BILL ANALYSIS
AB 2691
Page 1
Date of Hearing: April 19, 2010
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2691 (Hall) - As Amended: April 6, 2010
SUBJECT : California Global Warming Solutions Act of 2006 (AB
32): fees.
SUMMARY : Preempts state and local entities from imposing
greenhouse gas (GHG) emissions fees on specified major sources
of GHG emissions subject to regulation under AB 32.
EXISTING LAW :
1)Requires the Air Resources Board (ARB), pursuant to AB 32, to
adopt a statewide GHG emissions limit equivalent to 1990
levels by 2020 and adopt regulations to achieve maximum
technologically feasible and cost-effective GHG emission
reductions.
2)Authorizes ARB to adopt a schedule of fees to pay for the
costs of implementing the program established pursuant to AB
32's provisions.
3)Authorizes ARB to permit the use of market-based compliance
mechanisms to comply with GHG reduction regulations, to be
adopted by 2011 and operative by 2012, under limited
circumstances once specified conditions are met.
4)Provides for the establishment of county air pollution control
districts, and requires that a county district be established
in every county, unless the entire county is included within
the Antelope Valley Air Quality Management District, the Bay
Area Air Quality Management District, the Mojave Desert Air
Quality Management District, the South Coast Air Quality
Management District, the San Joaquin Valley Air Quality
Management District, if that district is created, a regional
district, or a unified district.
5)Authorizes air districts to establish a permit system that
requires, except as specified, that before any person builds,
erects, alters, replaces, operates, or uses any article,
machine, equipment, or other contrivance that may cause the
issuance of air contaminants, the person obtain a permit from
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the air pollution control officer of the district.
6)Authorizes air districts, among their general powers, to
impose fees on these stationary sources of air pollution.
THIS BILL :
1)Prohibits any state agency, city, county, city and county, air
district, or another political subdivision of the state from
imposing a GHG fee on any source of GHG emissions that is
subject to either a market-based compliance mechanism or fee
regulation under AB 32.
2)Overrides provisions of AB 32 preserving the authority of air
districts and state entities.
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of the bill. According to the author:
ARB is developing a statewide fee program as well as a cap and
trade program that covers the major stationary sources. Many
cities and local districts are adopting their own program for
addressing climate change. Since the impacts are not local,
but worldwide, California should have one program. Local fees
will be duplicative of the state fees. Local command and
control regulations could leave California facilities with two
conflicting rules that are impossible to comply with at the
same time.
2)Who would be covered by the bill? This bill would generally
prohibit the imposition of a GHG fee on any source of GHG
emissions that is subject to either a market-based compliance
mechanism or fee regulation under AB 32. No such regulation
is yet in effect, but based on fee and market-based compliance
regulations (i.e. cap and trade) proposed by ARB, the bill
will immunize the following entities from GHG fees:
a) The administrative fee to support ARB's costs of
implementing AB 32 will be assessed on approximately 350
entities, representing the largest emitters of GHG and 85%
of total statewide emissions, including large distributors
and users of natural gas, producers/importers of
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gasoline/diesel fuel, facilities that combust coal,
refineries, cement manufacturers, electricity importers and
instate generating facilities. The fee rate is estimated
at 17 cents per metric ton of CO2 equivalent, based on the
2009-10 budget for the program.
b) The preliminary proposed cap and trade program would
apply to an estimated 600 entities (presumably including
the 350 above) engaged in stationary combustion, cement
manufacturing, cogeneration, petroleum refining, hydrogen
production, aluminum production, facility operators
calcining carbonates, CO2 supplier or transfer recipient,
electricity generation, glass production, iron and steel
production, lime production, natural gas transmission and
distribution, nitric acid production, oil and gas
extraction field operation, production of industrial gases,
pulp and paper production, soda ash production, electricity
deliverers, transportation fuel deliverers, and natural gas
deliverers.
3)Other GHG fees in effect. The committee has identified only
one state or local GHG fee currently in effect. In 2008, the
Bay Area Air Quality Management District adopted a GHG fee of
4.4 cents per metric ton of CO2 equivalent on all stationary
sources subject to district permitting (except sources of
"biogenic" CO2) to recover the district's costs of its climate
protection program. The other air districts have authority to
adopt a similar fee, but none has been adopted or even
formally proposed. According to the BAAQMD:
Over 2500 District-permitted facilities have some level of
GHG emissions and would be subject to fees under Schedule
T. Most of these facilities have relatively low GHG
emissions levels (e.g., facilities with only an emergency
backup generator), and would have annual GHG fees under $1.
About 850 facilities would have annual GHG fees of $1 or
more; about 250 facilities would have annual GHG fees in
excess of $100; 14 facilities would have annual fees in
excess of $10,000; and 7 facilities would have annual GHG
fees in excess of $50,000 (i.e., the five Bay Area
petroleum refineries, and the two largest Bay Area power
plants). As would be expected, the largest industrial
facilities with the highest GHG emissions would have the
highest GHG fees.
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As a category, petroleum refineries emit just over one-half
of the Bay Area point source GHG emissions, and would
therefore pay about one-half of the total GHG fees under
Schedule T. Various types of power plants would
collectively pay about one-third of the total GHG fees,
although the fee for specific power plants would vary
significantly, from tens of dollars for small
distributed-generation facilities, to about $87,000 for the
largest central power plant.
4)Proposed author's amendments. This bill prohibits any "state
agency" from imposing a GHG fee on the sources covered by the
bill, which would include ARB. However, author has proposed
amendments to make an exception for fees adopted by ARB
pursuant to its existing authority granted in AB 32. This is
consistent with the apparent intent of the bill - to prohibit
fees the author considers duplicative of ARB fees on major
sources of GHG emissions.
REGISTERED SUPPORT / OPPOSITION :
Support
California Building Industry Association
California Chamber of Commerce
California Manufacturers & Technology Association
California Taxpayers Association
Western States Petroleum Association
Opposition
American Lung Association
Bay Area Air Quality Management District
Breathe California
California Air Pollution Control Officers Association
Catholic Charities, Diocese of Stockton
Center on Race, Poverty and the Environment
Clean Power Campaign
Clean Water Action
Ella Baker Center for Human Rights
Environmental Defense Fund
Fresno Metro Ministry
Friends of the Earth
Large-scale Solar Association
Merced/Mariposa County Asthma Coalition
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Natural Resources Defense Council
Physicians for Social Responsibility
Planning and Conservation League
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Sierra Club California
Solaria Corporation
The Orange County Interfaith Coalition for the Environment
TransForm
Union of Concerned Scientists
Urban Habitat
Vote Solar Initiative
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092