Amended
IN
Assembly
June 14, 2022 |
Amended
IN
Senate
March 17, 2022 |
Introduced by Senator Kamlager |
February 18, 2022 |
This bill would additionally prohibit a state agency from linking a market-based compliance mechanism with any other state, province, or country unless all of the following conditions are met: (1) the state agency has completed one or more formal regulatory processes within the last 3 years to review the state’s market-based mechanisms, as provided, (2) the state agency publicly consulted with the Independent Emissions Market Advisory Committee as part of that process, and (3) if the market-based compliance mechanism proposed for linking has issued or is authorized to issue an offset credit that can be used for compliance purposes, then the market-based compliance mechanism includes a provision that automatically reduces the number of emissions allowances it makes available for compliance purposes, as provided. The bill would make other technical and
nonsubstantive changes.
(a)(1)The Legislature finds and declares that the establishment of nongovernmental entities, such as the Western Climate Initiative, Incorporated, and linkages with other states, provinces, and countries by the State Air Resources Board or other state agencies for purposes of implementing the California Global Warming Solutions Act of 2006
(Division
25.5 (commencing with Section 38500) of the Health and Safety
Code) should be done transparently and should be independently reviewed by the Attorney General for consistency with all applicable laws.
(2)The purpose of this section is to establish new oversight and transparency over linkages with other states, provinces, and countries and related activities undertaken in relation to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety
Code) by state agencies to ensure consistency with applicable laws.
(b)(1)The state membership of the board of directors of the Western Climate Initiative, Incorporated, shall be modified as follows:
(A)One member, or the member’s designee, who shall serve as
an ex officio nonvoting
member, shall be appointed by the Senate Committee on Rules.
(B)One member, or the member’s designee, who shall serve as an ex officio nonvoting member, shall be appointed by the Speaker of the Assembly.
(C)The
Chair of the State Air Resources Board or the chair’s designee.
(D)The Secretary for Environmental Protection or the secretary’s designee.
(2)Sections 11120 through 11132 do not apply to the Western Climate Initiative, Incorporated, or to the members
specified in subparagraphs (C) and (D) of paragraph (1) when
those members are performing their duties under this section.
(c)The State Air Resources Board shall provide notice to the Joint Legislative Budget Committee, consistent with the notice required for Department of Finance augmentation or reduction authorizations pursuant to subdivision (e) of Section 28.00 of the annual Budget Act, of any funds over one hundred fifty thousand dollars ($150,000) provided to the Western Climate Initiative, Incorporated, or its derivatives or subcontractors, no later than 30
days prior to transfer or expenditure of these funds.
(d)The
Chair of the State Air Resources Board and the Secretary for Environmental Protection, as voting members representing the state on the Western Climate Initiative, Incorporated, shall report every six months to the Joint Legislative Budget Committee on any actions proposed by the Western Climate Initiative, Incorporated, that affect state government or entities located in the
state.
(e)A state agency, including, but not limited to, the State Air Resources Board, shall not link a market-based compliance mechanism established pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code) and specified in Sections 95801 to 96022, inclusive, of Title 17 of the California Code of Regulations with any other state, province, or country unless the state agency notifies the Governor
of the agency’s intent, and the Governor, acting in the Governor’s independent capacity, makes all of the following findings:
(1)The jurisdiction with which the state agency proposes to link has adopted program requirements for greenhouse gas reductions, including, but not limited to, requirements for offsets, that are equivalent to or stricter than those required by
the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety
Code).
(2)Under the proposed linkage, the state is able to enforce, to the maximum extent permitted under the United States and California Constitutions, the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code) and related
statutes
against any entity subject to regulation under those statutes and against any entity located within the linking jurisdiction.
(3)The proposed linkage provides for the enforcement of applicable laws by the state agency or by the linking jurisdiction of program requirements that are equivalent to or stricter than those required by
the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code).
(4)The proposed linkage and any related participation of the state in the Western Climate Initiative, Incorporated, shall not impose any significant liability on the state or any state agency for any failure associated with the linkage.
(f)The Governor shall issue written findings pursuant to subdivision (e) within 45 days of receiving a notice from a state agency pursuant to that subdivision,
and shall provide those findings to the Legislature. The findings shall consider the advice of the Attorney General. The findings to be submitted to the Legislature shall not be unreasonably withheld. The findings shall not be subject to judicial review.
(g)A state agency, including, but not limited to, the State Air Resources Board, shall not link a market-based compliance mechanism established pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code) and specified in Sections 95801 to 96022, inclusive, of Title 17 of the California Code of Regulations with any other state, province, or country unless all of the following conditions are met:
(1)Within the past three years, the state agency has completed one or more formal regulatory processes to review the state’s market-based compliance mechanisms, including all provisions governing the issuance and use of offset credits, for consistency with existing statutory standards. At a minimum, the state agency shall evaluate and address concerns regarding all of the following:
(A)Allowance overallocation in the state agency’s market-based compliance mechanisms, pursuant to subparagraph (D) of paragraph (2) of subdivision (c) of Section 38562 of the Health and Safety Code.
(B)Whether offset credits
eligible for use in the state agency’s market-based compliance mechanisms satisfy the requirements of paragraph (1) of subdivision (d) of Section 38562 of the Health and Safety Code.
(C)Whether offset credits eligible for use in the state agency’s market-based compliance mechanisms satisfy the requirements of paragraph (2) of subdivision (d) of Section 38562 of the Health and Safety Code.
(2)As part of the formal regulatory review process conducted pursuant to paragraph (1), the state agency publicly consulted with the Independent Emissions Market Advisory Committee established pursuant to Section 38591.2 of the Health and Safety Code.
(3)If a market-based compliance mechanism proposed for linking has issued or is authorized to issue an offset credit that can be used for compliance purposes, then the market-based compliance mechanism includes a provision that automatically reduces the number of emissions allowances it makes available for compliance purposes by a number that is equivalent to the climate benefits claimed by either of the following:
(A)The issuance of all offset credits, as observed historically and on an ongoing basis.
(B)The retirement of all offset credits used for compliance purposes, as observed historically and on an
ongoing basis.
(h)For purposes of this section, “link,” “linkage,” or “linking” means an action taken by the State Air Resources Board or any other state agency that will result in acceptance by the state of compliance instruments issued by any other governmental agency, including any state, province, or country, for purposes of demonstrating compliance with the market-based compliance mechanisms established pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code) and specified in Sections 95801 to 96022, inclusive, of Title 17 of the California Code of Regulations.