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Brief -- California Cap-and-Trade

Gov. Jerry Brown and state legislative leaders have unveiled a path to extending the life of California's cap-and-trade system for pollution credits, the centerpiece of an aggressive state climate change mitigation effort. Two bills in the lower house Assembly (AB 398 and AB 617) have been crafted to extend cap-trade to 2030 and increase monitoring and penalties for polluting local communities, respectively. In April, California's market-based, multi-billion-dollar cap-and-trade auction was upheld on a 2-1 vote by a state appellate court in Sacramento, supporting the California Air Resources Board's authority to hold carbon emission auctions and rejecting arguments by the California Chamber of Commerce and others that auctioning carbon allowances was in effect an "unlawful tax." However, the program is set to expire in 2020 without the legislative extension introduced by Brown and lawmakers. Backers of the proposal indicated they will seek a super majority two-thirds vote on the two measures to insulate the provisions against future court challenges.

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