BILL NUMBER: AB 32	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 7, 2006
	AMENDED IN SENATE  JUNE 22, 2006
	AMENDED IN SENATE  APRIL 18, 2006
	AMENDED IN SENATE  AUGUST 15, 2005
	AMENDED IN ASSEMBLY  MARCH 31, 2005

INTRODUCED BY   Assembly Members Nunez and Pavley
   (Principal coauthor: Assembly Member Nation)
   (Coauthors: Assembly Members Bass, Berg, Chan, Chu, Cohn, Dymally,
Evans, Frommer, Goldberg, Hancock, Jones, Karnette, Klehs, Koretz,
Laird, Leno, Levine, Lieber, Lieu, Montanez, Mullin, Nava, Oropeza,
Ridley-Thomas, Ruskin, Saldana, Wolk, and Yee)
   (Coauthors: Senators Bowen,  Chesbro,  Escutia, Kehoe,
Kuehl, Lowenthal, Romero, Simitian,  and Speier 
 Speier,   and Vincent  )

                        DECEMBER 6, 2004

   An act to amend Section 39003 of, and to add Chapter 7 (commencing
with Section 42875) to Part 4 of Division 26 of, the Health and
Safety Code, and to amend Section 25730 of the Public Resources Code,
relating to air pollution.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 32, as amended, Nunez  Air pollution: greenhouse gases:
California Global Warming Solutions Act of 2006.
   (1) Under existing law, the State Air Resources Board, the State
Energy Resources Conservation and Development Commission (Energy
Commission), and the California Climate Action Registry all have
responsibilities with respect to the control of emissions of
greenhouse gases, as defined, and the Secretary for Environmental
Protection is required to coordinate emission reductions of
greenhouse gases and climate change activity in state government.
   This  bill would provide that the state board is the state
agency charged with monitoring and regulating the sources and
reducing emissions of gases that cause global warming. The  bill
would enact the California Global Warming Solutions Act of 2006, to
require the state board to adopt regulations on or before January 1,
2008, establishing a program to require the reporting and
verification of statewide greenhouse gas emissions, as defined.
 The bill would require the state board to develop an
emissions baseline and monitor and enforce compliance, as specified.
The bill would provide that the state board is the state agency
charged with monitoring and regulating the sources and reducing
emissions of gases that cause global warming.  The bill
would require the state board to adopt, on or before January 1, 2008,
a statewide greenhouse gas emissions limit  equivalent to the
statewide greenhouse gas emissions levels in 1990  to become
effective in 2020, as specified.  The bill would also require the
state board to establish a series of enforceable interim emissions
limits that progressively reduce emissions levels to contribute to
meeting the 2020 limit, as specified. The bill would require the
state board to adopt greenhouse gas emissions reduction strategies,
as defined.   The 
    The  bill would require the Governor to establish an
interagency task force to coordinate investments of state moneys and
state programs that reduce emissions of greenhouse gases, promote
economic growth, make information publicly available to assist
sources of greenhouse gases to meet the requirements of the bill,
ensure that existing state programs support the emissions limits
established by the state board, monitor conditions and coordinate
planning and the state's response to changing climate conditions as
they impact state water supplies, air quality, environmental and
public health conditions, and the state's economy, and create and
maintain an Internet Web site, as specified.
   Because the bill would require the state board to establish
emissions limits and other requirements, the violation of which would
be a crime, this bill would create a state-mandated local program.
   (2) Under existing law the Energy Commission, in consultation with
certain state agencies, departments, and boards with jurisdiction
over matters affecting climate change, is required, by January 1,
2002, to update the inventory of greenhouse gas emissions from all
sources located in the state, as identified in a specified report, to
update its inventory every 5 years, and to report on the updated
inventory to the Governor and the Legislature.  Existing law requires
the Energy Commission to conduct at least one public workshop prior
to finalizing each updated inventory and to post its report and
inventory on the Internet. Existing law additionally requires the
Energy Commission to convene an interagency task force consisting of
state agencies with jurisdiction over matters affecting climate
change to ensure policy coordination for those activities, and to
establish a climate change advisory committee, as provided, to make
recommendations to the Energy Commission on the most equitable and
efficient ways to implement international and national climate change
requirements, as provided.
   This bill would delete the above-described requirements and
instead require that the Energy Commission update its inventory of
emissions of greenhouse gases to supplement the information collected
by the state board and enable the state board to maintain a
reasonably comprehensive inventory of the state's emissions of
greenhouse gases.
  (3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 39003 of the Health and Safety Code is amended
to read:
   39003.  The State Air Resources Board is the state agency charged
with coordinating efforts to attain and maintain ambient air quality
standards, to conduct research into the causes of and solution to air
pollution, to monitor and regulate the sources and reduce emissions
of gases that cause global warming, and to systematically attack the
serious problem caused by motor vehicles, which is the major source
of air pollution in many areas of the state.
  SEC. 2.  Chapter 7 (commencing with Section 42875) is added to Part
4 of Division 26 of the Health and Safety Code, to read:
      CHAPTER 7.  California Global Warming Solutions Act of 2006

