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Broad California Climate Order Requires Zero-Emission Cars By 2035; Transition of Oil Production Facilities

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On September 23, 2020, California became poised to adopt the most stringent automobile emission standards in the country and aggressively advance its efforts to ramp down oil production in the state.  With the signing of Executive Order N-79-20 (“Order”), which requires California state agencies to pursue certain actions “necessary to combat the climate crisis,” California Governor Gavin Newsom sent a signal to various industries in the transportation sector that accelerates an already-aggressive trend toward carbon neutrality in the state.  These mandatory state actions include the promulgation of regulations that would accomplish the goal of achieving 100 percent of in-state sales of new passenger cars and trucks to be zero-emission by 2035, as well as expediting regulatory processes to repurpose and transition upstream and downstream oil production facilities.

Motor Vehicle Targets

The Order directs the California Air Resources Board (“CARB”) to undertake actions to effectuate various zero-emission vehicle goals: 

  • Passenger Vehicles.  CARB shall develop and propose regulations requiring increasing volumes of new zero-emission vehicles (“ZEV”) with an ultimate goal of 100 percent of sales in 2035. 
  • Medium- and Heavy-duty Vehicles.  The Order sets a goal that 100 percent of medium- and heavy-duty vehicles in the state be zero-emission by 2045 for all operations “where feasible” and by 2035 for drayage trucks.  This goal is not a sales target, but a goal that all operations of such vehicles be zero emission by 2045 where feasible.  CARB must develop and propose regulations requiring increasing volumes of new zero-emission trucks and buses sold and operated in the state towards the goal.
  • Off-road Vehicles.  The Order sets the goal of transitioning to 100 percent zero-emission off-road vehicles and equipment operation by 2035 “where feasible.”  CARB must propose strategies, in coordination with other state agencies, the U.S. Environmental Protection Agency, and local air districts, to achieve this goal. 

In implementing the goals, CARB must act “consistently with technological feasibility and cost-effectiveness.”

In addition, the Governor’s Office of Business and Economic Development, in consultation with the State Air Resources Board, Energy Commission, Public Utilities Commission, State Transportation Agency, the  Department of Finance and other State agencies, local agencies and the private sector, is required to develop a Zero-Emissions Vehicle Market Development Strategy by January 31, 2021.  This strategy, which will be updated every three years, will outline the state’s actions to support new and used ZEV markets and ensure “coordinated and expeditious” implementation of the Order’s goals. 

Oil Production Facilities

The Order establishes mandates for numerous state agencies related to the goal of reducing the impacts of oil extraction as California transitions away from fossil fuel:

  • Upstream and Downstream Oil Production Facilities.  The California Environmental Protection Agency (“CalEPA”) and the California Natural Resources Agency (“CNRA”), in consultation with other agencies, must expedite regulatory processes to repurpose and transition upstream and downstream oil production facilities, while supporting community participation, labor standards, and protection of public health, safety and the environment. The agencies must report on progress and provide an action plan by July 15, 2021.
  • Oil Extraction Sites.  CalEPA and CNRA, in consultation with the Office of Planning and Research, the Department of Finance, the Governor’s Office of Business and Economic Development and other local and federal agencies, must develop strategies, recommendations and actions by July 15, 2021, to manage and expedite the responsible closure and remediation of former oil extraction sites as the state transitions to a carbon-neutral economy. The Department of Conservation’s Geologic Energy Management Division and other relevant State agencies shall strictly enforce bonding requirements and other regulations to ensure oil extraction operators are responsible for the proper closure and remediation of their sites.
  • Impacts of Oil Extraction Activities.  The Department of Conservation’s Geologic Energy Management Division must “propose a significantly strengthened, stringent, science-based health and safety draft rule that protects communities and workers from the impacts of oil extraction activities” by December 31, 2020.

Other Climate Actions

The Order requires state agencies to undertake other efforts to address climate change, including the following:

  • CARB, the Energy Commission, Public Utilities Commission, and other relevant agencies, must use existing authorities to accelerate deployment of affordable fueling and charging options for zero-emission vehicles.
  • The State Transportation Agency, the Department of Transportation and the California Transportation Commission, in consultation with the Department of Finance and other state agencies, must by July 15, 2021, identify near term actions, and investment strategies, to improve clean transportation, sustainable freight and transit options, while continuing a “fix-it-first” approach to the transportation system.
  • CARB, in consultation with other state agencies, shall develop and propose strategies to continue the state’s current efforts to reduce the carbon intensity of fuels beyond 2030 with consideration of the full life cycle of carbon.

The resulting regulations, strategies, and regulatory actions are sure to have a significant impact on automobile manufacturers, fuel producers and the industries and communities that support these businesses.  Baker Botts will be closely monitoring the regulatory process as this transition occurs.

To read the Executive Order, please click here.

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