UCLA law prof Jonathan Zasloff argues that Prop 26 doesn't undermine AB 32 and that the California Air Resources Board still has the ability to impose an oil severance fee:
First, take a look at the careful analysis that Cara, Sean, and Rhead produced a couple of weeks ago. It notes one extremely important fact about Proposition 26: its retroactive provisions only go back to January 2010, and AB 32 was enacted in 2006. AB 32 explicitly authorizes the California Air Resources Board to impose regulatory fees. Since Proposition 26 only applies to state “statutes,” it does not affect administrative regulations.
While this still screws state and local governments' ability to impose fees for any other activity unrelated to AB 32 (for example, at Netroots California on Saturday Ted Lieu said he'd like to levy a foreclosure fee on banks, but that Prop 26 makes this nearly impossible), Zasloff's argument is that Prop 26 cannot stop CARB from implementing any AB 32-related fees since voters clearly intended to uphold AB 32:
By passing Proposition 26, could we reasonably read the state’s voters as wanting to undermine AB 32? Absolutely not, because at the same time they passed Proposition 26 with a small though clear (52.8%) majority, they overwhelmingly (61.2%) rejected Proposition 23, which would have suspended AB 32. Thus, any doubts in interpreting Proposition 26 must be resolved in favor of allowing AB 32 to continue. Put another way, Proposition 26 has no effect on the broad grant of authority to the California Air Resources Board to implement, enforce, and fulfill the purposes of AB 32....
Thus, if CARB found with substantial evidence that, say, an oil severance fee — which charges oil as it is pumped from the ground — would be an appropriate way of internalizing the external costs of petroleum, then California courts would be obliged to defer to this determination. California is the only oil-producing state that lacks such a severance fee. Other such fossil fuel fees would also be permissible for CARB to impose, for the purposes of fulfilling AB 32′s mandate.
Zasloff's arguments are important, and I expect to see this employed in a future court battle over the meaning and implementation of Prop 26. It does indeed appear that Prop 26 won't undermine AB 32 to the extent we feared.
However, that's just one small silver lining. Prop 26's passage will have massively negative fiscal ramifications for state and local governments, making our budget crisis much worse and destroying our ability to recoup the externalized costs of other private actions. We got rid of the 2/3rds rule for budgets in the passage of Prop 25. Now it's time to lower the 2/3rds rule for taxes and fees. That battle begins today.