February 2, 2011 / 3:52 AM / 9 years ago

California court clouds cap-and-trade outlook

SAN FRANCISCO (Reuters) - A San Francisco judge has tentatively ruled that California did not adequately consider alternatives to creating a carbon market, a decision which clouds the premier U.S. climate change program’s outlook.

Century City and downtown Los Angeles are seen through the smog December 31, 2007. REUTERS/Lucy Nicholson

California’s so-called cap-and-trade plan is seen as the vanguard of U.S. climate change policy after the U.S. Congress failed to pass a federal system, and the plan’s fate is being watched globally by environmentalists and industry.

An attorney representing the challenge on Tuesday said the ruling, if finalized, could potentially delay implementation of the cap-and-trade carbon market due to start next year.

However, both sides can still file objections to the tentative ruling, which does not say precisely what happens to the cap-and-trade program, and can also be appealed, she said.

“It is really exciting but it is still very tentative,” said Alegria De La Cruz, whose clients believe the health effects of the plan have not been studied adequately and could backfire in some regions of the state.

The cap and trade plan establishes state-wide limits on emissions of carbon dioxide and other greenhouse gases but lets power plants and industry trade rights to emit, which could lead to different emissions in different regions.

A spokesman for the state’s Air Resoures Board (ARB), the climate change regulator found at fault in the ruling, noted the decision was tentative and declined to discuss its implications. A spokeswoman for the state attorney general declined comment.

Both sides have 15 days from the January 21 ruling to make objections, De La Cruz said. The ruling was not completely in favor of the challenge.

Superior Court Judge Ernest Goldsmith denied the attempt by the Association of Irritated Residents environmental justice group to force regulators to rewrite its blueprint for specific measures to combat global warming, known as the Scoping Plan of the 2006 climate change law.

But he tentatively ordered regulators to set aside the environmental certification for the Scoping Plan and to stop the Scoping Plan’s implementation until regulators come into compliance, saying an analysis of alternatives was needed.

He did not specify what steps were required, or what that meant for cap-and-trade, but indicated regulators should have analyzed existing data more carefully.

“ARB seeks to create a fait accompli by premature establishment of a cap-and-trade program before alternatives can be exposed to public comment and properly evaluated by the ARB itself,” he ruled.

“ARB could have, and should have, used data from existing programs, studies and reports to analyze the potential impacts of the various alternatives,” he concluded.

The case is Association of Irritated Residents vs. California Air Resources Board, CPF-09-509562.

Reporting by Peter Henderson; editing by Todd Eastham

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