agriculture and Ecosystem Services, 36 FOOD POLICY S72, S74 (2010). 

[5] CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE, https://www.cdfa.ca.gov/Statistics/, (last visited May 9, 2017).

[6] Environmental Farming Act Science Advisory Panel: Biannual Report, CDFA 1, 28 (2013) https://www.cdfa.ca.gov/oefi/efasap/docs/Science_Panel_Report.pdf.

[7] W.E. Rees, North American Soils and World Food, in INTERNATIONAL YEARBOOK OF SOIL LAW 2016 1, 26 (Herald Ginzky et al eds., 2016).

[8] See B.H. Farmer, Perspectives on the ‘Green Revolution’ in South Asia, 20 MODERN ASIAN STUDIES 175,  https://doi.org/10.1017/S0026749X00013627 (1986) (describing technologies of the Green Revolution).

[9]Ralph Grossi et al., California’s Shrinking Farmland, CALIFORNIA DEPARTMENT OF WATER RESOURCES, Bulletin 22, http://ucce.ucdavis.edu/files/repositoryfiles/ca4107p22-63026.pdf.

[10] The California Nitrogen Assessment: Challenges and Solutions for People, Agriculture, and the Environment, UNIVERSITY OF CALIFORNIA AGRICULTURE AND NATURAL RESOURCES 1, 7. (Thomas P. Tomich, ed.) http://asi.ucdavis.edu/programs/sarep/research-initiatives/are/nutrient-mgmt/california-nitrogen-assessment/ExecutiveSummaryLayout_FINAL_reduced.pdf.

[11] Id.

[12] Id. at 10.

[13] Id.

[14] Soil Salinization, CDFA, https://www.cdfa.ca.gov/agvision/docs/Soil_Salinization.pdf.

[15] Salinity in the Central Valley: A Critical Problem, WATER EDUCATION FOUNDATION, http://www.watereducation.org/post/salinity-central-valley-critical-problem, (last visited May 9, 2017).

[16] Dennis Wilchelns and Manzoor Qadir, Achieving Sustainable Irrigation Requires Effective Management of Salts, Soil Salinity, and Shallow Groundwater, 157 AGRICULTURE WATER MANAGEMENT 31, 35 (2015).

[17] J. William Futrell, The IUCN Sustainable Soil Project and Enforcement Failures, 24 PACE ENV. L. R. 99, 110 (2007).

[18] NATURAL RESOURCES CONSERVATION SERVICE: SOILS, https://www.nrcs.usda.gov/wps/portal/nrcs/main/soils/health/, (last visited May 9, 2017).

[19] SUSTAINABLE AGRICULTURE RESEARCH & EDUCATION, Qualities of a Healthy Soil, http://www.sare.org/Learning-Center/Books/Manage-Insects-on-Your-Farm/Text-Version/Managing-Soils-to-Minimize-Crop-Pests/Qualities-of-a-Healthy-Soil, (last visited May 9, 2017).

[20] Bobby Bell and Brenda Platt, Building Healthy Soils with Compost to Protect Watersheds, THE INSTITUTE FOR LOCAL SELF-RELIANCE 1, 7 (2013) http://ilsr.org/wp-content/uploads/2013/05/Compost-Builds-Healthy-Soils-ILSR-5-08-13-2.pdf.

[21] NATIONAL RESOURCES CONSERVATION SERVICE, Soil Health: Key Points, (2013) https://www.nrcs.usda.gov/Internet/FSE_DOCUMENTS/stelprdb1082147.pdf.

[22] NATIONAL RESOURCES CONSERVATION SERVICE, Soil Quality Resource Concerns: Salinization (1998) https://www.nrcs.usda.gov/Internet/FSE_DOCUMENTS/nrcs142p2_053151.pdf.

[23] CALIFORNIA DEPARTMENT OF AGRICULTURE, Healthy Soils Initiative, https://www.cdfa.ca.gov/oefi/healthysoils/HSInitiative.html (last visited May 9, 2017).

[24] John H. Davidson, Factory Fields: Agricultural Practices, Polluted Water and Hypoxic Oceans, 9 GREAT PLAINS NAT. RESOURCES J. 1, 17 (2004).

[25] Id.

[26] Sandra S. Batie, Soil Conservation in the 1980s: A Historical Perspective, 59 AGRICULTURAL HISTORY 107, 110 (1985).

[27] Id.  

[28] Id.

[29] Zachary Cain and Stephen Lovejoy, History and Outlook for Farm Bill Conservation Programs, CHOICES (May 9, 2017), http://www.choicesmagazine.org/2004-4/policy/2004-4-09.htm.

[30] Davidson, supra, note 24.

[31] NATURAL RESOURCES CONSERVATION SERVICES, More Than 80 Years of Helping People Help the Land: A Brief History of NRCS, https://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/about/history/?cid=nrcs143_021392 (last visited May 9, 2017).

[32] NATIONAL RESOURCES CONSERVATION SERVICE, supra note 31.

[33] NATIONAL ASSOCIATION OF CONSERVATION DISTRICTS, http://www.nacdnet.org/about-nacd/what-we-do/federal-policy/, (last visited May 9, 2017).

[34] Davidson, supra note 24, at 18.

[35] NATURAL RESOURCES CONSERVATION SERVICE, Core4 Conservation Practices Training Guide: The Common Sense Approach to Natural Resource Conservation, i, iv (1999) https://www.nrcs.usda.gov/Internet/FSE_DOCUMENTS/nrcs143_025540.pdf

[36] NATIONAL RESOURCE CONSERVATION SERVICE, Highly Erodible Land Conservation Compliance Provisions, https://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/programs/alphabetical/camr/?cid=nrcs143_008440 (last visited May 10, 2017).

