Update on PLF’s challenge to California’s cap-and-trade regulation

The briefing in our lawsuit challenging the auction component of CARB’s cap-and-trade regulation has been completed for many months, but the California Court of Appeal, Third District, has yet to set a date for oral argument.  Although the panel was … Continue reading

It’s cap and trade time again

On Friday, May 1, 2015, we filed our final brief in California’s appellate court in connection with our challenge to CARB’s scheme to sell carbon dioxide emissions allowances at auction to the highest bidders.  CARB intends to generate billions of dollars of revenue for the state from the auctions and use the funds for a variety of purposes that have little if anything to do with reducing carbon dioxide emissions.  Those unrelated purposes include diversion of funds to California’s general fund, high speed rail, and projects to benefit disadvantaged communities.

The California Constitution requires that such uses of the revenues be authorized by at least a two-thirds supermajority vote of both houses of the legislature.  CARB purported to create the auction under a 2006 statute known as A.B. 32, which was not enacted by a supermajority legislative vote.  Accordingly, the auction revenues are unconstitutional taxes.  Moreover, nothing in A.B. 32 actually authorizes CARB to sell emissions allowances at auction for billions of dollars.

CARB argues that the auction revenues are not illegal taxes because those who purchase emissions allowances at auction do so voluntarily.  But that ignores the realities facing California businesses that must comply with the cap and trade regulation, such as PLF’s client Morning Star Packing Company.  Morning Star makes tomato paste from tomatoes received from farms by heating the tomatoes in boilers fueled by natural gas, which causes carbon dioxide emissions in excess of CARB’s regulatory threshold.  As a result, Morning Star’s tomato processing facilities are required to obtain a sufficient number of emissions allowances in order to continue operating in California.  Because Morning Star does not receive all its required emissions allowances free of charge from CARB, it is forced to obtain them through other means, including purchasing them from CARB at the auctions.  Under the cap and trade regulation, this is a necessary cost of staying in business in California.

To characterize such payments as “voluntary” stretches the meaning of the term beyond recognition.  One could just as well argue that the payment of California income tax is “voluntary” because a California resident could choose to move out of the state and no longer be subject to the tax.  But, for those who choose to remain in California, the state income tax does not somehow become “voluntary” and not a tax.  Merely because a company like Morning Star chooses to continue to do business in the state by purchasing emissions allowances at auction does not make the auction payments any more “voluntary” or any less of a tax.

A PLF video provides additional insight into the case, and more information can be found at PLF’s website.

California gasoline rationing begins January 1

You read that correctly. Today, California motorists have the right to buy as much gasoline as they want, and fuel companies have the right to sell as much as they can supply, at prices agreeable to both. But in the New … Continue reading

CARB adopts amendments to AB 32’s scoping plan

It was only a matter of time. On the heels of the Cap-and Trade Regulation, on May 22, 2014, the California Air Resources Board adopted a regulatory plan that is so severe and so inimical to the interests of the state that it almost … Continue reading

President’s weekly report — February 28, 2014

Water Rights — The Public Trust Doctrine and The Blob In 1958 American audiences first saw Steve McQueen as a teenager trying to save his town from The Blob, the ever-expanding amoeba-like alien monster that threatened to engulf everything in its path.  … Continue reading

President’s weekly report — November 15, 2013

Equality Under the Law Program — Disparate Impact We have mixed emotions about the settlement in Township of Mt. Holly v. Mt. Holly Gardens.  This is the case where homeowner challengers to a redevelopment plan brought a “disparate impact” claim … Continue reading

PLF will appeal in challenge to cap-and-trade tax

Today the trial court ruled against PLF’s clients on its AB 32 claims, holding that AB 32 authorized the auctions and that the auction revenues were not unconstitutional taxes.   Morning Star Packing Company v. CARB, DECISION111413.  We strongly disagree with the ruling … Continue reading

President’s weekly report — August 30, 2013

Environment & Taxes — A.B. 32 “cap and trade” hearing A hearing was held on Wednesday in Morningstar Packing Co. v. California Air Resources Board, our challenge to California’s “cap and trade” auction of emissions credits for carbon dioxide.  We are arguing … Continue reading

PLF A.B. 32 legal challenge to be highlighted at American Bar Association annual meeting

On Friday, August 9, 2013, I’ll be speaking to lawyers from around the nation converging at the annual meeting of the American Bar Association in San Francisco, regarding PLF’s legal challenge to CARB’s Cap and Trade Regulation.  The regulation is the only one … Continue reading