NEWS

Landmark local emissions fee passed in N. Calif.

05/22/2008

Colin Sullivan, ClimateWire West Coast reporter

SAN FRANCISCO—Bay area air regulators voted overwhelmingly Wednesday to impose the first-ever carbon fees in the United States.

The Bay Area Air Quality Management District (BAAQMD), in the face of hostile opposition from petroleum companies, approved a 4.4-cent charge per metric ton of carbon dioxide equivalent on businesses in the agency’s nine-county region. The fee targets greenhouse gas emissions from stationary sources such as refiners, cement plants and retail gasoline outlets.

Opponents showed up in large numbers at a public hearing to accuse district officials of overstepping their bounds and creating confusion between local laws and the state’s landmark emissions bill, A.B. 32.

"It’s not about the fee, it’s about the jurisdiction," Dennis Bolt, manager of the Bay Area Region for the Western States Petroleum Association, told the district’s board of directors.

He accused the district of creating "a series of overlapping programs" and said, "Now we don’t know who’s in charge because of the whole blanket you’re throwing over what is a world-class law [A.B. 32]. It’s very concerning to us, and we think it’s not constructive."

BAAQMD Chairman Jerry Hill defended the initiative and insisted his district has the authority to assess the fee in concert with A.B. 32. Hill said he had already discussed the local fee with officials at the Air Resources Board and pledged to integrate the local fee with future state regulations to avoid duplications and "a patchwork of fees around the state" on emitters. Attorneys there, he added, "were comfortable with that."

Bolt later said, though, that his group has not ruled out legal action.

‘Money in your pocket’

Another opponent, local citizen Charlie Peters, told the board the fee is "an excuse to just put some money in your pocket." Bolt agreed and warned that the fee, which could be replicated in other local districts to pay for air quality compliance, could unravel the hard political work behind A.B. 32.

"There is now regulatory uncertainty on this issue," he said, questioning the right of Bay area regulators to assert authority under an old law, the California Clean Air Act. The new climate law, he argued, gives exclusive jurisdiction over stationary sources to the ARB, to provide more regulatory certainty to businesses.

Yet staff at the BAAQMD countered that they have the right to regulate "gases that contain carbon" under the California Clean Air Act, for health and safety reasons. A Contra Costa County supervisor on the district board, Gayle Uilkema, said the agency has been looking at carbon for some time "as a preliminary step that is requisite" to A.B. 32.

"This is not a new or sudden program," Uilkema said. "This is a short-term way to adopt some of the long-term goals."

She added: "We understand the concern about patchwork rules, and we’ll make sure to work to that concern."

‘Very minor fee’

Proponents of the rule argued the fee is minor and will only affect a handful of emitters. Of the 2,500 facilities subject to the fee, only seven operations—mostly refineries and power plants—would pay over $50,000 to comply, according to data compiled by the air district.

Most of the regulated emitters, in fact, would pay less than a dollar, noted board member John Gioia, another Contra Costa County supervisor.

"The vast majority ... will pay a very minor fee," he said.

Brian Bateman, director of engineering at the BAAQMD and the brains behind the fee structure, said the program would raise about $1.1 million in fiscal year 2009 to finance the district’s climate protection program. That will help make up for a $16.5 million shortfall in covering the costs of the agency’s activities, he said.

"The intent is to recover the costs of the climate protection program related to stationary sources," he said.

As for the jurisdiction dispute, Bateman insisted he drafted the rule to leave it open to revision in the near future when ARB unveils its implementation plan for A.B. 32. "We’ll be keeping a close eye on what the ARB might do," he said.