[37] CALIFORNIA DEPARTMENT OF CONSERVATION, DLRP Helps California Balance Growth with Agricultural Production, http://www.conservation.ca.gov/index/AboutUs/Pages/aboutUs_DLRP.aspx (last visited May 9, 2017).

[38] Cal. Pub. Res. Code § 9108. 

[39] California Agricultural Evaluation and Site Assessment Model: Instruction Manual, 1, 3 (1997), http://www.conservation.ca.gov/dlrp/lesa/Documents/lesamodl.pdf.

[40] Cal. Pub. Res. Code § 9063.

[41] CALIFORNIA DEPARTMENT OF CONSERVATION, supra note 37; Although weirdly, the existence of the DRC is still statutorily mandated. See Cal. Pub. Res. Code § 9051“There is in the Department of Conservation the Division of Resource Conservation.”

[42] CALIFORNIA DEPARTMENT OF CONSERVATION, supra note 37.

[43] Cal. Pub. Res. Code § 9151; The Resource Conservation District Guidebook: A Guide to District Operations and Management, CDC 1, 5 (1999), http://www.conservation.ca.gov/dlrp/RCD/pubs/RCD_guidebook/Documents/RCD_Guide_vol3.pdf.

[44] SAN MATEO RESOURCE CONSERVATION DISTRICT, Authorizing Statute for California Resource Conservation Districts, http://www.sanmateorcd.org/wp-content/uploads/2015/09/AUTHORIZING-STATUTE-FOR-CALIFORNIA-RESOURCE-CONSERVATION-DISTRICTS.pdf, (last visited May 9, 2017).

[45] Id; The Resource Conservation Guidebook, supra note 43.

[46] CALIFORNIA DEPARTMENT OF CONSERVATION, http://www.conservation.ca.gov/dlrp (last visited May 9, 2017).

[47] Id.

[48] California Food and Agriculture Code § 560.

[49] California Food and Agriculture Code § 566(a).

[50] Id.

[51] CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE, The Office of Environmental Farming, https://www.cdfa.ca.gov/oefi/ (last visited May 9, 2017).

[52] CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE, Healthy Soils Initiative Fact Sheet, https://www.cdfa.ca.gov/oefi/healthysoils/docs/HealthySoilsFactSheet.pdf (last visited May 9, 2017).

[53] Id.

[54] See Environmental Farming Act Science Advisory Panel California Department of Food and Agriculture Meeting Agenda PowerPoint (March 16, 2017), https://www.cdfa.ca.gov/oefi/efasap/docs/Binder-EFSAP-Meeting-03162017.pdf [hereinafter EFASA PowerPoint] (including No-till and Reduced-till, Cover crops, Cropland and Grassland Compost Application (Not a separate NRCS Practice), Improved Nutrient Management, Herbaceous Cover and Riparian Herbaceous Cover, Herbaceous Wind Barriers and Vegetative Barriers, Contour Buffer Strips and Riparian Forest Buffers, Field Borders, Filter Strips, Woody Cover, Windbreak/ shelterbelt establishment/renovation, Hedgerow Planting, and Silvopasture as subsidized practices).

[55] Id.

[56] Id. at green p. 3.

[57] Id at green 6.

[58] Id.

[59] CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE, Healthy Soils Action Plan, https://www.cdfa.ca.gov/oefi/healthysoils/docs/CA-HealthySoilsActionPlan.pdf (last visited May 9, 2017).

[60] J. William Futrell, New Action for Soil Protection A Solid Understanding of the Vital Role of Sustainable Soils Is an Environmental Imperative, 39 ENVTL. L. REP. NEWS & ANALYSIS 10077, 10078–79 (2009).

[61] CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE, Healthy Soils Initiative, https://www.cdfa.ca.gov/oefi/healthysoils/HSInitiative.html (last visited May 9, 2017).

[62] CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE, Healthy Soils Incentives Program, https://www.cdfa.ca.gov/oefi/healthysoils/HSInitiative.html (last visited May 9, 2017).

[63] Batie, Agricultural History, supra note 26 at 109.

[64] D.S. Powlson et al. Soil Carbon Sequestration for Mitigating Climate Change, in HANDBOOK OF CLIMATE CHANGE AND AGROECOSYSTEMS: IMPACTS, ADAPTATION, AND MITIGATION, 400 (Daniel Hillel and Cynthia Rosenzweig, eds., 2011).

[65] Id.

[66] Id.

[67] Id.

[68] Powlson, supra note 4.

[69] D.S. Powlson et al, supra note 64.

[70] Id.

[71] Andy Whitmore et al., Sub-Project A of Delfra Project SP1603: Studies to Support Future Soil Policy, DEPARTMENT FOR ENVIRONMENT, FOOD AND RURAL AFFAIRS RESEARCH PROJECT FINAL REPORT 1, 5 (2010).

[72] CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE, supra note 52.

[73] See CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE, supra note 59 (stating that demonstration projects should “increase on-farm carbon sequestration, greenhouse gas reductions, increase water holding capacity and increase crop yields.”) (emphasis added).

[74] S.A. Kahn et al, The Myth of Nitrogen Fertilization for Soil Carbon Sequestration, 36 J. ENVIRON. QUAL. 1821, https://dl.sciencesocieties.org/publications/jeq/abstracts/36/6/1821; Daniel Kane, Carbon Sequestration Potential in Agricultural Lands: A Review of Current Science and Available Practices, NATIONAL SUSTAINABLE AGRICULTURE COALITION BREAKTHROUGH STRATEGIES AND SOLUTIONS 1, 10 (2015) http://sustainableagriculture.net/wp-content/uploads/2015/12/Soil_C_review_Kane_Dec_4-final-v4.pdf.

