BALANCING ACTS: ENERGY INNOVATION IN A COMPLEX MARKET.

• Position: Proceedings of the 41st Annual Canada-United States Law Institute Conference on the State of Our Nations; The Canada-United States Relationship: Canada-United States Perspectives on Law, Policy and Politics in Tumultuous Times - Discussion

Moderator: Mark Purdon

Speaker: David Hults

Speaker: Gitane De Silva

Speaker: Chris Zeigler

ASSOCIATE PROFESSOR PARRAN: Okay. Thank you, everybody. And I'm glad we had a moment to refresh yourselves and get back to it. At this point, we are going to change to another topic that is very important in our relationship and one that has seen a fair amount of changes, that is, climate policy. We have a diverse group here with some, hopefully, very interesting and different perspectives on the issue, and without further ado, I turn it over to Mark, Mark Purdon, of IQ Carbone.

PROFESSOR PURDON: (Greeting in French.) I will be certainly providing the session in English, but I guess I will just briefly introduce myself, but I want to really turn it over to our panelists who are coming from far and wide, as well as here in Ohio.

So my name is Mark Purdon. I represent IQ Carbone. It's the Quebec Carbone Institute. We're a new non-profit research institute. We're independent, but I'm also a visiting researcher at the University of Montreal, Department of Political Science, but we have with us a panel that we are going to be discussing energy and environment issues, especially linkages to climate change and climate policy. We have a quite excellent panel, and I'm just going to sort of maybe introduce them briefly, but they will probably be able to give a better introduction of themselves and their organizations. But we have Mr. David Hults, who has come from California. He represents the California Air Resources Board where he is assistant chief counsel. We also have, in the center, Mr. Chris Zeigler, who is the executive director of the American Petroleum Institute, which is based here in Ohio.

MR. ZEIGLER: We are the Ohio Division, yes.

PROFESSOR PURDON: Ohio Division. And finally, we have Gitane De Silva, the senior representative of the Province of Alberta to the United States. So we have West Coast, the Prairie Mountains, and sort of a local representative, and if need be, I can chime in on the Quebec-Eastern Canada front, but I'm going to let our panelists do the talking today. So without any further ado, I'll turn it over to David.

MR. HULTS: Okay. Thank you very much, Mark, and thank you all for coming here today, and I hope this will be an interesting dialogue on energy and environmental issues with respect to the U.S.-Canada relationship by giving you a bit of context for my interests representing the California Air Resources Board and energy and environmental issues, especially as they relate to Canada.

The California Air Resources Board, or CARB, is the state agency in California that is charged with addressing and regulating air quality and climate change matters. CARB has a broad range of issues that it engages in as part of that clean air and climate umbrella. We have special authority under the U.S. Federal Clean Air Act to regulate, to promulgate standards for motor vehicles, and that's under Section 209 of the Clean Air Act. It allows for California to, if certain criteria are met, to avoid the preemption that might otherwise exist under the Federal Clean Air Act, and if California receives a waiver from the U.S. Environmental Protection Agency under that provision, then California can set independent standards, and other states in the country can choose to follow California's lead for the federal government, USEPA's lead. So that's one area. [It] is somewhat unique in environmental law where California acts as, in some ways, a separate national regulator of U.S. air quality issues, and that includes greenhouse gas regulations from motor vehicles, and that's one market CARB leads on.

Another that has been in the news of late is with respect to certain defeat devices for emissions in automobiles. We have led an investigation into Volkswagen's defeat devices along with the U.S. Environmental Protection Agency, and so that's something that has led to certain changes with respect to Volkswagen as an entity and with respect to their automobiles. These defeat devices allowed the vehicles to circumvent certain testing of air quality pollutants, and again, we were at the forefront of the investigation in discovering these devices that existed.

