After the State’s Cap-and-Trade program was upheld in district appellate court last month, the California Chamber of Commerce (Chamber), in league with the Pacific Legal Foundation, has taken its complaint to the California Supreme Court in an effort to halt what the organization calls an illegal tax via the carbon credits auction system.  The appeal is the latest action in a four-year legal battle between the Chamber and the State over the constitutionality of requiring industries to participate in a carbon auction as a method of reducing greenhouse gas emissions without formally adopting the program by a two-thirds vote in the Legislature.  

The appeal follows recent indications from industry groups, including the Chamber, that they might be willing to support an extension of the program if it is modified to give more certainty to facilities required to participate in the auction.  Governor Brown is currently seeking an extension of Cap-and-Trade beyond its current 2020 sunset date, approved by a two-thirds vote, and several legislative proposals are making their way through committees while negotiations take place between the various interested parties.  The Governor has said he will withhold approving any allocations of Cap-and-Trade auction proceeds in the 2017-18 budget year unless the program is extended.