In response to city budget deficits:
Saying they need to stop relying on the city’s general fund, Louisville Metro Air Pollution Control District officials plan to collect an additional $1.5 million in fees by 2014 from the several hundred businesses they regulate. ...
The district enforces the federal Clean Air Act in Louisville along with its own regulations. Some programs ... go beyond federal requirements. About 36 percent of its budget comes from grants, with much of that from the U.S. Environmental Protection Agency. Penalty fees make up about 13 percent, while the permit, emissions and program fees account for a total of 37 percent.
Louisville's general fund currently covers the other 14%. Assuming that the general fund comes from taxpayers, they are being charged twice for pollution reduction. First through taxes and second through higher prices for the polluting goods they purchase.
Charging polluters to fund air pollution regulations, in proportion to their pollution, is akin to a Pigouvian tax. The regulatory fees would provide an incentive to reduction air pollution.