In a split
decision, a California appellate panel recently affirmed a
lower court's decision upholding the state's greenhouse gas
cap-and-trade program. Challengers, including the California
Chamber of Commerce, the National Association of Manufacturers, and
the Pacific Legal Foundation, argued that: (1) the California Air
Resources Board (CARB) acted outside of its authority when it
created a cap-and-trade program that included an auction of
emission allowances, and (2) the revenue generated from the auction
sales constitutes an impermissible tax. California's
Proposition 13 requires taxes to be approved by a two-thirds vote
of each house of the legislature.
The majority opinion, authored by Judge Elena Duarte and joined
by Judge M. Kathleen Butz, concluded that the legislature gave
broad discretion to CARB to craft an allowance distribution system,
and creation of an auction system did not exceed the scope of that
legislative delegation. Although there was no
