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April 2017 Environment Committee Meeting
Infinera 220 Humboldt Court
CA2 | Sydney Conference Room Sunnyvale, CA 94089
April 12, 2017
1:30 - 2:00 pm – Networking 2:00 – 4:00 pm – Meeting
Call-in information – Dial: 605-475-3215 | Code: 1052733
Agenda
Time Item Who Outcome 1:30 Networking & Conversation All Information
2:00 Welcome & Introductions
Marty Gothberg, Infinera
Information
2:05 Presentation: Sustainability Accounting Standards Board
Quinn Underriner, SASB Information
2:35 Opportunities for business leadership on climate
Mike Mielke, SVLG Information
2:55 Discussion: Top 2017 Cmte Priority: Cap & Trade Extension – latest from the front lines (AB 151 and AB 378)
Mike Mielke, SVLG Information
3:10 Discussion: Top 2017 Cmte: Engagement on SF Bay wetlands – Apr 21 event
Lauren Boyd, SVLG Information
3:20 Legislative / Regulatory
AB 388 (Mullin) – GGRF Funding
AB 851 (Caballero) – Local Design-Build Project Delivery
Lauren Boyd, SVLG Action
3:45 Discussion: Upcoming events
Energy & Susty Summit, May 25
Mike Mielke, SVLG Information
3:55 Reminders / Open Forum
All Information
4:00 Adjourn All N/A
Reminder: No Cmte mtg in May (Summit). Our next meeting will be June 7. Host needed!
March 8, 2017 Environment Committee Meeting Notes & Action Items
Host: eBay
Attendees:
Members (in-person): Mike Cox (Anaerobe Systems), Martin Gothberg (Infinera), Rose Grymes
(NASA-Ames), Leo Kenny (Planet Singular), Bruce Klafter (Flex), Grant Leroy (The Detection
Group), Tim Lyons (Scoop), Kerry McCracken (Flex), Bruce Paton (Menlo College), John Tang
(San Jose Water Co), Chuck Wilhelm (Enlight Energy)
Members (on-phone): Ellen Gorchoff (Infinera), Carl Hekkert (Silicon Valley Bank), Bryan Silva
(Symantec)
SVLG: Mike Mielke, Sarah Qureshi, Lauren Boyd
Speakers: Kris Rosa (Noteware Government Relations), Rachael Gibson (SCVWD), John
Bourgeois (SBSPR)
Agenda Items
1. Approve February Meeting Minutes
MOTION (1st Rose Grymes, 2
nd Steve Joesten)
i. Approved: Unanimously.
ii. Abstain: None.
2. Discussion: Latest from Sacramento (Kris Rosa, Noteware Government Relations)
Policy Committee hearings are starting.
New legislators are starting to find their way around the Capitol.
Cap and Trade
i. Governor Brown’s budget includes $2.2 billion cap and trade auction proceeds,
but there are catches to the moneys.
1. Money only released if urgency clause, 2/3 vote, and ARB confirmed to
administer moneys beyond 2020.
2. Presumes cap and trade auctions generate over $500 million. Recent
auction generated $8 million.
ii. Securing 2/3 Cap and Trade vote.
1. 2/3 Democrat majority in the Assembly and the Senate, and many
Republicans from last year replaced with liberal Democrats
a. Mod-Dem Caucus in disarray.
b. A bill to extend cap and trade, AB 151, introduced by Mod-Dems.
2. There may be a bipartisan Cap and Trade vote
a. Survey of Republican voters in CA identified that they care about
poverty and climate change.
iii. There is still work to be done to get to 2/3 vote
1. Some Assembly members are worried about environmental justice
a. AB 378 (Garcia) will be the vehicle for these discussions.
2. Members of the Black Caucus will not compromise until needs of poor
communities are extended.
3. Pro Tem De León stated that auction proceeds need to be reformed.
2
Other items in the Legislature
i. Transportation Package
1. Governor wanted to get this done 4 years ago, but it stalled.
2. Mod-Dems and Dems in swing states worried pro-tax vote
ii. 100% Renewable Portfolio Standard
1. It is strange that this bill is still in Senate Rules Committee.
Discussion
i. Q: What is relationship between CA and Washington re: Federal funds?
1. A: Huge problem. Making up for a budget deficit in one area (e.g. Health
Care), will mean a budget deficit in another area of the budget.
ii. Q: Is there talk about a Water and Park bond?
1. A: Yes, but not seriously. The main focus is the transportation bond.
3. Presentation: Update on Silicon Valley Water Supply (Rachael Gibson, SCVWD)
General Updates
i. Drought conditions improved locally and statewide.
ii. Water conservation at 20% but may be revisited later this year.
2017 Priorities
i. Water Supply, Infrastructure, and Storage
1. Upgrades to Rinconada Water Treatment Plant & Anderson Dam
2. Monitoring imported water situation, including the Delta.
ii. Flood Protection
1. Raised $500 million, with 1/3 for flood protection, through Measure B.
2. Recent Coyote Creek events result of a 25-year storm event.
3. Difficulties working with U.S. Army Corps of Engineers
Potential Action Items for the Leadership Group.
i. Immediate support for Coyote Creek; Support for District-sponsored bills;
Support key infrastructure projects; Support regulatory and permitting processes.
Discussion
i. Q: Can you explain the recent issues with groundwater recharge?
1. A: Don’t want groundwater recharge ponds to be contaminated with
turbid stormwater.
ii. Q: What are we doing to upgrade Anderson Dam?
1. A: Anderson Dam is seismically unstable in the event of a 7.5 magnitude
earthquake on the Calaveras Fault. Don’t want to take risks.
