Nos. C075954 and C075930

COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT

CALIFORNIA CHAMBER OF COMMERCE, et al. Plaintiffs and Appellants,

v. CALIFORNIA AIR RESOURCES BOARD, et al.

Defendants and Respondents; NATIONAL ASSOCIATION OF MANUFACTURERS,

Intervener and Appellant, ENVIRONMENTAL DEFENSE FUND, et. al,

Interveners and Respondents.

MORNING STAR PACKING COMPANY, et al., Plaintiffs and Appellants,

v. CALIFORNIA AIR RESOURCES BOARD, et al.

Defendants and Respondents; ENVIRONMENTAL DEFENSE FUND, et. al,

Interveners and Respondents.

On Appeal from the Superior Court of Sacramento County . (Case No. 34-2013-80001464, Hon. Timothy M. Frawley, Judge)

APPLICATION TO FILE AMICI CURIAE BRIEF AND AMICI CURIAE BRIEF OF THE NATIONAL FEDERATION OF INDEPENDENT BUSINESS SMALL BUSINESS LEGAL

CENTER, OWNER-OPERATED INDEPENDENT DRIVERS ASSOCIATION, INC., AND ASSOCIATED CALIFORNIA

LOGGERS IN SUPPORT OF APPELLANTS

NFIB SMALL BUSINESS LEGAL CENTER Luke A. Wake (264647) 921 11th St., Ste. 400 Sacramento, CA 96814 Telephone: (916) 448-9904 Facsimile: (916) 916-5104

BENBROOK LAW GROUP, PC Bradley A. Benbrook (177786) Stephen M. Duvernay (250957) 400 Capitol Mall, Ste. 1610 Sacramento, CA 95814 Telephone: (916) 447-4900 Facsimile: (916) 447-4904

Attorneys for Amici Curiae NFIB Small Business Legal Center

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TABLE OF CONTENTS

A:e:eLICATIO "l\.T TO E'ILE A 7l!TTCI CTTRI"AE BRIDF _ ......... 2 ......... ··------,-·---··--·-·· - • - - ~- • ~ - -l~-- ,_,_ -- •S •- •••..t:1:.LV1.4" - • -•-•• •- ••l:J•~ ~ " -£1..a '' •- • - - • • .._..11J. · •• •..•.• ~ •.• ~.-·.-,~ •.• -.,-.-···-·····-'·-· ••••• t ·-

AMICI CURIAE BRIEF .................................................................... 7

INTRODUCTION ... , .......................................................................... 7

QUESTIONS PRESENTED .................................................... : ........ 9

STATENIENT OF CASE ................................................................... 9

ARGUMENT ..................................................................................... 9

I. Regulatory Authority Cannot be Inferred From Statutory Silence ...................................................................................... 9

A. State Agencies Have No Authority, Except What is Expressly Delegated ........ ; .................. ; .............................. 9

B. CARB's Theory of Unbounded "Gap-Filling Authority" is Untenable .......................................................................... 12

1. Agencies Have Authority to Act Only Within the Scope a Statutory Charge-to Directly Advance the Legislature's Regulatory Goals ............................................................. 14

11. It is Improper to Assume "Gap-Filling" Authority ..... 17

111. A General Grant of Authority Must be Construed __ Narrowly in Consideration of the Canons of ..... ··-

Construction .................................................................. 19 ./'Ii

II. The Legislature Denied CARB Authority to Auction Emission Allowances .......................................................... 21

A. Authority to Restrict GHG Emissions Does Not Authorize Monetary Exactions ....................................... 21

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B. The Act Entails Textual Cues that the Legislature Did Not Intend to Authorize Auctions and Intended to Minimize the Cost of Compliance ................................... 25

CONCLUSION ........................................................ ; ....................... 29

WORD COUNT CERTIFICATION ................................................ 30

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TABLE OF AUTHORITIES Cases

Am. Fed'n of Labor v. Unemp't Ins. Appeals Bd., 1° n l 4+t. 101,.., 11996'.'I- ··········--·-·-··-····-·····---···--·········-·······---··-···-·········--····--···········--·--·····--· .. ··---·-·····-··--9 --···--··-·-····--···--. ···--·······-··-- ·0-1.::1·a, tri"l ·t \ J , .... ., , • , .... ., .... ,, ...... , ...... , ...... , .... , , .. , , , .. , .... , .. .. .. •

Ass'n of Cal. Insurance Cos. v. Jones, 235 Cal.App.4th 1009 (2015) ................................................ passim

Bearden v. U.S. Borax, Inc., 138 Cal.App.4th 429 (2006) .................................................. ; ......... ·9

Cal. Ass'n of Health Facilities v. Dept. of Health Servs., 16 Cal.4th 284 (1997) .................................................................... 20

Cal. Redev. Ass'n v. Matosantos, 53 Cal.4th 231 (2011) .................................................................... 19

Engine Mfrs. Ass'n v. Cal. Air Resources Bd., 231 Cal.App.4th 1022 (2014) ........................................................ 16

Envtl. Prot. Info. Ctr. v. Dep 't of Forestry & Fire Prot., 43 Cal.App.4th 1011 (1996) .................................................... 11, 17

First Indus. Loan Co. of Cal. v. Daugherty, 26 Cal.2d 545 (1945) ............................................................. passim

Ford Dealers Ass'n v. Dept. of Motor Vehicles, 32 Cal.3d 34 7 (1982) .............................................................. ; 14, 15

In re Williamson, 43 Cal.2d 651 (1954) ........ .; ........................................................... 20

Koontz v. St. Johns River Management District -- ses--e.s. __ .;, 1ss-s. ct. 25-Sff c2orsJ .................. : .......... .-.: .......... :2·s

Kugler v. Yocum, ·--~ 69 Cal.2d 371 (1968) ..................................................................... 15

Morris v. Williams, 67 Cal.2d 733 (1967) ............................................................... 11, 23

111

People v. Chandler, 60 Cal.4th 508 (2014) .................................................................... 28

O'Grady v. Super. Ct., 139 Cal.App.4th 1423 (2006) .................................................. 20, 27

Physicians & Surgeons Labs., Inc. v. Dep 't of Health Servs., 6 Cal.App.4th 968 (1992) .................................................. 10, 13, 17

Reno v. Baird, 18 Cal.4th 640 (1998) .............................................................. 21, 25

Ry. Labors Execs. Ass'n v. Nat'l Mediation Bd., 29 F.3d 655 (D.C. Cir. 1994) ......................................................... 13

State ex rel. Nee v. Unum provident Corp., 140 Cal.App.4th. 442 (2006) ................................................... 13, 23

Verdugo v. Target, 59 Cal.4th 312 (2014) .............................................................. 20, 25

W States Petroleum Ass'n v. Bd. of Equalization, 57 Cal.4th 401 (2013) .................................................................... 11

