California's High Court Upholds GHG Allowance Auction Program

California's Supreme Court recently upheld the State's greenhouse gas (GHG) cap-and-trade auction program.  In a June 28, 2017 order, the Court denied petitions to review a lower court's ruling that affirmed the program's legality.  Filed by a coalition of industry groups, including the California Chamber, the petitions had alleged that the cap-and-trade program constitutes an illegal tax under Proposition 13 because the law authorizing it, AB 32, was not passed by a two-thirds vote.

While the Supreme Court's ruling is a win for the State and the program's supporters, some believe the program should be modified to ensure deeper GHG reductions.  The cap-and-trade program—whose authorization expires in 2020—has been the subject of a spate of recent legislative proposals in the California State Legislature, including one that would overhaul the program by implementing a stricter "cap-and-dividend" program and another that would limit the use of GHG offset credits.