(July 2, 2008) Two California Chamber of Commerce-opposed bills that will lead to fuel price increases won approval from Senate and Assembly policy committees last week.

• AB 2558 (Feuer; D-Los Angeles), a climate change tax, passed the Senate Transportation and Housing Committee.
• SB 1240 Kehoe (D-San Diego), a restrictive fuel standard, passed the Assembly Natural Resources Committee.

In 2006, Governor Arnold Schwarzenegger signed sweeping legislation to control greenhouse gas emissions, AB 32 (Núñez; D-Los Angeles; Chapter 488). AB 32 establishes a process for reducing greenhouse gas emissions and requires the development of a comprehensive plan in a balanced and expeditious manner.

The state Air Resources Board (ARB) has been assigned the task of exploring and developing regulations to achieve the reductions required by AB 32.

Climate Change Tax

AB 2558 assesses an unconstitutional tax on businesses and consumers in Los Angeles County and the Bay Area by imposing a tax by a majority vote on either motor vehicles or vehicle fuel. It proposes a gas tax of up to 3 percent of the retail sales price, or up to $90 per vehicle based on its emissions.

Such taxes, combined with rising energy prices due to existing environmental initiatives, are making it difficult for California’s small businesses to remain in the state.

AB 2558 disregards the multiple levels of work being done at the ARB to reduce the state’s greenhouse gas emissions. ARB already is working on the scoping plan that will be the guidebook for putting AB 32 into motion and developing the regulations.

As a special tax for a specific purpose, AB 2558 should be subject to a two-thirds vote for approval.

Restrictive Fuel Standard

SB 1240 interferes with the development of a competitive alternative fuels market and threatens job creation in California by creating a costly Low Carbon Fuel Standard that conflicts with the existing standard created by Governor’s Executive Order S-7-04.

To meet increasing consumer demand, the fuels market needs to be full of options and represent a mix of alternatives.

Unlike the Governor’s executive order, however, SB 1240 limits the fuel that technology providers could use to meet the 10 percent reduction standard.

SB 1240 ignores the planning under way at the ARB and pre-judges the outcome of AB 32 and the Governor’s Low Carbon Fuel Standard. Establishing another standard will only stall the reductions and create more uncertainty in the regulatory process.

Staff Contact: Amisha Patel

Additional Materials

Climate Change