Civil Rights Attorneys Sue over Greenhouse Gas Regulations that Affect Housing

January 19, 2019 By Susan Shelley 7 Comments

urban-housing-sprawl-366c0In what may signal the beginning of the end of alarmism over climate change, a group of civil rights activists is suing the California Air Resources Board. The issue is CARB’s plan to reduce greenhouse gas emissions by effectively limiting new housing construction. The lawsuit says this is driving up the cost of housing, worsening poverty and particularly victimizing minority communities.

The Global Warming Solutions Act of 2006 (Assembly Bill 32), signed by Gov. Arnold Schwarzenegger, committed California to a goal of reducing statewide greenhouse gas emissions. The California Air Resources Board was required by AB 32 to write “scoping” plans every five years detailing how the specified GHG reduction targets would be met.

The 2017 scoping plan includes “guidelines” for new housing that the lawsuit calls “staggering, unlawful and racist.”

The group that is suing is called The Two Hundred. It’s a Bay Area organization made up of longtime civil rights advocates who have spent decades fighting against discrimination. They say CARB’s new GHG housing provisions have a “disparate effect on minority communities,” which is illegal and unconstitutional.

CARB’s provisions “increase the cost and litigation risks of building housing,” intentionally worsen traffic congestion and raise fuel and electricity costs, the activists contend.

The lawsuit says CARB’s scoping plan calls for new housing in “California’s existing communities (which comprise 4 percent of California’s lands).” The idea is to reduce “vehicle miles traveled” by limiting sprawl. But the civil rights activists say this is leading to resegregation of California’s urban areas as older affordable housing is demolished to make way for high-density housing that is unaffordable.

A better solution, the group says, is to build homes on land that is outside the current urban boundaries, but CARB’s 2017 scoping plan is preventing that. Its “guidelines” are helping to block new housing developments.

CARB tried unsuccessfully to get the lawsuit thrown out. Fresno County Superior Court Judge Jane Cardoza issued an order in October allowing it to go forward.

Unless there’s a settlement, the courts will decide whether “California’s climate change policies, and specifically those policies that increase the cost and delay or reduce the availability of housing, that increase the cost of transportation fuels and intentionally worsen highway congestion to lengthen commute times, and further increase electricity costs, have caused and will cause unconstitutional and unlawful disparate impacts to California’s minority populations.”

Not to mention their impact on everybody else.

There are four “GHG Housing Measures” at issue. They attempt to limit “vehicle miles traveled,” set a “net zero” GHG standard for new housing developments and add a “CO2 per capita” measurement to local “climate action plans.” There’s also a set of policies to encourage “vibrant communities.”

CARB says these “GHG Housing Measures” are only “guidelines,” but the lawsuit calls them “unlawful underground regulations” that were imposed without a formal rulemaking process.

Something else that CARB skipped, the lawsuit charges, is the legally required economic analysis that “accounts for the cost of these measures on today’s Californians.”

Yes, civil rights activists are demanding that climate regulations meet the law’s required standard of cost-effectiveness.

But California’s climate regulations can’t meet any standard of cost-effectiveness.

As the lawsuit explains it, “California’s reputation as a global climate leader is built on the state’s dual claims of substantially reducing greenhouse gas emissions while simultaneously enjoying a thriving economy. Neither claim is true.”

The statewide economic growth numbers are misleading, the lawsuit says, because the averages are boosted by capital gains in the wealthy Bay Area tech sector, while most of the state struggles with low wages and high costs. And while Californians were paying too much for housing, fuel and electricity in order to achieve greenhouse gas reductions, other states actually had greater GHG reductions without doing anything.

“California’s climate policies guarantee that housing, transportation and electricity prices will continue to rise while ‘gateway’ jobs to the middle class for those without college degrees, such as manufacturing and logistics, will continue to locate in other states,” the lawsuit states.

This is something new in California. Civil rights activists are attempting to hold climate activists accountable for worsening the housing crisis and increasing poverty.

