BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                       AB 1071|
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                                   THIRD READING 

          Bill No:  AB 1071
          Author:   Atkins (D) and Eduardo Garcia (D)
          AmendedAmended:8/31/15 in Senate
          Vote:     21  

           AYES:  Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley

           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza
           NOES:  Nielsen

           ASSEMBLY FLOOR:  79-0, 6/1/15 - See last page for vote

           SUBJECT:   Supplemental environmental projects

          SOURCE:    Author

          DIGEST:   This bill requires each board, department, and office  
          (BDOs) within the California Environmental Protection Agency  
          (CalEPA) that has an enforcement authority to establish a policy  
          on the use of supplemental environmental projects (SEPs) that  
          benefit disadvantaged communities which may be voluntarily  
          undertaken in a settlement action in order to offset a civil  

          Existing law:  

          1)Defines "environmental justice" as "the fair treatment of  
            people of all races, cultures, and incomes with respect to the  
            development, adoption, implementation, and enforcement of all  
            environmental laws, regulations, and policies."  (Government  


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            Code §65040.12)

          2)Requires the Secretary of CalEPA to convene a Working Group on  
            Environmental Justice to assist the Agency in developing an  
            agencywide strategy for identifying gaps in existing programs,  
            policy or activities that may impede achievement of  
            environmental justice, as specified.  (Public Resources Code  
            (PRC) §71113)

          3)Requires each BDO within the CalEPA, in coordination with the  
            Secretary and the Director of the Office of Planning and  
            Research (OPR), to review programs, policies, and activities  
            and identify and address any gaps that may impede the  
            achievement of environmental justice.  (PRC §71114.1)

          4)Requires the CalEPA to identify "disadvantaged communities"  
            based on geographic, socioeconomic, public health, and  
            environmental hazard criteria.  (Health and Safety Code  

          5)Provides that under compliance with the provisions of the  
            Federal Water Pollution Control Act as amended in 1972 (Water  
            Code §13385):

             a)   Defines a "supplemental environmental project" as "an  
               environmentally beneficial project that a person agrees to  
               undertake, with the approval of the regional water board,  
               that would not be undertaken in the absence of an  
               enforcement action."

             b)   Allows the state or regional water board to direct a  
               portion of the penalty amount of a penalty to be expended  
               on an SEP in accordance with the enforcement policy of the  
               state board.

          1)Allows a Regional Water Quality Control Board (regional board)  
            to allow a violator, pursuant to the Storm Water Enforcement  
            Act of 1998, to reduce penalties by up to 50% by undertaking a  
            SEP in accordance with the enforcement policy of the State  
            Water Resources Control Board (SWRCB) and any applicable  
            guidance document.  (WAT §13399.35)


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          This bill:  

          1)States the intent of the Legislature that all BDOs within  
            CalEPA that have an enforcement authority develop a policy on  
            SEPs with a focus on benefiting environmental justice  


             a)   "Agency" as the CalEPA.

             b)   "Disadvantaged community" as a community identified  
               pursuant to Section 39711 of the Health and Safety Code.

             c)   A "supplemental environmental project" as an  
               environmentally beneficial project that someone subject to  
               an enforcement action voluntarily agrees to in a settlement  
               to offset some of a portion of a civil penalty.

          1)Requires each BDO within the CalEPA that has an enforcement  
            authority to establish a policy on SEPs that benefits  
            disadvantaged communities.

          2)Requires that the SEP policy include, at minimum:

             a)   A public solicitation process for potential SEPs from  
               disadvantaged communities.

             b)   An allowance that the SEP may be up to 50% of the  
               enforcement action.

             c)   An annual list of SEPs that may be selected from to  
               settle a portion of the enforcement action.

             d)   A consideration of the relationship between the location  
               of the violation and location of the proposed SEP.

          1)Requires the Secretary of CalEPA to compile a list of SEPs and  
            post it on the Agency's Internet Web site.



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          1) Supplemental Environmental Policies overview.  As of 2007, 28  
             states and the District of Columbia had formal policies in  
             the form of legislation, executive agency regulation or  
             guidelines on SEPs.  In a report from the same year, the  
             Public Law Research Institute noted that SEPs represent a  
             "real and practicable opportunity to provide significant  
             benefits to all the stakeholders" including direct benefits  
             to the environment.  

             They also note, however, that one must be aware of the  
             potential pitfalls of using SEPs over direct penalties.   
             These might include insufficient transparency and open  
             process leading to inequities for both violators and affected  
             communities and a perceived softening of enforcement  
             penalties.  In order to make the best use of SEPs, it follows  
             that clear guidelines and regular monitoring, evaluating, and  
             reporting on SEPs programs are essential.

             In 2015, the United States Environmental Protection Agency  
             (U.S. EPA) released an update to the 1998 U.S. EPA  
             Supplemental Environmental Projects Policy.  The federal  
             agency notes in the update that they are in strong support of  
             SEPs to "secure significant environmental and public health  
             benefits beyond those achieved by compliance, and to help  
             address the needs of communities impacted by violations of  
             environmental laws."

          2) SEP guidance in California.  In 2003, CalEPA released  
             recommended guidance on SEPs for its BDOs in settlements of  
             environmental enforcement cases.  Qualifications to list a  
             project as an SEP include ensuring that the project meets the  
             specified definition and implementation criteria, has an  
             appropriate cost in relation to fines paid, fits within a  
             specified category, and that all legal guidelines, including  
             nexus, are satisfied.  

