California's Supreme Court Confirms Dismissal of Challenge to Cap and Trade Program

On June 28, 2017, the California Supreme Court declined to hear an appeal of a case that had confirmed the constitutionality of California's Cap and Trade Program. As explained in a news article, this marks the end of the current legal challenges to the Cap and Trade program in California.

As we discussed in an earlier post, the appeal had been brought by the California Chamber of Commerce and was supported by manufacturers and others. At issue in the appeal was whether the auction sale of emissions credits under California’s Cap and Trade program amounts to a tax. If so, then the program would be unconstitutional because it did not receive approval from two-thirds of both houses of the California legislature. On April 6, 2017, the California Court of Appeal for the Third Appellate District had issued a decision dismissing an appeal of a lower court decision that had upheld the constitutionality of California’s Cap and Trade Program. The California Supreme Court’s decision denies any further appeal. This means that California’s Cap and Trade Program will continue under the current legislation. 

In the meantime, the California Legislature is currently considering whether and how to extend the Cap and Trade Program beyond the 2020 expiration date. A recent news report indicates that efforts are continuing to find a way to achieve two-third legislative support to extend California’s Cap and Trade Program and effectively shield the program from future legal challenges. 

The future status of California’s participation in Cap and Trade is important for Ontario, which is planning to join the WCI Cap and Trade auction process in 2018.