An environmental justice group is suing California's top air regulator over its overhaul of the state's cap-and-invest carbon market program, alleging it bypassed required environmental reviews for a new manufacturing decarbonization incentive.

The lawsuit claims the California Air Resources Board (CARB) failed to properly analyze the environmental impacts of the changes, which could grant 118 million allowances to industrial polluters.

The complaint argues the rushed approval of the program violates the California Environmental Quality Act (CEQA) and risks increasing fossil fuel emissions and air pollution.CARB officials defend the decision, stating they followed all applicable laws.

The lawsuit highlights concerns about the program's financial impact on the Greenhouse Gas Reduction Fund, which funds climate projects, and its potential to disproportionately affect low-income and minority communities.

Legal experts note the case raises critical questions about the environmental and economic consequences of the changes, with the court's decision likely to shape the future of California's climate policy.