             Specifically, SEPs must improve, protect, or reduce risks to  
             public health or the environment at large and allow the  
             enforcing agency to help shape the scope of the project prior  
             to approval, while remaining a voluntary action that a  
             defendant/respondent is not legally required to perform.   
             Furthermore, all projects should have an adequate "nexus,"  


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             defined as "the relationship between the violation and the  
             proposed project [which] exists if the project remediates or  
             reduces the probably overall environmental or public health  
             impacts or risks to which the violation at issue contributes,  
             or if the project is designed to reduce the likelihood that  
             similar violations will occur in the future."

             Since the release of these guidelines, various CalEPA BDOs  
             have adopted their own SEP policies.  In 2009, for example,  
             the SWRCB developed a Policy on Supplemental Environmental  
             Projects.  In accordance with CalEPA's guidance document,  
             SEPs may be performed by either the discharger or  
             third-parties paid by the discharger.  Each regional water  
             board is allowed to maintain a list of pre-approved SEPs for  
             consideration and must post an annual list of completed and  
             in-progress SEPs from the previous year.  The Air Resources  
             Board (ARB) also has a SEPs policy posted on its Internet Web  
             site as reviewed April 2015, and the Department of Toxic  
             Substances Control (DTSC) recently released a draft policy.

          3) SEPs and disadvantaged communities.  In 2014, the Central  
             Valley Regional Water Board engaged in a partnership with the  
             Rose Foundation, a grantmaking public charity based in  
             Oakland, to administer SEPs to Disadvantaged Communities  
             projects.  According to the regional board's resolution  
             (R5-2014-0040), "Many disadvantaged communities in the  
             Central Valley would benefit from SEPs, yet it is difficult  
             for dischargers that do not have day-to-day relationships  
             with these communities to create SEPs that are responsive to  
             their needs.  The Rose Foundation, by virtue of its  
             grantmaking experience, is uniquely situated to implement a  
             program that would allow SEP monies to penetrate deeply into  
             disadvantaged communities while supporting the water-quality  
             related SEP criteria contained in the Water Quality  
             Enforcement Policy and the SEP Policy."  

          Purpose of bill.  According to the author, "Many communities  
          across California are located in areas disproportionately  
          subjected to multiple sources of pollution.  As a result, these  
          communities are more vulnerable to and impacted by the harmful  


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          effects of pollution than others.  These environmentally  
          impacted communities, also known as environmental justice  
          communities, need resources to appropriately address  
          environmental health impacts and to implement community led  
          solutions.  Unfortunately, there is no strong mechanism to  
          ensure communities disproportionally impacted receive any  
          improvements after environmental damage has occurred.   
          Furthermore, when an environmental violation occurs, there is no  
          mechanism to ensure that the communities who are directly  
          impacted by the violation are able to receive any benefits.  

          "One way that environmental justice communities might see direct  
          environmental or public health benefits in their neighborhoods  
          is through the creation of an Environmental Justice Supplemental  
          Environmental Projects policy.

          "AB 1071 will ensure that all CalEPA boards, departments, and  
          offices establish a SEP policy specifically for environmental  
          justice communities."

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee:

           Unknown lost revenues, likely in the millions of dollars, to  
            various special funds as a result of penalty reductions as a  
            result of SEPs.

           Minor and absorbable costs to various special funds for the  
            BDOs to oversee SEPs.

          SUPPORT:   (Verified8/28/15)

          Asian Pacific Environmental Network


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          California Environmental Justice Alliance

          California Environmental Justice Coalition

          Center for Community Action and Environmental Justice

          Center on Race, Poverty & the Environment

          Central California Environmental Justice Network

          City Heights Community Development Corporation

          Clergy and Laity United for Economic Justice 

          Comite Civico Del Valle, Inc.

          Communities for a Better Environment


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          Environmental Health Coalition

          Environmental Justice Coalition for Water

          Food Empowerment Project

          Green Action for Health and Environmental Justice

          Inland Congregations United for Change 

          Los Angeles Waterkeeper

          Maximizing Access to Advance our Communities 

          People Organizing to Demand Environmental and Economic Rights 


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          San Diego - Imperial Counties Labor Council 

          San Joaquin Valley Latino Environmental Advancement & Policy  

          Sierra Club California

          Warehouse Worker Resource Center

          OPPOSITION:   (Verified8/28/15)

          None received

          ARGUMENTS IN SUPPORT: According to supporters, "AB 1071 will  
          provide a mechanism to bring environmentally beneficial projects  
          directly into low-income communities disproportionately burdened  
          by pollution.  Currently, there is no way to ensure that when a  
          violation occurs, the communities most impacted are able to  
          receive direct benefits or repair the harm done from pollution.

          "The California Environmental Protection Agency (Cal EPA) has a  
          policy that allows agencies to authorize environmentally  
          beneficial projects as part of enforcement actions or  
          settlements.  These projects are called 'Supplemental  
          Environmental Projects' (SEPS).  The projects are a successful  


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          means of ensuring environmentally beneficial projects are  
          implemented when a violation occurs.

          "Unfortunately, the existing policy is not set up to provide  
          benefits directly to disadvantaged communities, and there is  
          very little public information about how to engage the program.   
          Additionally, the Boards, Departments, and Offices within Cal  
          EPA underutilize this policy, thus limiting its effectiveness."

          ASSEMBLY FLOOR:  79-0, 6/1/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,  
            Daly, Dodd, Eggman, Frazier, Gallagher, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Atkins
          NO VOTE RECORDED:  Beth Gaines

          Prepared by:Laurie Harris / E.Q. / (916) 651-4108
          8/31/15 17:13:57

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