A third area that I point to is with respect to climate change, so California has the most ambitious climate targets in North America for reducing greenhouse gases. We have a mandate to reduce emissions, greenhouse gas emissions to 1990 levels by 2020 and to achieve a 40 percent reduction below 1990 levels by 2030. And we had a suite of measures that we implemented to achieve those goals. One of them is a cap-and-trade program, a market based program to reduce greenhouse gases, and as part of that cap-and-trade program, we have relationships with one Canadian province, Quebec, and we are pursuing another one with Ontario, and I will discuss that more a bit later.

So that's a brief sense of what CARB does. We have about 1,400 staff scattered across northern California and southern California, and we are quite busy. So that's what we do, and that provides some take on where I come from or where my agency comes from with respect to the topic of energy innovation. So I think there are different ways that you could look at that issue--energy security, energy costs. My agency's perspective, and my own perspective, is getting energy prices right to reflect the externalities of energy use and, in addition, spurring renewable sources of energy. So that's where, that's the context in which I view these issues.

So from that broader view, I want to just briefly touch on three topics. One, I want to give a flavor from where I stand on the relationship between the United States and Canada with respect to energy and climate issues, and then I will drill down a little more into California's role and then kind of speak broadly to California and other subnational jurisdictions like Ontario and Quebec who are in a champion fight against climate change.

So the U.S.-Canada relationship, I noted in the dinner last night the topic of softwood lumber came up. I just note as an aside, prior to going to law school, I worked at the U.S. Department of Commerce, and that brought me into contact with the softwood lumber dispute, and that was my opportunity to see much of Canada. So I know that we have, there are a variety of issues that cross the plate of U.S.-Canadian relations, softwood lumber being one of them, but energy and climate as well. Also, one other note of biography, again before law school, 1 served for three-and-a-half years at the U.S. Department of State, and I worked in the Bureau of Western Hemisphere Affairs, and our relationship with Canada was paramount in a variety of engagements that we had in the western hemisphere. That was true ten years ago, and I think it is even more true today.

So, as an example of other relationships between the U.S. and Canada, I know a couple of matters where we have engaged in energy of late. So in March of 2016, the leaders of Canada and the United States met and there was a joint statement that was issued on cooperating on matters of climate, energy, and in the Arctic. And that had several issues. There was a commitment, a joint commitment by each country to reduce methane emissions by 40 to 45 percent from 2012 levels by the year 2025. There was also a commitment to coordinate in carrying out the Paris Agreement, which was agreed to in December of 2015, under the framework of the United Nations Framework [Convention] on Climate Change [("UNFCCC")], and Canada and the U.S. agreed to goals to coordinate, they agreed to goals to meet the ambitions of the Paris Agreement, and they agreed to coordinate on those goals in March of 2016. Fast forward to February of this year, and there was another joint statement issued between Canada and the United States, but this time the president of the United States, who now is Donald Trump. So there remained a commitment to cooperate on energy matters, and that included, that includes issues like the Keystone Pipeline and also some environmental matters such as the Great Lakes. The discussion of climate was absent from that statement as best I can tell.

So you know, in some respects, the contours of engagement between the federal governments appear to be changing on climate matters. I would note that this week's executive order from President Trump on matters relating to energy did not include any suggestion that the United States would withdraw from the Paris Agreement. It did lay out several steps to reconsider the United States' plan for reducing greenhouse gas emissions from existing power plants, which is called the Clean Power Plant. It also called for reconsidering standards for new power plants and for oil and gas facilities, and it also called for reopening leases on federal public land to coal use, and it pulled back on President Obama's Climate Action Plan. It called for the federal government not to consider the social costs of carbon in promulgating new rules and regulations--the social costs of carbon being when an agency issues rules and regulations. Those have different costs and impacts, costs and benefits on the United States, and a full accounting of those costs and benefits might take into account the social costs that occur from greenhouse gas emissions. So the Trump Administration or President Trump in his executive order indicated that explicit consideration of social cost of carbon would be revised going forward. So there were a lot of takeaways from the executive order that we here in California are studying and the other entities are evaluating. Though, again, I note that as of now the United States' participation on the Paris Agreement has not changed. We'll see where these other steps lead.

A take away, though, that I would like to leave you with is California. You know, we operate in the federal system here in the United States as in Canada, and so California's own...