2. A: Long-term project to re-engineer Anderson Dam.
4. Presentation: SF Bay Wetlands Restoration Update and Opportunity (John Bourgeois, South
Bay Salt Ponds Restoration Project)
History of the South Bay Salt Pond Restoration (SBSPR) project
i. Between 1850 and 2000 much of the SF Bay shoreline diked, filled, & developed.
ii. SBSPR project borne out of ~16,500-acre land transfer Cargill Salt to the public
1. Effort led by U.S. Senator Feinstein and partners, including SVLG
San Francisco Bay today
i. Much of SF Bay Area infrastructure located around the SF Bay shoreline
1. Significant flood risk worsened by sea level rise
SBSPR project utilizes adaptive management restoration
3
i. Key uncertainties in restoration, i.e. climate change, sea level rise, mercury
methylation, mean must use adaptive management restoration
Significant progress to date, including 1600 acres tidal restoration & 7 mi new trails
Project on strong regional research, planning, and support, i.e. Measure AA and
Baylands Ecosystem Habitat Goals 2015 Science Update
Restoration urgent – 15 to 30 years to restore wetlands before lost to sea level rise.
Earth Day Event
i. Friday, April 21, 2017 from 9 AM to 12 PM – presentation & tour of project
Discussion
i. Q: What is the “Call to Action” for the event?
1. A: Need for Federal funding given uncertain political situation
2. A: Need for in-kind funding & additional moneys
5. Discussion: Top Committee Priority in 2017: Extending Cap and Trade (Mike Mielke, SVLG)
CA Air Resources Board (CARB) Scoping Plan Update
i. CARB updating scoping plan in accordance with SB 32
ii. Plan emphasized extending current programs and lays out new actions
1. New proposals include (1) reduce GHG emissions by 20% refinery
sector, and (2) post-2020 Cap and Trade program
Cap and Trade
i. Environmental Justice Issues
1. Concern that Cap and Trade negatively affects low-income communities
by allowing the worst polluters to continue to pollute.
ii. Extending Cap and Trade beyond 2020
1. Continues CA successful leadership on climate issues.
2. Concerns over meager auction proceeds
iii. Business sector Cap and Trade principles
1. CA needs to send strong signal to biz community on Cap and Trade
2. Cap and Trade driving community investments and economic impact
3. Positive economic impacts cut across many sectors
6. Discussion: Legislative Items (Lauren Boyd, SVLG)
AB 184 (Berman) – Se level rise planning: database
i. Staff Recommendation: Support.
ii. This bill would repeal a sunset date for existing legislation that requires various
public and private entities to submit sea level rise planning information to a sea
level rise planning database hosted by the CA Natural Resources Agency.
1. Centralized information could lead to more informed decision-making
about sea level rise planning and potential gaps in sea level rise planning
information.
2. May be concerns that this piece of legislation will extend to stricter
legislation, or that the legislation does not go far enough.
iii. Discussion
1. Q: Why did the enabling legislation include a sunset date?
a. A: The previous legislation included a sunset date to quell
concerns about a new government mandate to create a
database.
iv. MOTION (1st Rose Grymes, 2
nd Bruce Paton): The Environment Committee
recommends to Working Council to support AB 184 (Berman) – sea level rise
4
planning: database.
SB 5 (De León) --- California Drought, Water, Parks, Climate, Coastal Protection, and
Outdoor Access For All Act of 2018
i. Staff recommendation: Support in concept. This proposed bill is complex with
many components that are in flux; staff would like to support the bill in concept
and recommend increased monies for the San Francisco Bay Area.
ii. This bill would place a $3.5 billion park and water bond on the June 2018 ballot.
1. Needed investment in park and water system, but there is room for
increased allocations to the San Francisco Bay Area.
iii. Discussion:
1. Q: Who distributes the moneys?
a. A: The moneys are distributed by the Department of Parks and
Recreation, the CA Natural Resources Agency, or the
Legislature
iv. MOTION (1st Kerry McCracken, 2
nd Chuck Wilhelm): The Environment
Committee recommends to Working Council to support SB 5 (De León) in
concept, and to recommend increased moneys for the San Francisco Bay Area.
7. Reminders/ Open Forum
8. Adjourn
9. Next Meeting: There will be no May Environment Committee meeting. Please consider attending
our 2017 Energy & Sustainability Summit on May 25, 2017.
Quinn Underriner is the Sector Analyst for Technology & Communications at SASB where he manages
standards development and stakeholder engagement for the Semiconductor, EMS/ODM, Hardware,
Software & IT Services, Internet Media & Services, and Telecommunications industries. In his previous
role as a Research Analyst at SASB, Quinn conducted in-depth analysis of sustainability issues across
more than 15 industries and contributed to the development of associated sustainability accounting
metrics. Prior to SASB, Quinn was a Civic Consumption Fellow at Groundswell in Washington, DC. He
holds a BA from Grinnell College in Economics & Art History.
© 2017 SASB™
Sustainability Accounting Standards Board
Presentation for the Silicon Valley
Leadership Group
Quinn Underriner
Sector Analyst, Technology &
Communications
Today’s Discussion
2
2
3
1 Increasing Investor Demand for Corporate ESG Reporting
Current State of ESG Disclosure
Growing Regulatory Interest and Pressure
SASB & GRI in Harmony
How to Get Involved
4/10/2017 © 2017 SASB™
5
4
Investors Care about Sustainability A rapidly increasing share of global assets are managed with ESG issues in mind
Initiative AUM (US $)
PRI $59 trillion
CDP $95 trillion
International
Corporate
Governance
Network
$26 trillion
Investor
Network on
Climate Risk
$15 trillion
Key sustainability-related
investor initiatives and
Assets Under Management
Trends in U.S. Sustainable, Responsible, & Impact Investing 2005-2016
Adapted from US SIF Foundation
Today, 1 out of every 5 dollars under professional management in
U.S. managed under sustainable and responsible investment strategies.