   42875.   This chapter shall be known, and may be cited, as the
California Global Warming Solutions Act of 2006.
   42875.5.  The Legislature finds and declares all of the following:

   (a) Global warming poses a serious threat to California's economic
well-being, public health, and environment.  The potential adverse
consequences include the degradation of air quality, the loss of
mountain snowpack leading to serious water supply problems and risk
of catastrophic flooding, rising sea levels displacing thousands of
coastal businesses and residences, and severe damage to California's
marine ecosystems and the natural environment.
   (b) Global warming will directly affect some of California's
largest industries, including agriculture, wine, tourism, skiing,
recreational and commercial fishing, and forestry.
   (c) Global warming will increase the strain on electricity
supplies necessary to meet demand for summer air conditioning in the
hottest parts of the state.
   (d) California has a strong record of leadership on environmental
issues, including enacting some of the nation's first air quality
protections, energy efficiency requirements, renewable energy
standards, and landmark greenhouse gas emission standards for
passenger vehicles.
   (e) California's leadership and actions to reduce global warming
will have a significant impact by encouraging other states, the
federal government, and other countries to act, all of which will be
necessary to fully address this issue. In addition, by exercising
early leadership, California will position its economy, technology
centers, and businesses to benefit from national and international
efforts to reduce greenhouse gas emissions now and in the future.
   42876.  For the purposes of this chapter, the following terms have
the following meanings:
   (a) "Allowance" means an authorization to emit, during a specified
year, up to one ton of carbon dioxide equivalence.
   (b) "Carbon dioxide equivalence" means the amount of carbon
dioxide by weight that would produce the same global warming impact
as a given weight of another greenhouse gas, based on the most recent
information available from the Intergovernmental Panel on Climate
Change.
   (c) "Cost-effectiveness" means the cost per unit of reduced
emissions of greenhouse gases from a particular source or category of
sources resulting from an emissions reduction strategy compared to
the cost of reduced emissions resulting from other emissions
reduction strategies for the same source or categories of sources.
   (d) "Displacement" means a reduction in greenhouse gas emissions
within the state that is offset by an increase in greenhouse gas
emissions outside the state.   
   (e) "Electricity provider" means an entity that provides
electricity to retail end-use customers, including an electrical
corporation, as defined in Section 218 of the Public Utilities Code,
local publicly owned electric utility, as defined in Section 9604 of
the Public Utilities Code, electric service provider, as defined in
Section 218.3 of the Public Utilities Code, private energy producer,
as defined in Section 2802 of the Public Utilities Code, a facility
that uses cogeneration, as defined in Section 218.5 of the Public
Utilities Code, for the generation of electricity, and a community
aggregator operating pursuant to Section 366.2 of the Public
Utilities Code. "Electricity provider" does not include the
California Energy Resources Scheduling division within the Department
of Water Resources, when acting pursuant to Division 27 (commencing
with Section 80000) of the Water Code.  

