BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 726
                                                                  Page 1

          Date of Hearing:  September 10, 2013

                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES
                                Wesley Chesbro, Chair
                    SB 726 (Lara) - As Amended:  September 9, 2013

           SUMMARY  :  Imposes specified conditions on the participation of  
          the California board members of the Western Climate Initiative,  
          Incorporated (WCI, Inc.).  Requires the California Air Resources  
          Board (ARB) to develop a comprehensive strategy to reduce the  
          emissions of short-lived climate pollutants (SLCPs) by January  
          1, 2016.

           EXISTING LAW  :

          1)Imposes, pursuant to SB 1018 (Budget and Fiscal Review  
            Committee), Chapter 39, Statutes of 2012 (Resources Budget  
            Trailer Bill), conditions on the non-governmental entity WCI,  
            Inc., created to assist ARB in the implementation of AB 32  
            (Núñez), Chapter 488, Statutes of 2006.

             a)   Finds and declares that the establishment of WCI, Inc.  
               should be done transparently and should be independently  
               reviewed by the Attorney General for consistency with all  
               applicable laws.

             b)   Establishes the California membership of the board of  
               directors of WCI, Inc. as follows:

               i)     One appointee or his or her designee who shall serve  
                 as an ex officio nonvoting member shall be appointed by  
                 the Senate Rules Committee.

               ii)    One appointee or his or her designee who shall serve  
                 as an ex officio nonvoting member shall be appointed by  
                 the Speaker of the Assembly.

               iii)   The Chairperson of the ARB or her or his designee.

               iv)    The Secretary for Environmental Protection or his or  
                 her designee.

             c)   Requires ARB to provide notice to the JLBC of any funds  
               over $150,000 provided to WCI, Inc. or its derivatives or  
               subcontractors no later than 30 days prior to transfer or  








                                                                  SB 726
                                                                  Page 2

               expenditure of these funds.

             d)   Exempts WCI, Inc. and its ARB and CalEPA appointees from  
               Bagley-Keene when performing their duties.

          2)Bagley-Keene generally requires that all meetings of a state  
            body be open and public. Defines a "state body" to include a  
            board, commission, committee, or similar multimember body on  
            which a member of a body that is a state body serves in his or  
            her official capacity as a representative of that state body  
            and that is supported, in whole or in part, by funds provided  
            by the state body, whether the multimember body is organized  
            and operated by the state body or by a private corporation.

          3)CPRA requires that all records maintained by local and state  
            governmental agencies are open to public inspection unless  
            specifically exempt.  Defines "public records" to include any  
            writing containing information relating to the conduct of the  
            public's business prepared, owned, used, or retained by any  
            state or local agency regardless of physical form or  
            characteristics.

          4)Requires ARB, pursuant to AB 32 (Nunez), Chapter 488, Statutes  
            of 2006, to adopt a statewide greenhouse gas (GHG) emissions  
            limit equivalent to 1990 levels by 2020 and adopt regulations  
            to achieve maximum technologically feasible and cost-effective  
            GHG emission reductions. 

          5)Authorizes ARB to permit the use of market-based compliance  
            mechanisms to comply with GHG reduction regulations, to be  
            adopted by 2011 and operative by 2012, under limited  
            circumstances once specified conditions are met.  

          6)Requires any direct regulation or market-based compliance  
            mechanism to achieve GHG reductions that are real, permanent,  
            quantifiable, verifiable, and enforceable by ARB.

          7)Requires ARB, in adopting regulations, including market-based  
            compliance mechanisms, to design the regulations in a manner  
            that is equitable, seeks to minimize costs and maximize the  
            total benefits to California, and encourages early action to  
            reduce GHG emissions.

           THIS BILL  :  









                                                                  SB 726
                                                                  Page 3

          1)Requires WCI, Inc.'s California board members to participate  
            on the board so long as WCI, Inc. maintains: 

             a)   An open meetings policy consistent with the Bagley-Keene  
               Open Meeting Act (Bagley-Keene).

             b)   A public records policy consistent with the California  
               Public Records Act (CPRA).

             c)   Bylaws that limit its activities to the technical and  
               operational support of the (GHG) emissions reduction  
               programs of California and other jurisdictions, and do not  
               allow WCI, Inc. to have policymaking authority.