Water Replenishment Dist. of S. Cal. v. City of Cerritos, 202 Cal.App.4th 1063 (2012) ........................................................ 10

Whitcomb Hotel v. Cal. Emp't Comm'n, 24 Cal. 2d 753 (1944) .; .................................................................. 18

Whitman v. Am. Trucking Ass'ns, Inc., 531 U.S. 457 (2001) '. ....................................................................... 19

Yamaha Corp. of Am. v. State Bd. of Equalization, 19 Cal.4th 1 (1998) ........................................................................ 11

Constitutional Erovisions

California Constitution. Cal. Const., art. XIIIA, § 3 .............................. 28

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I Statutes l Cal. Code Regs., tit. 17, § 95802 ............................................................. 21

Cal. Code Regs., tit. 17, § 95811 ............................................................. 21

Cal. Code Regs., tit. 17, § 95812 ............ : ................................................ 21

Cal. Code Regs., tit. 17, § 95830-95834 .................................................. 22

Cal. Code Regs., tit. 17, §§ 95910-95914 ................................................ 22

Cal. Code Regs., tit. 17, § 98541. ............................................................ 21

Gov't Code § 16428.8 ............................................................................... 22

Health & Saf. Code§ 39712 .................................................................... 22

Health & Saf. Code § 39716 .................................................................... 22

Health & Saf. Code 39718 ....................................................................... 22

Health & Saf. Code § 39713 .................................................................... 22

Health & Saf. Code § 38570 .................................................................... 22

Health & Saf. Code§ 38597 .............................................................. 27, 28

Health & Saf. Code§§ 38500 et seq ........................................................ 21

T Health & Saf. Code § 38562 .............................................................. 18, 26

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Other Authorities

Cass R. Sunstein, Interpreting Statutes in the Regulatory State Law ,,Jt. .

and Administration After Chevron, 90 Col um. L. Rev. 2071 (1990) .. 17

Henry P. Monaghan, Marbury and the Administrative State, 83 Colum. L. Rev. 1 (1983) ..................................................................................... 10

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Nathan Sales & Jonathan H. Adler, The Rest is Silence: Chevron Deference, Agency Jurisdiction, and Statutory Silences, 2009 U. Ill. L. Rev. 1497 (2009) .......................................... '. ................................. 10, 17

Hugh D. Spitzer, Taxes vs. Fees: A Curious Confusion, ···· ---%8-Efonz:-b:·-Rev:-··3·3·5-(2tl03}":::·.:·:-.:·::·~:.: ... ::.;::.: .... :.:.:· .... : ........ :.: ....... :24

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APPLICATION TO FILE AMICI CURIAE BRIEF To the Honorable Presiding Judge of the Court of Appeal,

Third Appellate District:

Pursuant to Rule 8.200(c) of the California Rules of Court, the

National Federation of Independent Business Small Business Legal

Center ("NFIB Legal Center") and Associated California Loggers

respectfully apply for leave to file an amici curiae brief in support of

Plaintiffs and Appellants, California Chamber of Commerce, et al.,

and Morning Star Company, et al., in these consolidated cases.1

The NFIB Legal Center is a nonprofit, public interest law firm

established to provide legal resources and be the voice for small

business in the nation's courts through representation on issues of

public interest affecting small business. The National Federation of

Independent Business (NFIB) is the nation's leading small business

association representing members in Washington, D.C., and all 50

state capitols. Founded in 1943 as a nonprofit, nonpartisan

organization, NFIB's mission is to promote and protect the rights of

its members to own, operate and grow their businesses.

NFIB represents approximately 350,000 members nationwide

and its membership spans the spectrum of business operations,

ranging from sole proprietor enterprises to firms with hundreds of

1 As a courtesy, NFIB Legal Center notified Defendants-Respondents and Intervener-Respondents of its intention to file this amici brief, and respectfully requested their consent, on April 28, 2015. Defendants-Respondents stated that they do not oppose this application for leave to file the proposed amici curiae brief. Intervener-Respondents did not reply.

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employees. While there is no standard definition of a "small

business," the typical NFIB member employees 10 people and

reports gross sales of about $500,000 a year. The NFIB membership

is-a reflection of American small business. . ... - . . .

To fulfill its role as the voice for small business, the NFIB

Legal Center frequently files amici briefs in cases that will impact

the small business community. NFIB Legal Center seeks to file in ·"

this case because it raises an important issue for the small business

comm unity-and one that arises frequently in regulatory cases.

Specifically, this case raises the fundamental question of how courts

should review potentially ultra uires regulations. As NFIB Legal

Center recently explained in a letter brief to the California Supreme

Court, "where a regulation is adopted without lawful authority, real

lives are affected-often placing additional burdens and financial

strains on small businesses that are already struggling." Letter Br.

NFIB Legal Center, PaintCare u. Mortensen, Cal. Sup. Ct. Case No.

8225105 (Apr. 17, 2015). Accordingly, the question presented in this

case is not only of doctrinal importance, but also of tremendous

practical importance for the small business community. Thus NFIB

Legal Center's interest in this case transcends the substantive issue

at hand.

Y et1 __ t]:ie . NFIB Legal Center also wishes t_o ~VO!_~~ _ f3_J:!l:all

business concerns over the auction emission regulations at issue .)\';

here because those regulations drive up the cost of complying with

the California Air Resources Board's (CARE) Cap-and-Trade

Regulations. Those added compliance costs will directly affect those

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small businesses subject to CARB's cap-and-trade regime, and will

predictably affect other small businesses in their capacity as

consumers. The small business community is especially concerned

-that-tne 1rffsn.iled a:trctiori ···em1ssi6n.re·gulafiOiis-wilT resiiTfin-liigne-r . . energy costs.

The cost of energy is already a top concern for small business

owners nationally, and these concerns are heightened here in

California as small business owners fear that CARB's cap-arid-trade

regime-and the auctioning of emission allowances in particular-

will exacerbate the problem of rising energy costs. Indeed, these

interests are so great that the NFIB sought to intervene in this case.

And though that application was denied as untimely, small business

owners still have an interest in the questions presented. For these

reasons NFIB Legal Center seeks to file an amici brief at this

juncture.

The Owner-Operated Independent Drivers Association, Inc.

("OOIDA"), is a trade association made up of independent, small

business, and professional truck operators, many of whom operate in

California. OOIDA is a not-for-profit corporation incorporated in

1973 in the State of Missouri, with its principal place of business in

Grain Valley, Missouri. OOIDA is the largest international trade

association representing the interests of independent owner-- -·---

operators, small business motor carriers and professional drivers.

The 150,000 meri:ibers of OOIDA are professional drivers and small

business men and women located in all 50 states and Canada. One-

truck motor carriers represent nearly half the total number of active

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motor carriers operating in the United States while approximately

96 percent of active motor carriers operate 20 or fewer trucks.