© SASB 3 4/10/2017
Source: PwC, 2014
SHAREHOLDER PROPOSALS
50% GLOBAL INSTITUTIONAL INVESTORS
Will request
sustainability
information directly
from the company
89% “Very likely” to
sponsor or co-
sponsor a
shareholder
proposal
More likely to
consider ESG
information if
common
standards used
67%
2011 2012 2013 2014 2015
40% 40%
45%
55%
Sources: EY, 2011-2014, As You Sow, 2015
Percent of total proposals filed that are
related to social and environmental issues
63%
2016
67%
Investor Interest in Sustainability-related Information Resorting to costly and time-intensive means to obtain ESG information
© SASB 4 4/10/2017
The Pain Point for Investors Investors lack tools needed to integrate sustainability into investment decisions
Source: PwC, ESG Pulse 2016, October 2016. Base: 28
Issuer Reporting Investor Needs
vs.
29%
Issuer confidence in the quality
of the ESG information reported
Investor confidence in the quality of the
ESG information received from issuers
100%
How risks and opportunities are identified and quantified in financial terms
Comparability of sustainability reporting between companies in the same industry
Relevance and implications of sustainability risks/issues
Key performance indicators related to each identified material issue
Process used to identify material sustainability issues 57%
82%
79%
74%
68%
High degree of investor dissatisfaction with the current state of ESG disclosure
Source: PwC, Sustainability Goes Mainstream, May 2014
% Investors Dissatisfied
5 © SASB 4/10/2017
The mission of SASB is to develop and
disseminate sustainability accounting
standards that help companies disclose
material, decision-useful information to
investors in a cost-effective way.
That mission is accomplished through a
rigorous, transparent process that includes
evidence-based research and broad,
balanced stakeholder participation.
Facts about SASB
Independent 501(c)(3) non-profit
Develops & maintains industry-specific standards for 79 industries in 10 sectors
Intended for use in mandatory SEC filings such as the Form 10-K and 20-F
The SASB Mission Improved sustainability disclosure enhances market efficiency
4/10/2017 © SASB 6
4/10/2017 © SASB 7
Institutional Investor Support for Improved ESG Disclosure SASB’s Investor Advisory Group includes investors with over $20 trillion in assets
© SASB 8
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Infrastructure
Renewable Resources & Alternative Energy
Consumption II
Consumption I
Resource Transformation
Services
Transportation
Non-Renewable Resources
Technology & Communications
Financials
Health Care
State of Disclosure in Annual SEC Filings
No Disclosure Boilerplate Company-Tailored Narrative Metrics
Current State of Disclosure on SASB Topics in the Form 10-K Opportunity to transform disclosure from boilerplate to performance-based
Source: SASB analysis performed between May and August 2016 using the latest annual SEC Filings (i.e. Form 10-Ks and 20-Fs) for the top
companies, by revenue, per SICS industry (maximum of 10 companies).
4/10/2017
Current State of Disclosure on SASB Topics in the Form 10-K Many companies already identify topics as likely to be material
69 percent of companies are already
addressing at least three-quarters of the
disclosure topics SASB identified in their
industry
38 percent are already providing
disclosure on all disclosure topics
However, more than 50 percent
sustainability-related disclosures in SEC
filings use boilerplate language
© SASB 9 4/10/2017
A Standard will Improve Disclosure From Boilerplate to Metrics Analysts need comparable data in order to compare performance and price risk
Boilerplate disclosure: “Climate change and water availability may negatively affect our business and financial results…
Clean water is a limited resource in many parts of the world and climate change may increase
water scarcity and cause a deterioration of water quality in areas where we maintain brewing
operations. The competition for water among domestic, agricultural and manufacturing users is
increasing in some of our brewing communities.… The above risk, if realized, could result in a
material adverse effect on our business and financial results.”
[Form 10-K filed 12-Feb-15]
Quantitative disclosure:
“Overall this year, Diageo has delivered improved performance across all water and other
environmental target areas versus the prior year, and progressed towards meeting 2015 goals.
We reduced absolute water use by 9% or 2,268,000 cubic metres while water efficiency
improved by 2.4% compared to the prior year. In water-stressed locations, we have
reduced water wasted by 12%, an important contribution towards our target of a 50%
reduction versus the company’s 2007 baseline.”
[Form 20-F filed 12-Aug-14]
Sector: Consumption: Food & Beverage
Industry: Alcoholic Beverages
Disclosure Topic: Water Management
SASB Metric: (1) Total water withdrawn and (2) total water consumed, percentage of each in regions
with High or Extremely High Baseline Water Stress
4/10/2017 © SASB 10
Regulation S-K Concept Release Seeks comments on disclosure of public policy and sustainability matters
What ESG issues are important to investment
decisions?
What would an ESG disclosure framework look
like? Could it be flexible enough to address
evolving issues?
Would line-item disclosure requirements be
consistent with The Commission’s rule-making
authority? Would they yield immaterial
information?
Does information on ESG factors reported outside
Commission filings address investor needs?
Section F; pages 204-215
4/10/2017 © SASB 11
Overwhelming proportion of letters discussed need to improve sustainability
disclosure
Regulation S-K Concept Release Comments
of non-form
comment letters discuss
sustainability disclosures.
Just 4% of the Release
addressed sustainability
disclosures in SEC filings, yet…
2/3 …
4/10/2017 © SASB 12
Climate Risk: Ubiquitous but Differentiated by Industry Climate risks affect majority of capital markets, but industry impacts are unique
Carbon intensity of reserves in Oil & Gas –
Exploration & Production
Vulnerability of real estate in Insurance
Impact on crop yields in Agricultural
Products
Financed emissions in Commercial Banks
PFC emissions in Semiconductors
$27.5T Market cap of
companies
affected
Percentage of
U.S. equity
market impacted
93%
CLIMATE RISK
Impacts 72 of 79 industries
4/10/2017 © SASB 13
• Starting January 1, 2019 would require public
employee retirement fund boards to consider
climate risk as part of their fiduciary duty in each of
their investments
• Starting January 1, 2020 would also require board
to report on the carbon footprint of their investments
California State Senate
Bill SB 560 introduced
February 17th, 2017
Complementary Efforts Mandatory and voluntary reporting serve different purposes for different audiences
Material Information
Sustainability factors likely to
affect the financial condition or
operating performance of a
company
Relevant Information
All environmental, social, and
governance topics of interest
Investors
All
Stakeholders
© SASB 14
10-K or
20-F
”As you can see, GRI and SASB are intended to meet the unique needs
of different audiences. The GRI standards are designed to provide
information to a wide variety of stakeholders and consequently, include a
very broad array of topics. SASB’s are designed to provide information to
investors and consequently, focus on the subset of sustainability issues
that are financially material.
