BILL ANALYSIS
SB 295
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: SB 295
AUTHOR: Dutton
AMENDED: May 13, 2009
FISCAL: Yes HEARING DATE: May 20, 2009
URGENCY: Yes CONSULTANT: Randy Pestor
SUBJECT : CLIMATE CHANGE
SUMMARY :
Existing law , under the California Global Warming Solutions
Act of 2006 (CGWSA):
1) Requires the California Air Resources Board (ARB) to
determine the 1990 statewide greenhouse gas (GHG) emissions
level and approve a statewide GHG emissions limit that is
equivalent to that level, to be achieved by 2020. ARB must
adopt regulations for reporting and verification of GHG
emissions, monitoring and compliance with the program, and
achieving GHG emission reductions from sources or
categories of sources by January 1, 2011 to be operative on
January 1, 2012, subject to certain requirements. (Health
and Safety Code 38500 et seq.).
2) Requires ARB to prepare and approve a scoping plan for
achieving the maximum technologically feasible and
cost-effective reductions in GHG emissions from sources or
categories of sources of GHGs by 2020. ARB must evaluate
the total potential costs and total potential economic and
noneconomic benefits of the plan for reducing GHGs to the
state's economy, and public health, using the best economic
models, emission estimation techniques, and other
scientific methods. The plan must be updated at least once
every five years. (38561).
3) Authorizes the ARB to adopt GHG emission limits or emission
reduction measures prior to January 1, 2011, imposing those
limits or measures prior to January 1, 2012, or providing
early reduction credit where appropriate. (38563).
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4) Authorizes the Governor to adjust applicable deadlines for
regulations to the earliest feasible date after that
deadline in the event of extraordinary circumstances,
catastrophic events, or threat of significant harm. Within
10 days of invoking the adjustment period, the Governor
must provide written notification to the Legislature.
(38599).
This bill :
1) Requires ARB to complete an additional peer-reviewed study
to reevaluate the evaluations made regarding the potential
economic and noneconomic benefits of the plan for reducing
GHGs, considering any peer-reviewed comments on the
original evaluations. The additional study must include
certain matters (e.g., estimated annual actual costs of
recommendations and not averaged costs, estimates of
overall costs and savings and the cost-effectiveness of
identified reductions in GHG emissions, estimates of
capital investment timing, sensitivity of results to
changes in key inputs, small business impact, current state
of California economy).
2) Requires ARB to provide the study to the Legislature by
October 1, 2009.
3) Requires ARB to report to the Legislature by November 1,
2009, on whether the analysis has led or will lead to
scoping plan changes, including changes in the mix of plan
measures. ARB must also include recommended timeline
changes if the analysis makes timeline changes advisable or
necessary. This provision does not authorize ARB to adjust
any timelines.
4) Requires the Legislative Analyst's Office (LAO) to review
the ARB study and report to the Legislature by December 1,
2009, on: a) a critique of the adequacy of the ARB
economic impact analysis supporting the scoping plan
measures and reasonableness of conclusions, b) scoping
measures lacking supporting economic analysis, and c) an
evaluation whether ARB has complied with the above ARB
requirements. The LAO may provide any analysis or
information in addition to these matters, and ARB must
provide the LAO information necessary to complete the
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review in the timeframe provided.
COMMENTS :
1) Purpose of Bill . According to the author, "It is in the
best interest of both the economy and the environment to
implement AB 32 in the most cost-effective way possible.
Without a sound analysis, the Legislature and other policy
makers cannot ensure that AB 32 will be implemented in a
cost-effective manner. [ARB] has already agreed to re-do
its economic analysis this year; this bill would simply
ensure that the analysis is thorough, peer reviewed and
evaluated by the LAO."
In response to these concerns, SB 295 requires an additional
ARB peer-reviewed study followed by LAO review of the
study.
The Committee heard the April 13, 2009, version of this bill
April 20, 2009, which among other things prohibited ARB
from beginning to develop regulations to achieve GHG
emission reductions until certain ARB studies are complete
and the state unemployment rate is below 5.8% for 3
consecutive months. The bill was subsequently amended to
strike the provision prohibiting development of
regulations, while revising the ARB study requirements and
LAO review procedures, and requiring ARB to include
recommended changes to the CGWSA timelines if the analysis
makes the changes advisable or necessary (ARB cannot adjust
any timelines pursuant to this provision).
