California Air Resources Board v. La Paloma Generating Co.

The federal district court for the District of Delaware dismissed the California Air Resource Board’s appeal of a bankruptcy court ruling that held that the purchaser of a natural gas power plant owned by a company that had emerged from bankruptcy did not have successor liability for the debtor company’s pre-transfer compliance obligations under California’s cap-and-trade program. The district court concluded that the Bankruptcy Code’s “statutory mootness” provision (11 U.S.C. § 363) compelled the conclusion that the appeal was moot because reversal or modification of the bankruptcy court’s authorization of the power plant sale without the encumbrance of the compliance obligations (which amounted to approximately $63 million) would affect the validity of the facility’s sale.