As such, deciding between GRI and SASB is a false choice.” – Joint
letter, Jean Rogers, Founder and CEO of SASB, Tim Mohin, Chief
Executive of GRI
4/10/2017
© 2016 SASB™
15
SASB is in Deep Consultation on the Provisional Standards SASB’s deep engagement efforts with issuers and investors
2016: Deep consultation with issuers, internal review,
cost-benefit analysis
testing the materiality, decision-usefulness and
cost-effectiveness of the standards.
continuing conversations with previously
engaged stakeholders
expanding consultation to companies and
investors who previously did not provide input
INDUSTRY
TOPIC OR METRIC
CHANGE PROPOSED
RATIONALE
KEY QUESTIONS FOR RESEARCH & CONSULTATION
AGENDA FOR CHANGE
2017: Proposed changes, public comment (Aug-Oct)
Companies are Part of the Solution:
Evaluate using SASB standards, participate in consultation process
4/10/2017
2018: Codification
2016 2017 2018
Q4 Q1 Q2 Q3 Q4 Q1
Consultation Public Comment Codification
17
Appendix
4/10/2017 © 2017 SASB™
Standards Setting Organization Dedicated sector analysts follow industry issues, test materiality, and conduct deep consultation
Health Care Biotechnology; Pharmaceuticals; Medical
Equipment & Supplies; Health Care Delivery;
Health Care Distributors; Managed Care
Financials Commercial Banks; Investment Banking &
Brokerage; Asset Management & Custody
Activities; Consumer Finance; Mortgage Finance;
Security & Commodity Exchanges; Insurance
Anton
Gorodniuk
Technology & Communication Electronic Manufacturing Services & Original
Design Manufacturing; Software & IT Services;
Hardware; Semiconductors; Telecommunications;
Internet Media & Services
Quinn
Underriner
Non-Renewable Resources Oil & Gas – Exploration & Production; Oil & Gas –
Midstream; Oil & Gas – Refining & Marketing; Oil
& Gas – Services; Coal Operations; Iron & Steel
Producers; Metals & Mining; Construction
Materials
Transportation Automobiles; Auto Parts; Car Rental & Leasing;
Airlines; Air Freight & Logistics; Marine
Transportation; Rail Transportation; Road
Transportation
Nashat
Moin
Services Education; Professional Services; Hotels &
Lodging; Casinos & Gaming; Restaurants; Leisure
Facilities; Cruise Lines; Advertising & Marketing;
Media Production & Distribution; Cable & Satellite
Resource Transformation Chemicals; Aerospace & Defense; Electrical & Electronic
Equipment; Industrial Machinery & Goods; Containers &
Packaging
Henrik
Cotran
Consumption I Agricultural Products; Meat, Poultry & Dairy; Processed
Foods; Non-Alcoholic Beverages; Alcoholic Beverages;
Tobacco; Household & Personal Products
Levi
Stewart, CPA
Consumption II Multiline and Specialty Retailers & Distributors; Food
Retailers & Distributors; Drug Retailers & Convenience
Stores; E-Commerce; Apparel, Accessories & Footwear;
Building Products & Furnishings; Appliance Manufacturing;
Toys & Sporting Goods
Gabriella
Vozza
Renewable Resources & Alternative
Energy Biofuels; Solar Energy; Wind Energy; Fuel Cells & Industrial
Batteries; Forestry & Logging; Pulp & Paper Products
Infrastructure Electric Utilities; Gas Utilities; Water Utilities; Waste
Management; Engineering & Construction Services; Home
Builders; Real Estate Owners, Developers & Investment
Trusts; Real Estate Services
Bryan
Esterly, CFA
Andrew Collins
Technical Director
Eric Kane
Sonya
Hetrick
Henrik
Cotran
Interim
David
Parham
4/10/2017 © SASB 18
4/10/2017 © SASB 19
The Legal Context Underpinning SASB Standards SASB standards are designed to meet existing regulatory requirements
MD&A Disclosure Rules for Form 10-K
Item 303 of Regulation S-K, and SEC interpretations in 1989, 2003 for MD&A disclosures
• Known trends,..uncertainties, “reasonably likely to have a material effect on financial
condition or operating performance”
• Two step test to determine whether there is a duty to disclose
Probability/magnitude test (Supreme Court in Basic v. Levinson, 1988)
US Supreme Court Definition of Material Information
“Material information” is defined by the U.S. Supreme Court as
presenting a substantial likelihood that the disclosure of the omitted
fact would have been viewed by the reasonable investor as having
significantly altered the “total mix” of information made available.
TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976)
Material
Information Investors
UNIVERSE OF
ESG ISSUES SUSTAINABILITY
ISSUES
Industry Research
Industry Working Groups
Evidence Vetting Standards Council
Sub-Committee on Metrics Quality
Public Comment
Final Revisions
Provisional Standard
Average of
5 topics and 13 metrics
Standards
maintenance
Ongoing
Rigorous Process Drives SASB Standards Standards for each industry are rooted in evidence and shaped by market input
2800 Market Participants
Evidence of Financial Impacts
90 days
4/10/2017 © SASB 20
“Corporate Sustainability:
First Evidence on Materiality,”
Working Paper by Mozaffar Khan, George Serafeim, and Aaron Yoon
Harvard Business School, 2015
Using SASB’s framework, Harvard
researchers found that firms with good
performance on ‘material sustainability
issues’ and concurrently poor
performance on ‘immaterial
sustainability issues’ enjoy the
strongest financial returns.
They also found that 80 percent of
disclosures are immaterial, having no
correlation to positive performance.
