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Court Upholds California Carbon Auctions - Nov. 15, 2013

A Superior Court judge has rejected a legal challenge to California’s carbon auctions, a key piece of the state’s cap-and-trade program. - Nov. 15, 2013

The California Chamber of Commerce and Pacific Legal Foundation, on behalf of a dozen clients including Morning Star Packing Company and Dalton Trucking, had filed lawsuits in Sacramento Superior Court to block the carbon allowances, which require companies to bid money in exchange for emitting CO2.

The groups argued the permits constitute an illegal tax — the first four auctions have raised about $396 million for the state— that wasn’t approved by a supermajority vote by the California legislature and should be free to companies covered by the program.

California’s emissions reduction law, AB 32, was approved by a simple majority vote in 2006.

In Superior Court Judge Timothy M. Frawley’s decision, dated Nov. 12, he said the business groups’ arguments were not persuasive: “Although AB 32 does not explicitly authorize the sale of allowances, it specifically delegates to [California Air Resources Board] the discretion to adopt a cap-and-trade program and to ‘design’ a system of distribution of emissions allowances.”

The Pacific Legal Foundation on Thursday said it would file an appeal. The California Chamber of Commerce indicated it would follow suit. The court’s decision “is ripe for review and reversal by the appellate court,” Allan Zaremberg, president and chief executive of the California Chamber of Commerce, told Reuters.
Nov. 15, 2013