Bay Area and Congress At Odds Over Approach to Climate Change

(This article is reprinted from The Marin Lawyer)

It should come as no surprise that the Bay Area and Congress don’t exactly see eye to eye over how to address climate change – and two recent events underscored the stark contrast in the two approaches.

In Washington, D.C. early last month, the U.S. Senate briefly debated climate change legislation stalled in the Senate, before Republican opposition and waning support from moderate Democrats torpedoed the bill.

Around the time the federal legislation got hung up, our own air district here in the Bay Area passed one of the first and farthest-reaching carbon taxes in the nation. Even more striking was the overwhelming 15-1 margin by which the Bay Area Air Quality Management District Board (“Board”) voted to revise its fee structure to charge businesses in the nine Bay Area counties 4.4 cents for each ton of carbon dioxide they emit.

The federal government’s failure to enact legislation to curb climate emissions accentuates the significance of our local action. This Bay Area-wide “carbon tax,” which went into effect July 1, was hailed by environmentalists as a new model for reducing greenhouse gas emissions. While not the first such tax in the nation, it is by far the most substantial and farthest-reaching. The new fee on emissions is expected to raise $1.1 million annually, which will help pay for programs to measure and reduce Bay Area greenhouse gas emissions.

Authority for the new Carbon Tax

The Board is authorized to impose these new fees by Health & Safety Code § 42311(a), which allows air districts to impose fees to cover the costs of air district programs related to permitted stationary sources. Section 40728.5(a) requires a socioeconomic impact analysis whenever the Board proposes a rule that will significantly affect air quality or emissions limits. Because the new fees will not lead to a direct increase or decrease in air emissions, the Board found that a socioeconomic impact analysis was not required.

The California Environmental Quality Act (Cal. Public Resources Code §21000 et seq.), which ordinarily requires a government agency to prepare an Environmental Impact Report (EIR) prior to approval of certain projects does not require an EIR for amended fee schedules. Because the greenhouse gas emissions fee is technically an amendment to existing permit fees, no CEQA analysis was necessary before it was approved by the Board.

Only Permitted Businesses To Be Affected

Most small business owners need not fret over this new tax. Small businesses which do not emit significant greenhouse gases and are not currently required to file an air permit will not be required to suddenly start paying new fees. Only industrial facilities and businesses that are currently required to submit an air quality permit to operate will be required to measure and report their own emissions.

Small businesses that are required to file an air quality permit annually will likely experience a small fee increase. According to estimates published by the Board, the average small-sized dry cleaner paying an annual permit fee of $373 will likely see an increase of about $23. A small auto body shop paying a current fee of $292 will pay $34 more. Larger businesses will feel more of an impact, with a larger gas station currently paying a fee of $2,113 experiencing an increase of about $260.

Primarily Affecting Large Businesses

Most of the companies affected by the new fees are large businesses and heavier polluters. The top 10 companies combined will likely contribute more than $820,000 out of the estimated $1.1 million in revenue. Approximately seven power plants and oil refineries will have to pay more than $50,000 a year. Most of the 2,500 Bay Area businesses will pay less than $1.

A Sign of Things to Come?

Whether people agree or disagree with the new carbon tax, it is likely a sign of future efforts soon to come down the pike. California’s landmark climate change legislation, AB 32, gave the California Air Resources Board the authority to adopt a statewide carbon tax. And advocates for the ill-fated federal bill vow to try again after the election – both nominees Barack Obama and John McCain have expressed their support for climate change legislation.