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California Supreme Court leaves in place decision upholding cap-and-trade system

Mary Nichols, chairwoman of the Air Resources Board, oversees the cap-and-trade program. (Irfan Khan / Los Angeles Times)
Mary Nichols, chairwoman of the Air Resources Board, oversees the cap-and-trade program. (Irfan Khan / Los Angeles Times)

After more than four years, a legal challenge to California's cap-and-trade program has reached an unsuccessful conclusion.

The end came on Wednesday when the California Supreme Court declined to consider an appeal from business groups who consider the program to be an unconstitutional tax.

The program requires companies to buy permits to release greenhouse gases, a system intended to provide a financial incentive to reduce emissions.

The law that provided the program's foundation was not passed with a two-thirds vote in the Legislature, the legal threshold for new taxes, sparking lawsuits from the California Chamber of Commerce and the Pacific Legal Foundation. 

A state appeals court rejected their arguments in April, but they appealed. Business groups were also concerned the decision was too broad and could open the door to additional taxes. 

Despite the state's victory in court, there are other legal questions around cap and trade. Gov. Jerry Brown is pushing lawmakers to extend the program past 2020 with new legislation. 

“With this Supreme Court victory, now it’s up to us to take action extending California’s cap-and-trade system on a more permanent basis," Brown said in a statement. 

This story has been updated with a statement from the governor.

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