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Cap and Trade System Capped for Now

Los Angeles Environmental AttorneyEnvironmental AttorneyStephen T. Holzer
May 26, 2011

Los Angeles Environmental Attorney

What is Cap and Trade? In 2006, California passed Assembly Bill 32, the Global Warming Solutions Act, meant to help the state meet a set goal of reduced greenhouse gas emissions by 2020. The California Air Resources Board (CARB) developed plans to meet those goals. 

One strategy included a cap and trade system which allowed companies emitting fixed amounts of greenhouse gases to earn credits when they emit less, and to buy credits when they emit more. But critics of the plan say the strategy wasn’t well thought out.

In late March, Judge Ernest Goldsmith of the San Francisco Superior Court issued a tentative ruling invalidating CARB’s program. The Judge has now finalized his ruling. 


Why Is CARB Under Fire?


The implementation of AB 32 was challenged not by industry, but by a coalition of environmental justice advocacy groups, which claimed CARB had not adequately considered viable alternatives to a cap-and-trade system. Who are the parties that filed suit? 

     ▪ Association of Irritated Residents
     ▪ Communities Against Toxics
     ▪ Communities For a Better Environment
     ▪ Coalition For a Safe Environment
     ▪ Society For Positive Action
     ▪ West County Toxics Coalition
     ▪ Various Individuals

The plaintiffs complained that the system, which sets an overall level of greenhouse gases that industry may emit into the environment imposes burdens on low-income communities. 

The unfairness allegedly arises because, while an overall pollution limit may be set, companies exceeding emissions allowances can buy credits from other companies and continue existing levels of individual company pollution. 

The advocacy groups complained that the companies benefitting from a cap and trade system are disproportionately in low-income areas. While the system may cap pollution in the long run, the groups allege that the end result would actually raise greenhouse gas levels in low-income communities. 


Cap and Trade & CEQA


CARB’s approach to curbing greenhouse-gas pollution was specifically challenged on the basis of the California Environmental Quality Act (CEQA). Judge Goldsmith’s final Statement of Decision agreed with the groups’ claim that CARB violated CEQA by, “failing to adequately analyze alternatives” to cap and trade. In other words,  the Judge said, CARB had failed to determine whether the goals of greenhouse gas regulation could be achieved without the flaws identified by the plaintiff groups.

You can find Judge Goldsmith’s Statement of Decision at  (Association of Irritated Residents, et al. v. California Air Resources Board, et al., Case No. CPF-09-509562). 

CARB was supposed to finalize the cap and trade program by the end of October. Will they make their own deadline? Some say we will be trading carbon by 2012, while others expect a court appeal. 

Stephen T. Holzer is a Los Angeles Environmental Lawyer, Shareholder and Chair of the Environmental Law Department. Contact him by calling 818.990.2120.


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