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AG: Fossil Fuels Companies Can’t Pass Carbon Fees on to Consumers

Lawmakers who are crafting legislation to impose carbon collection fees on fossil fuels companies and other polluters have gotten a boost from a new ruling from the state Attorney General’s office.

The AG’s office issued an advisory opinion last week — which was conveyed to Del. David Fraser-Hidalgo (D-Montgomery) Monday night — that said lawmakers would be within their rights to prevent fossil fuels companies from passing any pollution fees along to consumers.

Fraser-Hidalgo and Sen. Benjamin L. Kramer (D-Montgomery) are introducing legislation that would charge fossil fuels companies a carbon collection fee for pollution — $15 per metric ton of carbon dioxide from combustion of non-transportation fossil fuels. The cost would rise $5 each year, to a cap of $60 per metric ton.

[Lawmakers Eye Carbon Fee from Polluters to Pay Part of Kirwan Tab]

But one of the sponsors’ worries is that the oil and gas companies would attempt to lessen their financial burden from any pollution fee by passing the expense along to their customers. With the AG’s ruling, lawmakers can now add language to the legislation that would prevent fossil fuels companies from doing so.

“I am not aware of any general legal impediment to the General Assembly enacting such a prohibition,” Jeremy M. McCoy, wrote to Fraser-Hidalgo on Jan. 14.

But McCoy later wrote: “However, there may be circumstances under which a pass-through prohibition could amount to an unlawful taking, namely if the prohibition places an entity into a situation where it is impossible for the entity to profitably engage in its business or maintain commercial viability.”

Even with that caveat, Fraser-Hidalgo is taking the AG’s opinion as another reason to move forward with the legislation.

“It guarantees that the fossil fuels industry will actually for the very first time be responsible for the total of their environmental damage,” he said in an interview, describing the legislation as an “accountability” measure to make oil and gas companies pay for decades of carbon pollution.

Fraser-Hidalgo is also circulating a report from the International Monetary Fund that shows global subsidies to the fossil fuel industry totaling $5.2 trillion in 2017.

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AG: Fossil Fuels Companies Can’t Pass Carbon Fees on to Consumers