Natalie Reed

San Francisco Superior Court Clears the Way for Cap-and-Trade Enforcement in 2013

Climate Change

CourtroomOn Tuesday, San Francisco Superior Court Judge Ernest H. Goldsmith, issued an order that removes one more obstacle from the California Air Resources Board’s (CARB) efforts to implement its plan to reduce greenhouse gas emissions through an unprecedented cap-and-trade program adopted by the agency in October and slated for enforcement in 2013. The court’s order discharging a peremptory writ of mandate issued by the court in May, indicates that CARB has complied with the Court’s previous order by adequately considering alternatives to its market-based cap-and-trade program, ending a year-long legal saga that threatened to derail the state’s plan to implement its landmark greenhouse gas reduction law, the Global Warming Solutions Act of 2006 (AB 32).

As reported by Forbes, CARB Chairman Mary D. Nichols affirmed in an interview yesterday at the 2011 United Nations Climate Change Negotiations in Durban, South Africa, that “[t]he court decision clears the way for [CARB] to implement the cap-and-trade program, which is only one portion of our overall plan to reduce [California’s]…greenhouse gas emissions. We have a number of other regulations in place, including our clean cars rules, our low carbon fuel standards, [and] our renewable energy standards.” Although Nichols considers this victory to be “an important step along the way,” she conceded the likelihood of future litigation, noting that “[a]t every step, when we initiate new programs and new requirements, there’s always some litigation…I am sure at other points there will be other challenges.” For the moment, however, Nichols related that the agency was “very happy to have this phase of it resolved and to have the court agree with us: that we did the appropriate environmental reviews, that we followed the health and environmental quality laws in developing our plan.”

As we previously blogged, in May, Judge Goldsmith ordered CARB to set aside its approval of the AB 32 Scoping Plan as it related to cap-and-trade and complete a more thorough review of alternatives to the plan’s proposed reduction measures. CARB, while undertaking the expanded environmental analysis ordered by the Superior Court, appealed the Superior Court’s decision. In June, the First District Court of Appeal issued a stay that allowed CARB to continue its cap-and-trade work during the pendency of the appeal, which stay was later upheld by the California Supreme Court. CARB, meanwhile, approved its expanded environmental analysis on the Scoping Plan, reapproved the Scoping Plan itself, and, in October, adopted its final cap-and-trade regulation. Still lingering, however, is CARB’s appeal of the Superior Court’s earlier ruling, now before the First District Court of Appeal.

As noted in a previous blog, the cap-and-trade program will establish a statewide declining aggregate greenhouse gas emissions cap on covered sectors and will provide uncapped industries, such as agriculture, with an excellent opportunity to consider ways in which they might capitalize on their ability to generate carbon offset credits.

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