OOIDA joins this amici coalition out of concern that CARB's

· -dHcisionto--a'Uction Bmtssion allowances, -.,_fnderit1:rcap-and-trade··--·-----·--

program, will result in higher fuel costs-and therefore higher

operating costs-for independent truckers. The assailed auction

emission regulations directly raise compliance costs for covered

entities, which includes fuel suppliers operating in California. Those

fuel suppliers are expected to pass those added compliance costs on

to consumers by charging higher rates to fuel distributors who will

ultimately charge truckers more for their fuel needs. Thus OOIDA

has keen interest in this proceeding because OOIDA has an interest

keeping transportation costs economical for its members.

The Associated California Loggers (ACL) is an association

representing small and independent family owned logging

businesses in California. ACL advocates on behalf of its members on

issues impacting the logging industry and seeks to educate its

members on pertinent regulations impacting their businesses. ACL

shares NFIB Legal Center's concern over the impact that CARB's

auction emission regulations will have on energy costs. ACL believes

the auctioning of emission allowances will result in higher operating

costs for ACL members. Further, ACL believes that at least some of ·- --- -··--···-----·-- --· ·---·-·---------·· ------- - -- - . -- --- ·-

its members may be directly subject to CARB's cap~and-trade

regulations and'·'\nay therein be directly burdened by the decision

auction emission allowances because these auctions raise the cost of

compliance for covered entities.

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Amici have reviewed the briefs of the parties and is familiar

with the issues presented. Amici believe that the proposed brief will

assist the Court by addressing the fundamental doctrinal issues . -·----------·-·-~·---~~~~~-- ---~-· -~"~--·~~ ~""°"-=-=·-·-.. ~-- - .......... . - ... -·- --- ·- -~ - ·--------- --· --~--··--~-·~··-----"~---·---~· -~~ ·----·------------ ·-·-- - . - ··---.--·"----·-··"'- -------

pre sen te d in this case. This amici curiae brief should prove

especially helpful · in fleshing-out the doctrinal problems with

Defendant-Respondents' "gap-filling" theory, which the superior

court errantly invoked in concluding that CARE had authority to

promulgate auction emission regulations in the face of glaring

statutory silence. Specifically, the proposed brief addresses first

principles of administrative law, and explains the irreconcilable

conflict between the superior court's analytical approach and the

well-established doctrine of California law that agencies are not

entitled to deference on questions of their own jurisdiction.

Accordingly, NFIB Legal Center respectfully urges this Court

to grant this application and file the attached amici curiae brief.

Dated: May 15, 2015

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Respectfully submitted,

NFIB Small Business Legal Center Luke A. Wake

Benbrook Law Group, PC Bradley A. Benbrook

~t,L__~ Luke A. Wake

Attorneys for Amici Curiae NFIB Small Business Legal Center

AMICI CURIAE BRIEF

INTRODUCTION The question here is whether AB 32's general authorization

-- --··-~~~--·-•~M-~••-'•~=~-~~ .. ~,••o-..,o ... ~ •-•••....-.·~-,·---....,,--" ··~.,- -~~--'-~·--~···~·--•--.,,-•·-· ~'•"-·~--~""""···~~,~~,u-,.~•••·--~·~·-----~--~--"·"--~·-.. -•,.••• ------•-•·--••••-• -·~--~~·-·--

for the California Air Resources Board (CARE) to create a "market-

based compliance mechanism." and to "design" a system. for the

"distribution of emissions allowances" entails the authority to raise

billions of dollars, through the auctioning of emission allowan.ces, as

a by-product of cap-and-trade regulation. Of course a necessary

component of any cap-and-trade regime is a program for distributing

emission allowances. For this reason, authority to create a cap-and-

trade program necessarily entails authority to make an initial

allocation of credits. But, that does not necessarily entail-or even

fairly imply-any authority to exact money from. the regulated

comm.unity. To be sure, in this case CARE would accomplish the

very same regulatory goal of reducing greenhouse gas ("GHG")

emissions to 1990 levels by the year 2020 if the agency had chosen to

equitably distribute emission allowances among covered entities at

no cost.

Whether distributed at no cost, or by auction-as CARE has

chosen-the regulatory effect is the same: covered entities must

reduce their aggregate emissions in order to remain in compliance,

and--m-ust-fu.Tther reduce emissions each year as GARB~ Fed-uces the

annual supply 01,.allowance credits. Therefore, CARE's decision to

auction emission allowances must be viewed as ultra vires because

the act of exacting money from covered entities is not germane to

goal of reducing GHG em1ss10ns. The auctions are entirely

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superfluous to that regulatory goal.

CARB defends its decision to auction emission allowances on

the view that AB 32 has conferred a broad and open-ended authority

on the agency to fill-in gaps where the Legislature was silent. Thus

despite the fact that the Act said nothing whatsoever about

auctioning emission allowances, or for what purpose auction

revenues might be devoted, CARB maintains that this Court should

defer to its judgment that the Legislature intended to authorize the

auctioning of emission allowances. The argument is circular-

assuming delegation of gap-filling authority because the CARB has

concluded that its authority should be so construed. But this free-

wielding theory of "gap-filling authority" contravenes first principles

of administrative law and conflicts with the well--established

doctrine that California courts will not defer to an agency's

interpretation on a jurisdictional question. Ultimately, CARB's

proffered interpretation must be rejected as untenable in

consideration of the canons of construction, including the canon

expressio unius est exclusio alterius and the fundamental principle

that courts will not infer a departure from common-law standards in

the absence of a demonstrably clear affirmation oflegislative intent.

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QUESTIONS PRESENTED Administrative agencies often claim broad "gap-filling authority"

to regulate on matters for which the governing statute is silent. This

case squarely raises these issues:

1. Does the Air Resources Board have authority to auction

emission allowances under its cap-and-trade program?

2. Is it proper to infer that the Legislature intended to confer

"gap-filling authority" to carry out regulatory acts that are not

germane to-and do not directly advance-the Legislature's

stated regulatory goal?

STATEMENT OF CASE Amici adopt the statement of case and facts set forth in

Plaintiffs-Appellants' respective briefs. Amici refer to Plaintiff-

Appellants and Plaintiff-Intervenor collectively as "the Regulated

Industry."

ARGUMENT I. Regulatory Authority Cannot be Inferred From

Statutory Silence

A. State Agencies Have No Authority, Except What is Expressly Delegated

Agencies are creatures of statute. Am. Fed'n of Labor v.

Unemp't Ins. Appeals Ed., 13 Cal.4th 1017, 1042 (1996) ("It is well

settled that administrative agencies have only the powers conferred

on them."). They mdst solely by virtue oflegislative enactments. For

this reason they have no inherent powers or prerogatives. See, e.g.,

Bearden v. U.S. Borax, Inc., 138 Cal.App.4th 429, 435-36 (2006);

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Water Replenishment Dist. of S. Cal. v. City of Cerritos, 202

Cal.App.4th 1063, 1072 (2012).

