BILL ANALYSIS
SB 722
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: SB 722
AUTHOR: Steinberg
AMENDED: As Introduced
FISCAL: Yes HEARING DATE: April 20, 2009
URGENCY: No CONSULTANT: Randy Pestor
SUBJECT : GREENHOUSE GAS REDUCTION REPRESENTATIONS
SUMMARY :
Existing law :
1) Authorizes any person who engages, has engaged, or proposes
to engage in unfair competition to be enjoined in any court
of competent jurisdiction (Business and Professions Code
17203). Actions for any relief may be by a person who has
"suffered injury in fact and has lost money or property as
a result of the unfair competition" (17204).
2) Under provisions relating to environmental representations
(17580 et seq.):
a) Requires any person who represents in advertising or
on a label that the consumer good it manufactures or
distributes is not harmful to, or is beneficial to, the
natural environment through the use of certain terms
(e.g., "ecologically friendly," "earth friendly," "green
product,") or any like term, to maintain in written form
certain information and documentation supporting the
validity of the representation. This information and
documentation must be furnished to the public upon
request.
b) Prohibits any person from making any untruthful,
deceptive, or misleading environmental marketing claim.
c) Provides that any violation of the above requirements
is a misdemeanor punishable by imprisonment in the
county jail not to exceed 6 months, or by a fine of no
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more than $2,500, or both.
3) Under the California Global Warming Solutions Act of 2006
(CGWSA), 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, and 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.).
This bill enacts the Greenhouse Gas Reduction Representations
Law that:
1) Prohibits any person from representing in advertising that
the sale of a GHG credit or emission reduction reduces GHG
emissions unless it meets one or more specified conditions
(e.g., credit or emission reduction meets ARB-adopted
methodologies in accordance with the CGWSA, credit or
emission reduction complies with California Climate Action
Registry protocols and is registered with the Registry,
person demonstrates and discloses that credit or emission
reduction meets certain conditions).
2) Requires any person who represents in advertising, for the
sale of a GHG credit or emission reduction, that the credit
or reduction results in a reduction in GHGs, to maintain in
written form and make available to the public certain
information and documentation supporting the validity of
the representation (e.g., basis of the claim, information
on any adverse environmental or public health impacts
associated with the credit or emission reduction).
3) Provides that a violation of the above requirements is not
a crime, and is punishable by a civil penalty of no more
than $2,500 per violation, and by payment of the cost of
the purchase of the emission reduction credit, offset, or
emission reduction. A violation may be brought by a person
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who can show harm or any governmental entity.
4) Contains related definitions and legislative intent.
COMMENTS :
1) Purpose of Bill . According to the author, "Individuals and
corporations purchase carbon offsets to compensate for the
greenhouse gas emissions they create or to which they
contribute. However, it has been reported that 'finding
projects that legitimately reduce humanity's carbon
footprint is hugely expensive and prone to abuse.'" The
author notes that there are no guidelines, regulations, or
oversight to ensure that advertising claims for carbon
offsets are valid, and that the FTC has not updated its
environmental advertising guidelines since 1998 despite
holding workshops in early 2008.
The author also notes that "Because of Proposition 64, state
law limits those who may raise a claim under the Unfair
Competition Law to individuals who have suffered injury in
fact and have lost money or property. When Proposition 64
passed in 2004, the carbon offset industry was minimal in
existence. It is just over the past few years that carbon
offsets have gone mainstream. GHG reductions are not as
tangible or easily defined in terms of 'injury in fact' or
'loss of money or property'. As more people purchase these
reductions to compensate for their carbon footprint,
questions arise as to what is being done to ensure that
people are buying genuine carbon offsets."
2) Concerns over carbon offsets . It was recently reported
that carbon offsets are "essentially promises to use money
in a way that will reduce emissions" and questions have
been raised about certifications behind the claims, and
whether offset companies might be double-counting carbon
reductions that would happen even without their efforts.
(Louise Story, "F.T.C. Asks if Carbon-Offset Money is Well
Spent," New York Times , 9 Jan. 2008).
It has also been reported that "finding projects that
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legitimately reduce humanity's carbon footprint is hugely
expensive and prone to abuse. 'Being climate conscious is
fashionable and people want the prestige of ecoaction
without having to make the sacrifices,' says Kevin Smith,
author of The Carbon Neutral Myth: Offset Indulgences for
your Climate Sins, and a researcher with the Transnational
Institute in Amsterdam. 'There are fundamental problems
with how you calculate the supposed benefits of any carbon
offset project. At best it's guesswork. At worst, it's
people making stuff up, sticking a price tag on it and
selling it to the gullible.' The fact is, those who buy
carbon offsets shouldn't be too quick to don halos."
(Jason Kirby, "Absolving Green Guilt," www.macleans.ca , 19
Mar. 2008).
It has also been noted that "The voluntary market for carbon
offsets and credits has grown from almost nothing five
years ago to $91 million in 2006 and likely more than $200
million in 2007, according to Ecosystem Marketplace
estimates. Some analysts see it nearing $4 billion within
three years. Growing along with it is a heated debate
among climate experts, environmentalists and policy makers
over the true measure of emissions reductions from projects
sold as squeaky green; the potential for fraud; and whether
government standards would help." (John Simerman, "Offset
industry sparks debate," Inside Bay Area , 5 Feb. 2008).
According to a recent U.S. Government Accountability Office
(GAO) report, "Data obtained from a firm that analyzes the
carbon market show that the supply of offsets increased
from about 6.2 million tons in 2004 to about 10.2 million
tons in 2007. Over 600 organizations develop, market, or
sell offsets in the United States, and the market involves
a wide range of participants, prices, transaction types,
and projects. The federal government plays a small role in
the voluntary market by providing limited consumer
protection and technical assistance, and no single
regulatory body has oversight responsibilities." ("Carbon
Offsets, The U.S. Voluntary Market Is Growing but Quality
Assurance Poses Challenges for Market Participants," GAO,
August 2008).
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3) Responding to concerns . In response to the above concerns,
SB 722 prohibits any person from representing that the sale
of a GHG credit or emission reduction reduces GHG emissions
unless it meets certain conditions, requires any person
making certain representations in advertising for the sale
of a GHG credit or reduction to maintain and make available
to the public certain information and documentation
supporting the validity of the representation, and sets
penalties for violations of these provisions.
SB 722 is modeled after current provisions relating to
environmental representations enacted by AB 3994 (Sher)
Chapter 1413, Statutes of 1990.
4) Related legislation . SB 722 is similar to SB 1762
(Perata), which was approved by the Committee April 28,
2008 (7-0). SB 1762 was subsequently amended to create a
California Climate Change Institute and was vetoed. AB
1851 (Nava) addressed offset issues, but was not consistent
with SB 1762. AB 1851 was subsequently amended to be
similar to SB 1762, and closely mirror SB 722, but the
author moved the bill to the Inactive File.
5) Outstanding considerations . Amendments are needed to: a)
strike "significantly" on page 3, line 37, since a credit
or emission reduction should not contribute to a violation
of any state or federal air quality or toxic air
contaminant standard; and b) strike "who can show harm" on
page 4, line 24, since it may be inappropriate to wait for
a person to be harmed in order for an action to be brought
for a violation of this bill's requirements.
6) Double Referral to Judiciary Committee . If this measure is
approved by this committee, the do pass motion must include
the action to re-refer the bill to the Senate Judiciary
Committee.
SOURCE : Senator Steinberg
SUPPORT : None on file
OPPOSITION : None on file
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