Materiality Approach Validated by External Research Harvard research supports SASB’s standards-development process
4/10/2017 © SASB 21
Institutional Investors support improved ESG disclosure
22
IAG members:
Encourage companies to disclose material and decision-useful ESG information to investors
Believe standards would improve the quality and comparability of sustainability-related
information
Believe SASB’s approach—which is industry-specific and materiality-focused —will help
provide investors with relevant and decision-useful information
Agree to participate in SASB’s ongoing standards development process, so that outcomes
best reflect investor needs
Agree to encourage companies to participate in SASB’s ongoing standards development
process, so that outcomes reflect both issuer and investor viewpoints
Believe that SASB standards can inform integration of sustainability factors into investment
and/or stewardship processes, such as corporate engagement and proxy voting
The SASB Investor Advisory Group (IAG) comprises leading asset owners and asset
managers who recognize the need for consistent, comparable and reliable disclosure
of material, decision-useful ESG information.
4/10/2017 © 2017 SASB™
AB 151 – Cap-and-Trade Joint Author: Assemblymember Cooper
Coauthors: Assemblymembers Low, Rubio, Grayson, and Gipson
SUMMARY
Assembly Bill 151 affirms the State’s goal of reducing
greenhouse gas emission at least 40 percent below 1990
levels by 2030 in the most technologically feasible and
cost effective way by using a market based mechanism:
Cap-and-Trade.
BACKGROUND
Existing law pursuant to Assembly Bill 32, the
California Global Warming Solutions Act of 2006,
created statewide greenhouse gas emission limits
equivalent to 1990 levels by 2020, and authorized the
California Air Resources Board (ARB) to uses a market-
based mechanism to reach that objective, also known as
Cap-and-Trade.
Last year, Senate Bill 32 required ARB to ensure that
statewide greenhouse gas emissions are reduced to at
least 40 percent below the 1990 level by 2030.
Cap-and-Trade is a market-based instrument to provide
economic incentives for achieving reductions in
greenhouse gas emissions. The “Cap” sets statewide
limits on emission allowances that are gradually lowered
over time. The California Air Resources Board (ARB)
distributes a mix of free allowances and holds a
quarterly auction to allow market participants to acquire
emission allowances.
The “Trade” creates a market for emission allowances
that lets companies buy and sell allowances, providing
the flexibility needed to meet their cap and creating an
incentive to invest in cleaner technologies. The
relationship between supply and demand of allowances
in the trading market in essence creates the price of each
emission allowance. Companies that end up with extra
allowances are then able to sell them to other companies
turning their emission cuts into revenue. At the end of
each compliance period companies must surrender
enough allowances to cover its actual emission of
greenhouse gases. The number of allowances allocated
is lowered every year with the cap ideally incentivizing
private industry to spur technological innovations that
result in companies emitting less greenhouse gas
emissions.
Currently, California’s historic Cap-and-Trade program
established by California Global Warming Solutions Act
of 2006 AB 32 is set to expire in 2020. Additionally,
there is pending litigation that asserts the auction
process under the Cap-and-Trade program is
unconstitutional because it was not enacted with the
necessary two-thirds majorities vote in both chambers of
the legislature as required in the California Constitution.
As a result of the legal uncertainty of continuing the
existing program, Governor Brown’s budget included
the following statement regarding the funding of his
Cap-and-Trade Expenditure Plan: “Funding for these
programs will be allocated only upon legislative
confirmation of the Air Board’s authority, through a two
thirds vote, to administer Cap-and-Trade auctions
beyond 2020.”
Additionally, the Greenhouse Gas Reduction Fund
(GGRF) was created to collect the funds generated from
the auction or sale of allowances in the Cap-and-Trade
system. This can generate significant revenues that the
State can use to pay for a variety of programs including
Transformative Climate Communities, energy
efficiency, public transit, low-carbon transportation,
affordable housing, major infrastructure improvements,
and help bolster investments in skilled workforce and
training programs and career technical education.
In 2012, Senate Bill 535, required the GGRF Investment
Plan to distribute a minimum of 25% of the money in
the fund projects located within disadvantaged
communities.
ASSEMBLY BILL 151 Specifically, AB 151 authorizes the extension of Cap-
and-Trade program and gives the legislature increased
oversight of the ARB by requiring the board to receive
the legislature’s input, guidance, and assistance prior to
adopting rules and regulations for the Scoping Plan and
the 2030 climate goals.
Additionally, the bill requires the ARB to prepare a
report for the legislature with policy guidance and
recommendations on the need for increased education,
career technical education, job training for a Just
Transitions to the green economy, and workforce
development in furtherance of the State’s climate goals.
Finally, AB 151 establishes the Compliance Offsets
Protocol Task Force to advise the board on the
development of new offset protocols and work with the
board to establish a multitiered system to incentivize
offset credits in disadvantaged communities and in the
State of California.
CONTACT Zachary Leary, Legislative Director
Office of Assemblywoman Autumn R. Burke
916.319.2062
AMENDED IN ASSEMBLY MARCH 2, 2017
california legislature—2017–18 regular session
ASSEMBLY BILL No. 151
Introduced by Assembly Members Burke and Cooper(Coauthors: Assembly Members Low Gipson, Grayson, Low, and
Rubio)
January 11, 2017
An act to amend Section 38561, 38562, and 38566 of, to add Section38567 to, and to add and repeal Section 38568 of, the Health and SafetyCode, relating to greenhouse gases.
legislative counsel’s digest
AB 151, as amended, Burke. California Global Warming SolutionsAct of 2006: market-based compliance mechanisms. mechanisms:scoping plan: report.
The(1) The California Global Warming Solutions Act of 2006 designates
the State Air Resources Board as the state agency charged withmonitoring and regulating sources of emissions of greenhouse gases.The state board is required to approve a statewide greenhouse gasemissions limit equivalent to the statewide greenhouse gas emissionslevel in 1990 to be achieved by 2020 and to ensure that statewidegreenhouse gas emissions are reduced to at least 40% below the 1990level by 2030.
