California Supreme Court Refuses to Take Up Challenge to Cap-and-Trade Program; CARB Confirms Board Hearing Will be Held in July

Beveridge & Diamond PC

The California Supreme Court yesterday refused to take up the appeal in California Chamber of Commerce v. CARB, ending litigation that would have struck down a key element of the California Cap-and-Trade program (the “Program”).  The Third Appellate District Court of Appeal had previously ruled against the California Chamber of Commerce’s argument that the Program’s auction of allowances was an unconstitutional tax under state law.  The Court of Appeal’s ruling is now the final say on this issue.

The ruling will impact the current debate over climate change in the California Legislature.  Governor Brown has been pushing for legislation to protect the Program from challenge as an unconstitutional tax.  Such legislation would require a two-thirds majority vote.  Now that the litigation pressure is off, Brown may be more aggressive in negotiations to extend the Program beyond 2020. 

Earlier today, CARB adopted amendments to the Mandatory Reporting of Greenhouse Gas Emissions Regulation, and Chair of the Board Mary Nichols confirmed that a previously tentative July board hearing will be held.  We believe it likely that CARB will adopt some version of its proposed amendments at the July hearing, because, among other reasons, if CARB fails to do so these amendments will expire.  We will continue to alert you of developments in this area.

*Jacob is not currently licensed to practice in California, and is supervised by Principals of the Firm who are licensed to practice in the state.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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