By Jason Fordney

The California Supreme Court on Wednesday declined to review a challenge of the state’s greenhouse gas cap-and-trade program, preserving the 2006 law that requires power plants and other polluters to reduce carbon emissions or purchase state-issued credits.

The court declined to review the California Chamber of Commerce’s appeal of an April 6 decision by the Third District Court of Appeal favoring of the program.

While the business interests represented by the chamber did not oppose the California Global Warming Solutions Act of 2006, which set the emissions limits, they attacked the associated California Air Resources Board (CARB) regulations that created the cap-and-trade program allowing the sale of some greenhouse gas emissions allowances.

The legislation required covered entities such as power plants to reduce greenhouse gas emissions to 1990 levels by 2020 and designated CARB to monitor and regulate emissions sources.

Under the program, large emitters of greenhouse gases must purchase emissions credits at CARB’s quarterly auctions to cover emissions not accounted for with free credits. The plaintiffs said the auction sales exceeded the State Legislature’s delegation of authority to the board, and that the revenue generated amounts to a tax.

The appeals court in its earlier ruling said “the legislature gave broad discretion to the board to design a distribution system, and a system including the auction of some allowances did not exceed the scope of legislative delegation.” The court said the legislature later ratified the system by specifying how to use the proceeds.

The appeals court also said the revenue is not a tax because it is a voluntary decision driven by business judgments regarding whether it is better to buy credits than reduce emissions, which, unlike a tax, has value.

“Reducing air emissions reduces pollution, and no entity has a right to pollute,” the lower court said.

The chamber did not immediately respond to a request for comment on the high court’s decision.

The Environmental Defense Fund and Natural Resources Defense Council intervened in the proceeding on behalf of CARB.

“This is the final step in this case to affirm California’s innovative climate program, including its carbon auctions, which serves as a vital safeguard to ensure polluters are held accountable for their pollution,” EDF senior attorney Erica Morehouse said in a statement.

Even with the court challenge behind it, cap-and-trade still faces an uncertain future. Gov. Jerry Brown is trying to extend the life of the program, which expires in 2020, through a ballot measure.

“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.

CARB is expected to auction about half of the program’s total allowances by 2020. As of January 2015, about 500 million allowances had been given away and about 75 million were auctioned.