The act requires the state board to prepare and approve a scopingplan for achieving the maximum technologically feasible andcost-effective reductions in greenhouse gas emissions and to updatethe scoping plan at least once every 5 years.
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This bill would require the state board to report to the appropriatepolicy and fiscal committees of the Legislature to receive input,guidance, and assistance before adopting guidelines and regulationsimplementing the scoping plan and a regulation ensuring statewidegreenhouse gas emissions are reduced to at least 40% below the 1990level by 2030.
This bill would require the state board, no later than January 1, 2019,and in conjunction with specified stakeholders, to report to theLegislature on the need for increased education, career technicaleducation, job training, and workforce development in ensuring thatstatewide greenhouse gas emissions are reduced to at least 40% belowthe statewide greenhouse gas emissions limit no later than December31, 2030, and as a result of the scoping plan, as specified.
The(2) The act authorizes the state board to include the use of
market-based compliance mechanisms and to adopt a regulation thatestablishes a system of market-based declining annual aggregateemissions limits for sources or categories of sources that emitgreenhouse gases, applicable from January 1, 2012, to December 31,2020, inclusive, as specified.
This bill would state the intent of the Legislature to enact legislationthat authorizes the state board to utilize a market-based compliancemechanism after December 31, 2020, in furtherance of the statewidegreenhouse gas emissions limit of at least 40% below the 1990 levelby 2030.
This bill would no longer limit the applicability of a regulation thatestablishes a system of market-based declining annual aggregateemissions limits for sources or categories of sources that emitgreenhouse gases from January 1, 2012, to December 31, 2020.
This bill would establish the Compliance Offsets Protocol Task Forcefor the purpose of investigating, analyzing, and providing guidance tothe state board in approving new offset protocols for a market-basedcompliance mechanism adopted pursuant to this part with a priorityon the development of new urban offset protocols, as specified. The billwould require the state board, in conjunction with the task force, todevelop a multitiered incentive system for compliance offset credits, asspecified.
Vote: majority. Appropriation: no. Fiscal committee: no yes.
State-mandated local program: no.
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The people of the State of California do enact as follows:
line 1 SECTION 1. It is the intent of the Legislature to enact later line 2 legislation to achieve the maximum technologically feasible and line 3 cost-effective reductions in greenhouse gas emissions in furtherance line 4 of the statewide greenhouse gas emissions limit target of at least line 5 40 percent below 1990 levels by 2030, pursuant to Section 38566 line 6 of the Health and Safety Code, by authorizing the State Air line 7 Resources Board to use a market-based compliance mechanism line 8 beyond the year 2020. line 9 SECTION 1. Section 38561 of the Health and Safety Code is
line 10 amended to read: line 11 38561. (a) (1) On or before January 1, 2009, the state board line 12 shall prepare and approve a scoping plan, as that term is understood line 13 by the state board, for achieving the maximum technologically line 14 feasible and cost-effective reductions in greenhouse gas emissions line 15 from sources or categories of sources of greenhouse gases by 2020 line 16 under this division. The line 17 (2) The state board shall consult with all state agencies with line 18 jurisdiction over sources of greenhouse gases, including the Public line 19 Utilities Commission and the State Energy Resources Conservation line 20 and Development Commission, on all elements of its plan that line 21 pertain to energy related matters energy-related matters, including, line 22 but not limited to, electrical generation, load based-standards or line 23 requirements, the provision of reliable and affordable electrical line 24 service, petroleum refining, and statewide fuel supplies to ensure line 25 the greenhouse gas emissions reduction activities to be adopted line 26 and implemented by the state board are complementary, line 27 nonduplicative, and can be implemented in an efficient and line 28 cost-effective manner. line 29 (b) The plan shall identify and make recommendations on direct line 30 emission emissions reduction measures, alternative compliance line 31 mechanisms, market-based compliance mechanisms, and potential line 32 monetary and nonmonetary incentives for sources and categories line 33 of sources that the state board finds are necessary or desirable to line 34 facilitate the achievement of the maximum feasible and line 35 cost-effective reductions of greenhouse gas emissions by 2020. line 36 (c) In making the determinations required by subdivision (b), line 37 the state board shall consider all relevant information pertaining line 38 to greenhouse gas emissions reduction programs in other states,
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line 1 localities, and nations, including the northeastern states of the line 2 United States, Canada, and the European Union. line 3 (d) The state board shall evaluate the total potential costs and line 4 total potential economic and noneconomic benefits of the plan for line 5 reducing greenhouse gases to California’s economy, environment, line 6 and public health, using the best available economic models, line 7 emission estimation techniques, and other scientific methods. line 8 (e) In developing its plan, the state board shall take into account line 9 the relative contribution of each source or source category to
line 10 statewide greenhouse gas emissions, and the potential for adverse line 11 effects on small businesses, and shall recommend a de minimis line 12 threshold of greenhouse gas emissions below which emission line 13 emissions reduction requirements will not apply. line 14 (f) In developing its plan, the state board shall identify line 15 opportunities for emission reductions emissions reduction measures line 16 from all verifiable and enforceable voluntary actions, including, line 17 but not limited to, carbon sequestration projects and best line 18 management practices. line 19 (g) The state board shall conduct a series of public workshops line 20 to give interested parties an opportunity to comment on the plan. line 21 The state board shall conduct a portion of these workshops in line 22 regions of the state that have the most significant exposure to air line 23 pollutants, including, but not limited to, communities with minority line 24 populations, communities with low-income populations, or both. line 25 (h) The state board shall update its plan for achieving the line 26 maximum technologically feasible and cost-effective reductions line 27 of greenhouse gas emissions at least once every five years. line 28 (i) (1) The state board shall report to the appropriate policy line 29 and fiscal committees of the Legislature to receive input, guidance, line 30 and assistance before adopting guidelines and regulations line 31 implementing the scoping plan adopted pursuant to this section. line 32 (2) A report to be submitted pursuant to this subdivision shall line 33 be submitted in compliance with Section 9795 of the Government line 34 Code. line 35 SEC. 2. Section 38562 of the Health and Safety Code is line 36 amended to read: line 37 38562. (a) On or before January 1, 2011, the state board shall line 38 adopt greenhouse gas emission emissions limits and emission line 39 emissions reduction measures by regulation to achieve the line 40 maximum technologically feasible and cost-effective reductions
