Second suit targets California's cap-and-trade program

Published: Wednesday, Apr. 17, 2013 - 12:00 am | Page 6B
Last Modified: Wednesday, Apr. 17, 2013 - 8:21 am

Less than a year old, California's pioneering effort to limit greenhouse gases is facing a second lawsuit claiming the program is an unconstitutional and burdensome tax.

The conservative Pacific Legal Foundation of Sacramento sued the state Tuesday to halt California's quarterly cap-and-trade carbon auctions, in which businesses pay at least $1 billion a year for the right to pollute.

The lawsuit in Sacramento Superior Court was filed on behalf of a handful of taxpayers, a Chico farm, a Woodland tomato processor and others.

It follows a similar suit filed last fall, just as the first state-run carbon auction was getting under way, by a group affiliated with the California Chamber of Commerce.

Both suits take aim at the centerpiece of the state's global warming law, Assembly Bill 32.

The program subjects more than 400 big polluters to a yearly "cap" on carbon emissions; the cap declines slightly each year. If a company exceeds the limit, it can scale back its pollution or buy additional emissions credits.

The state is giving away the vast majority of the credits for free, but a small percentage is being auctioned off by the state every three months. Companies can also buy credits from other polluters on the open market.

Because the auctions are expected to generate at least $1 billion a year in revenue for the state, Pacific foundation attorney Ted Hadzi-Antich said the program is a new tax that required a two-thirds supermajority vote from the Legislature. AB 32 didn't get such a supermajority.

The lawsuit says the program, even in its infancy, is creating hardship for businesses. Morning Star Packing Co., a Woodland tomato processor, has already spent $379,000 on carbon credits.

The California Air Resources Board, which is running the auctions, said in a written statement that the program "is being implemented in full accord with all state laws. ARB will continue moving forward with this important program."

And Erica Morehouse, a lawyer with the Environmental Defense Fund, said in a written statement that the Pacific foundation "is more concerned about protecting polluters than creating jobs and protecting public health."

Also Tuesday, the Air Resources Board released a proposed framework for investing the auction proceeds. The agency says the money should go toward clean-tech projects, recycling efforts and other endeavors.

Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

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