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Tuesday, Jul 30 2013 10:55 AM

Foundation says air measure component is illegal

BY LOIS HENRY Californian staff writer lhenry@bakersfield.com

Representatives of the Pacific Legal Foundation, which is suing the state over its "cap and trade" program, have been making the rounds up and down the state educating business people and average citizens about what they say is a harmful hidden tax rather than a simple regulatory scheme to improve the environment.

Tuesday they spoke to the Kern County Farm Bureau in front of a group of about 40 people.

Cap and trade is one of several programs authorized by Assembly Bill 32 (AB32), passed in 2006. The bill's goal is to reduce the state's greenhouse gas emissions to 1990 levels by 2020.

One method it authorized is cap and trade, under which industries are only allowed a certain amount of emissions "credits."

If they emit more, they must purchase credits in an auction run by the California Air Resources Board (CARB).

Pacific Legal Foundation is suing saying the auction is an unconstitutional state tax because it wasn't enacted by two-third majorities of both chambers of the Legislature, and that CARB has no authority to sell the credits.

Others have said cap and trade doesn't rise to the level of a tax because there's no requirement to buy the credits. Industries could just cut emissions instead. Some have expanded that argument to say industry has no right to pollute and, thus, no right to free credits under a cap-and-trade system.

All of that will be hashed out in court.

On Tuesday, Pacific Legal Foundation attorney Tony Francois was in Kern answering questions about the lawsuit and the intricacies of the program.

Francois said most people don't understand how much cap and trade will affect their daily lives.

"The real effect of the C02 limits will impact the use and price of fuel," he said.

CARB has set a cap on emissions from burning coal, natural gas, gasoline, diesel and propane, he said. To achieve that cap, the use of those fuels will have to be reduced.

He said by 2015, fuel wholesalers will have to report their sales volumes to CARB, which will use a conversion formula to determine how much of that fuel becomes greenhouse gas emissions. Those wholesalers will then have to buy credits to account for those emissions, Francois said.

Those costs will be passed on to consumers who will "think it's just another price increase and blame industry, not realizing it was a cost from the credit auction.

"That's how it becomes a hidden tax," he said. "It's very convenient for CARB, which hides behind the very industry it's vilifying."

Another suit against AB32 by the California Chamber of Commerce says the law didn't authorize CARB to impose fees other than those needed to cover administrative costs of implementing a greenhouse gas emissions program.

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