BILL ANALYSIS
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THIRD READING
Bill No: SB 722
Author: Steinberg (D)
Amended: 4/23/09
Vote: 21
SENATE ENV. QUALITY COMMITTEE : 6-1, 4/20/09
AYES: Simitian, Runner, Corbett, Hancock, Lowenthal,
Pavley
NOES: Ashburn
SENATE JUDICIARY COMMITTEE : 3-0, 5/5/09
AYES: Corbett, Florez, Leno
NO VOTE RECORDED: Harman, Walters
SUBJECT : Greenhouse gas credits
SOURCE : Author
DIGEST : This bill prohibits any person from representing
in advertisements or sales materials that the sale of a
greenhouse gas credit or emission reduction reduces
greenhouse gas emissions unless certain conditions are met.
This bill requires any person who represents in
advertising that a greenhouse gas credit or emission
reduction results in a reduction in greenhouse gases to
maintain in written form and make available to the public
certain information and documentation supporting the
validity of the representation. This bill provides for
civil remedies for a violation.
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ANALYSIS :
Existing law:
1. Requires the Air Resources Board to adopt regulations to
require the reporting and verification of statewide
greenhouse gas emissions and to monitor and enforce
compliance with the program. (Section 38500 et seq. of
the Health and Safety Code)
2. Generally prohibits the use of false or misleading
statements in advertising. (Section 17500 of the
Business and Professions Code). Existing law also
provides specified remedies and penalties for
violations, including civil penalties and injunctive
relief. (Sections 17534.5, 17535, and 17536 of the
Business and Professions Code)
3. Contains provisions relating to environmental
representations which:
A. Require 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") to maintain in written
form certain information and documentation supporting
the validity of the representation which must be made
available to the public upon request.
B. Prohibit any person from making any untruthful,
deceptive, or misleading environmental marketing
claim.
C. Provide any violation of the above requirements is
a misdemeanor punishable by imprisonment in the
county jail not to exceed six months, or by a fine of
no more than $2,500, or both. (Sections 17580,
17580.5, and 17581 of the Business and Professions
Code)
This bill:
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1. Prohibits any person from representing in advertisements
or sales materials for the sale of a greenhouse gas
credit or emission reduction that the credit or
reduction reduces greenhouse gas emissions unless it
meets one or more of the following conditions:
A. The credit or emission reduction meets
methodologies that have been adopted by the Air
Resources Board as being in compliance with the
California Global Warming Solutions Act of 2006.
B. The credit or emission reduction complies with one
or more protocols for voluntary emissions reductions
of greenhouse gases adopted by the California Climate
Action Registry.
C. The person demonstrates and discloses in any
advertising or other sales or promotional material
made available to the public, that the credit or
emission reduction meets all of the following
conditions:
(1) The credit or emission reduction is
quantifiable and measurable, as specified.
(2) The credit or emission reduction is surplus,
and is in addition to any greenhouse gas emission
reduction that would otherwise occur.
(3) The credit or emission reduction is
verifiable and enforceable by a state, regional,
or local agency within the State of California.
(4) The credit or emission reduction does not
cause or contribute to a violation of any state or
federal ambient air quality standard or toxic air
contaminant standard.
2. Requires any person who represents in advertising that a
greenhouse gas credit or emission reduction results in a
reduction in greenhouse gases to maintain in written
form and make available to the public the following
information and documentation supporting the validity of
the representation:
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A. The basis for the claim.
B. Information on any adverse environmental or public
health impacts associated with the creation and
maintenance of the credit or reduction.
3. Provides that a violation of the bill's provisions is
subject to a civil penalty, not to exceed $2,500 per
violation and the cost of the purchase of the credit,
offset, or reduction.
4. Provides that a violation of its provisions creates a
civil cause of action that may be brought by any person
who can show harm or by any governmental entity. Under
the bill, reasonable attorney's fees and costs are
available for any action brought.
5. Becomes operative on January 1, 2011, and becomes
inoperative if the Federal Trade Commission adopts rules
or regulations to protect consumers regarding claims or
representations for greenhouse gas emission credits or
reductions.
6. Contains related definitions and legislative intent.
Background
According to the U.S. General Accountability Office (GAO),
a "carbon offset," or greenhouse gas credit, is a
"measurable reduction of greenhouse gas emissions from an
activity or project in one location that is used to
compensate for emissions occurring elsewhere." In recent
years, two primary markets have developed for carbon
credits. In the larger compliance market, companies,
governments, and other entities buy carbon credits in order
to comply with caps on the total amount of carbon dioxide
they are allowed to emit. In the smaller, voluntary
market, individuals and companies purchase carbon credits
to mitigate their own greenhouse gas emissions from
transportation, electricity use, and other sources.
Carbon offsetting is beginning to gain popularity among
consumers who wish to counteract the potentially negative
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environmental effects of their lifestyles by purchasing
offsets. However, due to their intangible nature, the
quality of carbon offsets is difficult for consumers to
verify. This, coupled with the lack of a uniform standard
for the independent certification of carbon credits, has
created a situation where, the author asserts, consumers
risk purchasing credits that do not actually yield any
reduction in carbon emissions. Further, industrial
companies may be profiting from doing very little by
selling the carbon credits they have gained for
implementing "greener" technology or practices, which would
have occurred regardless of the sale. This bill would
establish consumer protections in the sale of these
intangible products.
NOTE: Please refer to the policy committee analysis for a
full discussion on this subject.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/7/09)
--
OPPOSITION : (Verified 5/7/09)
CalChamber [California Chamber of Commerce]
California Council for Environmental and Economic Balance
California Manufacturers and Technology Association
EcoSecurities
Western States Petroleum Association
ARGUMENTS IN SUPPORT : The author writes:
"Carbon offsets are 'essentially promises to use money in
a way that will reduce emissions' (Louise Story, 'FTC
Asks if Carbon-Offset Money is Well Spent,' The New York
Times , January 9, 2008). 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." (Jason Kirby, 'Absolving
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Green Guilt,' McCleans , March 19, 2008.)
"Currently there are no guidelines, regulations, or
oversight to ensure that advertising claims for carbon
offsets are valid. Although the Federal Trade Commission
held workshops in 2008 concerning carbon offsets and
renewable energy certificates as part of its effort to
examine marketplace developments and consumer perceptions
of environmental claims, the FTC has yet to revise its
environmental advertising guidelines which were last
updated in 1998. ? 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."
ARGUMENTS IN OPPOSITION : The Western States Petroleum
Association opposes the bill including its remedies
provisions, stating:
"? SB 722 would now create an entirely new cause of
action allowing any person who can show harm to sue
anyone who participated in a voluntary transaction that
did not comport with new California specific
requirements. The bill's new penalties are unnecessary
to impose liability on those who deal in the voluntary
market improperly. Civil liability already exists
between parties in the market due to the contract
inherent in a purchase."
The California Council for Environmental and Economic
Balance also opposes this provision of the bill, stating
that it "creates a new citizen suit cause-of-action,
bolstered by a 'bounty-hunter' provision of the award of
attorney fees and costs" which "will certainly chill the
market for voluntary offsets. ? To the extent that some
voluntary offsets are offered for sale in California, we
would expect the bounty hunter award to spur frivolous
lawsuits."
CalChamber makes similar arguments, stating that the bill
"create[s] new opportunities for litigation."
TSM:mw 5/7/09 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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