          2)Requires the Air Resources Board (ARB) to provide notice to  
            the Joint Legislative Budget Committee (JLBC) for all  
            procurements over $150,000 proposed by WCI, Inc. that are  
            expected to result in a contract no later than 30 days prior  
            to execution of those contracts.

          3)Requires ARB to include information in the Governor's Budget  
            on all proposed expenditures and allocations of money to WCI,  
            Inc.

          4)Requires ARB, no later than January 1, 2016, to develop a  
            comprehensive strategy to reduce the emissions of SLCPs.  In  
            developing the strategy, requires ARB to: 

             a)   Complete an inventory of sources and emissions of SLCPs  
               in the state based on available data. 

             b)   Identify research needed to address data gaps. 

             c)   Identify existing and potential new control measures to  
               reduce emissions from oil and gas production, agriculture,  
               waste, and any other sector identified by ARB. 

             d)   Prioritize the development of new measures for SLCPs  
               that offer cobenefits by reducing other air pollutants that  
               impact community health. 

             e)   Coordinate with other state agencies and districts to  
               develop and implement measures beyond the authority of ARB.  
                









                                                                  SB 726
                                                                  Page 4

          5)Requires ARB to consult with experts in academia, industry,  
            and the community on SLCPs, as specified. 

          6)Requires ARB to hold at least one public workshop during the  
            development of the strategy.  

          7)Requires ARB, no later than December 31, 2014, to propose a  
            regulation to reduce emissions from oil and gas extraction,  
            processing, and storage to ensure near-term reductions of  
            SLCPs.  

          8)Requires ARB, no later than December 31, 2014, to publish its  
            evaluation, including the findings of independent third-party  
            audits, of the opportunities for the largest industrial  
            sources of GHG emissions in the state to improve efficiency  
            and reduce onsite emissions of GHGs.  

          9)Defines SLCP as an agent that has a relatively short lifetime  
            in the atmosphere, from a few days to a few decades, and a  
            warming influence on the climate.  

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, potential costs of up to $75,000 from the Cost of  
          Implementation (COI) Account to comply with the Public Records  
          Act, depending on the number and complexity of actual requests.   
          Minor, if any, costs to comply with the Bagley-Keene Open  
          Meeting Act.  Unknown costs for the development of the SLCP  
          strategy.  

           COMMENTS  :  

           Western Climate Initiative  :  In November 2011, the Western  
          Climate Initiative formed WCI, Inc., a non-profit corporation  
          formed to provide administrative and technical services to  
          support the implementation of state and provincial GHG emissions  
          trading programs.  According to their Web site, WCI, Inc. will  
          develop a compliance tracking system that tracks both allowances  
          and offsets; administer allowance auctions; and conduct market  
          monitoring of allowance auctions and offset certificate trading.  


          The Board of Directors includes officials from the provinces of  
          Quebec and British Columbia, and public officials from the State  
          of California.  









                                                                  SB 726
                                                                  Page 5

          The Western Climate Initiative, not to be confused with WCI,  
          Inc., is a collaboration of independent jurisdictions working  
          together to identify, evaluate, and implement emissions trading  
          policies to tackle climate change at a regional level.  It began  
          in February 2007 when the Governors of Arizona, California, New  
          Mexico, Oregon, and Washington signed an agreement directing  
          their respective states to develop a regional target for  
          reducing GHG emissions, participate in a multi-state registry to  
          track and manage GHG emissions in the region, and develop a  
          market-based program to reach the target.  In the following  
          years, the Governors of Montana and Utah along with the Premiers  
          of British Columbia, Manitoba, Ontario, and Quebec joined the  
          original five states in committing to tackle climate change at a  
          regional level. 

          In July 2010, all 11 jurisdictions collaborated in the  
          development of the design for the WCI Regional Program, which  
          provides a roadmap to inform WCI partner jurisdictions as they  
          implement the cap-and-trade program in their jurisdictions.  All  
          states except for California, withdrew as partners from WCI in  
          2011.  California, along with British Columbia, Ontario, Quebec  
          and Manitoba are continuing to work together, as partners in  
          WCI, to develop and harmonize their emissions trading program  
          policies.  

