As discussed in The Climate Report, Spring 2012, two environmental groups filed suit in San Francisco Superior Court challenging the four offset protocols adopted by CARB as part of the cap and trade and early action offset credit programs. Citizens' Climate Lobby and Our Children's Earth Foundation v. California Air Resources Board. The challenged offset protocols, which set out the requirements for offset projects to qualify for offset credits, are incorporated into CARB's cap and trade regulations. Such offset credits can be purchased and sold, and used to partially fulfill California greenhouse gas reduction obligations. The four challenged protocols address Ozone Depleting Substances Projects, Livestock Projects, Urban Forest Projects, and U.S. Forest Projects.

The lawsuit is still in its early stages. Several parties have intervened on behalf of CARB, including the Climate Action Reserve, the Environmental Defense Fund, and a business group that includes (among others) major California utilities and energy companies. Jones Day represents The Nature Conservancy, which intends to file an amicus brief in support of the U.S. Forest Project protocol. Briefing is to be complete by October 5, 2012, and a hearing on the petition is scheduled for November 6, 2012