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line 1 in greenhouse gas emissions in furtherance of achieving the line 2 statewide greenhouse gas emissions limit, to become operative line 3 beginning on January 1, 2012. line 4 (b) In adopting regulations pursuant to this section and Part 5 line 5 (commencing with Section 38570), to the extent feasible and in line 6 furtherance of achieving the statewide greenhouse gas emissions line 7 limit, the state board shall do all of the following: line 8 (1) Design the regulations, including distribution of emissions line 9 allowances where appropriate, in a manner that is equitable, seeks
line 10 to minimize costs and maximize the total benefits to California, line 11 and encourages early action to reduce greenhouse gas emissions. line 12 (2) Ensure that activities undertaken to comply with the line 13 regulations do not disproportionately impact low-income line 14 communities. line 15 (3) Ensure that entities that have voluntarily reduced their line 16 greenhouse gas emissions prior to the implementation of this line 17 section receive appropriate credit for early voluntary reductions. line 18 (4) Ensure that activities undertaken pursuant to the regulations line 19 complement, and do not interfere with, efforts to achieve and line 20 maintain federal and state ambient air quality standards and to line 21 reduce toxic air contaminant emissions. line 22 (5) Consider cost-effectiveness of these regulations. line 23 (6) Consider overall societal benefits, including reductions in line 24 other air pollutants, diversification of energy sources, and other line 25 benefits to the economy, environment, and public health. line 26 (7) Minimize the administrative burden of implementing and line 27 complying with these regulations. line 28 (8) Minimize leakage. line 29 (9) Consider the significance of the contribution of each source line 30 or category of sources to statewide emissions of greenhouse gases. line 31 (c) In furtherance of achieving the statewide greenhouse gas line 32 emissions limit, by January 1, 2011, the The state board may adopt line 33 a regulation that establishes a system of market-based declining line 34 annual aggregate emission emissions limits for sources or line 35 categories of sources that emit greenhouse gas emissions, line 36 applicable from January 1, 2012, to December 31, 2020, inclusive, line 37 gases that the state board determines will achieve the maximum line 38 technologically feasible and cost-effective reductions in greenhouse line 39 gas emissions, in the aggregate, from those sources or categories line 40 of sources.
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line 1 (d) Any regulation adopted by the state board pursuant to this line 2 part or Part 5 (commencing with Section 38570) shall ensure all line 3 of the following: line 4 (1) The greenhouse gas emission emissions reductions achieved line 5 are real, permanent, quantifiable, verifiable, and enforceable by line 6 the state board. line 7 (2) For regulations pursuant to Part 5 (commencing with Section line 8 38570), the reduction is in addition to any greenhouse gas emission line 9 emissions reduction otherwise required by law or regulation, and
line 10 any other greenhouse gas emission emissions reduction that line 11 otherwise would occur. line 12 (3) If applicable, the greenhouse gas emission emissions line 13 reduction occurs over the same time period and is equivalent in line 14 amount to any direct emission reduction required pursuant to this line 15 division. line 16 (e) The state board shall rely upon the best available economic line 17 and scientific information and its assessment of existing and line 18 projected technological capabilities when adopting the regulations line 19 required by this section. line 20 (f) The state board shall consult with the Public Utilities line 21 Commission in the development of the regulations as they affect line 22 electricity and natural gas providers in order to minimize line 23 duplicative or inconsistent regulatory requirements. line 24 (g) After January 1, 2011, the The state board may revise line 25 regulations adopted pursuant to this section and adopt additional line 26 regulations to further the provisions of this division. line 27 SEC. 3. Section 38566 of the Health and Safety Code is line 28 amended to read: line 29 38566. (a) In adopting rules and regulations to achieve the line 30 maximum technologically feasible and cost-effective greenhouse line 31 gas emissions reductions authorized by this division, the state line 32 board shall ensure that statewide greenhouse gas emissions are line 33 reduced to at least 40 percent below the statewide greenhouse gas line 34 emissions limit no later than December 31, 2030. line 35 (b) (1) The state board shall report to the appropriate policy line 36 and fiscal committees of the Legislature to receive input, guidance, line 37 and assistance before adopting rules and regulations implementing line 38 this section.
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line 1 (2) A report to be submitted pursuant to this subdivision shall line 2 be submitted in compliance with Section 9795 of the Government line 3 Code. line 4 SEC. 4. Section 38567 is added to the Health and Safety Code, line 5 to read: line 6 38567. (a) The Compliance Offsets Protocol Task Force is line 7 hereby established for the purpose of investigating, analyzing, and line 8 providing guidance to the state board in approving new offset line 9 protocols for a market-based compliance mechanism adopted
line 10 pursuant to this part with a priority on the development of new line 11 urban offset protocols. line 12 (b) The Compliance Offsets Protocol Task Force shall consist line 13 of multiple stakeholders, including, but not limited to, all of the line 14 following: line 15 (1) Scientists. line 16 (2) Representatives from air pollution control and air quality line 17 management districts. line 18 (3) Carbon market experts. line 19 (4) Environmental justice advocates. line 20 (5) Labor and workforce representatives. line 21 (6) Forestry and agriculture experts. line 22 (7) Business representatives. line 23 (c) The state board, in conjunction with the Compliance Offsets line 24 Protocol Task Force, shall develop a multitiered incentive system line 25 for compliance offset credits in the following order: line 26 (1) Offsets in disadvantaged communities, as identified pursuant line 27 to Section 39711. line 28 (2) Offsets in communities with stationary sources that emit line 29 greenhouse gases and are regulated by the state board. line 30 (3) Offsets in the state or on Native American or tribal lands. line 31 (4) Offsets in territories linked to the state through a greenhouse line 32 gas emission trading program. line 33 (5) Offsets in the United States. line 34 SEC. 5. Section 38568 is added to the Health and Safety Code, line 35 to read: line 36 38568. (a) No later than January 1, 2019, the state board shall line 37 report to the Legislature on the need for increased education, line 38 career technical education, job training, and workforce line 39 development in ensuring that statewide greenhouse gas emissions line 40 are reduced to at least 40 percent below the statewide greenhouse
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line 1 gas emissions limit no later than December 31, 2030, pursuant to line 2 Section 38566, and as a result of the scoping plan, adopted line 3 pursuant to Section 38561. The state board shall work in line 4 conjunction with all of the following: line 5 (1) Secretary of Labor and Workforce Development. line 6 (2) California Workforce Development Board. line 7 (3) State Department of Education. line 8 (4) California Community Colleges. line 9 (5) Trustees of the California State University.
