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Contact: Theodore Hadzi-Antich
Senior Staff Attorney
Pacific Legal Foundation
(916) 419-7111


Wednesday: Court will hear challenge to California’s cap-and-trade auction

SACRAMENTO, CA; August 23, 2013: This coming Wednesday, August 28, Pacific Legal Foundation’s lawsuit challenging California’s “cap and trade” auction regulation will be heard in California Superior Court for Sacramento County. The hearing is set for the 9:30 a.m. docket, before Superior Court Judge Timothy M. Frawley.

What: Court hearing on lawsuits (including PLF's) challenging California’s “cap and trade” auction regulation.

Who: The Honorable Timothy M. Frawley will hear the case. PLF Senior Staff Attorney Ted Hadzi-Antich will represent PLF’s clients in the challenge.

Where: Sacramento County Superior Court, Department 29, 720 9th Street, Sacramento, CA 95814.

When: Wednesday, August 28, 2013, 9:30 a.m. docket.

The “cap and trade” auction regulation creates a quarterly auction program requiring many California employers to bid significant amounts of money for the privilege of continuing to emit carbon dioxide — or be faced with closing their doors in California, laying off their employees, and moving their businesses to other states.

Filed on behalf of a broad spectrum of California businesses, trade associations, and individuals harmed by the regulation, PLF’s lawsuit challenges the auction process as an unconstitutional state tax because it was not enacted by two-thirds majorities in both chambers of the Legislature, as required for new taxes by the California Constitution (Proposition 13 and Proposition 26).

As PLF’s complaint states, the California Air Resources Board (CARB) devised the auction plan as a means of raising billions of dollars in revenue, without any instruction or direction from the Legislature. CARB created the auction program ostensibly to implement AB 32, the 2006 legislation that requires reductions in the emission of carbon dioxide in California by the year 2020. But nothing in AB 32 authorizes an auction process to sell carbon dioxide emission allowances for billions of dollars. Nor does AB 32 authorize the creation of any kind of new tax.

Ted Hadzi-Antich
Senior Staff Attorney

“Our lawsuit holds CARB accountable to the rule of law,” said PLF Senior Staff Attorney Ted Hadzi-Antich. “All on their own, without any legislative authorization, the bureaucrats at CARB hatched an auction scheme to vacuum in billions of dollars of new revenues for the state, at the expense of California’s already beleaguered businesses and taxpayers. These unelected regulators aren’t a law unto themselves and they can’t be allowed to create massive new tax programs violating the state Constitution and undermining the state’s economy.”

PLF is a donor-supported, public-interest watchdog organization that litigates nationwide for limited government, property rights, free enterprise, and a balanced approach to environmental regulations. PLF represents all its clients free of charge. PLF’s plaintiffs in this case include:

▸ The Morning Star Packing Company, headquartered in Woodland, California. Morning Star’s three tomato processing facilities emit carbon dioxide, and Morning Star participated in two CARB auctions to date, purchasing 31,000 allowances at a total cost of $379,860, a sum that could have been better used to increase production and hire more employees.

▸ Merit Oil Company, a third-generation California family business whose operations include storing, transporting, and selling a variety of petroleum products, including gasoline, diesel fuel, solvents, kerosene, and lubricants.

▸ California Construction Trucking Association (CCTA), a nonprofit California trade association representing nearly 1,000 members who own and operate on-road and non-road vehicles, engines, and equipment, primarily in connection with construction projects. Approximately 60 percent of CCTA’s members are sole proprietors of one-truck operations.

▸ Dalton Trucking, Inc., a California corporation in the business of operating and leasing loaders, dozers, blades, and water trucks. In addition, Dalton Trucking performs specialized services in open top bulk transportation, lowbed, general freight on flatbeds and vans, as well as rail and intermodal services.

▸ Loggers Association of Northern California (LANC), a California nonprofit trade association whose mission is to support, promote, and advocate for the logging industry in Northern California. LANC has 160 members, many of whom are family logging businesses that have been involved in logging operations in California for generations.