Agencies have no inherent powers, only delegated ones.

That is why they are called 'administrative agencies'-

they are created to administer programs established by

[the Legislature], and in doing so they act as the

[Legislature's] agents. As Professor Monaghan noted,

"[T]he universe of each agency is limited by the

legislative specifications contained in its organic act."

This means that [the Legislature] must delegate an

agency power to act. If [the Legislature] [does] not act,

the agency [has] no authority.

Nathan Sales & Jonathan H. Adler, The Rest is Silence: Chevron

Deference, Agency Jurisdiction, and Statutory Silences, 2009 U. Ill.

L. Rev. 1497, 1504 (2009) (quoting Henry P. Monaghan, Marbury

and the Administrative State, 83 Colum. L. Rev. 1, 14 (1983)).

Accordingly, the agency bears the burden of demonstrating

that it has been affirmatively authorized to undertake a challenged

action. See First Indus. Loan Co. of Cal. v. Daugherty, 26 Cal.2d 545,

549-550 (1945) (explaining that an agency must demonstrate that a

regulation "falls within the power specifically conferred upon the

[agency]"). In keeping with the understanding that an agency's

lawful authority is limited by the text of the governing statute, ,.;'1,

California courts hold that no deference is owed to an agency's

interpretation of jurisdictional language. Physicians & Surgeons

Labs., Inc. v. Dep 't of Health Servs., 6 Cal.App.4th 968, 982 (1992)

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("Thus, the first task of the reviewing court is to decide [whether]

the agency reasonably interpreted its legislative mandate as

regulations that alter or amend the statute or enlarge or impair its

scope are void."); Enutl. Prat. Info. Ctr. u. Dep 't of Forestry & Fire

Prat., 43 Cal.App.4th 1011, 1022 (1996). In the absence of a clear

and unambiguous textual grant of authority, the agency bears a

heavy burden to justify an assertion of regulatory authority. See W.

States Petroleum Ass'n u. Ed. of Equalization, 57 Cal.4th 401, 415

(2013) (affirming that courts exercise independent judgment "when

an implementing regulation is challenged on the ground that it is 'in

conflict with the statute' ... or does not 'lay within the lawmaking

authority delegated by the Legislature"') (quoting Yamaha Corp. of

Am. u. State Ed. of Equalization, 19 Cal.4th 1, 10-11 & n.4 (1998)).

vVhere the statute is seemingly silent on a specific matter for

which an agency asserts regulatory authority, it is necessary to

engage in a critical analysis of the statutory framework-employing

the canons of construction to ascertain the meaning of jurisdictional

language. See Envtl. Prat. Info. Ctr, 43 Cal.App.4th at 1022. In some

cases, authority is implicitly derived from an express authorization

to carry out a given act because a specific authorization necessarily

entails authorization to carry out those actions necessary to

a~d~_9.1.1:~t~~rc~1:?1J2lete the task. See Morris v. William[!, 67 Qal]

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demonstrating that its proffered interpretation is the most

reasonable-taking into account the structure of the act as whole,

pertinent legislative history, and all of the canons of construction.

See Ass'n of Cal. Insurance Cos. v. Jones, 235 Cal.App.4th 1009

(2015) ("[N]either the trial court nor we are required to give

deference to an administrative agency's interpretation of the scope of

its own authority.").

B. CARB's Theory of Unbounded "Gap-Filling Authority" is Untenable

In the absence of any specific statutory authorization for its

conduct, CARE contends that the Legislature has conferred "gap-~

filling authority" in the general charge to reduce greenhouse gas

emissions, and in the broad authorization to create a market-based

cap-and-trade system. 2 But this invocation of the "gap-filling"

2 As a threshold matter, CARE argues that the statutory authorization to "design" a system for the "distribution of emissions allowances" constitutes a direct authorization to auction emission allowances. But that argument still infers authority from silence. CARE assigns meaning to this language that is neither plain nor compelled from context. The most natural reading of this authorization is that the Legislature intended to make explicit what was already implicit-i.e., that the Legislature has given CARE the tools necessary to establish a cap-and-trade program, which necessarily requires a system for distributing emission allowances. Indeed, every cap-and-trade program must include some program for distributing credits among regulated entities. But as the Regulated Industry has demonstrated, there are many cap-and-trade programs that distribute emission allowances without auctioning credits. See E.g., Cal. Envtl. Protection Agency, South Coast Air Quality Mgmt. Dist., Rule Book (outlining rules for a cap-and-trade program predating AB 32, which distributed credits without charge), online at http://www.arb.ca.gov/drdb/sc/cur.htm.

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doctrine is misplaced. CARB's approach must be rejected because it

would give administrative agencies free-wielding powers to do

anything not expressly prohibited by the statute, so long as the

agency's interpretation seems consistent with the spirit, or the

purpose, of the regime.

Indeed, a presumption of "gap-filling authority" would turn

first principles of administrative law on their head. State ex rel. Nee

v. Unumprovident Corp., 140 Cal.App.4th. 442, 452-53 (2006)

(reaffirming the principle that "[a] ministerial officer may not ...

under the guise of a rule or regulation vary or enlarge the terms of a

legislative enactment or compel that to be done which lies without

the scope of the statute and which cannot be said to be reasonably

necessary ... ") (quoting First Indus. Loan Co., 26 Cal.2d at 550); see

also Ry. Labors Execs. Ass'n v. Nafl 111ediation Ed., 29 F.3d 655, 659

(D.C. Cir. 1994) (reasoning that a presumption of delegated power

absent an express withholding of such power "comes close to saying

that the [agency] has power to do whatever it pleases merely by

virtue of its existence .... "). An agency's authority simply cannot be

presupposed. Such an assumption runs contrary to the basic precept

that agencies have only those powers expressly delegated-and

contrary to the doctrine that agencies are not entitled to deference

on questions of their own jurisdiction. Physicians & Surgeons Labs.,

6 Cal.App.4th at 982.

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i. Agencies Have Authority to Act Only Within the Scope a Statutory Charge-· to Directly Advance the Legislature's Regulatory Goals

CARB cites Ford Dealers Ass'n u. Dept. of Motor Vehicles, 32

Cal.3d 34 7 (1982), in support of its assertion that the Legislature

has delegated authority for it to "'fill up the details'" of AB 32's

"complex and multi-pronged regulatory program." (Resp.'s Br. of Cal.

Air Resources Bd. at 29.) But that decision does not stand for the

proposition that an agency may fill-in gaps on matters for which the

governing statute is utterly silent, where-as in this case-the

contested act is not germane to any explicit authorization. Ford

Dealers did not endorse an untethered theory of "gap-filling

authority" that would enable an agency to write text into a statute.

