California's cap-and-trade carbon auctions are within the authority of the state Air Resources Board under a seven-year-old law aimed at addressing global warming, a Sacramento judge has tentatively ruled.
Sacramento County Superior Court Judge Timothy M. Frawley said in the ruling that Assembly Bill 32 gave the Air Resources Board discretion to decide whether to adopt a cap-and-trade program and design the method for distributing pollution allowances.
The program subjects hundreds of large-scale polluters to an annual "cap" on the amount of carbon they can emit; with the cap declining slightly each year. Companies exceeding the cap can either reduce their pollution or purchase additional emissions credits -- from the state or other companies.
A small percentage of the credits are being auctioned every three months. Frawley stopped short of ruling on whether the multibillion dollar program constitutes an illegal tax.
The judge heard arguments Wednesday from attorneys for the conservative Pacific Legal Foundation and the California Chamber of Commerce, which filed similar lawsuits earlier this year and last fall as the carbon program was getting underway.
"That was one of the major aspects of our lawsuits -- that CARB did not have the authority," PLF attorney Ted Hadzi-Antich said outside the courthouse. "We are hopeful that the final ruling will be different, but it's difficult to guess what it's going to say."
The organizations argue the program is unconstitutional because it was not passed by at least a two-thirds majority of the Legislature. Attorneys for the state and environmental groups contend it isn't a tax and was not put in place to raise money.
Auction participants are walking away with something of value, David Clegern, a climate change spokesman for the Air Resources Board, said at the courthouse.
"The people who get them, if they reduce their emissions enough, they have the ability to sell or trade these things," Clegern said. "There is value there."
PHOTO: This Jan. 10, 2009 file photo shows a flock of geese flying past a smokestack at the Jeffery Energy Center coal power plant near Emmitt, Kan. Associated Press/Charlie Riedel, File