Marten Law: Previewing Legal Challenges to Cap-and-Trade

By Robert F. Lawrence, Dustin Till and Svend Brandt-Erichsen, Matren Law PLLC

Excerpt: California's greenhouse gas (GHG) cap-and-trade program is due to be finalized within a few weeks, over widespread opposition and concern about its effects on California's economy. Looking forward, California business and citizens groups are considering how and when to challenge the regulations in court. This article reviews some of the likely challenges and their strengths and limitations.

Final regulations in California are subject to judicial review, and may be challenged as being unconstitutional or inconsistent with the statute that authorized their development, or for conflicting with other federal or state statutes. In the case of the Air Resource Board's (ARB) cap-and-trade program, all of these objections are likely. A successful appeal can invalidate all or part of a new program, and sometimes requires an agency to start a new rulemaking process entirely.

I. Constitutionality

The most obvious challenge, and one that ARB prepared for, is that the cap-and-trade regulations violate the commerce clause of the federal Constitution. There are at least two ways to frame this argument. The first is that the program discriminates against out-of-state goods or services. The second is that the regulation impermissibly burdens or inhibits interstate commerce.

About the Author(s)

Robert Lawrence has practiced for 28 years in the field of real estate and project finance and development, serving as the lead environmental counsel for billions of dollars worth of transactions. His primary expertise relates to both conventional and renewable energy assets, including oil and gas exploration and development, refining, pipelines and electricity generating facilities, as well as chemical manufacturing, mining, and real estate development. In addition to transactional environmental expertise, Robert has deep experience in the Clean Air Act, climate change law (including California's cap-and-trade program), renewable energy siting and permitting. He also has expertise with the National Environmental Policy Act and the California Environmental Quality Act, and unique California practices relating to hazardous waste regulation and environmental cleanup.

Robert is admitted to practice in California, New York and the District of Columbia. He received a J.D., cum laude, from Georgetown University Law Center in 1983 and an A.B., cum laude, from Dartmouth College. He was formerly chair of Orrick's environmental transactions group. Prior to his nearly 10 years at Orrick, he was Chair of the Environmental Practice at Milbank Tweed from 1993 to 2003, and before that practiced at Skadden Arps. 

As a lawyer with the Marten Law PLLC, Dustin Till practices environmental and land use litigation with a special focus on climate change issues, permitting, and environmental review in the Pacific Northwest. Dustin represents clients in Washington, Oregon, Idaho and Alaska on a broad range of environmental matters, including permitting and energy infrastructure siting. Dustin shares his climate change expertise on behalf of Marten Law writing ongoing articles for LexisNexis' Environmental Law and Climate Change Center.

Dustin has appeared before the Eighth Circuit Court of Appeals, federal district court and the Washington State Court of Appeals. 

Svend Brandt-Erichsen, a partner at Marten Law PLLC, practices in Alaska and Washington, and has been an environmental lawyer for nearly 20 years. He currently is advising clients on carbon management and other environmental issues associated with energy project development, including coal gasification plants. Svend has spent his career assisting petroleum, coal-based and alternative energy firms with the environmental issues associated with power development and distribution and with oil and gas production, transportation, and refining. He has represented clients in Alaska, Washington, Oregon, Idaho, Montana, and California.

Marten Law PLLC is an environmental law firm advising companies and public agencies on some of the most challenging aspects of environmental, land use and natural resource legal matters. With experience in nearly every aspect of environmental law, the firm strives to help clients navigate the maze of federal, state, and local regulations in order to resolve disputes and grow their business. Marten Law is a leading legal expert on climate change policy, lending content and ongoing commentary to LexisNexis' Environmental Law and Climate Change Center

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