Legal News Alert from Stoel Rives Environmental Law Group
March 23, 2011
San Francisco Superior Court has issued a final decision in Association of Irritated Residents v. California Air Resources Board. For the moment, the California Air Resources Board (CARB) is enjoined from further rulemaking to implement the California Global Warming Solutions Act (A.B. 32), including for the cap-and-trade program. The Court upheld the validity of CARB’s Scoping Plan for implementation of A.B. 32, saving CARB from having to revise the Plan. But, the Court found flaws with CARB’s environmental review of the Scoping Plan under the California Environmental Quality Act (CEQA), in particular its analysis of alternatives to the Plan’s recommended greenhouse gas (GHG) reduction measures, such as cap and trade. CARB is enjoined from further rulemaking until the agency has come into compliance with CEQA by amending its environmental review of the Scoping Plan.
For entities facing regulation under A.B. 32, this decision has important implications. Scoping Plan GHG reduction measures that have already made their way through the rulemaking process appear unaffected. But CARB’s cap-and-trade program never made it out of the formal rulemaking process. While the Board members of CARB approved the cap-and-trade program in December 2010, it left it to the Executive Officer to take final action to adopt the proposed regulation (or bring it back to the Board) after more details were finalized. CARB had a packed schedule this year to finalize cap and trade prior to its January 1, 2012 start date. Under the Court’s final decision, these activities will have to be shelved if they fall within the rubric of further rulemaking or implementation. Regulated entities may thus have a temporary reprieve from the onset of cap and trade in 2012. But continued uncertainty over the details of CARB’s planned GHG regulation of stationary sources is a less than ideal situation for regulated sources.
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