[75] NATIONAL RESOURCES CONSERVATION SERVICE, $19 Million Available to California’s Farmers to Improve Air Quality, https://www.nrcs.usda.gov/wps/portal/nrcs/detail/ca/newsroom/releases/?cid=nrcseprd1322668 (last visited May 10, 2017).

[76] CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE, supra note 59.

[77] Id.

[78] EFASA PowerPoint, supra note 54.

[79] Id.

[80] Powlson et. al, supra note 4.

[81] Futrell, supra note 17 at 102  (“The U.S. is a world leader in citizen participation in soils programs and other environmental programs could learn from their experience.”).

[82] Letter from Karen Buhr of the California Association of Resource Conservation Districts to the Environmental Farming Advisory Panel (February 2017) (on file with the California Department of Food and Agriculture at https://www.cdfa.ca.gov/oefi/healthysoils/docs/HealthySoilsComments-Jan19-Mar1_2017.pdf).

[83] Letter from Noah Diech of the Center for Carbon Removal to Amrith Gunasekara of the Environmental Farming Advisory Panel (26 February 2017) (on file with the California Department of Food and Agriculture at https://www.cdfa.ca.gov/oefi/healthysoils/docs/HealthySoilsComments-Jan19-Mar1_2017.pdf).

[84] Letter from Janaki Jagannath of the Community Alliance for Agroecology, Kevin D. Hamilton of the Central California Asthma Collaborative and Sarah Aird of the Californians for Pesticide Reform to the Environmental Science Advisory Panel (March 1, 2017) (on file with the California Department of Food and Agriculture at

https://www.cdfa.ca.gov/oefi/healthysoils/docs/HealthySoilsComments-Jan19-Mar1_2017.pdf)

[85] J. William Futrell, The IUCN Sustainable Soil Project and Enforcement Failures, 24 PACE ENV. L. R. 99, 110 (2007).

[86] Testimony from Michael H. Shapiro to the Congressional Subcommittee on Environment and Public Works (May 22, 2013) (on file with the EPA at https://www.epa.gov/sites/production/files/2013-09/documents/nutrient_trading_and_water_quality.pdf).

[87] Futrell, supra note 86.

[88] CALIFORNIA DEPARTMENT OF WATER RESOURCES, Making Water Conservation a California Way of Life, http://www.water.ca.gov/wateruseefficiency/conservation/docs/Water%20Conservation%20Trailer%20Bill%20Fact%20Sheet%20FINAL.pdf (last visited May 10, 2017).

[89] Letter from Ben Chou of the NRDC et al to the California Department of Water Resources and the State Water Resources Control Board (October 14, 2016) (on file with author).

[90] Wichelns and Qadir, supra note 16.

[91] Id.

[92] Id.

[93] NATIONAL ASSOCIATION OF CONSERVATION DISTRICTS, supra note 37.

[94] Cal. Pub. Res. Code § 9018.

[95] Cal. Pub. Res. Code § 9063.

[96] J.B. Ruhl, Farms, Their Environmental Harm, and Environmental Law, 27 ECOLOGY L. Q.  263, 335 (2000).

[97] Peter M. Lacy, Our Sedimentation Boxes Runneth Over: Public Lands Soil Law as The Missing Link in Holistic Natural Resources Protection, 31 ENVTL. L. 433, 467 (2001).

[98] Id.

[99] Id.

[100] Id.

[101] Id.

[102] Futrell, supra note 17 at 102.

[103] Lacy supra note 97 at 467.

[104] Montgomery, supra note 3 at 13268.

[105] Id. at 13271.

The Case for Cap-and-Trade: California’s Battle for Market-Based Environmentalism

Theodore McDowell*

 This post is part of the Environmental Law Review Syndicate. Read the original here and leave a comment.


The California Cap-and-Trade program has been a beacon of success for market-based environmentalism. The program masterfully incorporated the lessons learned from previous cap-and-trade initiatives by more precisely allocating emission allowances and by setting higher price floors for auctions. The ambitious emissions reduction target and extensive range of gases covered by cap-and-trade have resulted in a substantial decrease in greenhouse gas emissions across the State. But the program has recently been involved in contentious litigation, with the chief concern being whether the emission regulations exceed the authority of the California Air Resource Board. The recent Morning Star Packing Company v. California Air Resources Board decision ultimately upheld the program, providing California Cap-and-Trade with a new lease on life.[1] However, with recent federal policy demonstrating a marked shift away from ecological conservationism, the survival of the nation’s best hope for free-market environmentalism still hangs in the balance.

I. Introduction

The California Cap-and-Trade Program (“CAT”) is derived from the California Global Warming Solutions Act of 2006 (“Global Warming Act”), which requires the State to reduce its greenhouse gas (“GHG”) emissions to 1990 levels by 2020.[2] The California Air Resource Board (“CARB”) is the State regulatory agency responsible for the project.[3] In 2011, the CARB adopted cap-and-trade regulations and created the CAT to set limits on GHG emissions.[4] The first auctions for the CAT were held in 2012, and the program went into full effect on January 1, 2013.[5]

The CAT operates in two phases each year. First, a number of emission allowances are freely distributed to entities that fall under the purview of the program.[6] Second, the remaining allowances are auctioned off on a quarterly basis.[7] The free distributions are reduced annually, and eventually all the allowances will be distributed via auctions.[8] The program also permits carbon offsets to satisfy up to eight percent of an entity’s compliance obligations.[9] The ultimate objective is to create incentives for businesses to craft environmentally friendly industrial practices as the number of yearly allowances decreases over time.