On the contrary, that case explains that, when confronted with

vague language, an agency may promulgate regulations to clarify its

meaning-consistent with the agency's statutory charge. Id. at 362-

63. That rule is consistent with the first rule of administrative law:

that agencies only have those powers that the Legislature has

affirmatively delegated.

In Ford Dealers, a trade association contested the Department

of Motor Vehicle's authority to promulgate regulations defining

certain communications as deceptive because the Legislature had

not specifically identified those communications as deceptive in the

governing statute. Icf,. at 356-57. But the Supreme Court rejected

those arguments because DMV was vested with the authority to

promulgate regulations as necessary to regulate deceptive

advertisements; the Court reasoned that this charge to enforce a

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prohibition on deceptive advertisements required the agency to

interpret what the Legislature intended to be covered. Id. at 363

("DMV clearly has the discretion to decide that statements such as

-those at issue here are inherently misfeading."). Thus the Court

recognized that DMV had authority to "fill up the details" of that

regulatory regime-but only because it determined that DMV was

drawing within the statutory lines. Id. at 362 (quoting Kugler u.

Yocum, 69 Cal.2d 371, 376 (1968)).

This understanding is confirmed on examination of the line of

cases that Ford Dealers relied upon. Specifically, the Court cited

Kugler, which dealt with the question of whether the Legislature

could constitutionally delegate powers to an agency to fill-in details

of a regulatory regime. 69 Cal.2d at 376. There, the Court explained

that "[t]he Legislature may, after declaring a policy and fixing a

primary standard, confer upon executive or administrative officers

the 'power to fill up the details' by prescribing administrative rules

and regulations to promote the purposes of the legislation and to

carry it into effect . ... " Id. (quoting First Indus. Loan Co., 26 Cal.2d

at 549 (1945) (emphasis added)). Likewise, First Industrial Loan Co.

affirmed the Legislature's power to delegate authority to an agency

to promulgate rules and regulations consistent with a "policy" or

"p~~~~!l st~~~~~~" fixe_~ by statute, which might in_dllde "g-ap·f~lli11,g-_ authority"-if expressly conferred. 26 Cal.2d at 549 .

• _J\1

Those cases stand only for the unremarkable proposition that

an agency may be delegated the authority to fill-in the details of a

statute within the scope of a general authorization, such that an

15

authorization to regulate greenhouse gas emissions may authorize

CARB to take a whole host of regulatory actions directly advancing

that regulatory objective. See, e.g., Engine Mfrs. Ass'n v. Cal. Air

Resources Bd., 231 Cal.App.4th 1022, 1039-41 (2014) (concluding

that CARB's mandate to adopt regulations to reduce GHGs

conferred broad enough authority to require compliance testing on

in-use heavy-duty engines). But none of those cases support CARB's

free-wielding assertion that an agency may invoke "gap-filling

authority" to carry out an act that is in no way germane to the direct

advancement of regulatory goals set forth by statute. 3 Such a rule

would enable an agency to supplement its delegated powers to

accomplish tangential goals that the Legislature never

contemplated. Here CARB seeks to contort the concept of"gap-filling

authority" in a manner that would validate any regulatory action

that the agency thinks promotes sound policy-so long as it is not

inconsistent with the text of AB 32. That is a perversion the "gap-

3 In each of the cases CARB that relies on, the regulation was logically within the field of authority conferred and directly advanced the Legislature's explicit regulatory objectives-as determined by a court in review of the full statutory regime. Ralphs Grocery Co. v. Reimel, 69 Cal.2d 172, 182-83 (1968) (holding that a broad statutory authorization to "foster and encourage the orderly wholesale marketing and wholesale distribution of beer" could reasonably be construed as conferring authority to prohibit quantity discounts on the sale of beer); Credit Ins. Gen. Agents Ass'n of Cal. v .

.•. 'j,.

Payne, 16 Cal.3d 651, 656-57 (1976) (reading a general rulemaking. provision, in conjunction with other provisions authorizing the insurance commissioner to disapprove of insurance forms that are determined to be "unjust, unfair, inequitable,"· etc., as authorizing regulation of commission rates for insurance agents).

16

filling" doctrine because it infers "gap-filling" powers from utter

silence.

ii. It is Improper to Assume "Gap-Filling" Authority

Where an agency claims '1gap-filling" authority to regulate on

a matter that is arguably within the scope of a general statutory

charge, California courts do not defer to that assertion of authority.

See Envtl. Prat. Info. Ctr., 43 Cal.App.4th at 1022 ("[The] standard of

review is one of respectful nondeference."). Such deference would be

inappropriate because jurisdictional language is, by its very nature,

intended to limit the scope of powers conferred. Sales & Adler,

supra, at 1541-43. Indeed, to defer to an agency on a question of the

scope of its own powers would be to let foxes guard the hen-house.

See Cass R. Sunstein, Interpreting Statutes in the Regulatory State

Law and Administration After Chevron, 90 Colum. L. Rev. 2071,

2097 (1990) (observing that, "in Anglo-American law, those limited

by law are generally not empowered to decide on the meaning of the

limitation.").

Deference toward an agency's assertion of jurisdiction would

encourage self-aggrandizement of power. Sales & Adler, supra, at

1501-02. It would enable an agency to exploit any ambiguity in

jurisdictional language to advance its proffered policies, and, more

realistically, its institutional interests. Id. at 1548. For all of these

reasons, California c@urts rightly hold that agencies are not entitled

deference on questions of their own jurisdiction. Physicians &

Surgeons Labs., Inc., 6 Cal.App.4th at 982; see also Sales & Adler,

supra, at 1535 ("However much expertise agencies may have at

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answering technical or policy questions, they have no institutional.

advantage in resolving jurisdictional questions.").

In the face of this doctrine CARE contends that this Court

should assume the agency's authority to auction emission

allowances. The argument holds that through the general mandate

to reduce California's GHGs, and the general authorization to create

a cap-and-trade system, the Legislature has conferred broad "gap-

filling authority" upon the agency to "design" the cap-and-trade

program in whatever manner CARE thinks most prudent. CARE

contends that the only substantive limitations on its authority were

set forth in discrete requirements to take into account certain

considerations in the process of promulgating its cap-and-trade

regulations; however, by that logic an agency could convert general

language in any statute into a free-wielding power to act in any

manner not explicitly forbidden by the statute. 4 Accordingly, this

Court must reject CARB's unfettered "gap-filling" view of

administrative law by affirming that no deference is owed to an

agency's assertion of authority. See Ass'n of Cal. Ins. Cos., 235

Cal.App.4th at 1009 (holding that an assertion of gap-filling

authority must be rejected in light of the canon expressio unius est

exclusio alterius). "Whatever the force of administrative construction

... final responsibility for the interpretation of the law rests with

the courts." Whitcomb Hotel v. Cal. Emp't Comm'n, 24 Cal. 2d 753,

757 -58 (1944). .,

4 Health & Safety Code section 38562, subdivision (b)(l) sets forth those considerations that CARE was required to weigh in designing its system for allocation of emission allowances.

