On October 8, 2021, plaintiffs sued the legislature of the State of Baja California, challenging the validity of a tax introduced in the Treasury Bill of the State of Baja California. The rule aimed to curb greenhouse gas (GHG) emissions by taxing gasoline, diesel, and gas sales. On July 8, 2021, the Eighth District Judge in the State of Baja California struck down the tax after reasoning that the tax invaded Congress’s exclusive authority to impose taxes on gasoline and other fuels. State authorities appealed the decision. On November 30, 2021, The Fifth Collegiate Tribunal of the Fifteenth Circuit affirmed the decision, noting that while the Supreme Court has recognized the validity of imposing taxes on greenhouse gas emissions, the method that the State of Baja California had chosen to quantify the tax (based on sales of gasoline, diesel, or gas) encroached upon Congress’s exclusive authority to tax the sale of such fuels.

Key environmental legal questions:

Whether Baja California’s tax on the sale of gasoline, diesel and gas was unconstitutional.