Chris Megerian
April 6, 2017, – 2:03 p.m.

Reporting from Sacramento—

California’s controversial cap-and-trade program, a cornerstone of the state’s battle against climate change, has been upheld by a state appeals court.

Two judges on the appeals court panel sided with state officials who argued that the program, which requires companies to buy permits to release greenhouse gases into the atmosphere, fell within their authority to regulate industry.

A third judge on the panel of the 3rd District Court of Appeal in Sacramento agreed with the business groups who claimed that cap and trade functioned as an unconstitutional tax.

“This is great news for one of the world’s most ambitious climate programs and one of the best tools to solve climate change globally,” said Erica Morehouse, a lawyer with the Environmental Defense Fund. “We need that kind of positive news more than ever these days.”

The case, which began with a lawsuit filed nearly four years ago by the California Chamber of Commerce, has been a cloud over the cap-and-trade program ever since it began.

However, the decision could still be appealed to the California Supreme Court.

“We are reviewing the decision and evaluating our options,” said Denise Davis, a spokeswoman for the California Chamber of Commerce.

In addition, lawmakers are still debating whether to extend the program because there are separate legal questions over whether it can keep operating after 2020.

Read the ruling here.