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California Judge Orders Delay of State’s Carbon-Market Rules

March 21 (Bloomberg) -- A California judge ordered state environmental officials to stop work on carbon cap-and-trade regulations until alternative approaches, such as a carbon tax, are fully studied.

The California Air Resources Board violated state law when it approved a December 2008 plan that laid the groundwork for the trading program, Judge Ernest Goldsmith said in a March 18 ruling obtained today. The plan failed to analyze alternatives that might be better than a cap-and-trade program, he said.

The “important alternative” of a carbon tax got a “scant two paragraphs” of discussion in the plan, he said. The public should have been told “not only why cap-and-trade was chosen, but also why the alternatives were not,” Goldsmith said. The judge’s order blocks the environmental agency from working on carbon regulations until it studies the alternatives.

California’s cap-and-trade regulation seeks a 15 percent cut in greenhouse gases from power plants, refineries, factories, cars and trucks by 2020. The program, similar to the federal cap-and-trade system President Barack Obama failed to get through Congress last year, is scheduled to start in 2012.

The Air Resources Board voted 9-1 in December to move ahead with the program, in which companies would buy and sell a declining number of allowances to release carbon dioxide, a greenhouse gas that scientists have linked to global warming.

The Air Resources Board plans to appeal Goldsmith’s ruling, Stanley Young, an agency spokesman, said in an e-mail. The decision may slow programs besides cap-and-trade such as “efforts to improve energy efficiency, establish clean car standards and develop low carbon fuel regulations,” he said.

‘First Step’

The Center on Race, Poverty & the Environment and other advocacy organizations sued the board, arguing its global-warming rules don’t do enough to clean up poor, polluted neighborhoods. Goldsmith’s ruling is the “first step” in forcing the agency to abandon cap-and-trade, Alegria De La Cruz, the center’s legal director, said today in a telephone interview.

“Cap-and-trade isn’t the right choice for California,” she said. The judge’s ruling requires state officials “to look at the big picture again,” she said.

The advocacy group’s criticisms of the regulations are “unfounded,” Young said.

To contact the reporter on this story: Simon Lomax in Washington at slomax@bloomberg.net

To contact the editor responsible for this story: Steve Geimann at sgeimann@bloomberg.net

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