Source: https://www.reedsmith.com/en/perspectives/2016/08/carb-releases-final-proposed-amendments-to-capandt
Timestamp: 2019-04-26 15:45:37+00:00

Document:
The California Air Resources Board’s (CARB) timeline toward amending California’s cap-and-trade regulations progressed with the release of its final proposed amendments and supporting documentation August 2, 2016. Formal comment period starts August 5, 2016. Comments may also be presented orally or in writing at a scheduled public hearing September 22, 2016. Written comments not submitted at the hearing must be received by CARB no later than 5 p.m. September 19, 2016.
Background On July 12, 2016, CARB deviated from the typical rulemaking process and released a preliminary draft of proposed amendments to the state’s cap-and-trade regulations. Since then, CARB submitted a draft of its formal regulatory package to the Office of Administrative Law July 19, 2016. On August 2, 2016, CARB published its final proposed regulations and supporting documentation, including a full Initial Statement of Reasons (it previously published a portion of it July 12).
CARB also takes a strong but contested position as to the viability of California’s cap-and-trade auctions of carbon allowances. This stance is at the heart of a pending court decision in the Court of Appeal of the State of California Third Appellate District. The consolidated cases of California Chamber of Commerce v. California Air Resources Board, and Morning Star Packing Co. v. California Air Resources Board, challenge the constitutionality of, and CARB’s authority, to utilize cap-and-trade auctions on various legal grounds. For more information on these legal challenges, read our previous alert. Both cases are fully briefed and are awaiting oral argument. The court is expected to calendar oral argument by fall of this year.
Included in CARB’s Initial Statement of Reasons released August 2 is a comprehensive summary of, and CARB’s rationale for, each regulatory provision. This e-alert focuses on certain proposed amendments to the auction provisions – particularly to changes to the format or participation in cap-and-trade auctions.
According to CARB, this proposed provision is necessary to allow CARB to remove allowances that remain unsold after two years from immediate availability, and to supplement the Allowance Price Containment Reserve when the market is depressed for a lengthy period of time. This would restrict market access to these unsold allowances.
CARB’s final proposed amendments to the cap-and-trade regulations can be found here.
If you have any questions or would like additional information on the material covered in this Alert, please contact one of the authors, or the Reed Smith lawyer with whom you regularly work.
CARB Staff Report: Initial Statement of Reasons at 13 (August 2, 2016).
See 17 CCR § 95911(f)(1).
See 17 CCR § 95911(g).
See 17 CCR § 95911(h).
See 17 CCR § 95911(c)(3)(C).
See 17 CCR § 95911(d).
See 17 CCR § 95912(d)(4)(E).
See 17 CCR § 95912(j)(1).

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