A San Francisco court has issued an eagerly awaited final decision in Association of Irritated Residents v. California Air Resources Board, challenging the California Air Resources Board (CARB) plan for implementation of the Global Warming Solutions Act, otherwise known by its Assembly Bill moniker, A.B. 32. A coalition of environmental justice advocates sued CARB in an attempt to invalidate the A.B. 32 Scoping Plan, as well as CARB’s environmental review of the Scoping Plan conducted pursuant to the California Environmental Quality Act (CEQA).
The court upheld the validity of the Scoping Plan itself, saving CARB from having to revise the Plan. But, the court found flaws with CARB’s environmental review of the Scoping Plan and has blocked further rulemaking to implement the Plan until these deficiencies are corrected. The final decision issued by the court did not differ significantly from the tentative decision released in late January 2011, despite objections to the tentative filed by both sides. However, the final decision did provide some sought-after clarification on the scope of the court’s remedy. CARB adopted the Scoping Plan in December 2008 and since that time has adopted various regulations proposed in the Scoping Plan, including the state’s cap-and-trade program. The tentative decision enjoined CARB from further implementation of the Scoping Plan until it came into compliance with CEQA. In the final decision, the court clarified that CARB is enjoined from any further rulemaking, presumably on any Scoping Plan program, until CARB amends its environmental review to correct the deficiencies identified by the court.
Programs stemming from the Scoping Plan that have already made their way through the rulemaking process thus appear unaffected, and their implementation can move forward. But the cap-and-trade program has not 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 the Executive Officer to take final action to adopt the proposed regulation (or bring it back to the Board) after more details were sorted out. CARB had a packed schedule this year to finalize the program prior to its January 1, 2012 start date. From the court’s statements, below, these activities will be shelved:
Continued rulemaking and implementation of cap and trade will render consideration of alternatives a nullity as a mature cap and trade program would be in place well advanced from the premature implementation which has already taken place. In order to ensure that ARB adequately considers alternatives to the Scoping Plan and exposes its analysis to public scrutiny prior to implementing the measures contained therein, the Court must enjoin further rulemaking until ARB amends the [environmental review document] in accordance with this decision.
The statutory language of A.B. 32 requires that greenhouse gas emission reduction measures adopted to achieve the goal of 1990 greenhouse gas emission levels by 2020 become operative by January 1, 2012. If CARB misses this deadline for the cap-and-trade program, the statute (and court’s decision here) are silent on the implications. Perhaps the release valve in A.B. 32, giving the Governor authority to adjust deadlines for the state under certain circumstances, will come into play if CARB cannot amend its environmental review in time or obtain other relief from the court. In the meantime, regulated entities may have a temporary reprieve from the onset of cap-and-trade in 2012. Somehow, though, I doubt these entities are thankful for the continued uncertainty over the details of CARB’s planned greenhouse gas regulation of stationary sources.
For more on the fine points of Judge Goldsmith’s decision, continue reading.
In accordance with precedent, Judge Goldsmith deferred to CARB’s interpretation of A.B. 32’s substantive mandates in crafting a Scoping Plan in accordance with A.B. 32. Given this deference, the court upheld the Scoping Plan. But, the court agreed with plaintiffs that there were some flaws in CARB’s analysis of the total potential costs and total potential economic benefits of the Scoping Plan to the state’s economy, environment, and public health. Overall, however, the court found that plaintiffs’ criticisms on this point were over broad and fell short of demonstrating that the agency’s actions were arbitrary and capricious in violation of its duty to analyze the costs and benefits of direct regulation of greenhouse gas emissions and the cap-and-trade approach.
The other half of the case, challenging the environmental review of the Scoping Plan, the court did not agree in toto with plaintiffs’ claims, but all you need is one CEQA flaw to require additional or amended environmental review. Judge Goldsmith found that CARB’s analysis of environmental impacts associated with the Scoping Plan was acceptable, but the analysis of alternatives to the Scoping Plan’s proposed programs and regulations was inadequate. CARB did not undertake an adequate analysis of the impacts of each proposed alternative to the mix of preferred greenhouse gas reduction measures presented in the Scoping Plan, in particular the alternative for use of a carbon fee or tax. The court explained that a more thorough analysis of alternatives is required under CEQA to inform the public why CARB chose a cap-and-trade program as a primary greenhouse gas reduction measure instead of alternative measures like a carbon tax or greater reliance on source-specific regulation. The court also found that CARB had improperly adopted the Scoping Plan before finishing its environmental review. In accordance with CEQA and the tenets of administrative law, the court has not (and could not have) required CARB to come to a different conclusion in its environmental review, i.e. that CARB should have chosen alternatives to cap-and-trade and other proposed greenhouse gas reduction measures. The power of an adverse CEQA decision, as here, is that the court can delay implementation of a project pending compliance with CEQA. Unless CARB requests and is granted some sort of a reprieve on this aspect of the decision, CARB’s rulemaking activities are suspended pending amendment of the environmental review of the Scoping Plan.
After the issuance of a tentative decision, both sides filed a request for hearing on their objections to the tentative. The court denied the hearing request and issued its final decision on March 18, 2011.