The CAT also has an enormous scope, and it is the world’s second largest market-based mechanism designed to reduce GHG emissions.[10] This size makes the successful implementation of the program especially impressive. The success is due largely to a design structure that draws upon the shortcomings of previous cap-and-trade initiatives, such as the Regional Greenhouse Gas Initiative (“RGGI”) in the northeastern United States and the Emissions Trading System (“ETS”) in the European Union.

II. Lessons Learned from the Regional Greenhouse Gas Initiative

The CAT was not the first emissions marketplace in the United States. In 2009, the RGGI went into effect as a cap-and-trade marketplace for CO2 emissions in the following nine states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.[11] However, the RGGI has been plagued with numerous shortcomings that have frustrated the performance of the initiative and which impart several lessons on how to more effectively design a cap-and-trade system.

A. Lesson 1: Cap-and-Trade Programs Need a Broad Scope

A key drawback of the RGGI is its limited scope. The program applies exclusively to CO2 emissions and only covers electrical power plants with the capacity to generate twenty-five or more megawatts.[12] Predictably, the results of the RGGI have been underwhelming, as only 163 facilities fall under the regulatory reach of the program.[13] Furthermore, CO2 emissions merely account for twenty percent of the GHG emissions in the nine participant states—a number that shrinks even further since the RGGI only regulates the electrical sector.[14] This narrowed scope has undermined the efficacy of the RGGI so drastically that Congress considers the program’s contribution to global GHG reductions to be “arguably negligible.”[15]

B. Lesson 2: Emission Forecasts Must Be Accurate

The second significant failing of the RGGI was that it overestimated the amount of CO2 emissions among the member states.[16] In fact, the RGGI set an initial emissions cap that was above actual emissions levels.[17] This was a gross oversight that stemmed from two key defects in the RGGI’s design.

First, the RGGI emission limits for the first cap period, which ran from 2009–2013, were based on emission estimations made in 2005.[18] Between 2005 and 2009, the amount of electricity generation in the member states decreased by thirty-six percent due to energy efficiency improvements and structural changes in energy generation portfolios.[19] Second, the RGGI distorted its emission forecasts by including all electrical power plants that had the capacity to generate twenty-five or more megawatts in its estimates.[20] Limiting the emission calculations to power plants that actually generated twenty-five or more megawatts would have produced more accurate projections.

These errors have been catastrophic for the initiative. The initial regulations had no effect on most businesses, which were already emitting below the inflated emissions cap.[21] Participation in the RGGI was therefore minimal, since many of the targeted businesses had no need to reduce emissions, purchase allowances, or generate offset credits.[22] Furthermore, because the RGGI does not limit the amount of allowances that can be “banked” and used in subsequent years, many companies have stored substantial amounts of these initial surplus allowances for future use.[23]

The administrators of the RGGI have taken extreme measures to try and remedy these miscalculations. Most notably, they implemented a “revised emissions cap,” running from 2014–2020, that slashes the emission limits by forty-five percent in an effort to match actual emission levels.[24] Such radical action would not have been necessary if the initial emissions cap had been more precise.

C. Lesson 3: Auctions Need Robust Price Floors

A final pitfall of the RGGI is its undervalued price floor for auctions. The reserve price has hovered around two dollars per allowance, despite being scheduled to increase according to the Consumer Price Index (“CPI”).[25] But the fact that auctioned allowances have been sold at prices exceeding five dollars indicates that businesses are willing to pay more.[26] The program therefore severely underappreciated the corporate demand for allowances and forfeited substantial potential earnings. Moreover, by greatly undervaluing the price floor, the RGGI administrators neglected to protect against suboptimal years when allowance prices have plummeted. A higher reserve price would have preserved the revenue generation capacity of the program, even during these off years.[27]

III. Lessons Learned from the European Union’s Emission Trading System

There are also numerous lessons to be learned from the deficiencies of the European Union’s ETS, which is the world’s largest market-based mechanism for reducing GHG emissions.

A. Lesson 1: Cap-and-Trade Programs Need Ambitious Initial Targets

At the conclusion of Phase I of the ETS, the “Learning Phase” that ran from 2005–2007, it was apparent that the initial targets for emission reductions were far too lenient.[28] Indeed, the lax regulations during Phase I only produced GHG reductions of three percent.[29] The EU was forced to compensate by crafting extreme targets for Phases II and III of the program, setting emissions goals of six percent below 2005 levels for Phase II and twenty-one percent below 2005 levels for Phase III.[30] If the EU had formulated a more ambitious target for Phase I rather than over-prioritizing the transition of members into the program, it would have avoided the need for these drastic adjustments.

