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San Francisco County Superior Court Judge Ernest Goldsmith ruled on Friday that the state Air Resources Board (ARB) did not properly consider alternatives to cap and trade when it picked the market-based mechanism to achieve about 20 percent of overall emissions reductions by 2020. The Center on Race, Poverty and the Environment and other environmental justice advocates had sued over a provision in the California Environmental Quality Act requiring state agencies to analyze the environmental justice consequences of their policies.

California regulators still might be able to start their greenhouse gas trading program in January 2012, despite the court decision (pdf) to stay the first trading system in the United States for greenhouse gas emissions from power plants, oil and gas refineries, transportation fuels and other heavy industries.


Judge Goldsmith ruled that the agency's "functionally equivalent document (pdf)" that it released in December 2008 to explain its selection of cap and trade was insufficient. ARB 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. Goldsmith could have ruled that a trading scheme was an unacceptable method of reducing emissions. He could also have stayed the entire suite of regulations that the state is pursuing, 69 in all, including a low-carbon fuel standard, local development and smart growth guidelines, and emissions reductions from ships and trucks.

The cap and trade component was the heart of A.B. 32, the 2006 California global warming law.

The question now is whether ARB can get back on track by Oct. 28, the date that it has to finalize the program according to internal regulations. If it misses the deadline, agency employees will have to begin the process over again, starting with submitting the original cap-and-trade regulation back to the board for approval. The decision might also delay rulemakings going on at other agencies, including a proceeding in the California Public Utilities Commission on how to spend proceeds from the auction of allowances.

Governor Jerry Brown has not shown expressed his position on this issue yet. (NYT, 5/23/2011)