2) Addressing climate change . Climate change refers to
long-term changes in temperature, precipitation, wind
patterns and other parts of earth's climate system. The
Intergovernmental Panel on Climate Change (IPCC) defines
climate change as "any change in climate over time, whether
due to natural variability or as a result of human
activity." For some time, scientific research increasingly
attributes these climate changes to GHGs, especially those
generated from use of fossil fuels. Scientists indicate
that the earth is warming faster than any time in the
previous 1,000 years, and the 10 warmest years of the last
century occurred in the last 15 years. A rise in
temperature accompanied by climate change affects how
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organisms live, adapt, and survive.
AB 4420 (Sher) Chapter 1506, Statutes of 1988, required the
State Energy Resources Conservation and Development
Commission (CEC), in consultation with certain entities, to
conduct a study and report to the Legislature and the
Governor by June 1, 1990, on how climate change may affect
the state's energy supply and demand, economy, environment,
agriculture, and water supplies. The study also required
recommendations for avoiding, reducing, and addressing
related impacts - and required the CEC to coordinate the
study and any research with federal, state, academic, and
industry research projects.
AB 4420 led to two reports: "The Impacts of Global Warming on
California" (1989) and "Climate Change Potential Impacts
and Policy Recommendations" (1991). According to the
state's Climate Action Team, "The political discussion
generated from these reports helped pave the way for
implementation of policies to address climate change."
SB 1771 (Sher) Chapter 1018, Statutes of 2000, required the
Secretary of the Resources Agency to establish the
California Climate Change Registry. SB 1771 also required
the CEC, in consultation with certain entities, to update
the GHG emissions inventory and to develop data and
information on climate change - and to provide certain
entities and interest groups with information on the costs,
technical feasibility, and demonstrated effectiveness of
methods for reducing or mitigating production of GHGs from
in-state sources. SB 1771 required the inventory to be
updated every five years. SB 527 (Sher) Chapter 769,
Statutes of 2001, revised certain California Climate Change
Registry responsibilities.
Governor Schwarzenegger issued Executive Order (EO) S-3-05
June 1, 2005, to establish emission reduction targets for
the state, require the Secretary for Environmental
Protection to coordinate oversight efforts with certain
other entities to meet the targets, and set various
reporting requirements.
AB 32 (Nunez/Pavley) Chapter 488, Statutes of 2006, requires
the ARB to determine the 1990 statewide greenhouse gas
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(GHG) emissions level and approve a statewide GHG emissions
limit that is equivalent to that level, to be achieved by
2020 - and sets related requirements (see Summary above).
In implementing AB 32, ARB adopted the first list of early
action measures June 21, 2007, and adopted an augmented
list of early action measures October 25, 2007. Mandatory
reporting regulations for GHGs were adopted and the 2020
GHG emissions target were set December 6, 2007. The
Scoping Plan was adopted December 12, 2008, and ARB
rulemaking continues in 2009 and 2010. First early action
measures take effect January 1, 2010, major GHG reduction
rulemaking concludes January 1, 2011, with rules taking
effect January 1, 2012.
3) Scoping Plan analysis . Assemblymembers Niello and Villines
have raised concerns regarding the AB 32 Scoping Plan and
economic analysis of that plan to the LAO. In a March 9,
2009, report to the Assembly Natural Resources Committee,
the LAO outlined concerns regarding: a) inconsistent and
incomplete evaluation of costs and savings, b) a lack of
analytical rigor in macroeconomic modeling, c) a limited
role of economic analysis in scoping plan development, and
d) failure to lay out an "investment pathway."
The LAO recommended: a) legislative oversight "to ensure that
AB 32 is implemented cost-effectively and efficiently, and
that the gaps and weaknesses in the economic analysis that
we have identified are addressed;" b) ARB take advantage of
its economic analysis and modeling "to inform the make-up
of the scoping plan in terms of the mix of measures and
relative importance of particular measures;" and c) the
Legislature "provide policy direction on the use of
market-based compliance mechanisms."
4) ARB response to SB 295 . According to the ARB, LAO and
formal peer review process critiques "raised a number of
legitimate issues in terms of alternative approaches that
could have been taken in terms of both the assumptions and
analysis. Some of the criticism, especially from LAO, also
highlighted to us that we had not done an adequate job in
explaining our assumptions and approach to the work we did.
We do not claim that the assumptions we used were the only
reasonable assumptions possible - no one conducting
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economic analysis should ever make such a claim - but we do
believe that our assumptions provided a solid basis for
analyzing the long-term macroeconomic effects of
implementing the Scoping Plan."
