CARB - Climate Action Reserve

Association of Irritated Residents v.
California Air Resources Board
Summary and Status Update
California Cap and Trade Workshop
Climate Action Reserve
Houston, TX
Jean-Philippe Brisson, Senior Counsel
Head, Environment and Climate Change Practice
Linklaters LLP
June 14, 2011
Legal Notice
The contents of this presentation are for general informational purposes only
and do not claim to be comprehensive or provide legal or other advice. This
presentation is not intended to create, and does not create, an attorney-client
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AIR v. CARB: Why is it Relevant?
1. Will the courts preempt entry into force of cap-and-trade?
No, not under this lawsuit
2. Will the start of cap-and-trade program be delayed?
Possible, but unlikely
Issue is whether stay will remain in effect while CARB fixes the FED
3. Will the lawsuit be a drain on limited CARB resources?
Yes, but to what extent?
Paragraph 9, Edith Chang’s Declaration
California Environmental Quality Act (“CEQA”)
Purpose: requires government agencies to consider environmental consequences
before approving plans and policies or committing to a course of action on a project
Procedural Requirement: agencies must identify environmental effects, mitigation
measures and alternatives to the proposed project in an Environmental Impact
Report (“EIR”)
Certified Regulatory Program
> Certain agencies, such as the California Air Resources Board (“CARB”), are
“Certified Regulatory Programs” and file functionally equivalent documents
(“FEDs”) instead
“Tiering”: allows agencies to conduct EIRs or FEDs in two steps
> Program EIR/FED is prepared for a series of actions that may be considered one
large project
> Project EIR/FED examines the impact of a specific development project and may
incorporate by reference earlier EIRs or FEDs
Global Warming Solutions Act of 2006 (“AB 32”)
AB32 Adopted and signed into law in 2006
> Sets 2020 reduction goal into law
> Directs CARB to prepare a scoping plan (the “Scoping Plan”) to identify how
best to achieve the 2020 limit
Scoping Plan
> Approved December 12, 2008
> CARB conducted a first-tier, program FED for the Scoping Plan
> Appendix J of the Scoping Plan: 119-page program FED
> Program FED assessed a number of options, including no source-specific
regulatory requirements without cap-and-trade component, carbon fee, no
action, a variation of the proposed measures in the Scoping Plan
Cap-and-Trade Draft Regulations
> Approved December 16, 2010
> Appendix O contains the project FED
California Climate Programs
AB 32
Low Carbon
Fuel Standard
Cap & Trade
AIR v. CARB: Parties, Action and Posture
Petitioners: a collection of concerned citizens and nonprofit
Respondents: CARB, the Chairman of CARB, and members of CARB
Nature of Action: Petition for Writ of Mandate, filed June 10, 2009
Court: Superior Court of California, County of San Francisco, Judge
Timeline of Events
June 10th,
January 24th,
Initial Filing of
March 18th,
Final Decision
May 20th, 2011 June 1st, 2011
Judgment and
June 3, 2011
Court of Appeal issues temporary stay
June 13, 2011
CARB publishes amended FED
June 20, 2011
AIR needs to file its response
CARB files
AIR v. CARB: Arguments
AIR makes arguments in two general categories
1. CARB improperly interpreted and failed to comply with AB 32
2. CARB violated CEQA and its Certified Regulatory Program because
of inadequate FED
CARB argues that it complied with AB 32 and CEQA, and that AIR
disagrees with its policy decisions
AIR v. CARB: Court Decision
1. CARB did not improperly interpret or fail to comply with AB 32
2. CARB did violate CEQA because it
> failed to adequately analyze alternatives to cap-and-trade in the
program FED (e.g., no source-specific regulatory requirements
without cap-and-trade component, carbon fee, no action, a
variation of the proposed measures)
> improperly approved the Scoping Plan prior to FED completion
AIR v. CARB: Judgment and Writ
Limited to cap-and trade program only (recent development)
1. Order to set aside the Program FED
2. Enjoining “further implementation” of Scoping Plan
> No further “rulemaking” activites
> What is that?
> notice and comments
> finalize regulations
> hold public workshops?
Upper hand?
Recent Developments?
May 23
ARB files an appeal
Issue: Is the Superior Court order automatically stayed?
Thurs. June 2
ARB petitions for writ of Supersedeas
(1) argues that there is an automatic stay
(2) if there is no automatic stay, asks for one
Frid., June 3
Ex-parte application by AIR with Superior Court
Frid., June 3
Court of Appeals issues temporary stay – asks AIR to file
documents by June 20, 2011
Mon. June 6
Superior Court finds CARB in violation of the writ
Is Everyone Confused Now?
Even the courts are confused!
What happened?
> CARB claims AIR knew about the Court of Appeals stay but did not tell the
Superior Court on June 3, 2011
> Who has the upper hand now?
What next?
> CARB is proceeding as if the Superior Court June 6, 2011 decision is
> Superior Court cancelled hearing where Mary Nichols and James Goldstene
were ordered to testify
> AIR is asking Court of Appeals to cla
Bottom Line?
AIR is probably right
So what is CARB’s strategy?
> Get a stay
> Fix FED before appeal process concludes
What’s the risk?
> The stay is not granted