A California state court has determined that the California Air Resources Board (ARB) failed to consider alternatives to the state’s planned cap-and-trade scheme as required by the California Environmental Quality Act (CEQA). Assn. of Irritated Residents, et al., v. ARB, No. CPF-09-509562 (Cal. Super. Ct., San Francisco 3/18/11). The decision stops ARB from implementing California’s climate change law, A.B. 32, until the agency complies with CEQA.

A.B. 32, also known as the Global Solutions Act of 2006, aims to reduce the state’s greenhouse gas (GHG) emissions to 1990 levels by 2020. ARB was charged with implementing A.B. 32 and adopted its scoping plan in December 2008. Since then, ARB has approved a number of regulations contemplated by the scoping plan, including a GHG cap-and-trade scheme that was approved in December 2010.

Addressing ARB’s evaluation of possible alternatives to the measures described in the A.B. 32 scoping plan and specifically focusing on the cap-and-trade program, the court admonished the agency for not discussing in detail a carbon fee alternative to cap-and-trade and noted that ARB devoted two paragraphs only of its 500-page scoping plan to this alternative. While the court found that ARB improperly began implementing the scoping plan before its CEQA process was complete, it also determined that ARB has the authority to “identify and make recommendations on those measures it ‘finds are necessary or desirable to facilitate’ the achievement of A.B. 32’s” emission reduction goals.

Because the order enjoins “any further implementation of the measures contained in the Scoping Plan until the state has complied with CEQA,” the injunction’s breadth is apparently unclear. ARB will appeal this ruling and will ask the court to clarify its intended scope. An injunction of all measures would presumably include programs such as improved energy efficiency, clean-car standards and low-carbon fuel regulations, which are arguably beyond the cap-and-trade program’s scope. The ruling also raises questions as to whether California’s cap-and-trade program, slated to commence January 1, 2012, will begin on time.