The California Chamber of Commerce sued the state today in a last-minute protest against the historic "cap and trade" greenhouse gas auction set for Wednesday.
In a suit filed in Sacramento Superior Court, the chamber said the auction is really "an unconstitutional tax" on businesses that are affected by the state's global warming act, AB 32.
The suit doesn't seek an injunction blocking Wednesday's debut auction, and the California Air Resources Board, which is running the program, said it expects to proceed with the sale of carbon credits as scheduled.
But the chamber does want to derail future auctions, which are scheduled for regular intervals over the next eight years. "This is a program that goes from now until 2020," said Loren Kaye, president of the chamber's affiliated organization the California Foundation for Commerce and Education.
The state expects to raise between $500 million and $1 billion selling carbon emission credits Wednesday and at a second auction next February. But a lawsuit looming over the process "could dampen the enthusiasm" for the auction, said Jon Costantino, executive director of the Association of Carbon Market Participants.
Business groups have been petitioning Gov. Jerry Brown for weeks to scuttle the auction, with no success.
Cap and trade is supposed to be a business-friendly, market-driven approach to curbing carbon emissions. While the state imposes an overall cap on the total amount of carbon emissions, polluters can comply with the law by cleaning their smokestacks or buying emissions credits at market prices.
The state is giving away 90 percent of the credits for free, but is auctioning off the rest.
The Chamber said the Air Resources Board has the authority to impose regulatory fees, but has exceeded that authority by establishing the auction.
Timothy O'Connor, with the Environmental Defense Fund, said lawsuit is an "unsavory" attempt to derail the cap and trade process.
"They're throwing a wrench in California's comprehensive program" to curtail carbon emissions, he said.
Stanley Young, a spokesman for the Air Resources Board, said the agency is "confident that the cap and trade program will withstand any court challenge."