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iii. A General Grant of Authority Must be Construed Narrowly in Consideration of the Canons of Construction

Every delegation of regulatory authority must be construed to

have principled limitations-otherwise it would run afoul of the non-

delegation doctrine. First Indus. Loan Co., 26 Cal.2d at 549. On a

more fundamental level, every delegation must be understood to

entail limits because a conferral of jurisdictional authority

necessarily outlines the nature-and therefore the scope-of the

authority conferred. Id. at 550. But even where the text of a statute

suggests a seemingly broad delegation of regulatory authority, it is

important to remember that statutory provisions are never read in

isolation; they must be harmonized within the larger statutory

,regime. Ass 1n of Cal. Ins. Cos., 235 Cal.App.4th at 1009 ("We deduce

that authority from the language of the statute itself by applying

familiar maxims of statutory construction.") This means that in

many cases an otherwise broad conferral of authority must be

understood as cabined by a rational construction of the Act as a

whole. Id.

In this case it is especially important to keep in mind that an

assertion of regulatory authority is highly questionable on a matter

for which one would expect the Legislature to have spoken more

directly or specifically. Cal. Redev. Ass'n v. Matosantos, 53 Cal.4th

231, 260-61 (2011) (qbserving that "drafters oflegislation 'do not ...

hide elephants in mouseholes."') (quoting Whitman v. Am. Trucking

Ass'ns, Inc., 531 U.S. 457, 468 (2001)). For example, where a statute

expressly authorizes an agency to regulate X and Y, but makes no

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mention of Zed, the only logical conclusion is that the Legislature

did not intend to authorize regulation of Zed. O'Grady v. Super. Ct.,

139 Cal.App.4th 1423, 1443 (2006) (affirming the principle that

statutes are "presumed to exclude things not mentioned"). Even if

the agency could point to general language that might justify its

regulation of Zed, if read in isolation, the more specific provisions

outlining the requirements to regulate X and Y-but neglecting any

mention of Zed-belie any assertion that the Legislature intended to

confer "gap-filling authority" to regulate Zed. See In re Williamson,

43 Cal.2d 651, 654 (1954) (recognizing specific language must be

given effect over more general language).

Another relevant principle of construction holds that an

interpretation should not be presumed if it would displace common

law standards or principles. '"[U]nless expressly provided, statutes

should not be interpreted to alter the common law, and should be

construed to avoid conflict with common law rules."' Verdugo v.

Target, 59 Cal.4th 312, 326 (2014) (quoting Cal. Ass'n of Health

Facilities v. Dept. of Health Servs., 16 Cal.4th 284, 297 (1997)).

Accordingly, if the statutory text is silent on a question, and there

are two proffered interpretations, the better interpretation is that

which protects settled expectations. Id. In such a case, it must be

presumed that the Legislature would have spoken more clearly if it

intended a departure from the status quo. Id. at 326-27. Thus, an

interpretation should be rejected-especially when inferred from

silence-if it would impose substantially greater burdens on

individuals exercising common law rights than would be necessary

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under an alternative reading that just as well advances the same

regulatory goal. See Reno v. Baird, 18 Cal.4th 640, 652 (1998)

(rejecting an interpretation that would impose severe adverse effects

on the regulated comm unity-but with only "minimal potential

[public] benefit[s]"-on the presumption the Legislature would not

have intended such a result).

II. The Legislature Denied CARB Authority to Auction Emission Allowances

A. Authority to Restrict GHG Emissions Does Not Authorize Monetary Exactions

The Global Warming Solutions Act charges CARB with

promulgating regulations to achieve the legislative goal of reducing

GHG emissions to 1990 levels by 2020. Health & Safety Code §§

38500 et seq. To that end, CARE was authorized to implement a cap-

and-trade program utilizing a "market-based compliance

mechanism." Id., §§ 38505(k); 38570. And the agency has decided to

move forward with plans to implement a cap-and-trade regime-

w herein "covered entities"5 are required to obtain "emission

allowances"6 in order to continue emitt_ing GHGs. 7 Cal. Code Regs.,

tit. 17, §§ 98541.

5 Entities in specified industries-for example, the food processing industry-are considered "covered entities" if they annually emit 25,000 metric tons of GHGs. Cal. Code Regs., tit. 17, §§ 95802(a); 95811; 95812.)

.. \\ 6 Each emission allowance authorizes the holder to "emit up to one metric ton ... of any GHG specified in§ 95810, subject to ... [specified limitations]." Cal. Code Regs., tit. 17, § 95820.) 7 Each year the regulations provide that CARB will issue fewer and fewer emission allowances, therein ensuring that over time

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To make the system work, the CARE needed to determine how

emission allowances should be allocated among covered entities. One

option would have been to freely distribute each year's emission

allowances in an equitable manner. Instead, CARE decided to

auction the remaining portion to the highest bidder-therein

exacting billions of dollars from the regulated community. Cal. Code

Regs., tit. 17, §§ 95830-95834, and 95910-95914.)

CARE invokes AB 32 as its authority to conduct these

auctions; however, AB 32 never mentions the word "auction." Nor

does the Act include the words "proceeds" or "revenues." For that

matter, AB 32 never gives any indication that the Legislature

contemplated how auction proceeds might be used. 8

CARE can only point to general language authorizing it to

implement a cap-and-trade regime. Health & Safety Code§ 38570 (c)

(stating CARB "shall adopt regulations governing how market-based

compliance mechanisms may be used by regulated entities subject to

greenhouse gas emission limits ... to achieve compliance."). But,

whilethe statute clearly authorized CARE to impose GHG emission

restrictions using a "market-based compliance mechanism," CARB's

assumed authority to raise revenues in allocating emission

"covered entities" are forced to reduce their aggregate emissions. 8 The Legislatu;re subsequently enacted statutes to appropriate any revenues collected through CARB's auctions; however, those enactment do not speak to whether CARE was authorized, under AB 32, to auction emission allowances. (Gov't Code § 16428.8 (b)-(d); Health & Saf. Code §§ 39712(a)-(c), 39716(a)-(c), 39718(a)-(b); § 39713(b).)

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allowances-through an auction-is based on a highly questionable

inference.

The problem is that authority to auction emission allowances

cannot be inferreclfrom the general grant of authority to establish a

cap-and-trade regime because it not reasonably necessary to raise

revenues through an auction in order to either enforce compliance

with a market-based cap-and-trade system or to meet AB 32's

regulatory goal of reducing GHG em1ss10n levels. See

Unumprovident Corp., 140 Cal.App.4th at 452-53 (emphasizing that

an explicit authorization only confers implicit authority to do what is

"reasonably necessary" to carry out the general charge); First Indus.

