While policymakers in Washington continued to make progress on comprehensive GHG legislation, the California Air Resources Board (CARB) provided a reminder that Sacramento remains the current capital of climate change regulation. This month, CARB will consider--and almost certainly adopt--a regulation that would impose "carbon cost" fees on businesses in six economic sectors: natural gas utilities and users, producers and importers of gasoline and diesel fuels, refineries, cement manufacturers, retail providers and marketers of imported electricity, and coal facilities. The fee is estimated to generate $51.2 million in annual fees. The funds would be used to help implement other aspects of the state GHG regulatory scheme known as AB 32. CARB intends to recalculate sector- and facility-specific fee totals each year, based on the agency's regulatory needs, the "common cost" of carbon, and facility-specific emissions estimates.

CARB believes the proposed regulation covers 85% of California's GHG emissions. But others think the regulation is not broad enough. For example, some industry groups have questioned why CARB did not seek to spread the burden among a broader group of businesses and industry sectors.

CARB faces criticism--and posssible litigation--on another front as well. Natural gas and electricity importers allege that CARB cannot legally impose fees on interstate commerce in those sectors, and have urged the agency to reconsider its position.

CARB will consider the fee regulation at its June 25-26 meetings. Comments may be submitted to the agency through June 24.