Enviro Groups Win Key Cap-and-Trade Ruling

(CN) - A San Francisco judge stopped implementation of California's landmark cap-and-trade program, ordering a state agency to look at the possibility of implementing a carbon tax instead.

California-based environmental justice groups including the Association of Irritated Residents and California Communities Against Toxics had claimed that the cap-and-trade plan, the United States' first, is not the best way to reduce the greenhouse gases emissions that contribute to climate change.

Superior Court Judge Ernest Goldsmith rejected the groups' claims that the plan violated California's 2006 Global Warming Solutions Act, which intends to reduce greenhouse gas emissions to 1990 levels by 2020.

The court's March 17 ruling states that the legislature meant to give the California Air Resources Board broad latitude in interpreting the act.

Goldsmith wrote that the plan appropriately left out mandatory caps for agricultural and industrial sectors, which were covered by an incentive approach and the cap-and-trade program.

Cap and trade - a market-oriented system in which companies buy and sell emissions credits - can overlap with direct regulation, making the two not directly comparable, the court continued. Direct regulation, which could result in more emissions reductions, therefore can't be taken as the standard, Goldsmith ruled.

The court agreed that the plan's evaluations - including health effects - were not the best. But, as a whole, they withstood the legal test for consideration of environmental benefits and analysis of greenhouse-gas-reduction programs around the world.

Goldsmith also said the plan's impact analysis under the California Environmental Quality Act passed muster, as it considered a wide array of effects on areas like air quality, biological resources, energy demand, and noise and solid waste.

But the plan did fail in its analysis of alternatives, as it did not provide meaningful discussion about the alternative of a carbon fee or tax. In a "scant two paragraphs," the air board's reference to a carbon tax "consists almost entirely of bare conclusions justifying the cap and trade decision," Goldsmith wrote.

In addition, the judge said the state agency can't cloak adoption of the plan under the term "approval." The court enjoined implementation and ordered the environmental justice groups to specify the scope of their demands.

The California Air Board may appeal, though this could take longer than adding a carbon tax analysis.

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