B. Lesson 2: Allowances Must Be Apportioned Judiciously

Similar to the RGGI, the ETS grossly over-allocated emission allowances. In fact, ETS allowances initially exceeded the amount of actual emissions by four percent.[31] This miscalculation was devastating for Phase I of the ETS, as it enabled European businesses to emit 130 million tons more in GHGs than they had emitted prior to the implementation of the program.[32] This surplus destroyed the demand for allowances in the ETS marketplace, and auction prices fell precipitously.[33] The EU was forced to heavily reconfigure ETS allowance allocations to try and mitigate the damage caused by these initial overestimations, and it is still attempting to normalize the ETS marketplace.[34]

C. Lesson 3: Cap-and-Trade Programs Need Balanced Market Designs

The ETS has also been hamstrung by its inferior market design. Phase I of the program did not permit any allowances to be banked for future use.[35] Coupled with the initial over-allocation of allowances, this meant that most regulated entities possessed surplus allowances they had to expend by the year-end. This resulted in extreme downward price volatility at the conclusion of trading periods, as many companies attempted to dump the remainder of their emission allowances into the auctions.[36] The EU was once again forced to implement significant revisions to correct this oversight.[37] And while the ETS now permits allowances to be banked, the initial trading instability across Europe nearly destroyed the program.[38]

The EU also does not set a reserve price for ETS auctions, meaning there is no price protection for emission allowances.[39] This remains a gross oversight by the EU, as the lack of a price floor fails to account for the inevitable fluctuation of allowance prices due to changes in weather or energy price cuts. As a consequence, the ETS has lost significant revenue during periods of low auction demand where allowances have sold for pennies on the dollar, and the program will continue to be financially vulnerable until this design flaw is remedied.[40]

D. Lesson 4: Cap-and-Trade Programs Need Administrative Uniformity

Administrative inefficiencies have also plagued the ETS. The most glaring hole was the initial lack of a single registry for ETS participants.[41] Prior to 2012, each nation participating in the ETS had its own registry, which resulted in inconsistent regulation across the system.[42] The Danish registry, for example, failed to vet its registrants for two years.[43] The registry ultimately became so saturated with fraudulent companies that over ninety percent of account holders had to be deleted in 2010.[44] Even after the EU moved all participants into a single registry, the credibility lost among consumers during these initial years continues to plague the reputation of the program.

E. Lesson 5: Cap-and-Trade Programs Need Strong Cyber-Security

The final shortcoming of the ETS is that its cyber-security has been extremely assailable. “Phishing” has been one particularly vexing problem. The scam involves the creation and promotion of fake registries that solicit users to reveal their ETS identification codes. The “phishers” then use this information to carry out carbon trading transactions in legitimate registries. These deceptions have had severe economic ramifications, and as much as three million euros have been stolen in a single month.[45]

Hacking has been another key cyber-security issue for the ETS. Hackers have been able to infiltrate users’ computer systems and sell off all their allowances for immediate cash payments on the “spot market.”[46] Numerous companies have been crippled by this scam, and hackers have defrauded certain businesses of more than seven million euros worth of emission allowances.[47]

IV. The Success of the California Cap-and-Trade Program

When considering the numerous oversights of the RGGI and ETS programs, the success of the CAT is doubly impressive. This success is due to the balanced design of the CAT, which incorporates the strengths of the RGGI and ETS while mitigating their weaknesses.

A. Success 1: The CAT Has Precise Methods for Accurately Allocating Allowances

Both the RGGI and ETS erred by overestimating actual emission levels and allocating excessive allowances. The CARB avoided this mistake by crafting a precise allocation methodology that prevented surplus allowances from derailing the auction marketplace. Foremost, the CARB calculated California emission levels for the years immediately preceding the creation of the CAT to more accurately forecast future emissions. The CARB also narrowed the variability of its emissions estimates by only including emitters who had actually emitted 25,000 or more metric tons of CO2 or equivalents.[48] Emitters who merely had the capacity to emit beyond the 25,000 metric ton threshold were not included in the calculations. The greater accuracy of the CAT estimates was evidenced during the program’s first quarterly auction in 2012, where all twenty-three million allowances offered at the auction were purchased above the reserve price.[49]

B. Success 2: The CAT Began Ambitiously While Also Facilitating Transition

Another common error of the RGGI and ETS was that their design strategies over-prioritized transitioning members into their systems. The programs initially neglected to implement substantive emission reduction targets for fear of overwhelming participants, and they have subsequently instituted dramatic reforms to compensate. By contrast, the CARB recognized the need to balance the transition of members into the program against regulatory efficacy, lest one derail the other.

The CARB facilitated the transition of participants into the CAT by narrowing the scope of the first compliance period to only cover electrical and industrial sectors. It waited until the second compliance period to expand into the transportation and heating fuel sectors to provide companies time to adjust their business practices.[50] Yet the CARB also implemented considerable GHG reduction targets. The CARB initially set a 2020 reduction goal of seventeen percent below 2013 levels, which still eclipses the target of the RGGI.[51] Due to these ambitious benchmarks, the CAT has already produced “non-negligible” emission reductions and economic gains, with 2013 alone seeing GHG reductions of over a million and a half metric tons and statewide economic growth of two percent.[52] The CAT has benefitted greatly from such a stable infrastructure, and it remains on track to reach its ultimate emission reduction target by 2020.[53] 

C. Success 3: The CAT Has a Broad Scope

The CARB also built off the mistakes of the RGGI by broadening the regulatory scope of the CAT. Because it only regulates CO2 emissions, the RGGI covers less than twenty percent of the GHG emissions generated across its nine participating states.[54] By contrast, the CAT emulates the ETS by also covering CO2 equivalents such as CH4, N2O and other fluorinated GHGs, resulting in more effective emission restrictions.[55] The CARB also recognized that the RGGI erred in solely regulating electrical power plants. Accordingly, the CARB extended CAT regulations into other sectors heavy in GHG emissions, such as industrial, transportation, and heating fuel sectors.[56] Because of this broader scope, the CAT already covers over 600 facilities in California, whereas the RGGI only reaches 163 facilities across nine states.[57] The CAT also covers more than eighty-five percent of California’s GHG emissions, which is almost four times the amount of GHG coverage under the RGGI.[58]

