Senate BillNo. 1

Introduced by Senator Gaines

December 1, 2014

An act to add Section 38576 to the Health and Safety Code, relating to greenhouse gases, and declaring the urgency thereof, to take effect immediately.


SB 1, as introduced, Gaines. California Global Warming Solutions Act of 2006: market-based compliance mechanisms: exemption.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The state board is required to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020, and to adopt rules and regulations in an open, public process to achieve the maximum, technologically feasible, and cost-effective greenhouse gas emissions reductions. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing state board regulations require specified entities to comply with a market-based compliance mechanism beginning January 1, 2013, and require additional specified entities to comply with that market-based compliance mechanism beginning January 1, 2015.

This bill instead would exempt categories of persons or entities that did not have a compliance obligation, as defined, under a market-based compliance mechanism beginning January 1, 2013, from being subject to that market-based compliance mechanism. The bill would require all participating categories of persons or entities to have a compliance obligation beginning January 1, 2025.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1


The Legislature finds and declares all of the

3(a) The landmark California Global Warming Solutions Act of
42006 (Division 25.5 (commencing with Section 38500) of the
5Health and Safety Code) set the goal of reducing greenhouse gas
6emissions to 1990 levels by 2020. The act required the State Air
7Resources Board to develop a scoping plan, including direct
8regulations, performance-based standards, and market-based
9mechanisms, to achieve this level of greenhouse gas emissions

11(b) The State Air Resources Board has implemented a
12market-based compliance mechanism under the California Global
13Warming Solutions Act of 2006 (Division 25.5 (commencing with
14Section 38500) of the Health and Safety Code).

15(c) Beginning January 1, 2015, the State Air Resources Board’s
16market-based compliance mechanism expanded from covering
17large industrial facilities to include carbon-based transportation
18fuels used today by the state’s motorists.

19(d) Including transportation fuels in a market-based compliance
20mechanism requires suppliers of transportation fuels to purchase
21carbon allowances for gasoline and diesel sold and used in the
22state, therefore, adding a carbon price to the cost of transportation

24(e) The State Air Resources Board’s regulatory analysis for the
25market-based compliance mechanism anticipates carbon allowance
26costs ranging from $15 to $75, inclusive, per ton between 2015
27and 2020.

28(f) Including transportation fuels in a market-based compliance
29mechanism links the cost of gasoline and diesel to potentially
30volatile carbon markets placing the state’s motorists, families, and
31small businesses at risk.

32(g) Many areas of the state continue to struggle from
33disproportionately high unemployment rates and the state’s
P3    1hard-working low-income and middle-income families will likely
2suffer most from this sudden addition in addition to potentially
3volatile carbon costs on transportation fuels.


SEC. 2.  

Section 38576 is added to the Health and Safety Code,
5to read:



(a) For purposes of this section, “compliance
7obligation” means the quantity of greenhouse gas emissions for
8which a person or entity is required to submit greenhouse gas
9emissions allowances or offsets to the state board pursuant to a
10market-based compliance mechanism.

11(b) (1) If the state board adopts a market-based compliance
12mechanism pursuant to this part, only those categories of persons
13or entities that had a compliance obligation beginning January 1,
142013, shall have a compliance obligation on the effective date of
15the act adding this section, until December 31, 2024.

16(2) Beginning January 1, 2025, all categories of persons or
17entities participating in a market-based compliance mechanism
18shall have a compliance obligation.


SEC. 3.  

This act is an urgency statute necessary for the
20immediate preservation of the public peace, health, or safety within
21the meaning of Article IV of the Constitution and shall go into
22immediate effect. The facts constituting the necessity are:

23To protect California’s struggling economy from the harmful
24effect of higher fuel costs, it is necessary for this act to take effect