San Francisco Bay Area Air District First in Nation to Impose Fees on GHG Emissions
This post was written by Todd O. Maiden, Lawrence A. Demase, Louis A. Naugle.
On May 22, 2008, the Bay Area Air Quality Management District (“BAAQMD”) became the first agency in the nation to impose fees on businesses that emit greenhouse gases (“GHGs”). The new regulation, effective July 1, will require 2,500 businesses in nine Northern California counties to pay 4.4 cents for every metric ton of emitted carbon dioxide. While the fees may amount to less than $1 per year for more than 1,500 small businesses, some companies that operate oil refineries, power plants and manufacturing facilities may pay between $50,000-$200,000. The regulation will apply to any business holding a current BAAQMD permit that restricts emissions resulting in smog. The new measure is anticipated to generate approximately $1.1 million in fees, which BAAQMD will use to track GHG emissions.
BAAQMD – California’s first regional agency dealing with air pollution – was created by the California Legislature in 1955. The regional agency oversees air quality issues in all seven Bay Area counties – Alameda, Contra Costa, Marin, San Francisco, San Mateo, Santa Clara and Napa – and in portions of Solano and Sonoma Counties.
The new measure is intended to reduce emissions and impose an assessment to cover the ultimate costs of global warming upfront. However, the fees may be too modest to impact individual behavior. Nevertheless, proponents hope the measure will set a precedent and provide a model framework for state and local agencies.
Critics argue the agency lacks the authority to impose these fees because the state has sole jurisdiction to monitor and regulate GHG emissions. California has passed AB 32, the Global Warning Solutions Act of 2006, which requires that greenhouse emissions be reduced to 1990 levels by 2020, and further reduced to a level 80 percent below 1990 levels by 2050. Critics also assert that the BAAQMD measure will interfere with state’s efforts because it will create uncertainty as to the controlling regulation, will undermine existing state programs, and may engender duplicative fees.
The measure may yet be subject to legal challenge. It could, for example, be subject to state or federal preemption, especially if other programs are adopted that either tax emissions or establish a cap-and-trade program. On the other hand, a spokesman for the California Air Resources Board has reportedly suggested that requirements for future statewide programs could be superimposed over the local fee program, leaving it intact. Although uncertainty exists about the future of the measure, the agency seized the initiative in a way that is likely to get the attention of state and federal agencies.