ARB also notes that it "stands behind its economic analysis
work done on economic analysis of the Scoping Plan which
provided the Board the information it needed on the impacts
of the broad roadmap for implementing AB 32. ARB faced a
legislative deadline of January 1, 2009, to adopt the Plan.
Had the Board believed it lacked the basis to adopt the
Plan, ARB would have asked for more time. However, ARB
determined that California was better served by adopting
the Plan and committing to develop more complete
information and thorough analysis during the Plan's
implementation."
ARB cites its additional efforts regarding modeling tools,
small business impacts, sensitivity analysis, and economic
analysis related to individual regulations and
nonregulatory measures, and notes that it is "closely
monitoring the scientific basis for climate action and
finds good reason not to delay but to accelerate the
process of developing and implementing GHG control
measures. ARB's Research Division is tasked with tracking
scientific investigations and literature on climate change
worldwide, and the most recent findings indicate the need
for even greater, not less, expedience and leadership in
reducing GHGs. Many of the anthropogenic compounds
contributing to global warming are now well understood to
persist for decades or centuries in the atmosphere. The
globally gathered evidence of elevated temperatures and
consequent effects on ecosystems and the biosphere
continues to increase."
5) Costs of inaction . While SB 295 no longer prohibits
development of CGWSA regulations until certain conditions
are met, this bill does require ARB to include recommended
changes to the CGWSA timelines if the analysis makes the
changes advisable or necessary.
Delays in acting on climate change can also result in costs.
A recent Climate Action Team (CAT) draft assessment on
climate change provides analyses on climate change impacts
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relating to various matters, such as warming trends,
precipitation, sea-level rise, agriculture, forestry, water
resources, and public health.
For example, regarding sea level rise the report notes that
"Sea level measured over several decades at California tide
gage stations has risen at a rate of about 17 cm (7 inches)
per century. The sea-level rise projections in the 2008
Impacts Assessment indicate that the rate and total
sea-level rise in future decades may increase substantially
above the recent historical rates. The 2008 estimates
represent a significant departure from those in the 2006
CAT report." According to the report, "By 2050, sea-level
rise could range from 30 to 45 cm (11 to 18 inches) higher
than in 2000, and by 2100, sea-level rise could be 60 to
140 cm (23 to 55 inches) higher than in 2000. As sea level
rises, there will be an increased rate of extreme high
sealevel events, which can occur when high tides coincide
with winter storms and their associated high wind wave and
beach run-up conditions. The draft CAT report notes that
"analysis reveals that $100 billion of property and 475,000
people are located in Bay and open coast areas vulnerable
to inundation in 2099. However, risk is not evenly
distributed among the counties in the San Francisco Bay,
with San Mateo and Alameda counties having 40 percent of
assets at risk, the greatest amount in the Bay Area.
Marin, Santa Clara, and San Francisco counties are also
exposed to a high degree of risk; exposure to risk in these
counties is higher than in all other counties along the
Pacific coast, with the exception of Orange County.
Exposure to risk in Sonoma and Napa counties is relatively
modest. While all sectors are vulnerable to the impacts
from sea-level rise, 70 percent of all assets at risk are
residential, followed by the commercial sector with 20
percent. In addition to buildings and their contents, a
wide range of other critical infrastructure, such as roads,
hospitals, schools, emergency facilities, water and
wastewater treatment plants, and others will also be at
increased risk of flooding. Continued development in
vulnerable areas would put additional assets and people at
risk."
If the Committee believes additional ARB analyses and LAO
review is necessary, as required by SB 295, and ARB
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subsequently determines that any timelines should be
extended or the SB 295 analysis results in any delays, then
this bill should also ensure that the 2020 deadline for
achieving the GHG emissions limit is not affected.
6) Support and opposition concerns . According to the author
and sponsor, "California lawmakers drafted AB 32 with good
intentions, attempting to lower [GHG] emissions. In
today's poor economic condition, the legislation will exact
damaging unintended consequences to the state's vulnerable
business community." Other supporters generally cite
current economic conditions and the need for additional
economic analysis of AB 32 measures. According to San
Bernardino County, "With the current recession deepening
and many of the engines and people of our economy
struggling, it is the Board's position that now is not the
time to force new regulations that can exacerbate the
problems of a recessionary period through higher compliance
costs." CalChamber believes additional economic analysis
should guide ARB, but does not want delays in
implementation of AB 32.
