Senior Staff Attorney
Pacific Legal Foundation
PLF will appeal in challenge to cap-and-trade tax
Sacramento, CA; November 14, 2013: Pacific Legal Foundation announced today that it will file an appeal in its challenge to California’s cap-and-trade auction regulation, after Sacramento County Superior Court Judge Timothy M. Frawley issued a ruling upholding the regulation.
The “cap-and-trade” auction regulation creates an 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.
PLF's lawsuit contends that the California Air Resources Board (CARB) devised the auction regulation without authorization from the Legislature. Moreover, even if AB 32, the greenhouse-gas reduction law, purported to authorize an auction process to generate billions of dollars in revenue, the cap-and-trade auction regulation would still be invalid because AB 32 was not enacted by two-thirds majorities in the Legislature, as required for new taxes by the California Constitution.
PLF Senior Staff Attorney Ted Hadzi-Antich issued this statement on today’s court ruling:
“Today the trial court ruled against PLF’s clients on its claims, holding that AB 32 authorized the auctions and that the auction revenues were not unconstitutional taxes,” said PLF Senior Staff Attorney Ted Hadzi-Antich. “We strongly disagree with the ruling and will appeal to the California Court of Appeal, where the appellate court will decide all issues de novo, meaning, from scratch.”
“Not only are the billions of dollars to be generated at CARB’s auctions unconstitutional taxes, but the revenue-raising auctions themselves were not authorized by the California Legislature,” Hadzi-Antich continued. “In a democracy, an administrative agency comprised of unelected bureaucrats can only carry out the will of the people, as set forth by the Legislature. CARB cannot carry out its own will, especially when its will conflicts with the California Constitution. On behalf of our clients, PLF will carry this lawsuit forward in the public interest.”
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.
- 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.
- 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, plaintiffs 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.”
Filed in Sacramento County Superior Court, the case is Morning Star Packing Company, et. al. v. California Air Resources Board.
About Pacific Legal Foundation
Donor-supported Pacific Legal Foundation (www.pacificlegal.org) 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.