Environmental Fee Bills on Fast Track to Governor

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, Jan. 30, 2003 Share this on FacebookTweet thisEmail this to a friend

On Tuesday, January 28, the Assembly approved AB1X 10 (Jenny Oropeza D-Long Beach) which grants broad authority to the California Air Resources Board (CARB) and the State Water Resources Control Board to levy major fee increases on regulated industries. Companion measures - SB1X 4 and SB1X 6 (Wes Chesbro D-Arcata) - will be up for a vote in the Senate on Thursday. These measures are moving quickly to the Governor's desk, without input from affected stakeholders, on the premise that they are necessary to implement the Governor's proposed spending cuts. In the case of these bills, the "cuts" are in fact cost shifts from the General Fund to fee payers. More importantly, they confer far greater authority to the agencies than is necessary, even to fully implement the Governor's proposals.

CMTA understands that the severity of the state's fiscal crisis requires the Legislature to make difficult choices in balancing the budget. Nonetheless, we must respectfully take issue with the proposed legislation -- both in terms of the significance of its impact on our members and the manner in which it is being considered.

The proposed grant of authority would trigger significant fee increases. Under current law (Health and Safety Code section 39612), CARB fees are paid by a relative handful of sources (about 60) and are capped at $3 million per year. Based on the Governor's proposal, total fee revenue would be increased to roughly 330 percent of the current baseline. Moreover, this proposal would remove the cap entirely, effectively giving CARB a blank check and leaving open the possibility of ongoing fee increases.
The proposed changes will not achieve the "polluter pays" objective. The programs listed in H&SC 39612 address the emissions of thousands of sources statewide. It is important to note that the vast majority of these are permitted sources which should not be viewed or treated as violating applicable environmental laws, as the term "polluter" implies. To achieve true equity among fee payers, the Legislature should consider allocating fees in proportion to the contribution of various source categories to the state emission inventory and CARB's workload associated with those sources.
CARB should be required to justify the Governor's proposed cost shift. As best we can tell, CARB has not yet disclosed to the Legislature or to the public any analysis demonstrating the need for another $10 million in new fees to preserve necessary regulatory functions. The current economic climate is forcing businesses to drastically cut costs and eliminate expenditures. State agencies should be held to the same standard. CMTA would like to understand what steps CARB is taking to reorder its regulatory priorities and ensure maximum efficiency in resource allocation among its statutorily mandated programs. We suspect that some of the actions contemplated in H&SC 39612 have already been completed, calling into question the need to sustain expenditures at current levels.
The timeframe for consideration of this bill is unnecessarily abbreviated. CMTA understands that the Legislature would like to give CARB adequate lead time to implement the proposed changes in regulation. However, given that these changes are being proposed for fiscal year 2003-04, and given the 90-day trigger for special session legislation, it is not necessary in our view to rush such a significant policy change through the legislative process in two- to three-weeks time.
The process affords no opportunity for public input. Notice of budget subcommittee deliberations has been sporadic and vague in terms of subject matter. Where hearings were noticed, the file stipulated current year budget adjustments, not future year changes. In at least one case, the subcommittee did not allow testimony. At present, the bill is only circulating in mock-up form. It is difficult to determine what is being considered at any given point in time, much less to provide any input into legislative deliberations.

The water board bill language raises similar issues, including complete removal of the existing discharge fee cap. Members should be aware that the cap was doubled just last year pursuant to the budget act. In addition, this proposal significantly expands the types of core program costs that can be covered by fees (e.g., surface and groundwater monitoring, administrative costs) and in so doing would obligate permitted dischargers to pay for costs that are entirely unrelated and disproportionate to their discharges.

CMTA believes that it would be premature for the Legislature to pass a measure granting broad new fee authority to any agency until the above issues are more fully and openly debated in the legislative process.
Read more Environmental Impacts articles

Capitol updates archive 989898989