   (f) 
    (e)    "Emissions reduction strategies" means
programs, measures, standards  ,  and flexible compliance
mechanisms pursuant to this chapter applicable to sources or
categories of sources.

   (g) 
    (f)    "Flexible compliance mechanisms" means
mechanisms  including, but not limited to,   ,
including  banking, borrowing, and market mechanisms  ,
 that provide compliance flexibility to entities that are
required to ensure that their greenhouse gas emissions do not exceed
their emissions allowances.

   (h) 
    (g)    "Greenhouse gases" or "greenhouse gas"
means "greenhouse gases" as defined in Section 42801.1  , or a
substance, contami  nant, or particle determined by the
state board to cause or contribute to climate change pursuant to
Section 42880  .

   (i) 
    (h)   "Interim emissions limit" means a maximum
annual allowable level of greenhouse gas emissions established by
the state board for sources or categories of sources.

   (j) 
    (i)    "Significant sources" means sources or
categories of sources whose emissions are at a level that the state
board determines that their participation in the program established
pursuant to Section 42877 will further the objective of enabling the
state board to effectively monitor compliance with the statewide
emissions limit.

   (k) 
    (j)    "Statewide emissions" means the total
annual emissions of greenhouse gases from all sources in the state,
including all emissions of greenhouse gases from the generation of
electricity delivered  by electricity providers  and
consumed in California, accounting for transmission and distribution
line losses, whether the electricity is generated in-state or
imported. Statewide emissions shall be expressed in tons of carbon
dioxide equivalence.

   (l) 
    (k)    "Statewide emissions limit" means a
maximum annual allowable level of statewide emissions.
   42876.5.  All state agencies shall consider and implement
strategies to reduce greenhouse gas emissions. It is the intent of
the Legislature that the state board cooperate with other state
agencies to achieve the statewide emissions limits created pursuant
to Section 42878 and account for projected reductions in greenhouse
gas emissions from state agency programs not subject to this chapter.

   42877.  (a) On or before January 1, 2008, the state board shall
adopt regulations establishing a program to require the reporting and
verification of statewide greenhouse gas emissions  . The
state board shall develop an emissions baseline  and  to
 monitor and enforce compliance.

   (1) 
    (b)    The regulations shall require the
monitoring and annual reporting of greenhouse gas emissions from
significant sources identified by the state board, beginning with the
sources or categories of sources that contribute the most to
statewide emissions. The reporting program shall also account for all
electricity consumed in the state, including transmission and
distribution line losses from electricity generated within the state
or imported from outside the state.

   (2) 
    (c)    The state board may add other
significant sources to the program no later than January 1, 2010.

   (b) 
    (d)    The regulations shall, where appropriate
and feasible, incorporate the standards and protocols developed by
the California Climate Action Registry, established pursuant to
Chapter 6 (commencing with Section 42800).  Entities that voluntarily
participated in the California Climate Action Registry prior to
December 31, 2006, and have a fully developed reporting program,
shall not be required to significantly alter their reporting or
verification program except as necessary to ensure that reporting is
complete and verifiable for the purposes of state regulation and
tracking of greenhouse gas emissions.
   42877.5.  If the federal government enacts a law limiting
greenhouse gas emissions that the state board determines is of
equivalent or greater effectiveness in achieving the statewide
emissions limits and timeframes established pursuant to this chapter,
the state board may modify or elect not to adopt emissions reduction
strategies pursuant to this chapter for any greenhouse gas or source
included in the federal  policy   law  .

