The legal challenge to California\u2019s carbon cap-and-trade program was temporarily rebuffed Aug. 28 by a Sacramento Superior Court Judge. \u201cThe court tentatively agrees that the auction provisions of [C]ARB\u2019s cap-and-trade regulations are within the broad scope of authority delegated\u201d to the Air Board under AB 32, the state\u2019s climate protection law, held judge Timothy Frawley. He added, \u201cif there were any lingering doubt, the post-AB 32 statutes addressing the use of auction proceeds confirm (or ratify) the Legislature\u2019s intent to allow distribution of allowances through auctions and reserve sales.\u201d Dave Clegern, Air Board spokesperson, commented his agency \u201cwon\u2019t have anything new to say until there\u2019s a final ruling.\u201d Industry organizations, including the California Chamber of Commerce represented by the Pacific Law Foundation, challenge the Air Board\u2019s authority to conduct auctions that trade carbon allowances. They insist the board exceeded its legislative authority, and declared the auction an illegal tax because it requires a two-thirds legislative vote, not a majority. While the judge tentatively ruled the Air Board acted within legislative bounds, he did not indicate whether he would accept or reject the argument that the sale of carbon allowances constitutes an impermissible tax under the state\u2019s Proposition 13. \u201cAnything is possible on both issues,\u201d said R.S. Bradford, a Pacific Legal Foundation principal attorney. He added that the expectation was that a final decision will uphold the board\u2019s authority to hold auctions under AB 32. Yet undecided is whether there are restrictions on the use of the auction proceeds and whether the auction is exempt from Prop. 13. Is the auction like cigarette and gas taxes, which are geared towards changing people\u2019s behavior and not generating revenue, and thus not covered by Prop. 13? Frawley asked. He also is contemplating whether it is \u201csignificant that a portion of the allowances are freely distributed to regulated sources,\u201d according to the court. Frawley said during the Aug. 28 hearing that if the auction is deemed a tax, \u201cthe state loses,\u201d said Bradford. It is not known when a final ruling will be issued.