PLF challenges “cap and trade” in court

by Cate Moore on August 4, 2013

For the last few years, the California Air Resources Board has been making rural lives miserable with the diesel regulations that have been threatening to make most of our equipment fleets illegal.  They have been busy bees in other areas, too.  One of the biggest business-suppressing schemes they have going is carbon credits, or “cap and trade” scheme.  Forestry has mostly been involved with the “carbon source” side of the picture; some of the state’s biggest employers, including our largest energy producers, dairies, produce packagers and loggers are stuck on the other side, being forced to either purchase carbon credits or pull out of the state.

Pacific Legal Foundation  is challenging the legality of the California “cap and trade” carbon market scheme on the basis that it is a tax, not a regulatory fee.

Regulatory fees must reflect the actual costs of the regulatory agencies in processing permits and doing inspections.  These funds remain within the jurisdiction of the agency as the funds supporting its cost of doing business.

Cap and Trade accounting does not reflect this.  Instead, the money goes to the general fund and the fees are not matched to CARB expenses or any other costs in administration.  These are the attributes of a tax.

To be legal, taxes in California must:

  • originate within the legislature
  • pass both houses with a 2/3 majority

Cap and trade does not meet these criteria.  It was developed within the California Air Resources Board.  CARB claims they are merely implementing a greenhouse gas reduction under AB 32, but AB 32 does not authorize an auction whose proceeds go to the general fund, and even if it did, AB 32 did not pass by 2/3.

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