* Group says 'Climate Law Implementation to Halt'
* California law seen as vanguard U.S. climate effort
* State judge holds key -- he writes detailed order
By Rory Carroll and Peter Henderson
WASHINGTON/SAN FRANCISCO, March 31 (Reuters) - An environmental justice group which has won a court ruling on Thursday said California's entire landmark climate change law may be put on hold after talks with regulators broke down.
The suit threatens the most aggressive climate change policy in the nation, California's 2006 omnibus law which covers vehicle pollution, generation of clean energy such as solar and wind, and even building policy as well as a carbon market, which is the core of the court case. Fans and foes of attempts to stop global warming around the globe are watching California's efforts.
The fate of the law, including the outlook for new vehicle fuel standards and clean energy targets, is still in the hands of a San Francisco judge who has asked the environmental group to draft a detailed order. The state says it will appeal.
A market for greenhouse gases called cap-and-trade is due to begin on January 1, 2012, but the initial March 18 ruling has led some to believe it may be delayed.
The Association of Irritated Residents who brought the case fear the oldest, highest polluting facilities in California could continue or increase their pollution, harming the least affluent parts of the state even if better-off areas prosper.
The parties met privately on Wednesday to discuss how to proceed in the wake of the broadly worded March 18 San Francisco Superior Court ruling that the California Air Resources Board violated state law by failing to properly consider alternatives to setting up a carbon market.
The climate change law is known as AB 32.
"We were unable to reach an agreement with the Air Resources Board that would allow the good parts -- the great majority of the measures -- of AB 32 to proceed," Caroline Farrell, Executive Director of the Center on Race, Poverty & the Environment, said in a statement. "The Air Resources Board is driving AB 32 off a cliff."
A spokesman for the state said the board took the ruling seriously, intended to more fully consider alternatives to a cap-and-trade carbon market, and would appeal the final order.
The environmental group declined to say exactly how they would draft the order but announced the breakdown of talks in a statement entitled "Climate Law Implementation to Halt."
Whether the judge will issue the order as crafted by the group or modify it is unclear said Jon Costantino, A former CARB engineer who works at law firm Manatt Phelps & Phillips and has been following the case.
Ultimately though, he expected the Air Resources Board to be able to put together the analysis of alternatives to cap and trade, which is the crux of the judge's request, in a matter of weeks.
"There are a lot of unknowns, but ARB is still progressing with the view that they are going to make their deadlines," he said. The cap-and-trade plan is due to start at the beginning of 2012.
Emilie Mazzacurati, head of North American Carbon Research at Thomson Reuters Point Carbon, said the breakdown in the negotiation raises the stakes for CARB's appeal of the ruling.
But an attempt broadly to halt the climate law could have the unintended effect of making it easier for the state to win an appeals court agreement to put the ruling on hold pending appeal, she said. (Reporting by Point Carbon reporter Rory Carroll in Washington and Reuters reporter Peter Henderson in San Francisco;editing by Sofina Mirza-Reid)
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