BILL ANALYSIS
AB 376
Page 1
Date of Hearing: April 27, 2009
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Nancy Skinner, Chair
AB 376 (Nava) - As Amended: April 13, 2009
SUBJECT : Voluntary greenhouse gas emission offsets
SUMMARY : Requires a person selling a greenhouse gas (GHG)
emission offset for voluntary purposes to disclose specified
information in advertising materials and ensure the offset has a
unique serial number and is tracked by a registry. Provides for
civil penalties up to $10,000 for each violation.
EXISTING LAW :
1)Requires the Air Resources Board (ARB) to adopt a statewide
GHG emissions limit equivalent to 1990 levels by 2020 and
adopt regulations to achieve maximum technologically feasible
and cost-effective GHG emission reductions. Requires ARB to
adopt methodologies for the quantification of voluntary GHG
emission reductions.
2)Generally prohibits the use of false or misleading statements
in advertising, including any untruthful, deceptive, or
misleading environmental marketing claim. Limits civil
penalties to those who prove injury or loss of property.
Provides an affirmative defense when an environmental
marketing claim conforms to voluntary guidelines published by
the Federal Trade Commission (FTC).
THIS BILL :
1)Makes findings regarding voluntary GHG emission offsets.
2)Defines key terms, including defining "voluntary offset" as a
product claiming to represent a reduction in GHG emissions not
required by any law or regulation.
3)Requires any person selling a voluntary offset in the state to
disclose in any marketing materials all of the following:
a) The geographic location of the project used to
create the voluntary offset, including the state or
country of origin.
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b) The date or range of dates that the emission
reduction represented by the voluntary offset occurred or
will occur.
c) A brief description of the project used to create
the voluntary offset.
d) Limitations on the permanence of the emission
reductions that correspond to the voluntary offset,
including the potential for unexpected reversal of an
emission reduction, and the basis of claims
e) The name of the certification body or governmental
entity protocol under which the voluntary offset was
verified, although use of a recognized protocol for
verification is not required.
f) The name of the protocol under which the project's
emissions reductions were quantified, although use of a
recognized protocol for quantification is not required.
g) The name of the registry where the voluntary offset
is registered.
h) Information on any significant environmental or
public health impacts associated with the creation and
maintenance of the voluntary offset project, including,
but not limited to, impacts on species, habitat,
ecosystems, land use, air quality, and water supply and
quality.
4)Requires, beginning January 1, 2011, any person selling a
voluntary offset in the state to ensure the offset has a
unique serial number and is registered with and tracked by a
registry.
5)Prohibits selling the same offset more than once.
6)Prohibits selling, advertising or labeling offsets in
violation of the bill, or willfully or knowingly misinforming
or misleading the public
7)Provides that any person who violates any provision of the
bill is liable for a civil penalty up to $10,000 for each
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violation.
FISCAL EFFECT : Unknown
COMMENTS :
1)History of environmental advertising standards. California
previously has enacted environmental advertising standards for
consumer products in general. To address manufacturers
promoting products as "ozone friendly" and "biodegradable"
when, in fact, such claims were misleading, if not false, the
Legislature enacted AB 3994 (Sher), Chapter 1413, Statues of
1990, to provide for state definitions of environmental terms
and procedures for verifying claims made to the public.
A group of industry and advertising trade associations sued
the state, claiming AB 3994 violated the right of free speech
of advertisers. A 1992 ruling by the 9th U.S. District Court
of Appeal upheld AB 3994, but struck down the state law term
"conveniently recyclable" as too vague. Attempts to clarify
the definition through legislation failed in 1991-1995.
Meanwhile, the FTC released voluntary guidelines on the use of
environmental terms in advertising. The FTC guidelines do not
have the force of law. In response to manufacturers'
complaints about interstate commerce problems posed by
California-specific labeling standards, enforcement of AB 3994
effectively was preempted in 1995 by SB 426 (Leslie), Chapter
642, Statutes of 1995, which provided an affirmative defense
when an environmental marketing claim conforms to the FTC
guidelines.
2)New product, new claims. The carbon offset market is fairly
new and growing substantially. Individuals and corporations
purchase carbon offsets to compensate for the GHG emissions
they create or contribute to. However, there are no
guidelines, regulations, or oversight to ensure that
advertising claims for offsets are valid. The FTC has not
updated its environmental advertising guidelines for over 10
years.
As more people purchase these reductions to compensate for
their carbon footprint, questions arise as to what is being
done to ensure that they are purchasing genuine carbon
offsets. There is growing concern about the validity of
emission reductions from projects sold and the potential for
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fraud. According to the author, "by setting minimum
disclosure requirements and requiring registration of offsets,
this bill will add credibility to the market and provide
offset consumers with information that will enable them to
differentiate between offsets based on the types of project,
the location of the project, the vintage of the offset, and
the protocol they were approved under."
3)Will this bills's certification provisions provide assurance
to consumers? This bill establishes extensive and potentially
unwieldy disclosure requirements to describe offset projects
for advertising purposes, but lacks a practical mechanism to
ensure that offset sales consistently meet consumer-protection
standards. The bill provides for civil penalties if the
Attorney General or a district attorney can prove a violation
after the fact, but the bill lacks a transparent or public
process to verify the legitimacy of offsets in the first
place. There is no provision for a public agency to set
standards or provide oversight and enforcement. Under the
bill, the "certification bodies" and "registries" responsible
for adopting protocols, tracking and validating offsets could
be private, for profit organizations. This could permit
industry-funded organizations created to sanction deceptive
claims. The author and the committee may wish to consider
whether offsets should be validated directly by a public
agency, such as ARB, or by a recognized non-profit
organization, such as the Climate Action Registry, or another
registry organization that uses protocols recognized by ARB.
4)Does an offset really represent a GHG reduction if it isn't
"permanent?" Among its provisions, AB 32 requires GHG
reductions used for compliance purposes to be "real,
permanent, quantifiable, verifiable, and enforceable by
(ARB)." This bill sets new and somewhat inconsistent
standards for offsets, including omitting the word "permanent"
and requiring disclosure in marketing materials of
"limitations on the permanence of the emission reductions that
correspond to the voluntary offset, including the potential
for unexpected reversal of an emission reduction." Perhaps
offsets sold in the voluntary market shouldn't be held to the
same standard as compliance offsets, but if they aren't
required to represent permanent reductions, their value is
questionable.
5)Double referral. This bill has been double referred to the
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Assembly Judiciary Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Environmental Defense Fund
Nature Conservancy
AB 376
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Opposition
None on file
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092