California GHG Auction Poses Test For EPA Policy

California will hold its first GHG allowance auction Nov. 14 amidst legal challenges, industry warnings and a host of other hurdles that will test whether the state's landmark cap-and-trade program. The California GHG cap-and-trade allowance program provides a model for how EPA and other policymakers could address GHG emissions in the future.

President Obama signaled in his Nov. 7 acceptance speech that he hopes to use his second term to continue his efforts to address climate change but did not provide any specifics on how he hoped to address this. While EPA is currently working to craft a GHG performance standard for new power plants, the agency has resisted calls to develop a rule governing existing facilities or to create a cap-and-trade program using its existing authority.

California's cap-and-trade program is expected to be face lawsuits following the auction. The Pacific Legal Foundation (PLF), which advocates for property rights and limited government, is one organization working on multiple lawsuits against the program. A source says lawsuits will likely be filed after the Nov. 14 auction to ensure they are “ripe.” Among PLF's likely challenges are federal claims that the regulations violate the Constitution's commerce clause or state claims that regulators never received authorization from the California Legislature to hold GHG allowance auctions, amounting to an illegal tax on businesses, according to the source.  (Inside EPA, 11/9/2012)