March 22, 2011, 6:13 pm

California Judge Calls Time Out for Climate Change Law

By FELICITY BARRINGER

Ric Francis/Associated Press Steam rising from a refinery in Wilmington, Calif. In analyzing how to reduce greenhouse gas emissions, state regulators examined the potential impact on this industrial suburb of Los Angeles.

Irony usually speaks for itself, so I’ll tread lightly here. But what is one to make of a climate-change law that withstands a $35 million campaign supported by conservative oil interests only to be thrown off course by a legal challenge from the leftier edges of the environmental movement, particularly its environmental justice wing?
And what to make of a court opinion that awards a partial victory to these groups — relying not on a finding of environmental injustice but rather on a determination that the state of California failed to engage in a crucial economic debate about policy alternatives?
Last week’s decision by Judge Ernest A. Goldsmith of state superior court in San Francisco offers a second look at some of the arguments being made against A.B. 32, the state climate-change law passed in Sacramento in 2006. A few Democrats, particularly those representing poorer industrial areas, were deeply suspicious of cap-and-trade policies to rein in greenhouse gas emissions, arguing that their constituents would be hurt when a local polluter simply paid for pollution allowances rather than cutting back on the pollution itself.
Greenhouse gases, of course, are thought of as having more of a global impact than a local one. But the incidental benefits of greenhouse-gas reductions can include a reduction in conventional pollutants, which do tend to enter the ground-level air close to industrial plants.
Much of the case advanced by opponents of the climate-change law like the so-called Association of Irritated Residents, the West County Toxics Coalition and the Society for Positive Action, consisted of arguments that the California Air Resources Board demanded too little of the polluters, not too much.
Too little to curb agricultural air pollution, which disproportionately affects Hispanic workers in the central valley, they argued. Too little about industrial pollution in areas like Wilmington, near Los Angeles, or in Richmond, north of Oakland. Too little in the way of direct requirements, and too much in the way of market-oriented mechanisms.
These arguments did not seem to impress Judge Goldsmith. But the groups had another arrow in their quivers.
What he did find compelling was the contention that regulators from the California Air Resources Board were too enamored of cap-and-trade policy, which issues allowances to the polluting sectors equal to a preset emissions ceiling and then allows companies to trade them as needed.
The Scoping Plan, a central document in the reams of paper underpinning of the final rules adopted last December, gave short shrift to anything other than cap and trade, the judge ruled.
So the argument that carried the day had the least to do with environmental justice and the most to do with a more purely economic dispute: which works better, a market-based approach or a simple carbon tax? Several prominent economists have come out in favor of the carbon tax, including Gilbert Metcalf of Tufts University, Joseph Stiglitz, the Columbia University professor and Nobel laureate; and the former labor secretary Robert Reich, who now teaches at the University of California, Berkeley.
In faulting the Air Resources Board’s consideration of alternatives, Judge Goldstein sounded like a teacher saying that a student had neglected one essay test question almost entirely:

“Most notably, the scoping plan fails to provide meaningful information or discussion about the carbon fee (or carbon tax) alternative in the scant two paragraphs devoted to this important alternative. The brief 15-line reference to the carbon fee alternatives consists almost entirely of bare conclusions justifying the cap-and-trade decision. Informative analysis is absent.
A.R.B. fails to describe what a carbon fee program consists of, how fees or taxes are established, criteria for setting the amounts, what the California, United States and worldwide experience has been, how it is administered and by whom, what are the alternatives for the use of the revenue and what sectors of the economy it should be considered for, or not, and why.”

The state needs to take that part of the test again, and pass, to be able to introduce the cap-and-trade program in 2012.
The Air Board says it will appeal and present a 500-page document — call it extra-credit — to show that it has laid out a more thorough consideration of the carbon tax.