Buzz Eades, Executive Director of LANC, issued this statement: “Logging has been an important part of the California economy for many generations, and family logging businesses have provided substantial economic benefits to this state. To strike at loggers now with these ill conceived regulatory taxes, at a time when the recovery is still very, very shaky, is an example of the worst kind of governmental abuse. Our competitors in the Northwest, most notably Oregon and Washington, aren’t being hit with these new taxes, either directly or indirectly. Who benefits from imposing these new costs on businesses in California? Nobody.”

▸ Ron Cinquini Farming, a farming operation in Chico, California, owned and operated by Ron Cinquini. Mr. Cinquini personally owns and farms 30 acres, farms another 125 acres under contract, manages his family’s farm of 400 acres, and performs custom farming work on another 600 acres.

▸ Robinson Enterprises, Inc., a California company headquartered in Nevada City, California. Robinson Enterprises is engaged in several businesses, including logging, petroleum products storage and transportation, construction services, heavy equipment fleet operation and management, and trucking.

▸ Construction Industry Air Quality Coalition (CIAQC), a California trade association founded in 1989 by four Southern California trade associations: Associated General Contractors, Building Industry Association of Southern California, Engineering Contractors Association, and Southern California Contractors Association. CIAQC provides its members with information concerning environmental regulatory issues and provides regulatory agencies with information regarding the impacts of environmental regulations on the construction industry.

Also among the plaintiffs are three individuals who are challenging the auction process because it increases their own personal utility and fuel costs:

▸ Norman R. “Skip” Brown, of Sacramento, has resided in California his entire life. As a homeowner, he understands that the auction program will increase his utility expenses because his suppliers of natural gas and electricity must participate as bidders for carbon dioxide emissions allowances and will pass on the cost of purchasing these allowances to their customers. His fuel costs as a motorist will be affected for the same reasons.

Skip Brown issued this statement: “I’m retired and I supplement my fixed income only by part-time consulting. In other words, I’m like millions of other Californians who have to watch our family budgets carefully. But now state bureaucrats have imposed a burdensome new tax, without authorization, that will raise basic living costs for me and all Californians. I am frankly concerned that the continued government-generated cost increases in this state may require my wife and me to move out of California. We dearly don’t want to do that, because our children and grandchildren live here, but CARB isn’t making life in this state any easier for us and for millions of others like us.”

▸ Joanne L. Brown is married to plaintiff Skip Brown and, like her husband, she understands that the auction program will raise her utility costs, as well as her fuel costs as a motorist. She does not wish to move out of the state because California has been her home for over 50 years, her children and grandchildren reside in the state, and she wishes to remain near them.

▸ Robert Michael McClernon is a California taxpayer who objects to the illegal imposition of new taxes on Californians and whose fuel costs and utility costs will be increased because the suppliers will be hit with new expenses because they must participate in the auction process.

Finally, petitioners include one of the nation’s most prominent taxpayer defense organizations:

▸ The National Tax Limitation Committee (NTLC), headquartered in Roseville, California, is one of the oldest and most strategically oriented pro-taxpayer/entrepreneur organizations in America. Established in 1975, NTLC grew out of the work that Founder and President Lew Uhler, in alliance with California Governor Ronald Reagan, undertook to devise strategies to control the size and growth of government. NTLC’s mission is, “To make structural changes in fiscal and governance practices at all levels of government, and to limit and control taxes and spending, so as to enhance the power and freedom of individuals and their enterprises.”

The case is Morning Star Packing Company, et. al. v. California Air Resources Board. More information, including the complaint, a fact sheet, videos and podcasts, may be found at PLF’s website:

About Pacific Legal Foundation
Donor-supported Pacific Legal Foundation is a watchdog organization that litigates for limited government, property rights, individual rights, free enterprise, and a balanced approach to environmental regulations in courts nationwide. PLF represents all clients free of charge.

This year marks PLF’s 40th anniversary. PLF recently won its seventh straight direct-representation victory at the U.S. Supreme Court in the precedent setting property rights case of Koontz v. St. Johns River Water Management District.

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