Texas Company Sues California Over 'Pay-to-Play' Fee Funding Green Research
Quadrant Performance Materials alleges the state's regulation forces businesses to fund research that could ultimately harm their operations, violating First Amendment rights.
A Texas-based spray foam insulation company has filed a lawsuit against California, alleging that a state regulation forcing businesses to fund "green research" is unconstitutional. Quadrant Performance Materials claims the California Department of Toxic Substances Control is compelling the company to financially support research aimed at developing alternatives to its own products.
The regulation, implemented last month, requires spray foam manufacturers to pay two cents per pound of product sold in the state into a Green Chemistry and Engineering Innovation Fund. According to the lawsuit, this fund is designated for research and development of safer alternatives to spray polyurethane foam, which contains unreacted methylene diphenyl diisocyanates identified by the state as a respiratory irritant.
Quadrant Performance Materials argues that this fee amounts to a "pay-to-play" system that forces companies to fund initiatives that could lead to the termination of their business. The lawsuit states that companies cannot direct, veto, or benefit from the research they are compelled to fund. Furthermore, the company contends that current alternatives are not functionally or technically feasible.
"The State requires producers of spray polyurethane foam (spray foam) to first fund private research aimed at replacing the products they sell, effectively funding the termination of their business — research those companies cannot direct, cannot veto and will never benefit from," the lawsuit reads.
Christian Townsend, an attorney with the Pacific Legal Foundation representing Quadrant, stated, "California cannot create a pay-to-play system requiring manufacturers to fund government-preferred ideas just to sell spray foam in California." The lawsuit also asserts that if the funded research results in a viable alternative, the research grantee would hold intellectual property rights, potentially preventing Quadrant from using the alternative without a license.
The suit further claims the regulation may violate the Commerce Clause of the U.S. Constitution, which prohibits states from unduly burdening interstate commerce. The plaintiffs assert that the regulation unfairly targets out-of-state companies shipping lawful products into California. The lawsuit alleges that this situation creates a real possibility of Quadrant no longer being able to sell its products in the state. The California Post has reached out to the state department for comment.