Jump to Navigation
Jump to Content

California Chamber of Commerce v. California Air Resources Board

ELR Citation: 43 ELR 20249
Nos. 34-2012-80001313, (Cal. Super. Ct., 11/12/2013)

A California court upheld 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). As in its tentative decision issued last August, the court ruled 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. In this decision, however, the court also looked at whether the sale of allowances would be a "tax" under Proposition 13, which would require approval by two-thirds of the legislature. The court ruled that although it was a "close question," the charges here are more like traditional regulatory fees than taxes. The primary purpose of the charges is regulatory, the proceeds must be used to further the regulatory purposes of AB 32, and, even if selling allowances is not "necessary" to achieve AB 32's goals, selling allowances may still advance those goals. In addition, the total amount of fees collected will not exceed the costs of the regulatory activities they support, and there is a sufficient nexus between the fees charged and the regulatory burden imposed by the fee payers' products or operations.