Air Board Delays Vote on Greenhouse Gas Fees

By Published On: June 26, 2009

Concerns about electricity import impacts and litigation pressures led the California Air Resources Board June 25 to delay adopting new greenhouse gas emissions fees. The Air Board plans to vote on possible fees at its July 23 meeting in San Diego. The state “needs a stable and reliable source of revenue” to carry out its climate protection law, AB 32, said Tom Cackette, Air Board chief deputy executive officer, introducing the rule to the board. He added that the fee--to be collected from about 250 upstream companies that cover 85 percent of greenhouse gas emissions--was designed to minimize the administrative burden for fee payers and the Air Board. It mostly would be collected from utilities, natural gas suppliers, oil refiners, and a few other industries. The proposed 12 cent fee on each metric ton of greenhouse gas emissions associated with imported electricity, fuels, and various industrial processes aims to raise $49.7 million in new revenue in fiscal year 2009-10. Of that money, the Air Board plans to use $13.5 million to repay the state for three years worth of “loans” for work on the 2006 law. The Air Board said the state has spent $82.5 million of money from other funds over the past three fiscal years, which must be repaid with AB 32 emission fees. The delayed vote came as the state faces a fiscal crisis that may leave it unable to pay its bills in a matter of days. The Air Board projects the new fees would raise the annual cost of electricity and natural gas for Californians an average of 62 cents per household. The cost of operating a car would increase an average of 65 cents in the coming 12 months. The Air Board postponed a vote in response to a lawsuit 11 business groups filed last month, including the California Manufacturers & Technology Association, California Chamber of Commerce, and Western States Petroleum Association. The groups seek financial records from the Air Board that address the justification for the fees. “While it’s stirred up a lot of dust, it’s really a distraction because there’s no secrecy about what it costs,” said Air Board chair Mary Nichols of the litigation. She challenged the groups to come up with positive alternatives to the proposed fee. Other businesses and organizations expressed concerns about the fee too. For instance, Southern California Public Power Authority attorney Norman Pedersen cautioned the Air Board to avoid double counting imported electricity. The problem, public utility representatives explained, is that sometimes California imports power, and at other times exports power to offset imports under energy exchange arrangements. In these instances, only the net imports should be subject to the fees, they said. Nichols asked the staff to study the situation over the next month. At issue in the litigation is the Air Board’s slow response to a California Public Records Act request the business groups filed to shine light on the underlying financial records used to justify the fees, said Dorothy Rothrock, CMTA senior vice president of government relations. Rothrock added that the businesses want the Air Board to commit to dropping the fee should it gain revenue through other greenhouse gas fees, such as auctioning emissions rights under a carbon cap-and-trade program. The business groups, she said, first requested documentation informally, but after the Air Board did not provide it they filed a Public Records Act request in February. After delays and receipt of limited documentation, the business groups filed a lawsuit in Sacramento County Superior Court May 7. “We feel we have fully complied with the requirements of the Public Records Act,” said Air Board spokesperson Stanley Young. He said the Air Board provided the business groups 8,878 documents. Documents the Air Board filed with the court indicated that it took the agency’s staff time to gather, review, and provide the large volume of material. However, Rothrock said it was not until June 19--just a few days before the fee adoption hearing--that the Air Board handed over the final 5,000 documents. They were released after Sacramento Superior Court Judge Patrick Marlette directed the agency June 12 to produce the documents by that date or list which ones it was withholding. The business groups advocated for a one month delay in imposing the fees. An Air Board staff member claimed the last round of documents was provided in response to a subsequent Public Records Act request the agency did not receive until last month.

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