FOR IMMEDIATE RELEASE
July 6, 2026
Communities for a Better Environment Files Lawsuit to Stop CARB Giveaway to Big Oil
LOS ANGELES, CA – Communities for a Better Environment (CBE https://www.cbecal.org/) has filed a lawsuit in Los Angeles County Superior Court over a recent decision by the California Air Resources Board (CARB) to approve billions in giveaways to Big Oil at the expense of investments in housing, transit, and clean air and water without proper environmental review and public process. CBE is suing CARB over a flawed environmental review for California’s Cap-and-Invest Program. Read the lawsuit filed by CBE.
On May 29, 2026, CARB took action to approve changes to the Cap-and-Invest program, allocating billions of dollars of incentives to oil companies and other industrial polluters with little oversight. The change approved by CARB dramatically increases the percentage of oil refinery greenhouse gas emissions covered by free industrial allowances, and gives oil refiners access to a new subsidy called the “Manufacturing Decarbonization Incentive” (MDI). This action effectively guts the climate ambition of California’s Cap-and-Invest program and also significantly reduces revenue for the Greenhouse Gas Reduction Fund (GGRF) intended for housing, transit, and clean air and water. GGRF programs represent necessary and comprehensive investments that ensure communities can continue to reduce emissions and meet the future impacts of climate change as equitably as possible.
Following a rushed process, CARB took this action despite overwhelming opposition from stakeholders across California, including local governments, air districts, agriculture, housing and transit groups, and impacted communities.
CBE’s lawsuit states that CARB violated the California Environmental Quality Act (CEQA) when it failed to meaningfully analyze the impacts of the new Manufacturing Decarbonization Incentive and increased free allowances in the policy that CARB adopted, and when it failed to provide the Board and the public with alternative options and potential mitigations.
“CEQA is an environmental and public health bill of rights for all Californians,” said Lauren Gallagher, NorCal Associate Attorney for CBE. “It requires that public decisionmakers must understand major environmental projects before they are approved. CARB violated this law by rushing approval for a project that even they acknowledge needs more review – when CARB fails to vet these changes under CEQA, our communities lose out on the strategies and investments we are counting on to achieve California’s climate goals, protect health, and promote affordability for working families.”
CBE is asking the Court to force CARB to go back to the drawing board to redo their analysis and ultimately approve program regulations that will achieve California’s climate goals while prioritizing funding for clean air, safe drinking water, affordable housing, and public transit.
The Legislative Analyst’s Office estimates that the policy change approved by CARB would result in $2 billion annual funding losses for public transit, safe drinking water programs, clean air, and affordable housing. Cuts would severely impact the Affordable Housing Sustainable Communities (AHSC) Program, which funds the creation of 2,000 new, affordable homes each year, and the Transit Intercity Rail Capital Program and Low Carbon Transit Operators Program, which has reduced over 35 million metric tons of climate-warming emissions since 2014.
Meanwhile, the 100 biggest oil and gas companies have collectively raked in an extra $30 million per hour in just the first month of the war on Iran. Big Oil is expected to make $234 billion in windfall profits from the conflict by year’s end if oil prices stay high. In the first quarter of 2026, the oil and gas industry spent record amounts lobbying in California in an attempt to blame high gas prices on environmental regulations and gut California’s climate and health protections. All the while, CARB was redirecting billions to the oil and gas industry through California’s top climate program.
About Communities for a Better Environment
Founded in 1978, Communities for a Better Environment (CBE) is one of the preeminent environmental justice organizations in the nation. CBE provides residents in heavily polluted urban communities in California with organizing skills, leadership training and legal, scientific and technical assistance, so that they can successfully confront threats to their health and well-being.
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