California Cap & Trade Challenge Final Order Issued

By Lee Smith
Stoel Rives LLP, Oregon Law Firm
Renewable Law Blog

On Friday, May 20, 2011, Judge Goldsmith of San Francisco Supreme Court issued a final order (PDF) with respect to a lawsuit challenging the environmental review of the Cap and Trade regulations created under California’s AB 32 Greenhouse Gas statute and the associated Scoping Plan. In its order, the Court enjoined the Cap and Trade portion of the Scoping Plan.

This revised final order is narrower than the draft order previously circulated in March. The order applies only to the Board Regulation O8-47 and Executive Order G-09-001 (approving the climate change scoping plan) as they relate to Cap and Trade; and the Cap and Trade regulations themselves Regulation 10-42. The Executive order enjoins the California Air Resources Board (CARB) from:

“[e]ngaging in any cap and trade-related Project activity that could result in an adverse change to the physical environment until ARB has comes into complete compliance with ARB’s obligations under its certified regulatory program and CEQA, consistent with the Court’s Order. This includes any further rulemaking and implementation of cap and trade especially but not limited to any action in furtherance of California Cap and Trade Program Resolution 10-42.”

Keep in mind, this lawsuit was filed challenging a CEQA type document which is procedural in nature. Thus, once CARB revises the environmental document in the manner required by the court and it is determined to be sufficient at the time the writ is returned, the project may go forward. Additionally, in the interim, those portions of AB 32 that are not related to Cap and Trade, such as mandatory reporting, are still in effect pursuant to the Implementation Schedule.

In the interim, it will be interesting to see whether various interests will attempt to make changes to the Cap and Trade program. The Sierra Club has already come out in favor of changes related to emissions levels and environmental justice issues.

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