           Short-Lived Climate Pollutants  .  SLCPs refer to emissions that  
          have a relatively short lifetime in the atmosphere, from a few  
          days to a few decades, and have a warming influence on climate.   
          These mainly include black carbon, methane, tropospheric ozone,  
          and hydrofluorocarbons (HFCs), and are the most significant GHGs  
          after carbon dioxide (CO2).  SLCPs are responsible for a  
          substantial amount of current global warming, with particularly  
          large impacts in urban areas and sensitive regions of the world  
          like the Arctic, and have negative impacts on public health and  
          the environment.  For example, methane has a global warming  
          potential 25 times that of CO2.  HFCs have the highest global  
          warming potential at up to 14,800 times that of CO2.   

          In February 2012, the United National Environment Programme  
          launched the Climate and Clean Air Coalition to Reduce  
          Short-Lived Climate Pollutants (Coalition), which includes the  
          governments of the United States, Bangladesh, Canada, Ghana,  
          Mexico, and Sweden.  According to the Coalition, addressing  
          SLCPs will have multiple, immediate benefits by protecting  
          public health now and slowing the rate of climate change in the  








                                                                  SB 726
                                                                  Page 6

          first half of this century.  

          While ARB has taken some actions that affect SLCP emissions,  
          such as requiring methane capture at solid waste landfills, it  
          has not developed a comprehensive strategy for these emissions.   


          According to the author, this bill is critical to improve public  
          health and "[builds] upon the great work related to AB 32."   
           
           Related Legislation.   SB 527 (Gaines) of the current legislative  
          session repeals WCI, Inc.'s exemption from Bagley-Keene and  
          provides that a contract between the state and WCI, Inc. shall  
          be subject to audit by the State Auditor.  SB 527 has been  
          enrolled to the Governor.

           Prior Legislation.   SB 1018, the 2012 Resources Budget Trailer  
          Bill, among other provisions, exempted WCI, Inc. from  
          Bagley-Keene.

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          Asian Americans Advancing Justice, Los Angeles
          Asian Immigrant Women Advocates
          Asian Neighborhood Design
          Asian Pacific Environmental Network
          Asian Pacific Policy & Planning Council
          Asthma Coalition of Los Angeles County
          Bay Localize
          California Air Resources Board
          California Environmental Justice Alliance
          California Healthy Nail Salon Collaborative
          California Nurses Association
          Catholic Charities, Diocese of Stockton
          Center on Race, Poverty & the Environment
          Clean Power Campaign
          Coalition for Clean Air
          Communities for a Better Environment
          EndOil/Communities for Clean Ports
          Environmental Defense Fund
          Environmental Justice Project
          Environmental Justice Task Force
          Filipino American Coalition for Environmental Solidarity








                                                                  SB 726
                                                                  Page 7

          Forests Forever
          Friends of the Earth
          Global Alliance for Incinerator Alternatives
          Greenpeace
          Green Education, Inc. 
          Hastings Environmental Law Association
          InNative
          Justice in Nigeria Now
          Kebetkache Women Development and Resource Centre
          Local Clean Energy Alliance
          Long Beach Alliance for Children with Asthma
          New York Mayor's Office of Long-Term Planning and Sustainability
          Physicians for Social Responsibility, Los Angeles
          People's Community Organization for Reform and Empowerment
          Rainforest Resource and Development Centre
          Rising Sun Energy Center
          Sacramento Housing Alliance 
          The City Project
          The Greenlining Institute
          The Nature Conservancy
          One individual
           
            Opposition 
           
          California Cattlemen's Association
          California Chamber of Commerce
          California Citrus Mutual 
          California Cotton Growers Association
          California Cotton Ginners Association
          California Farm Bureau Federation
          California Grape and Tree Fruit League 
          California League of Food Processors
          California Manufacturers & Technology Association
          California Nevada Cement Association
          Coalition for Sustainable Cement Manufacturing & Environment
          Nisei Farmers League
          Western Agricultural Processors Association
          Western Plant Health Association
          Western States Petroleum Association

           
          Analysis Prepared by  :  Elizabeth MacMillan / NAT. RES. / (916)  
          319-2092 










                                                                  SB 726
                                                                  Page 8