Loan Co., 26 Cal.2d at 550 (same); Morris, 67 Cal.2d 733 at 737

(same).

When scrutinized, it is plain that ARB does not seek to color

within the lines, but to draw outside the lines that the Legislature

established with enactment of AB 32. ARB is authorized to create a

cap-and-trade regime, but this authorization must be understood in

context. See Ass'n of Cal. Ins. Cos., 235 Cal.App.4th at 1009. The

Legislature delegated regulatory authority only for the purpose of

effecting a statewide reduction in GHG emissions. Viewed through

that contextual lens, ARB's asserted authority to auction emission

allowances is misplaced because it is unrelated to the goal of

reducing GHGs.

To be sure, ARB would achieve its regulatory goals in the

same manner whether emission allowances are equitably allocated

at no charge among covered entities, or auctioned to the highest

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·bidder.Both distribution methods yield the very same result. Either

way, covered entities are forced to reduce their aggregate statewide

emissions to conform with ARB's descending annual cap on GHG

emissions-which is (either way) proportional to the number of

emission allowances that ARB chooses to issue in any given year.

The only difference is that in auctioning emission allowances ARB

can exact monies from. covered entities.9

Thus it is evident that ARB's asserted authority to auction

emission allowances is extraneous: it falls beyond the scope of the

general authorization to design a system for the distribution of

emission allowances. See First Indus. Loan Co., 26 Cal.2d at 550

(affirming that a general authorization only confers power to do that

which is "reasonably necessary or appropriate to subserv[e] or

promot[e] the interests and purposes of the statute."). And that

understanding-implicit in the very structure of the Act-is only

confirmed by the fact that ARB's interpretation would result in

substantially greater compliance costs for the regulated comm unity,

a result that would only make sense if the Legislature had been

explicit in authorizing the auctioning of emission allowances.

Indeed, the decision to auction emission allowances adds

tremendously to the burden of compliance because covered entities

must not only find ways to reduce emissions, but must-under

9 Amici maintain that this exaction constitutes an illegal tax. But either way, the exaction ofm.oney-whether viewed as a fee or a tax-achieves something extraneous to the goal of forcing regulated entities to reduce GHGs. See Hugh D. Spitzer, Taxes vs. Fees: A Curious Confusion, 38 Ganz. L. Rev. 335, 343 (2003).

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ARB's regulations-pay for the right to continue emitting where

they would otherwise be afforded that right at no cost. 10

B. The Act Entails Textual Cues that the Legislature Did Not Intend to Authorize Auctions and Intended to Minimize the Cost of Compliance

In the absence of clear and definitive language, it would be

unreasonable to assume that the Legislature intended to impose

billions of dollars in added compliance costs on the regulated

community. 11 Cf. Verdugo, 59 Cal.4th at 326. Further, in this case

there are firm textual clues-in the plain language of the Act-

10 In the coming years CARE plans to auction up to half of its aggregate annual emission allowances; however, under CARB's view the agency might just as well choose to auction all of emission allowances: That would radically drive up compliance costs for the regulated community all the more. Further, CARB's theory would seemingly enable the agency to ratchet up compliance costs further by raising the floor price at which it might sell emission allowances. Simply put, CARB's construction would enable the agency to exact far greater revenues than the estimated $12-$70 billion that the current regime is anticipated to raise for the State. Amici maintain the Legislature would have spoken more clearly if it had intended to write ARB a blank check to exact unbounded revenues. 11 Clearly the Legislature intended a departure from the common law in authorizing imposition of a cap-and-trade regime because the Legislature was explicit in authorizing CARE to regulate GHG emissions that covered entities would otherwise be free to emit. But CARB's purported authority to auction emission allowances presumes a further departure from common law standards, wherein property owners must not only obtain a permission slip to continue emitting GHGs, but most now pay for that right. For this reason as well, CARB's interpretat_ion should be rejected. Reno 18 Cal.4th at 652 (emphasizing that a statutory construction should be rejected if it would impose significant added regulatory burdens without substantially advancing the statute's

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confirming that the Legislature intended ARB to choose a system of

allocation that minimizes compliance costs. For example, AB 32

provides that ARB should: "[d]esign ... regulations, including

distribution of e:rnissions allowances where appropriate, in a manner

that is equitable, seeks to minimize costs and maximize the total

benefits to California, and encourages early action to reduce

greenhouse gas emissions." Health & Safety Code § 38562 (b )(1)

(emphasis added).

ARB suggests that its decision to auction emission allowances

is reasonable because, in charging the regulated community billions

of dollars for those credits, the agency believes it may encourage

early compliance by "reward[ing] those firms that reduce emissions

in order to avoid purchasing allowances." (ARB Br. at 14.) But this

reliance on the mandate to consider a distribution system

"encourag[ing] early action" is misplaced. First, as an empirical

matter, it is highly debatable whether ARB's plans to auction

emission allowances did much-if anything-to encourage covered

entities to reduce GHG emissions early on. Second, ARB's logic

utterly ignores the statute's requirement that ARB should "seek to

minimize costs and maximize the total benefits to California .... "

Health & Safety Code§ 38562(b)(l). To be sure, ARB's rationale for

why the regime might (theoretically) encourage early compliance is

entirely predicated upon the fact that the auctioning of emission

allowances results in added compliance costs that will be financially

painful for California's business community-and ultimately

regulatory goals).

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consumers. Third, these provisions can be perfectly harmonized if

interpreted as authorizing an equitable distribution of emission

allowances at no cost to covered entities. 12 Clearly, this approach

would further the Legislature's goal of reducing GHG emissions to '

1990 levels without imposing unnecessary costs on the regulated

comm unity and consumers.

Finally, ARB's theory of broad "gap-filling authority" cannot

justify the auctioning of emission allowances because the

Legislature explicitly authorized ARB to exact monies from covered

entities in the provision authorizing the exaction of fees. Health &

Safety Code§ 38597. This demonstrates that the Legislature knows

how to authorize the exaction of monies when it intends to confer

· such authority. Indeed, under the maxim expressio unius est exclusio

alterius, the inclusion of an express authorization to exact fees in

one provision strongly implies the denial of any inferential authority

to exact monies under a more general provision. O'Grady, 139

Cal.App.4th at 1443; Ass'n of Cal. Ins. Cos., 235 Cal.App.4th at 1009.

That presumption is all the greater here because the auctioning of

emission allowances enables ARB to exact far more than is

12 Amici maintain that one reasonable approach-and perhaps a more equitable solution-would have simply awarded proportionally more emission allowances (at no cost) to smaller entities. This would encourage larger entities-which have greater capital assets and or access to capital-to invest in green technologies. This approach would have minimized costs to Californians while achieving the same regulatory goals, and would further avoid the inequitable problems that arise with auctioning of emission allowances, whereby larger firms have an unfair competitive advantage over smaller firms.

