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million. An even bigger deficit was predicted for FY 2005, when TCEQ projects the fee will bring in $35.6 million, while costs for the program are expected to be more than $40 million.

One way to raise revenues to cover the cost of the program would be to either eliminate the 4,000- ton emissions cap or raise the cap from 4,000 tons to 8,000 tons. In the process, the per-ton fee might be lowered for all industries, while still raising more money to pay for air quality programs.

Both ideas were pursued in the 77th

legislative session, with the second being stripped out in

conference committee of the TCEQ's sunset bill after being accepted unanimously by the Senate.8 Most recently, Senator Gonzalo Barrientos has introduced a bill – SB 171 -- to the 78th Legislature which would raise the air emissions cap from 4,000 to 8,000 tons per pollutant and require that TCEQ consider lowering the overall fee per ton.

Impacts of Air Emission Fees on Different Industries

Because of the “volume discount,” the largest industrial facilities pay considerably less per-ton than do smaller ones. For example, the chart below shows that the four facilities emitting more than 100,000 tons of pollutants annually paid an average of $3.28 per ton, while those facilities emitting less than 4,000 tons annually paid the full $28.63 ton fee (see Table 1).

Most of the facilities that enjoy a volume discount are located in the eastern or northeastern part of the state. Seven of the eight biggest emitters in the state are coal or lignite-burning power plants, including Alcoa's power generating units at its Rockdale smelter (see Table 2). Revenue losses by the state and disincentives for industries to reduce pollution due to these caps are significant. While the economy has grown and companies have worked to reduce air pollution, revenue from fees on air pollution are expected to fall in coming years, leaving the TCEQ with a negative fund balance in the Clean Air Account for FY 2005. In FY 2003, if the 51 facilities that emitted one or more pollutants in excess of 4000 tons/year were assessed the full $28.63/ton fee, the state would have gained $27 million (see Table 3).

Cost per ton

$35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00

$3.28 per ton

$28.63 per ton

TXU Electric Co.- Martin Lake Station (117,553 tons)

ExxonMobil Corporation (501 tons)

What Different Facilities Pay for Title V Air Emissions Fee in Rusk County, FY 2003

8 The amended version of HB 2912 – the TNRCC Sunset Bill – included an amendment offered by Senator Gonzalo Barrientos to raise the air emissions fee cap from 4,000 to 8,000 tons per pollutant which was unanimously approved by the Senate. However, in conference committee the amendment was stripped.

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