D. Success 4: The CAT Has a Balanced Market Design

The CAT also avoided the severe design blunders of the RGGI and ETS. Rather than undervaluing or ignoring auction price floors, the CARB instituted a strong reserve price of ten dollars in 2012, which has been set to increase each year thereafter by five percent (in addition to increases for inflation).[59] Allowances have consistently sold above these amounts, but the price floor has provided steady protection against downward price volatility during poor trading periods.[60] Moreover, the built-in mechanism for annual increases to the reserve price has ensured that the price floor continues to increase irrespective of CPI circumstances.[61]

The CAT further protects against precarious price drops by permitting allowances to be banked.[62] This avoids the price instability problems of the ETS by discouraging businesses from dumping surplus allowances into auctions at the end of trading periods. Nevertheless, the CAT imposes limits on the maximum amount of allowances that can be held by a business.[63] This circumvents the design flaw of the RGGI that allows businesses to bank an inordinate amount of allowances and eliminate any need to subsequently reduce emissions.[64]

The revenues generated by the CAT best demonstrate the success of its market design. The first auction raised more than $289 million, and the first compliance period generated $969 million in revenue for California.[65] Projections estimate that the CAT will generate two billion dollars or more per year as the program’s regulatory scope continues to scale upwards.[66]

E. Success 5: The CAT Has Strong Administrative and Security Practices

The CAT has also benefitted immensely from its efficient administration and strong security practices. Foremost, the CAT keeps a single registry for all its regulated entities, ensuring vigilant and orderly monitoring of all participants.[67] The cyber-security protocols of the CAT have been extremely successful as well.[68] To prevent hackers and phishers from infiltrating the program, CAT auctions take place over a four-hour window that is constantly supervised by state employees.[69] The bidders and supervisors remain undisclosed to the public, and all parties must surrender their electronic devices during the auction.[70] This “sealed bid” approach to the auctions has protected the CAT from the fraud and counterfeiting issues that tormented the RGGI and ETS.[71]

 V. A Recent Legal Challenge: Are Cap-and-Trade Auctions Tax Programs?

Despite the success of the CAT, the program has faced serious legal obstacles. The principal challenge took place in the recent Morning Star Packing Company v. California Air Resources Board case, where the plaintiffs alleged that the auctions were unconstitutional and violated California law.[72] The chief contention was that the CAT constituted a tax on companies for emitting GHGs.[73] The plaintiffs argued that the statutory authorization of the CAT, the Global Warming Act, therefore fell under the purview of California’s Proposition 13, which requires legislators to pass by two-thirds vote “any act to increase state taxes for the purpose of increasing revenue.”[74] Because the Global Warming Act was not passed by a two-thirds vote, the plaintiffs asserted that the CARB exceeded its regulatory authority when it created the CAT.[75]

The dispositive issue in the case was whether the auctions were unconstitutional taxes or whether they were permissible regulatory fees placed on tradable commodities.[76] The Sacramento superior court ultimately upheld the CAT, concluding that emission allowances were tradable commodities in a marketplace.[77] The court considered several distinctions between taxes and regulatory fees, but the chief difference seemed to be that whereas the government sets tax prices, the market determined the auction price of the emission allowances.[78] Thus, the fact that the allowances had no value independent of the California regulatory scheme did not transform the auctions into a tax program, and the allowances remained tradable commodities.[79]

Yet the superior court ruling did not mark the end of the contentious litigation. The Morning Star decision was appealed to the Sacramento appeals court, which affirmed the lower court judgment by a two-to-one majority decision.[80] In turn, the appellate court ruling was appealed to the California Supreme Court, which ultimately declined to hear the case in June of 2017.[81] What should have been a resounding victory, however, was diminished by the fact that the State Supreme Court did not issue a written opinion on the program itself.[82] Nevertheless, the affirmation of the CAT provided market-based environmentalism with a new lease on life and has galvanized California policymakers and legislators.

VI. The Aftermath of Morning Star

The ramifications of the Morning Star have already been substantial in California. State legislators quickly capitalized on the State Supreme Court’s dismissal of the case by voting to extend the CAT an additional ten years through 2030.[83] The extension produced newfound confidence in environmentalism and revitalized the market economy surrounding the CAT – whereas previous quarterly auction sales had dropped sharply, the California government sold every emission permit offered in the August 2017 auction.[84]

Yet these successes have not been replicated on a national scale. This is somewhat perplexing, as the CAT provides a workable model upon which to base the creation of a federal cap-and-trade program. In particular, Congress could convincingly argue that the Morning Star case supports the notion that cap-and-trade programs deal with tradable commodities and do not constitute tax programs. Congress could therefore avoid having to rely on the Taxing and Spending Clause of the Constitution to justify the creation of an auction program and, instead, could derive its authority from the broader powers of the Commerce Clause.

The affirmation of Morning Star also provides strong persuasive reasoning for Congress to resolve the longstanding debate on whether emission allowances are “physical” (or “nonfinancial”) commodities, which are physically deliverable and consumable, or “financial” commodities that are satisfied through cash settlements.[85] Relying upon the Morning Star court’s description of allowances as being consumable and involving the physical transfer of title, Congress now has a strong basis for asserting, on the federal level, that allowances are physical commodities.[86] This would shield a federal cap-and-trade program from the administrative burdens of complying with the Commodity Exchange Act and other commercial regulations. [87]

Despite the reasoning provided by Morning Star, recent federal policy has demonstrated a marked shift away from the environmentalist approach espoused by the Obama Administration.  The recent withdrawal of the Clean Power Plan, the Obama-era rule regulating greenhouse gas emissions, best evinces this change in protocol.[88] Indeed, with the Environmental Protection Agency consistently the choice target of President Trump’s proposed budget cuts, environmentalism on a national level has been placed in a precarious position.[89]