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authorized under the provision authorizing the collection of fees.

r Health & Safety Code § 38597. Indeed, it is unfathomable that the

Legislature would explicitly spell out authority to exact a modest

fee, but wo;id i;tend for an inference of authority to effect a far greater monetary exaction. 13

13 The canon of constitutional avoidance offers yet another compelling reason to reject a construction authorizing CARB to exact billions of dollars from the regulated comm unity. People v. Chandler, 60 Cal.4th 508, 524 (2014). Regardless of whether the exaction is characterized as a "tax" or "fee"-CARB's construction raises serious constitutional problems. If understood as a tax, the auctioning of emission allowances violates the California Constitution. Cal. Const., art. XIIIA, § 3. But if understood as imposing monetary fees on the regulated community, the auctioning of emission allowances raises a constitutional problem under the Takings Clause of the United States Constitution. The U.S. Supreme Court made this clear in 2013 with its decision in Koontz v. St. Johns River Management District, which held that the Takings Clause prohibits government from conditioning the right to use private property on a requirement to pay a fee-except in cases where the fee bears a nexus, and is roughly proportional, as determined on an individualized basis, to an adverse impact that the owner's conduct might have on the public. 568 U.S. ---,133 S. Ct. 2586 (2013);LukeA. Wake &JarodM. -Bona, Legislative Exactions After Koontz v. St. Johns River Management Distri'ct (forthcoming in Geo. Int'l Envtl. L. Rev., fall 2015) (observing that "Koontz calls into question permitting regimes requiring applicants to pay into special funds-regardless of which public goals they seek to advance.") (manuscript at 46, online at http://papers.ssrn.com/sol3/papers.cfm? abstract_id=2564205).

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CONCLUSION

For the foregoing reasons, amici respectfully urge this Court

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I to reverse the decision of the Superior Court. I

" ~-------------·-··········· ·········-····-···•"''----·--·-·•«•••«·-······-···-.. -·---.. --.;

Respectfully submitted, Ii

Dated: May 15, 2015

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NFIB Small Business Legal Center Luke A. Wake

Benbrook Law Gro~p, PC Bradley A. Benbrook

-~.~ ~s-LukeA. Wake

Attorneys for Amici Curiae NFIB Small Business Legal Center

WORD COUNT CERTIFICATION I certify, pursuant to Rule 8.204(c) of the California Rules of

Court, that the at~9:ched brief, including footnotes, but excluding the

caption page, tables, and this certification, as measured by the word

count of the computer program used to prepare the brief, contains

5,663 words.

Dated: May 15, 2015

~-£.=----LukeA. Wake

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PROOF OF SERVICE

CASE NO. C075954 and C075930

-----------·---··---''''''"'"-"'''""'-''"'-··-,,,,,,,,_,,,,_,,, ___ ,, __ ,,_,,,, .. ,------... -The undersigned hereby certifies as follows:

I am an employee of the law firm of Benbrook Law Group, PC, 400 Capitol Mall, Suite 1610, Sacramento, California. I am over 18 years of age and am not a party to the within action.

On May 15, 2015 I served a true copy of the foHowing document:

APPLICATION TO FILE AMICI CURIAE BRIEF AND AMIC{CURIAE BRIEF OF THE NATIONAL FEDERATION OF INDEPENDENT

BUSINESS SMALL BUSINESS LEGAL CENTER, OWNER-OPERATED INDEPENDENT DRIVERS ASSOCIATION, INC., AND ASSOCIATED

. . CALIFORNIA LOGGERS IN SUPPORT OF APPELLANTS

on the party(ies) in this action by placing a true copy thereof in a sealed envelope( s ), addressed as follows:

--Theodore Hadzi-Antich Pacific Legal F0tmdation 930 G Street Sacramento, CA 95814

Attorney for: Morning Star Packing Co.

Matthew Dwight Zim1 Shute Mihaly & Weinberger, LLP 396 Hayes Street San Francisco, CA 94102

Attorney for: Environmental Defense Fund James R. Parrinello Nielsen, Merksamer, Parrinello, Gross & Leoni 2350 Kerner Boulevard, Suite 250

-Sancl{afaelrCA.-949-01. - . --·

Attorney for: California Ch'1mber of Commerce --~

Gavin Geraghty McCabe Offiice of the Attorney General PO Box 70550 Oakland, CA 94612-0550

Atiorney for: California Air Resources Board

David Alexander Zonana Office of the State Attorney General 1515 Clay Street, 20th Floor P.O. Box 70550 Oakland, CA 94612-0550

Attorney for: California Air Resources Board et al.

Erica Morehouse Martin Environmental Defense Fund 1107 9th Street, Suite 1070 Sacramento, CA 95814

Attorney for: Environmental Defense Fund Robert E. Asperger Office of the State Attorney General P.O. Box 944255 1300 I Street Suite 125 Sacramento, CA-94244 -- .. - -----· - ------ ...

Attorney for: California Air Resources Board

Sean A. Commons Sidley Austin LLP 555 West 5th Street Los Angeles, CA 90013

Attorney for: National Association of Manufactures

PROOF OF SERVICE

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Eric D. McAlihur Paul J. Zidlicky Sidley Austin LLP Sidley Austin LLP 1501 K Street NW 1501 K Street NW Washington, DC 20005 • Washinb,ton, DC 20005

Attorney for: National Association of Attorney for: National Association of M1:1.1,rnfactures . - - ·--- ---···-- ··-- . . Manufactures .. . .... Roger R. Martella, Jr. Matthew Dwight Zinn Sidley Austin LLP Shute Mihaly & Weinberger 1501 K Street NW 396 Hayes St Washington, DC 20005 San Francisco, CA 94102

Attorney for: National Association of Manufactures

Attorney for: Environmental Defense Fund

Sean H. Donahue Erica Morehouse Martin Donahue & Goldberg Environmental Defense Fund 2000 L Street, NW, Suite 808 1107 9th Street, Suite 1070 Washington, DC 20036 Sacramento, CA 95814

Attorney for: Environmental Defense Fund Attorney for: Environmental Defense Fund David Richard Pettit Sacramento Superior Court Natural Resources Defense Council 720 9111 Street 1314 2nd Street Sacramento, CA 95814 Santa Monica, CA 90401

Attorney for: Resources Defense Council Supreme Court of California 350 McAllister Street San Francisco, CA 94102-4 797

(4 CoDies)

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___ (HAND-DELIVERY) by sending a true copy thereof in an envelope addressed as indicated above, and by then sealing said envelope(s) and giving the same to a messenger for personal delivery.

I declare under pen'alty of perjury under the laws of the United States of America and the

State of California that the foregoing is true and correct.

Dated: May 15, 2015 Kelly McConnen

PROOF OF SERVICE