In opposing SB 295, the Planning and Conservation League (PCL)
notes that "California's plan to reduce [GHG] emissions
pursuant to AB 32 is our most promising engine to
strengthen our economy by reducing energy consumption and
generating California-based jobs." PCL cites an ARB
economic analysis showing "that AB 32 will boost the
state's economy by $27 billion and create 100,000 new jobs"
and a UC Berkeley economic analysis showing "AB 32 will
increase the Gross State Product (GSP) by about $76
billion, increase household incomes by up to $48 billion,
and create as many as 403,000 new energy efficiency and
climate driven jobs." The California Teachers Association
notes the need to "finally address this serious problem
without further delay," and cites an "up-tick in the
economy with new 'green jobs.'"
7) Clarification needed . A definition is needed for the term
"sector" (referenced on page 2, line 10). This issue was
also raised with regard to SB 721 (Steinberg) and a
definition in SB 295 should mirror the term in SB 721 (See
SB 721 71407(d)(2) (page 11, lines 12 to 16; April 23,
2009, version) or reference sectors specified in the
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Scoping Plan Economic Analysis Supplement.
SB 295 requires certain analysis for "at least five measures
in the scoping plan . . . to which the scoping plan
assigns the highest target amount of [GHG] reductions."
This provision should specify the five measures to be
analyzed under this provision even if more measures were to
be analyzed.
SOURCE : California Black Chamber of Commerce
Note: Some support and opposition based on April 13, 2009
version.
SUPPORT :
ACE Clearwater Enterprises
Alvia Corporation
Amcor PET Packaging
American Chemistry Council
American Coalition for Clean Coal Electricity
American GI Forum of California
BMB Construction Properties
Baxter Healthcare Corporation
Bell Gardens Chamber of Commerce
Building Owners and Managers Association of California
Bishop-Wisecarver Corporation
Cal-Tax
California Automotive Wholesalers Association
California Business Properties Association
California Chamber of Commerce
California Construction and Industrial Materials Association
California Forestry Association
California Hispanic Chambers of Commerce
California homebuilders represented by the California Building
Industry Association (CBIA)
California Independent Petroleum Association
California League of Food Processors
California Manufacturers & Technology Association
California Metals Coalition
California Poultry Federation
California Retailers Association
California Small Business Alliance
California Small Business Association
California Taxpayers' Association
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California Trucking Association
Carson Black Chamber of Commerce
Caterpillar Inc.
Chemical Industry Council of California
Dairy Institute of California
Dart Container Corporation
Delta Computer Solutions, Inc.
Delta Construction Co., Inc.
Dow Chemical Company
Duran HCP Inc.
Fontana City Council
Fountain Valley
Glenn County Board of Supervisors
Greater Corona Hispanic Chamber of Commerce
Greater Los Angeles African American Chamber of Commerce
Greater Riverside Chambers of Commerce
Hispanic Chamber of Commerce Silicon Valley
Homel Foods Corporation
Industrial Association of Contra Costa
Industrial Environmental Association
International Council of Shopping Centers
Inland Empire Division of the League of California Cities
Johnson Controls
Kern County Black Chamber of Commerce
Laguna Hills
Lake Arrowhead Communities Chamber of Commerce
Lake Forest
Lockheed Martin
Manufacturers Council of the Central Valley
MKP Environmental, LLC
Metal Finishing Association of Northern California
Metal Finishing Association of Southern California
Milpitas Chamber of Commerce
Murrieta
Napa Chamber of Commerce
National Association of Industrial and Office Properties
National Federation of Independent Business
Orange County Board of Supervisors
Orange County Division, League of California Cities
Praxair Inc.
PPG Industries, Inc.
Printing Industries of California
Rancho Cucamonga
Regional Black Chamber of Commerce - Southern California
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Regional Council of Rural Counties
River Point Insurance Agency
Sacramento Black Chamber of Commerce
San Bernardino County Board of Supervisors
San Mateo County Economic Development Association
Santa Barbara County Taxpayers Association
Santa Barbara Technology and Industry Association
Santa Rosa Chamber of Commerce
Shasta County Board of Supervisors
Silicon Valley Black Chamber of Commerce
Simi Valley Chamber of Commerce
Solar Turbines
Team Success Incorporated
Town of Apple Valley
Triche Entertainment
Tustin City Council
USS-POSCO Industries
Vulcan Materials Company
Warren Consulting Group
Weatherford
Wellness Express Healthcare, Inc.
