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Business Lobby Balks at California|Auction of Carbon Emission Rights

SACRAMENTO, Calif. (CN) - On the eve of the first auction for carbon-emission permits in California, the state's Chamber of Commerce filed a lawsuit that slams the plan as a "money grab."

By auctioning carbon allowances to entities responsible for the majority of the state's pollution, the California Air Resources Board has created an unconstitutional tax, according to the complaint filed Tuesday in superior court.

"This action brought by an unelected state board to use regulatory statutes to raise tens of billions dollars from taxpayers is unprecedented in our state's history," the powerful business lobby claims. "Even the elected and democratically accountable Legislature and governors of California have never imposed such a massive tax/fee.

"What is shocking about this money grab, in addition to the fact it exceeds the authority granted to the regulatory agency by the Legislature, is the agency's admission that this revenue-raising component of its regulations is unnecessary to achieve the purposes of the regulatory scheme."

The agency's cap-and-trade method of reducing greenhouse gas emissions was enacted by AB 32. Signed by the governor in 2006, this law allows the board to cap the amount greenhouse gases that can be emitted every year by individual polluters.

This law does not, however, allow the board to hoard a portion of the emission allowances so that it can sell them to the highest bidder at an auction scheduled for Nov. 14, the Chamber of Commerce insists.

If allowed to continue its scheme, the board will give itself about half of all the allowances that will ever be circulated through cap and trade by 2020, according to the complaint.

"Absent in AB 32 is any explicit authorization by the Air Resources Board to raise billions of dollars of revenue for the state by withholding and auctioning off or selling of a percentage of the statewide GHG emissions allowances adopted by the board," the chamber says. "The only fee authorized by AB 32 is a regulatory fee limited to covering ordinary administrative costs of implementing the GHG emissions regulatory program."

The board had "flatly disavowed the notion that AB 32 would give it the 'carte blanche' power to raise revenue beyond the limited administrative fee authorized by AB 32," the complaint states. "Despite this concession, the board changed its tune."

The chamber says that its lawsuit is not about the merits of climate change, nor does it challenge the Legislature's authority to manage the state's greenhouse gas emissions.

"This lawsuit is about one thing and one thing only - the lack of authority of the unelected, politically-appointed Air Resources Board to engraft into a regulatory program a $70 billion or more revenue-raising device that would impose what is in effect an invalid tax or an unconstitutional fee," the complaint states.

In a statement, Chamber of Commerce President Allan Zaremberg called the board's plan "the most costly way to implement AB 32 and it will hurt consumers, the job climate, and the ability of businesses to expand here."

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