California's innovative cap-and-trade program to control greenhouse gas emissions will have to wait another year. Air Resources Board ("ARB") Chairwoman Mary Nichols testified to state lawmakers that the ARB planned "to initiate the program in 2012, but start the requirements for compliance in 2013," a full year after the planned start date.

The postponement was not a surprise. Last March, a state court enjoined the program, ruling that the ARB had failed to meet the procedural requirements of the California Environmental Quality Act ("CEQA") in adopting its cap-and-trade regulations by (1) failing to adequately describe and analyze alternatives in its Scoping Plan, specifically with regard to its justification for a cap-and trade program, and (2) improperly beginning to implement the Scoping Plan prior to completing its CEQA-required environmental review process. More details regarding the ruling are available in our prior update here.

State Senator Fran Pavley, an author of AB 32, the state's greenhouse gas law, called a hearing to address the implications of the court rulings. In the meantime, the ARB appealed the superior court's ruling and, earlier this week, the appellate court lifted the superior court's injunction pending a decision on the appeal. Although the appellate ruling gave the ARB a green light to go forward with its cap-and-trade program, Ms. Nichols explained that, to comply with the trial court's order, the ARB had released a revised Scoping Plan alternatives analysis for public comment and eventual adoption by the Board.