As the sands shift on federal climate change policy, California’s cap-and-trade program survives to fight another day. Yesterday, a California Court of Appeal upheld the program because it does not impose a tax subject to the two-thirds supermajority vote requirement under Proposition 13. The Court also affirmed the California Air Resources Board’s (CARB) authority to auction GHG emissions allowances. For the ins and outs of the decision and prior coverage of the case, pop on over to Renewable + Law for a great post by my colleagues, Allison Smith and Parissa Florez.
Now, stating the obvious here: a lot is riding on this case. The cap-and-trade program has generated billions of dollars in fees and the program plays a crucial role in California’s goal to cut GHG emissions. Those fees don’t get paid with monopoly money, but instead hit the bottom line of companies across many different industries. Of course, some consider the fees to be a small price to pay to prevent flooding, the sixth mass extinction, and in their view, the end of the world. On a level that hits closer to home for many readers of this blog, the challenge to the cap-and-trade program has added to the uncertainty of how to address GHG emissions for development projects subject to CEQA. As previously discussed by my colleague, Tom Henry, reliance on the cap-and-trade program appears to be one of the few approaches to a legally defensible CEQA GHG analysis.
CARB won this round, but this case will surely be appealed to the California Supreme Court given the stakes involved. Regardless of what happens there, I’m not entirely convinced CARB has much to worry about. Times have changed since adoption of AB 32 in 2006 and the creation of the cap-and-trade program under that law. A future host of the TV show “The Apprentice” was setting California’s climate change policy back then and now a former host of The Apprentice is dismantling federal climate change policy. Trump’s environmental deregulation goals have created a political climate where California will step in to fill any voids. In the view of many Democrats and others, protecting the cap-and-trade program from challenge has become even more important today. Plus, don’t forget that California Democrats now have their two-thirds supermajority in the State Legislature to protect the program, even if it is ultimately considered a tax.