Maybe it’s the political climate that’s changing.

 is a columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

This article was originally published by Fox and Hounds Daily

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Cap and trade is looking more and more like a tax

February 16, 2018 By Susan Shelley 7 Comments

cap-and-trade-mindscanner-sstockThe veneer that keeps everybody from seeing that the cap-and-trade program is really just a tax is coming unglued.

Mayor Eric Garcetti blasted out an email newsletter happily announcing that the Jordan Downs public housing development in Watts will be refurbished with money from the hidden tax you’re paying for gasoline and electricity.

Watts will receive a $35 million grant of cap-and-trade funds, which Garcetti said will help make “dreams come true” with “improved quality of life, a renewed focus on public health, and better access to affordable housing.”

The city said the work on Jordan Downs will include rebuilding “distressed” units, creating recreational programs, and opening “about 165,000 square feet for retail.”

The funds will also pay for solar panels, a food waste prevention program, and 10 electric buses.

The cap-and-trade money comes from the state’s Greenhouse Gas Reduction Fund, which takes in revenue from the sale of allowances to emit greenhouse gases. The allowances, sold at state auctions, are purchased by companies that generate electricity, refine petroleum, make cement and process food. The prices of those things in California now include the cost of buying these permits to emit greenhouse gases.

Other states don’t do this, but in 2006, to save the planet from global warming, California passed a law to require a reduction in greenhouse gas emissions. Under the mandate now set in current law, greenhouse gas emissions statewide must be 40 percent below 1990 levels by 2030.

To achieve this goal, the California Air Resources Board developed the cap-and-trade program. It puts a statewide limit on GHG emissions, and businesses that are under the law are required to have a permit for each ton of GHG emitted. Every year fewer permits are issued, and the minimum price is a little higher.

The money that’s paid to the state for these permits looks a lot like a tax. But a state appeals court ruled that it’s not a tax, because it’s not compulsory. Any business that doesn’t want to pay it, the court reasoned, could simply go out of business.

Now you know why other states don’t do this.

For California politicians, the cap-and-trade funds are like a gift from heaven. Gov. Jerry Brown is spending them on the bullet train, which is barred by law from being funded with a tax increase. And the Legislature can hand out the rest of the loot to local governments and organizations seeking funding for pet projects.

To help spend the money, lawmakers created a committee called the California Strategic Growth Council and tasked it with advancing the revitalization of local communities. The SGC oversees the Transformative Climate Communities program, which considers grant applications from community groups, like the Watts Rising Collaborative, an advocacy organization made up largely of departments of the city government.

So your city tax dollars are being spent to lobby for cap-and-trade funds that come from the extra money you’re paying for electricity, gasoline and anything that’s made or moved in California.

Some of the $35 million grant for Watts will be spent to connect residents with new jobs created by TCC projects, and in a hint of how the spending will work out in practice, the funds will also be used for a “displacement avoidance plan” which will provide resources to “educate residents about their housing rights.” In other words, gentrification.

But nobody’s admitting that. It’s all under the banner of fighting climate change.

The president and CEO of the Housing Authority of the city of Los Angeles, Douglas Guthrie, said the Housing Authority is “proud to be leading this transformational initiative to build a healthier Watts” with “greenhouse gas reduction strategies.”

It’s just a tax. All of California accounts for only 1 percent of worldwide greenhouse gas emissions, so cutting emissions to 40 percent below 1990 levels is an exercise in futility, if what you’re really worried about is climate change.

Politicians are not really worried about climate change.

The cap-and-trade program is turning into a tax for community redevelopment and for a plain old slush fund. It doesn’t help Earth’s climate, but it does real damage to California’s business climate. Cap-and-trade is a hidden tax on energy that is making everything in California more expensive than in other states.

The biggest challenge for regulators is to prevent the prices of the allowances from going up too sharply. It might bring the game to a crashing end if people noticed the economic damage they’re enduring. When the voters put two and two together, things can heat up fast.

 Columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

This article was originally published by Fox and Hounds Daily

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Air Board Asks Courts to Create New Tax

May 20, 2015 By Loren Kaye 14 Comments

carbon-tax-1In a landmark case before the Third District Court of Appeal, the California Air Resources Board (ARB) recently argued for creation of an unprecedented tax doctrine that could raise billions of dollars in new revenues. The ARB described the new revenue not as a tax or a fee (or any other recognized revenue-raising mechanism), but as a “byproduct” of a regulatory program.

The case, California Chamber of Commerce v. California Air Resources Board, challenges the legality of the cap-and-trade auction ARB set up as part of its program to reduce greenhouse gas (GHG) emissions to meet goals outlined in AB 32, the climate change law.

CalChamber is arguing that (1) the ARB exceeded the authority the law granted it by reserving GHG allowances to itself and auctioning those allowances to GHG emitters to raise revenues, and (2) such an auction is a “tax” requiring a two-thirds vote of the Legislature, which was not obtained.

(CalChamber is not challenging AB 32 or the cap-and-trade mechanism itself, because the goals of AB 32 can be achieved effectively using cap and trade. In fact, the efficacy of cap and trade to meet the GHG reduction goals would be unaffected in the absence of the auction.)

The lawsuit aims to prevent the powerful regulatory agency from expanding its reach beyond the boundaries set by the Legislature, and to maintain the integrity of the revenue-raising rules of Proposition 13. But the ARB has raised the stakes even higher by suggesting that the revenues raised by the auction are neither taxes nor fees.

The auctions so far have raised nearly $1.6 billion in revenues that have been deposited into state coffers. The Legislative Analyst has estimated the auction will raise tens of billions more dollars by 2020.

The ARB instead claims that the auction is a legitimate exercise of its regulatory powers and that the billions in new revenues are “incidental” to that regulation. In fact, the ARB flatly states that the auction was not enacted for the purpose of increasing revenues; therefore, it is not a tax.

The Air Board had previously acknowledged that the auction revenues resided comfortably within the state’s tax system, and as “a non-distortionary source of proceeds” could be used “as a substitute for distortionary taxes such as income and sales taxes.”

The lead doctrine on determining whether a charge is a fee or a tax is the California Supreme Court decision in Sinclair Paint v. Board of Equalization. The court held that a regulatory fee is legitimate if (1) there is a reasonable relationship between the amount charged and the burdens imposed by the fee payer’s operations; (2) it is not used for unrelated revenue purposes; and (3) the remedial measures funded with the charge are caused by or connected to the fee payer’s operations. Lacking any of these factors, the charge is a tax.

Since it is apparent that the auction cannot meet these criteria, the ARB dismissed Sinclair’s relevance, stating that the “requirements that govern fees are not useful for reviewing other exercises of the police power.” Even though the ARB claims the revenues are incidental to a regulatory program, it declined to label them as “fees.”

In other words, the ARB has asked the court—in the case of fees imposed for regulatory purposes—to disregard the leading doctrine on regulatory fees.

To be sure, there are charges that government legitimately imposes that are neither fees nor taxes which fit comfortably within the Proposition 13 rubric: special assessments and development fees for infrastructure, charges for goods and services, fines and penalties for law breaking.

But the ARB has sought refuge in none of those time-tested revenue constructs. Instead, it has asked the court to invent a new, unique category of non-tax, non-fee, non-assessment, non-penalty, non-service charge that fits the auction revenue system.

The ARB is seeking a safe harbor for revenues “incidental to regulation” that it claims are not regulatory fees, and which will generate tens of billions of dollars for new spending programs that somehow are not taxes. In fact, next year the revenues from auctions will be one of the largest sources of state revenues—and bound to grow as the ARB allocates even more allowances to itself.

CalChamber has vigorously disputed this new doctrine, calling it “unprecedented, undemocratic and amorphous.” Proposition 13 and the Sinclair decision have limited and rationalized tax and fee doctrine for 37 years, setting out the rules that balance operational flexibility with accountability.

The Court of Appeal will hear oral arguments in this case later this year.

 is president of the California Foundation for Commerce and Education

Originally published by Fox and Hounds Daily

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