According to a panel of legal experts, it is unlikely that recent legal challenges to California’s cap-and-trade program will delay the start of compliance with the system on January 1, 2013. Speaking at the Navigating the American Carbon World conference in San Francisco on April 12, 2012, lawyers said that state regulators have done a good job in designing a system that can withstand legal challenges from regulated industries including the oil, gas and power sectors.
“Even if lawsuits are filed, I don’t think we’re going to see anything between now and the end of 2012 that will actually delay it,” said Tim O’Connor, a lawyer with the Environmental Defense Fund (EDF). He added that: “There might be lawsuits that are continuing, but nothing that will actually derail it at December 31, 2012,” when compliance with the program begins. Other panel members agreed that it was difficult to envision a scenario where a lawsuit would knock the program completely off course.
The majority of the lawsuits filed so far against the California Air Resources Board (ARB), the state agency that designed and is implementing the program, have come from environmental groups, not industry.
A lawsuit by an environmental justice group known as the Association of Irritated Residents (AIR) last year contributed to the ARB’s decision to delay compliance with the program until 2013.
In March 2012, two employees at the Environmental Protection Agency (EPA), acting as private citizens, filed a lawsuit claiming the ARB overstepped its authority when it said offset credits could count for compliance with the system. State officials and independent legal experts at the conference said they were confident the state would prevail in that case.
One reason lawsuits from industry have yet to materialize may be because the state has designed a system that stands on firm legal ground, EDF’s O’Connor said: “I would hope that the reason we haven’t seen a lot of legal challenges so far is because there are a lot of options that have been taken off the table because of smart design and design that is in compliance with the law”.
(Sources include: Thomson Reuters Point Carbon)