In re E.ON Generacion S.A., Judgment No. 1205/2010 of Mar. 4, 2010

An energy retailing company brought suit against the General Government Administration of Spain, challenging Royal Decree 1370/2006 of November 24th (Official Bulletin of the State No. 282 of November 25, 2006), which implemented amendments to Spain’s National Allocation Plan for greenhouse gas allowances for 2008-2012. Court found that rules setting standards for SO2 emissions, and which took into account investments to reduce SO2 emissions by coal-fired power plants in assigning emission allowances under the Plan, were null and void on their face because they were not specifically authorized by Spain’s implementing statute for the EU’s Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003, Law 1/2005 of March 9th. Rules relating to the provisional assignment of credits for new installations also found to be contrary to the implementing statute because they effectively altered the definition of “new entrants” in the statute. However, the Court rejected plaintiff’s argument that the Plan’s methodology for the assignment of credits to coal-fired power plants was invalid because it placed undue burdens on certain facilities, as well as its argument that the allowance reserves for new entrants were inadequately low.