Bill Text: CA AB720 | 2015-2016 | Regular Session | Introduced

California Assembly Bill 720 (Prior Session Legislation)

Introduced

Bill Title: California Global Warming Solutions Act of 2006: market-based compliance mechanisms.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2016-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB720 Detail]

Download: California-2015-AB720-Introduced.html

BILL NUMBER: AB 720	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Cooley

                        FEBRUARY 25, 2015

   An act to add Sections 38575 and 38576 to the Health and Safety
Code, relating to greenhouse gases.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 720, as introduced, Cooley. California Global Warming Solutions
Act of 2006: market-based compliance mechanisms.
   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.
   This bill would require the state board, for any market-based
compliance mechanism that the state board might adopt, to allow
participating entities to freely sell or transfer greenhouse gas
emissions allowances held in a holding account, as defined, or
compliance account, as defined, except for allowances that have been
expressly retired to meet a compliance obligation, as defined.
   This bill would require the state board, for any market-based
compliance mechanism that the state board might adopt, to set a price
cap on any allowances offered for purchase through the state board.
   This bill would exempt from the Administrative Procedure Act and
the California Environmental Quality Act a regulation adopted by the
state board pursuant to this act.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) The California Global Warming Solutions Act of 2006 (Division
25.5 (commencing with Section 38500) of the Health and Safety Code)
was adopted to reduce carbon emissions associated with the state's
economy. Section 38560 of the Health and Safety Code charges the
State Air Resources Board with the duty of adopting rules and
regulations "to achieve the maximum technologically feasible and
cost-effective greenhouse gas emissions reductions from sources or
categories of sources."
   (b) One measure that the state board has implemented in
furtherance of the act is a market-based compliance mechanism, known
as the cap-and-trade regulation.
   (c) For a market-based compliance mechanism to operate effectively
and allow entities covered by the market-based compliance mechanism
the efficiency and flexibility to achieve emissions reductions at the
lowest possible cost, the market for emissions allowances must
promote liquidity while also preventing market manipulation.
   (d) As part of the market-based compliance mechanism, the state
board has adopted a holding limit, placing a limitation on the total
number of allowances that any entity participating in the program can
hold at one time, subject to certain exceptions. The current holding
limit could adversely affect the liquidity and efficiency of the
emissions allowance market in that the holding limit functions to
require some entities participating in the market-based compliance
mechanism to surrender compliance instruments for compliance prior to
established regulatory compliance deadlines, thus creating
artificial scarcity in the market.
   (e) Revising the holding limit to permit entities participating in
the market-based compliance mechanism to freely transfer allowances
from a compliance and holding account to meet their obligations under
the market-based compliance mechanism will promote market efficiency
and fairness while maintaining the state board's ability to preserve
market integrity and prevent market manipulation.
  SEC. 2.  Section 38575 is added to the Health and Safety Code, to
read:
   38575.  (a) For purposes of this section, the following terms have
the following meanings:
   (1) "Compliance account" means an account, created by the state
board for an entity participating in a market-based compliance
mechanism that has a compliance obligation, to which the entity
transfers allowances and offsets to meet its compliance obligations.
   (2) "Compliance obligation" means the quantity of verified
reported greenhouse gas emissions or assigned greenhouse gas
emissions for which an entity participating in a market-based
compliance mechanism is required to submit compliance instruments to
the state board.
   (3) "Holding account" means an account created for each entity
participating in a market-based compliance mechanism, or a
voluntarily associated entity, to hold allowances or offsets.
   (4) "Offset" means a greenhouse gas emissions reduction or
greenhouse gas emissions removal enhancement verified by the state
board that may be used by an entity participating in a market-based
compliance mechanism to satisfy a compliance obligation.
   (b) For any market-based compliance mechanism that the state board
might adopt pursuant to this part, the state board shall allow
participating entities to freely sell or transfer greenhouse gas
emissions allowances held in a holding account or compliance account,
except for allowances that have been expressly retired to meet a
compliance obligation. This subdivision also applies to allowances
held jointly by a group of entities with a direct corporation
association.
   (c) No later than June 30, 2016, the state board shall promulgate
a regulation for the purposes of this section. A regulation adopted
pursuant to this section shall be exempt from the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code) and the California
Environmental Quality Act (Division 13 (commencing with Section
21000) of the Public Resources Code).
  SEC. 3.  Section 38576 is added to the Health and Safety Code, to
read:
   38576.  (a) For any market-based compliance mechanism that the
state board might adopt, the state board shall set a price cap on any
allowances offered for purchase through the state board.
   (b) No later than June 30, 2016, the state board shall promulgate
a regulation for the purposes of this section. A regulation adopted
pursuant to this section shall be exempt from the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code) and the California
Environmental Quality Act (Division 13 (commencing with Section
21000) of the Public Resources Code).