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California Chamber of Commerce v. California Air Resources Board

ELR Citation: 43 ELR 20207
Nos. 34-2012-80001313, (Cal. Super. Ct., 08/27/2013)

A California court issued a tentative decision upholding the California Air Resource Board's (CARB's) authority to sell greenhouse gas allowances at auction under the California Global Warming Solutions Act of 2006, also known as Assembly Bill 32 (AB 32). The court tentatively agreed that the auction provisions of CARB's cap-and-trade regulations are within the broad scope of authority delegated to CARB in AB 32. The text and structure of AB 32 demonstrate that the legislature intended CARB to have discretion to decide whether to adopt a cap-and-trade program and, if so, to "design" the method for distributing allowances. At the time AB 32 was enacted, both auctioning and free distribution were widely recognized methods of distributing allowances. In delegating to CARB the authority to design the distribution of emissions allowances, the legislature delegated to CARB the choice of distribution methods. The court will hold a hearing on the question of whether the sale of allowances constitutes a "tax" under Proposition 13, which would require approval by two-thirds of the legislature.