CARB lawsuit could end cap and trade

April 17, 2013

By Katy Grimes

Ding dong! Could CARB be dead?

The Pacific Legal Foundation filed a lawsuit yesterday against the California Air Resources Board challenging California’s cap and trade regulation.

The cap and trade program was created by CARB ostensibly as part of AB 32, California’s Global Warming Solutions Act of 2006.

“The regulation creates a quarterly auction program requiring many California employers to bid significant amounts of money for the privilege of continuing to emit carbon dioxide — or be faced with closing their doors in California, laying off their employees, and moving their businesses to other states,” the PLF explained in a press statement.

The PLF said the lawsuit challenges the auction process “as an unconstitutional state tax because it was not enacted by two-thirds majorities in both chambers of the Legislature, as required for new taxes by the California Constitution (Proposition 13 and Proposition 26).”

“The California Constitution is crystal clear that new state taxes require at least two-thirds approval in both chambers of the Legislature,” said PLF attorney Ted Hadzi-Antich. “The ‘cap and trade’ auction program is a new state tax that will generate billions of dollars of revenues for the state on the backs of California taxpayers. Because it was not passed by at least a two-thirds majority vote of the Legislature, it is unconstitutional. Case closed.”

We at CalWatchdog have been saying this for several years.

And CARB has tried to make it sound as if the cap and trade auctions have been a resounding success. They haven’t been.

Even more importantly, the overshadowing issue is the secrecy in which the auctions have been conducted by the state agency, and its refusal to publish any information about the bidders or the amounts of carbon credits they purchased.

But back to the PLF and the reason for the lawsuit.

“It is stunning that the tax was imposed by bureaucratic fiat,” Hadzi-Antich continued. “CARB wasn’t implementing any provision of AB 32 with the auction program for massive new revenues. It decided to raise billions of dollars for the state by making up a new tax out of thin air. In a representative democracy, we can’t have unelected bureaucrats grabbing legislative power and concocting burdensome new tax programs that siphon even more money from productive, private hands into an already bloated public sector.

“CARB’s auction program isn’t just unconstitutional, it’s also an assault on economic and environmental common sense,” Hadzi-Antich continued. “California cannot even hope to address global warming issues without widespread participation by other governments. Yet except for the isolated Canadian province of Quebec, no other governments are promulgating similar regulations. As the costs mount and businesses move out of California, other states will welcome them. There’s got to be a better, more rational way to deal with the issues than CARB’s all-too-transparent scheme to generate billions of dollars for the state through an illegal tax.”

Here is the lawsuit by the Pacific Legal Foundation.

We will stay on top of this exciting legal case.

For more about CalWatchdog’s CARB coverage, here is a link to our stories about CARB, and a link to stories about CARB’s cap and trade program.