It remains to be seen whether this federal paradigm shift will take a toll on the CAT. It is certain, however, that the demise of the CAT would be the death knell for market-based environmentalism in the United States. Fortunately, the CAT has several contingency protocols to counteract market volatility. In particular, the CARB can hold unsold allowances off the market for at least nine months to compress the supply and force participants back to the auctions.[90] This foresight proved to be invaluable in the wake caused by the initial Morning Star appeal in 2016, during which time the May 2016 and August 2016 auctions only sold eleven percent and thirty-five percent, respectively, of the allowances offered.[91] The remedial mechanisms built into the CAT allowed administrators to re-stabilize the market, and the November 2016 auction resulted in the successful sale of eighty-nine percent of the offered allowances.[92] Nevertheless, these contingencies are merely stopgap solutions, and hesitation among market participants will likely resurface as Californian and national policy progress along their collision course. Until a clear and unified path towards environmentalism is forged across the nation, an ominous shadow will remain cast over the CAT.

VII. Conclusion

The CAT has been a landmark initiative for environmentalism in the United States. Incorporating lessons from the RGGI and ETS, the program has struck a masterful balance in its market design and has produced significant environmental and financial gains for California. The affirming decision of the California judiciary and recent expansion of the program by the California legislature have been beacons of hope for cap-and-trade. Despite these successes, the future of the CAT remains in doubt, plagued by an uncertain socio-political climate where federal support for environmentalism has recently waned. And while the CAT has withstood previous legal and economic challenges, it is undeniable that the decisive battle for market-based environmentalism across the United States has begun.


* J.D. 2017, University of Virginia School of Law. I would like to thank Alisha Mehta for her advice and comments and Pamela Lim for her tireless support, without which this article would not be possible.

[1] Morning Star Packing Co., et al. v. California Air Resources Board, et al., Sacramento Appellate Court, Case No. 34-2012-80001313 [hereinafter Morning Star Appellate Decision], http://documents.latimes.com/appeals-court-upholds-californias-cap-and-trade-program/.

[2] California Environmental Protection Agency, Assembly Bill 32 Overview, http://www.arb.ca.gov/cc/ab32/ab32.htm.

[3] Id.

[4] California Cap-and-Trade Program Summary, Center for Climate and Energy Solutions (Jan. 2014), https://www.c2es.org/docUploads/calif-cap-trade-01-14.pdf.

[5] Id.

[6] Id. From 2013–2015, the program covered electrical and industrial power plants that emitted 25,000 or more metric tons of CO2 or equivalent gases per year. Since 2015, fuel distributors have also been covered.

[7] Id.

[8] Id.

[9] Id. Carbon offsets are greenhouse gas emission reductions that are credited to a company that funds or participates in an activity that reduces carbon footprints in the environment.

[10] Id.

[11] Lucas Bifera, Regional Greenhouse Gas Initiative, Center for Climate and Energy Solutions 1 (Dec. 2013), https://www.c2es.org/docUploads/rggi-brief-12-18-13-updated.pdf.

[12] Jonathan Ramseur, The Regional Greenhouse Gas Initiative: Lessons Learned and Issues for Congress,  Congressional Research Service 2 (Apr. 27, 2016), https://www.fas.org/sgp/crs/misc/R41836.pdf.

[13] Id.

[14] Id. at 3.

[15] Id. at 19.

[16] Id. at 3–7.

[17] Id. at 4.

[18] Id. at 4–5.

[19] Id. at 5.

[20] See id.

[21] Id. at 4–5.

[22] Id. at 3­–7.

[23] Overview of RGGI CO2 Budget Trading Program, Regional Greenhouse Gas Initiative 6 (Dec. 2007), http://www.rggi.org/docs/program_summary_10_07.pdf.

[24] Ramseur, supra note 12 at 7–8.

[25] Id. at 8–12.

[26] Id.

[27] Id.

[28] Emissions Trading in the European Union: Its Brief History, Pew Center on Global Climate Change 1–2 (Mar. 2009), https://www.c2es.org/docUploads/emissions-trading-in-the-EU.pdf.

[29] Id.

[30] Id.

[31] Tamra Gilbertson, Fraud and Scams in Europe’s Emissions Trading Systems, Climate & Capitalism, May 5, 2011, http://climateandcapitalism.com/2011/05/05/fraud-and-scams-in-europes-emissions-trading-system/.

[32] Id.

[33] Id.

[34] See id.

[35] Emissions Trading in the European Union, supra note 28 at 1–2.

[36] Id.

[37] Id.

[38] Id.

[39] Flawed Application of the Auction Reserve Price in the EU ETS, Emissions-EUETS.com (Feb. 23, 2013), http://www.emissions-euets.com/auctionsco2allowances/153-flawed-application-of-the-auction-reserve-price-in-the-eu-ets.

[40] Gilbertson, supra note 31.

[41] Id.

[42] Id.; Union Registry, European Commission, https://ec.europa.eu/clima/policies/ets/registry_en (last visited Feb. 17, 2017).

[43] Gilbertson, supra note 31.

[44] Id.

[45] Id.

[46] Id.

[47] Id.

[48] California Cap-and-Trade Program Summary, supra note 4.

[49] Dana Hull, 13 Things to Know About California’s Cap-and-Trade Program, San Jose Mercury News (Feb. 22, 2013), http://www.mercurynews.com/ci_22092533/13-things-know-about-california-cap-trade-program.

[50] California Cap-and-Trade Program Summary, supra note 4.

[51] Id.