Western State Petroleum Association
Wincentive Corporation
100 Black Men of the Bay Area
17 Individuals
Individuals/Organizations Support
Gary S. Anderson, Mayor Pro Tem, Sonora
Joel Ayala, President & CEO, CA Hispanic Chamber of Commerce
Tony Barba, Kings County Board of Supervisors
Rubert Begun, Mayor & Council Member, Capitola
Neil Blais, Rancho Santa Margarita City Council
Anthony Botelho, San Benito County Board of Supervisors
Cheryl Brothers, Fountain Valley City Council
Howard Bush, President, Snap Educational Solutions
Sandy Cajas, President, Regional Hispanic Chamber of Commerce,
Long Beach
Susan Cash, Inyo County Board of Supervisors
Bill Connelly, Butte County Board of Supervisors
Earl "Skip" Cooper II, Black Business Association
Bea Cortes, Councilwoman, Grand Terrace
Jaime De La Cruz, San Benito County Board of Supervisors
Murie Roberts De La Parra, CEO, BMB Construction Properties
Ronn Dominici, Madera County Board of Supervisors
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John Dale Dunn, MD JD, Texas
Richard Fagundes, Kings County Board of Supervisors
Joel Fox, President, Small Business Action Committee
Frank Fry, Westminster City Council
Ron Garcia, Mayor Pro-Tem, Brea
Federal D. Glover, Supervisor, Contra Costa County
Tara Lynn Gray, President & CEO, Yadari Enterprises
Robert H. Griffin, CPA, William, Adley & Company LLP
John Hernandez, Executive Director, Central California
Hispanic Chamber
Aliek Hill III, President, DJN Entertainment
Ken Hill, President, Richmond NAACP
Jan Horton, Yorba Linda City Council
Al Johnson, Director, LA County Department of Public Health
Dean L. Jones, C.P.M., CEO, Southland Partnership Corporation
Janice Keating, Councilmember, Modesto
Donald J. Kurth, M.D., Mayor, City of Rancho Cucamonga
Steve Lambert, Supervisor, District 4, Oroville
Joel Lautenschleger, Mayor, City of Laguna Hills
Don Maben, Kern County Supervisor
Darlene Mar, Council of Asian American Business Associations
Jere Melo, Council Member, Fort Bragg
L. Dennis Michael, Mayor Pro Tem, Rancho Cucamonga
Reb Monaco, San Benito County Board of Supervisors
Earlene Morris, Bakersfield Black Chamber of Commerce
Vern D. Moss, Madera County Board of Supervisors
Scott Nassif, Mayor Pro Tem, Town of Apple Valley
Michael Nelson, Merced County Board of Supervisors
Joe Neves, Chairman, Kings County Board of Supervisors
Steve Nolan, Mayor of Corona
Ray Nutting, El Dorado County Board of Supervisors
William O'Bryant, Councilmember, Modesto
Tony Oliveira, Kings County Supervisor
Kristin Olsen, Vice Mayor, Modesto
John Pinches, Mendocino County Board of Supervisors
John V. Pomierski, Mayor of Upland
Eddie Price, President, San Diego Urban Economic Corporation
Michael J. Reagan, Solano County Board of Supervisors
Jim Reed, Vice Mayor, Scotts Valley
James Ridenour, Mayor, City of Modesto
Johnnie Roberts Jr., Ronald H. Brown Democratic Club
Frank Scialdone, Fontana City Council
Angela Scott-Ferrell, California Black Chamber of Commerce
David A. Sheppard, Member, Sonora City Council & Past Mayor
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Sam Spagnolo, Council Member, Rancho Cucamonga
Russell L. Thomas, Chairman of the Board, Calaveras Board of
Supervisors
Carol Lee Tolbert, Executive Director, Civic Pride
John M. Vasquez, Solano County Board of Supervisors
Acquanetta Warren, Mayor Pro Tem, City of Fontana
Ray Watson, Kern County Board of Supervisors
Daryle Whyte, Chairman of the Board, 100 Black Men of the Bay
Area
Beverly Hamm Williams, L.A. Metro Publications, Inc.
Kim K. Yamaguchi, Butte County Board of Supervisors
Dennis R. Yates, Mayor of Chino
OPPOSITION :
Air Resources Board
American Lung Association of California
California Alliance for Retired Americans
California League of Conservation Voters
California Teachers Association
Clean Power Campaign
Coalition for Clean Air
Environment California
Environmental Defense Fund
National Parks Conservation Association
Planning and Conservation League
Sierra Club California
TransForm
Union of Concerned Scientists