   42878.  (a) (1) It is the intent of the Legislature that the state
board design emissions reduction strategies to meet the statewide
emissions limits established pursuant to this section in a manner
that minimizes costs and maximizes benefits for California's economy,
improves and modernizes California's energy infrastructure,
maximizes additional environmental and economic co-benefits for
California, and complements state efforts to improve air quality.
   (2) (A) The state board shall consult broadly with stakeholders in
developing regulations to meet the purposes of this chapter and to
meet the statewide emissions limits in a beneficial and
cost-effective manner.
   (B) By March 1, 2007, the state board shall convene a stakeholder
process to inform the development of regulations and programs to
reduce greenhouse gases in California. The state board shall solicit
information and input from regulated entities on the most efficient,
low-cost, and beneficial ways they can reduce their greenhouse gas
emissions, identify regulatory and legal barriers to implementing
emissions reduction strategies, evaluate state investment strategies
in research and development and applied technologies, and work with
regulated entities to develop draft plans that may be used in
conjunction with regulatory process to reduce greenhouse gas
emissions. The purpose of these plans shall be to reduce regulatory
costs and obligations, where feasible, in achieving greenhouse gas
reductions called for in this chapter.
   (3) It is the intent of the Legislature that the state board
coordinate and consult with other state agencies that regulate
significant emitters of greenhouse gases. It is the further intent of
the Legislature that the Public Utilities Commission and the state
board cooperate in the development of emissions reduction strategies,
including limits on greenhouse gas emissions applied to electricity
and natural gas providers regulated by the Public Utilities
Commission in order to ensure that electricity and natural gas
providers are not required to meet duplicative or inconsistent
requirements, and to ensure that  all electricity providers
meet consistent requirements   consistent requirements
are met  .
   (b) On or before January 1, 2008, the state board shall determine
what the statewide greenhouse gas emissions levels were in 1990, and
adopt a statewide emissions limit that is equivalent to that level to
become effective in 2020. The state board shall evaluate the best
available scientific and economic information on greenhouse gas
emissions to determine the 1990 level. The state board shall not
require individual entities to provide information on their 1990
emissions levels.
   (c) The state board shall establish an advisory committee
consisting of three representatives from communities in the state
with the most significant exposure to air contaminants or localized
air contaminants, or both, including, but not limited to, communities
with minority populations or low-income populations, or both. The
Governor, the President pro Tempore of the Senate, and the Speaker of
the Assembly shall each appoint one of the members of the committee.
This committee shall make recommendations to the state board during
the public process to develop and adopt emissions reduction
strategies.
   (d) Beginning  in  January 1, 2009, the state
board shall adopt greenhouse gas emissions reduction strategies by
regulation. In adopting emissions reduction strategies, the state
board shall do all of the following:
   (1) Design emissions reduction strategies, including distribution
of emissions allowances where appropriate, in a manner that is
equitable, seeks to minimize costs and maximize the total benefits to
California, and encourages early action to reduce greenhouse gas
emissions.
   (2) Ensure that emissions reduction strategies do not
disproportionately burden low- and moderate-income households.
   (3)  (A)    Provide flexible compliance
mechanisms  including, but not limited to, banking,
borrowing, and market mechanisms which provide compliance flexibility
to entities that are required to ensure that their greenhouse gas
emissions do not exceed their emissions allowances.   ,
including providing for conditions on flexible compliance mechanisms,
based on recommendations from the stakeholder process pursuant to
subparagraph (B) or based on the report pursuant to subparagraph (C).
The state board shall ensure that the flexible compliance
mechanisms, in conjunction with the other emissions reduction
strategies adopted by the state board, achieve, at a minimum, the
emissions reductions required by this chapter. 

   (A) 
    (B)    Prior to considering market mechanisms
to reduce greenhouse gas emissions, the state board shall work with
the advisory committee established pursuant to subdivision (c), as
well as with other stakeholders, to identify circumstances under
which the operation of market-based programs to reduce greenhouse gas
emissions may worsen localized air pollution problems, particularly
in communities that are already disproportionately impacted by
pollution from power plants, refineries, commercial trucking routes,
ports, and other major large industrial facilities. The state board
shall consider the potential for direct, indirect  ,  and
cumulative impacts on air quality from these programs.