[52] Dave Clegern, California greenhouse gas inventory shows state is on track to achieve 2020 AB 32 target, California Environmental Protection Agency (June 30, 2015), http://www.arb.ca.gov/newsrel/newsrelease.php?id=740.

[53] Id.; Michael Hiltzik, California’s cap-and-trade program has cut pollution. So why do critics keep calling it a failure?, L.A. Times (July 29, 2016),  http://www.latimes.com/business/hiltzik/la-fi-hiltzik-captrade-20160728-snap-story.html.

[54] Ramseur, supra note 12 at 2.

[55] California Cap-and-Trade Program Summary, supra note 4.

[56] Id.

[57] Id.

[58] Id.; Emily Reyna, Four Reasons California Cap and Trade Had an Extraordinary First Year, Forbes (Jan. 14, 2014), http://www.forbes.com/sites/edfenergyexchange/2014/01/08/four-reasons-california-cap-and-trade-had-an-extraordinary-first-year/#58ffab0e4dfc.

[59] California Cap-and-Trade Program Summary, supra note 4.

[60] Archived Auction Information and Results, California Environmental Protection Agency, http://www.arb.ca.gov/cc/capandtrade/auction/auction_archive.htm.

[61] California Cap-and-Trade Program Summary, supra note 4.

[62] Archived Auction Information and Results, supra note 60.

[63] California Cap-and-Trade Program Summary, supra note 4.

[64] Id.

[65] Hull, supra note 47; Michael Hiltzik, Emissions cap-and-trade program is working well in California, L.A. Times (June 12, 2015), http://www.latimes.com/business/hiltzik/la-fi-hiltzik-20150613-column.html.

[66]  Hiltzik, supra note 65.

[67] California Cap-and-Trade Program Summary, supra note 4.

[68] Laurel Rosenhall, Why hasn’t California’s cap and trade pollution program been the model for the U.S.?, L.A. Daily News (July 31, 2015), http://www.dailynews.com/environment-and-nature/20150731/why-hasnt-californias-cap-and-trade-pollution-program-been-a-model-for-us.

[69] Id.

[70] Id.

[71] Id.; Gilbertson, supra note 31.

[72] Morning Star Packing Co., et al. v. California Air Resources Board, et al., Sacramento Superior Court, Case No. 34-2013-80001464 [hereinafter Morning Star Superior Court Ruling]. The case was consolidated and decided jointly with California Chamber of Commerce, et al. v. California Air Resources Board, et al., Sacramento Superior Court, Case No. 34- 2012-80001313. The joint decision is available at: http://www.edf.org/sites/default/files/content/decisionchambermorningstar.pdf.

[73] Id. at 5.

[74] Id.

[75] Id.

[76] Id. at 11–14.

[77] Id. at 16–18.

[78] Id.; Allie Goldstein, Cap-and-Trade Is Not A Tax, California Court Says, Ecosystem Marketplace (Nov. 18, 2013), http://www.ecosystemmarketplace.com/articles/cap-and-trade-is-not-a-tax-california-court-says/.

[79] Goldstein, supra note 78.

[80] See generally Morning Star Appellate Decision.

[81] Dan Whitcomb, California Supreme Court Upholds Cap-and-Trade Law, CNBC (June 28, 2017), https://www.cnbc.com/2017/06/28/reuters-america-california-supreme-court-upholds-cap-and-trade-law.html.

[82] Id.; Chris Megerian, California Supreme Court Leaves in Place Decision Upholding Cap-and-Trade System, L.A. Times (June 28, 2017), http://www.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-cap-and-trade-supreme-1498684764-htmlstory.html.

[83] Melanie Mason & Chris Megerian, California Legislature Extends State’s Cap-and-Trade Program in Rare Bipartisan Effort to Address Climate Change, L.A. Times (July 17, 2017), http://www.latimes.com/politics/la-pol-ca-california-climate-change-vote-republicans-20170717-story.html.

[84] California Cap-and-Trade Program: Summary of Joint Auction Settlement Prices and Results, California Air Resources Board (Aug. 2017), https://www.arb.ca.gov/cc/capandtrade/auction/results_summary.pdf.; Chris Megerian, California Cap-and-Trade Program Gets Shot in the Arm with Strong Permit Auction, L.A. Times (Aug. 23, 2017), http://www.latimes.com/politics/la-pol-sac-cap-trade-auction-results-20170823-story.html.

[85] CFTC Glossary, United Statutes Commodity Futures Trading Commission,   http://www.cftc.gov/ConsumerProtection/EducationCenter/CFTCGlossary/glossary_p.

[86] See generally Morning Star Superior Court Ruling.

[87] See, e.g., 7 U.S.C. § 1a(47)(B)(ii) (2012) (excluding from the definition of “swap” “any sale of a nonfinancial commodity or security for deferred shipment or delivery, so long as the transaction is intended to be physically settled”).

[88] Daniella Diaz et al., EPA Administrator Scott Pruitt Announces Withdrawal of Clean Power Plan, CNN (Oct. 10, 2017), http://www.cnn.com/2017/10/09/politics/environmental-protection-agency-scott-pruitt-clean-power-plan/index.html.

[89] Brady Dennis & Juliet Eilperin, EPA Remains Top Target with Trump Administration Proposing a 31 Percent Budget Cut, Washington Post (May 23, 2017), https://www.washingtonpost.com/news/energy-environment/wp/2017/05/22/epa-remains-top-target-with-trump-administration-proposing-31-percent-budget-cut/?utm_term=.c5889f6eca1d.

[90] Hiltzik, supra note 53.

[91] Summary of Joint Auction Settlement Prices and Results, supra note 84.

[92] Id.