CLIMATE:

Judge stays Calif. cap-and-trade program

SAN FRANCISCO -- A California judge today blocked the state's cap-and-trade program until regulators provide sufficient justification for imposing a market-based system for curbing emissions.

The decision by Judge Ernest Goldsmith of San Francisco County Superior Court could upset state plans for starting a cap-and-trade system next January under a landmark law that mandates lowering emissions to 1990 levels by 2020.

Goldsmith ruled that the state Air Resources Board (ARB) violated the California Environmental Quality Act by not adequately exploring alternatives to cap and trade, like a carbon tax or direct regulation.

The board must set aside its December 2010 decision approving the trading system for emitters over 25,000 metric tons per year, and must cease all rulemaking activities related to cap and trade until it complies with the law, Goldsmith ruled. The trading program was designed to cover 85 percent of the state's industrial emissions by 2020, including emissions from power plants, oil and gas refineries, transportation fuels and other heavy industries.

The plaintiffs -- led by the Association of Irritated Residents and other environmental justice groups -- had alleged that a cap-and-trade system would hurt low-income communities by allowing emitters to avoid local limits on greenhouse gases by buying credits or offsets (E&ENews PM, April 25).

The agency's "functionally equivalent document" that it released in December 2008 to explain its selection of cap and trade was insufficient, the judge ruled.

"ARB committed a prejudicial abuse of discretion when it failed to proceed in a manner require[d] by law by inadequately describing and analyzing project alternatives sufficient for informed decision making and public participation," Goldsmith wrote.

ARB will have 15 months to comply with the order.

Goldsmith ruling didn't go as far as it could have under two proposals submitted by the plaintiffs. One of the plans would have stayed California's entire suite of greenhouse gas reduction policies -- 69 in all, including a low-carbon fuel standard, local development and smart growth guidelines, and emissions reductions from ships and trucks.

But the judge also could have allowed the market to move forward while requiring ARB to redo an alternatives analysis, as the state requested.

Look for more details in Monday's edition of ClimateWire.

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