   (B) 
    (C)    Prior to considering flexible compliance
mechanisms pursuant to this chapter, the state board shall evaluate
and report to the Legislature the types, need, and costs and benefits
of these mechanisms with the purpose of identifying which mechanisms
would be most beneficial in achieving reductions in greenhouse
gases. The report shall recommend which mechanisms should be
considered in regulations to reduce greenhouse gases, and should
prioritize and recommend conditions for mechanisms to protect air
quality, the environment, and public health, and reduce the costs of
implementation. The state board shall work with the stakeholder
community and other appropriate parties and state agencies in this
study.
   (4) Ensure that entities that have voluntarily reduced their
greenhouse gas emissions prior to the implementation of this section
receive appropriate consideration for early voluntary reductions.
   (5) Ensure that the implementation of this section complements and
does not interfere with efforts to achieve and maintain federal and
state health based ambient air quality standards and to address toxic
air contaminant emissions.
   (6) Evaluate the long-term cost-effectiveness of emissions
reduction strategies.
   (7) Evaluate the societal benefits of emissions reduction
strategies, including reductions in other air pollutants,
diversification of energy sources, and other benefits to the economy,
environment, and public health.
   (8) Minimize the administrative burden of implementing and
complying with the emissions reduction strategies.
   (9) Design emissions reduction strategies in a manner that
minimizes displacement of greenhouse gas emissions.
   (10) Where feasible, coordinate with other states, the federal
government, and other countries in the design and implementation of
emissions reduction strategies in order to minimize displacement of
greenhouse gas emissions, maximize the effectiveness of California's
program, and facilitate the development of effective regional,
national, and global programs for reducing emissions of greenhouse
gasses.
   (e) On or before January 1, 2010, the state board shall establish
a series of enforceable interim emissions limits applicable to
sources or categories of sources, or both, to become effective
beginning on January 1, 2012, that progressively reduce emissions
levels to contribute to meeting the 2020 limit. In determining which
sources and categories of sources will be subject to the interim
emissions limits, the state board shall consider factors including,
but not limited to, the following for each source or category of
sources:
   (1) The significance of its contribution to statewide emissions.

   (2) The effectiveness of existing emissions reduction strategies
in reducing greenhouse gas emissions.
   (3) The ease of implementation and cost-effectiveness of further
greenhouse gas emission reductions from these sources.
   (f) On or before January 1, 2015, the state board shall adopt
regulations that establish a statewide emissions limit, to become
effective on January 1, 2030, including a scheduled series of limits
that will progressively reduce emissions of greenhouse gases from the
2020 emissions limit  , until 2030   to the
2030 limit  . The state board shall evaluate the best available
economic and scientific information and existing and projected
technological capabilities for the purpose of adopting these
regulations.
   42878.5.  Any violation of any rule, regulation, order, emission
limitation or other emissions reduction strategy adopted by the state
board pursuant to Sections 42877 and 42878 shall be subject to the
penalty provisions of Article 3 (commencing with Section 42400) of
Chapter 4 of Part 4. The state board shall be responsible for
enforcing these penalty provisions.
   42879.  (a) Nothing in this chapter shall relieve any entity of
compliance with state air and water quality requirements, or other
requirements for protecting public health or the environment.
   (b) Nothing in this chapter shall limit or expand the existing
authority of any district. It is the intent of the Legislature that
the state board consult with the districts in the development of
measures for the reduction of emissions of greenhouse gases that will
affect emissions of criteria pollutants from stationary sources.
   (c) This chapter shall not be interpreted to preclude, prohibit,
or restrict the construction of any new facility or the expansion of
an existing facility subject to regulation under this chapter if all
applicable permitting requirements are met and the facility 
obtains any required allowances under any allowance based system
implemented   is in compliance with regulations adopted
 pursuant to this chapter.   
   42880.  (a) No later than January 1, 2008, the state board shall
complete a study to identify additional substances, contaminants, and
particles suspected to cause or contribute to climate change,
including, but not limited to, tropospheric ozone and ozone
precursors, carbon monoxide, chlorofluorocarbons, and their
substitutes.
   (b) The state board shall update the study annually.  
   42880.5.  (a) The state board may require any additional actions
necessary to reduce greenhouse gas emissions to the levels required
by this chapter. If Chapter 200 of the Statutes of 2002 is not fully
implemented, the state board shall adopt necessary measures to
compensate for the loss of anticipated reductions in greenhouse gases
in the transportation sector.
   (b) The state board may provide information and assistance to
cities, counties, and local agencies to help reduce greenhouse gas
emissions in their jurisdictions. 
   42881.  On or before January 1, 2009, and annually thereafter, the
state board, in consultation with the task force established
pursuant to Section 42883, shall report to the Legislature on the
current level of emissions of greenhouse gases and progress made
toward compliance with the statewide emissions limits on greenhouse
gases established by the state board. The report shall include an
inventory of current emissions of greenhouse gases  and shall
evaluate the adequacy of the regulations adopted to meet the
emissions limits of this chapter  .
   42883.  (a)  The Governor shall establish an interagency task
force, to be convened by the Secretary for Environmental Protection
which shall consist of the following:
   (1) The Secretary of the Resources Agency or his or her designee.

