Environmental Law

Bay Area Air Pollution Regulators Approve First-of-its-Kind GHG Fee

By Dennis Pfaff and Kevin Livingston, Editors

Air pollution regulators in the San Francisco Bay Area on Wednesday overwhelmingly approved what is believed to be the first set of fees of their kind on greenhouse gas emissions, over the objections of oil industry and other business groups.

"It's vitally important that we do this," however, said Jerry Hill (pictured, at center), chairman of the Bay Area Air Quality Management District, shortly before the body voted 15-1 to impose the fee. The agency has jurisdiction over air pollution matters in all or parts of nine counties in San Francisco region.

"This is a perfect example of that public policy where you think globally and act locally and that's exactly what we're doing today," Hill said.   

The 4.4-cent per metric ton fee on businesses emitting greenhouse gases, effective July 1, is expected to generate about $1.3 million a year to fund a variety of programs, including developing an emissions inventory. While most of the estimated 2,500 businesses covered by the rule are expected to pay a dollar or less, some large facilities -- oil refineries and power plants -- could pay more than $50,000 a year, according to the district's estimates (see text of plan here).

Certain emissions, such as "biogenic" carbon dioxide, present in wood, vegetable oils and yard waste, would not be subject to the fee. The largest sources of such emissions are landfills and sewage treatment plants. 

It appeared to be the first time in the nation such a fee program had been adopted (see previous Climate Law Update story here). In 2006, voters in the city of Boulder, Colorado, approved a tax on energy usage as a way of funding efforts to combat climate change (see report on Boulder program here).

Backed by environmental and health groups, the Bay Area plan was attacked by others, including a representative of the refining industry, who would not rule out taking the matter to court. Dennis Bolt, Bay Area manager for the Western States Petroleum Association, an industry group, warned that the action by the regional agency could undermine state efforts to control heat-trapping pollutants, such as those to be taken under the auspices of AB 32. He also questioned the board's legal authority to take the step.

Bolt told Climate Law Update that companies now would not know what regulatory scheme they would be facing: 

"It's not about the money. It's about the business uncertainty that has been raised in this state. It's about to travel to other districts in the state and could undermine the entire initiative going on in Sacramento, which is gargantuan and world-class." 

Despite assurances from the board's lawyers that the agency had the power to take the action, Bolt disagreed. "We believe the conclusion that the district has come to about their jurisdiction in this matter is wrong," he said, although he stopped short of outright threatening to sue.

William Quinn, vice president of the California Council for Environmental and Economic Balance, expressed concerns over the emergence of a "patchwork of programs" relating to efforts to control climate change. The organization's web site says it includes members from both business and organized labor.

But Brian Bunger, the air district's chief lawyer, insisted his agency was within its power to enact the new charges. He said air agencies such as the Bay Area district, had long ago, been granted authority under the California Clean Air Act  to regulate emissions that include carbon (see overview of law here); see relevant section here): 

"Clearly greenhouse gases fit within that definition of pollutant. So our fee here is to address a number of issues around our program, which includes things like inventorying and looking at control technologies, coordinating with the [California Air Resources Board] on AB 32, that sort of thing. All of that work relating to stationary sources can lead us to fee recovery."  

He said that AB 32, the 2006 law that is driving California efforts to cut its greenhouse emissions, contains a provision leaving intact the existing authority of air districts. Additionally, both Bunger and Jack Broadbent, the district's executive officer, gave assurances that the district's efforts would not conflict with those going on at the state level.

"We have no desire to run headlong into interfering with the ARB's work in this area," he said, referring to the state air agency.

Among those praising the board's action was Linda Weiner, director of air quality advocacy and outreach for the American Lung Association of California. While she said there would be a "modest fee" for industry, "the biggest cost is to do nothing" to combat greenhouse emissions.

Also backing the district's move was a representative of the big garbage disposal company Waste Management. He said the fees "appear reasonable," although he suggested that officials consider the actual emissions from the company's five landfills because he said they are producing fewer pollutants than the national average.

 (Photo: Climate Law Update)

Full post as published by Climate Law Update on May 21, 2008 (boomark / email).