Court Rules California Climate Payments Aren’t Taxes


Publish Date:
April 7, 2017
  • Upton, John
Climate Central
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State judges told the California Chamber of Commerce on Thursday that its members don’t have a right to pollute, rejecting claims by its attorneys that payments required to release greenhouse gases under a marquee climate program are a kind of tax.

The state appeals court ruling could have profound implications for the future of the state’s embattled cap-and-trade program, making it more likely to survive beyond 2020, when it could help the state meet some of the world’s most ambitious climate targets.

Michael Wara, an environment and energy expert at Stanford Law School, described the ruling as a “huge win” for California that “creates a new category of revenue raising activities” — which are neither taxes nor fees.

Wara warned that settling for a simple majority vote on cap-and-trade could backfire for the Democrats, because if the ruling is appealed and overturned, the program could be deemed illegal.

“When an appeals court makes new law, you always have to worry a little bit, because usually the appeals court is supposed to follow precedent,” Wara said. “To me, this looks like a very innovative ruling.”

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