   (2) The Secretary of the Business, Transportation and Housing
Agency or his or her designee.
   (3) The Secretary of the State and Consumer Services Agency or his
or her designee.
   (4) The President of the Public Utilities Commission or his or her
designee.
   (5) The chairperson of the state board or his or her designee.
   (6) The Chairperson of the State Energy Resources Conservation and
Development Commission or his or her designee.
   (7) Representatives of other state agencies or departments that
the Governor determines have an important role in reducing emissions
of greenhouse gases.
   (b) The interagency task force shall establish an advisory
committee consisting of stakeholders including representatives from
industry groups, environmental and environmental justice groups,
experts, and others, to inform its activities.
   (c) The interagency task force, to the extent feasible, shall do
all of the following:
   (1) Coordinate state investments and programs that reduce
emissions of greenhouse gases.
   (2) Promote economic growth by encouraging California industries
to develop and deploy technologies and processes that reduce
greenhouse gas emissions for use both in California and for export.

   (3) Make education and outreach information publicly available
about state programs that provide assistance for sources of
greenhouse gases to meet the requirements of this chapter.
   (4) Ensure that existing state programs support the emissions
limits on greenhouse gases established by the state board pursuant to
this chapter.
   (5) Monitor conditions and coordinate planning and the state's
response to changing climate conditions as they impact state water
supplies, air quality, environmental and public health conditions,
and the state's economy.
   (6) Create and maintain an Internet Web site clearinghouse for
information on the state's policies and emissions reduction
strategies to reduce greenhouse gas emissions, the activities of the
interagency task force, and any other information on the state's
efforts to meet the purposes of this chapter.
  SEC. 3.  Section 25730 of the Public Resources Code is amended to
read:
   25730.  The commission, in consultation with the State Air
Resources Board, the Department of Forestry and Fire Protection, the
Department of Transportation, the State Water Resources Control
Board, the California Integrated Waste Management Board, and other
state agencies with jurisdiction over matters affecting climate
change, shall do both of the following:
   (a) Acquire and develop data and information on global climate
change, and provide state, regional, and local agencies, utilities,
business, industry, and other energy and economic sectors with
information on the costs, technical feasibility, and demonstrated
effectiveness of methods for reducing or mitigating the production of
greenhouse gases from in-state sources, including net reductions
through the management of natural forest reservoirs. The commission,
in consultation with the State Air Resources Board, shall provide a
variety of forums for the exchange of that information among
interested parties, and shall provide other state agencies with
information on cost-effective and technologically feasible methods
that can be used to reduce or mitigate the emissions of greenhouse
gases.
   (b) Update its inventory of emissions of greenhouse gases in order
to supplement the information collected by the State Air Resources
Board pursuant to Section 42877 of the Health and Safety Code, and to
enable the State Air Resources Board to maintain a reasonably
comprehensive inventory of the state's emissions of greenhouse gases.
The inventory shall include information on the greenhouse gas
emissions associated with petroleum products consumed in California
based on, and including, but not limited to, data collected pursuant
to the Petroleum Industry Information Reporting Act of 1980 (Chapter
4.5 (commencing with Section 25350) of Division 15).
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.