line 10 (6) Regents of the University of California. line 11 (7) Interested stakeholders. line 12 (8) Green Collar Jobs Council, established pursuant to Section line 13 15002 of the Unemployment Insurance Code. line 14 (b) The report shall include, but need not limited to, providing line 15 policy guidance and recommendations on all of the following: line 16 (1) Creating and retaining jobs and stimulating economic line 17 activity in the state. line 18 (2) Preparing the state’s pupils and students with career line 19 technical education for the green economy. line 20 (3) Preparing the state’s pupils, students, and workers with the line 21 skills necessary to successfully compete in the global economy. line 22 (4) Developing worker retraining programs to assist the existing line 23 workforce with the necessary tools to upgrade their skills resulting line 24 in a just transition, as that term is defined by the state board. line 25 (5) Responding to the job creation and workforce needs of the line 26 state’s new and emerging industries, including emerging line 27 technologies that will result in greater greenhouse gas emissions line 28 reductions. line 29 (6) Integrating workforce skill requirements with the rapidly line 30 changing local and regional labor markets. line 31 (7) Developing job training programs to assist specific line 32 populations, such as at-risk youth, displaced workers, veterans, line 33 and others facing barriers to employment. line 34 (8) Targeting workforce development programs and activities line 35 in disadvantaged communities, as identified pursuant to Section line 36 39711, and communities that are located near entities regulated line 37 by the state board pursuant to this division. line 38 (9) Identifying and leveraging state and federal funding line 39 resources, including, but not limited to, moneys collected through line 40 a market-based compliance mechanism, developed pursuant to
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line 1 Part 5 (commencing with Section 38570), to implement the line 2 recommendations made in the report consistent with the regulatory line 3 purposes of this division. line 4 (c) (1) A report to be submitted pursuant to this section shall line 5 be submitted in compliance with Section 9795 of the Government line 6 Code. line 7 (2) Pursuant to Section 10231.5 of the Government Code, this line 8 section is repealed on January 1, 2023.
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PROBLEM California’s landmark climate change law, AB 32, required the Air Resources Board (ARB) to develop regulations and authorized market mechanisms to reduce California's greenhouse gas (GHG) emissions to 1990 levels by the year of 2020. SB 32 requires an additional 40 percent reduction by 2030. As the state prepares a comprehensive strategy to achieve the 2030 target, questions have been raised about the most effective and equitable approach, the role of market mechanisms like cap and trade or a carbon tax and how best to support clean air, sustain economic growth, and improve outcomes for disadvantaged communities.
Solution AB 378 emphasizes principles of accountability and equity as California continues it its efforts to reduce greenhouse gases. Specifically, AB 378 requires the ARB to account for the social costs of GHG emissions. AB 378 also authorizes the ARB to continue using a carbon-pricing market mechanism to the meet the statewide greenhouse gas reduction target established by SB 32, while adhering to principles that address equity issues that still persist in California’s disadvantaged communities. AB 378 also requires the ARB, in meeting the SB 32 target, to adopt an effective and equitable mix of measures, and ensure that these measures support achieving air quality and other public health goals.
BACKGROUND AB 32 required the 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. AB 32 also authorized ARB to adopt the cap and trade regulation, which is in effect through 2020. 2016 legislation (SB 32 and AB 197) further requires ARB to ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by 2030, prioritize direct emission reductions, and consider social costs when adopting regulations to meet the 2030 limit.
STATUS INTRODUCED ON FEBRUARY 9TH - TO BE HEARD IN ASSEMBLY COMMITTEE ON NATURAL RESOURCES.
SUPPORT
American Lung Association Asian Pacific Environmental Network California Environmental Justice Alliance California League of Conservation Voters California Natural Gas Vehicle Coalition Center for Race, Poverty and the Environment Clean Energy Fuels Coalition for Clean Air Environment California Environmental Defense Fund Greenlining Institute Leadership Counsel for Justice and Accountability Natural Resources Defense Council NextGen Climate America Public Advocates State Building and Construction Trades Council Union of Concerned Scientists
OPPOSITION
CONTACT Mandi Strella [email protected] Office of Assemblymember Garcia 916-319-2058
Assembly Bill 378 Climate Equity Act
Assemblymembers C. Garcia, Holden, and E. Garcia.
california legislature—2017–18 regular session
ASSEMBLY BILL No. 378
Introduced by Assembly Members Cristina Garcia, Holden, andEduardo Garcia
(Coauthors: Assembly Members Bloom, Bonta, Eggman, Friedman,Gomez, Jones-Sawyer, Kalra, McCarty, Reyes, Mark Stone,Thurmond, and Ting)
February 9, 2017
An act to amend Section 38562.5 of, and to add Section 38567 to,the Health and Safety Code, relating to greenhouse gases.
legislative counsel’s digest
AB 378, as introduced, Cristina Garcia. California Global WarmingSolutions Act of 2006: regulations.
The California Global Warming Solutions Act of 2006 designatesthe State Air Resources Board as the state agency charged withmonitoring and regulating sources of emissions of greenhouse gases.The act authorizes the state board to include the use of market-basedcompliance mechanisms. The act requires the state board to approve astatewide greenhouse gas emissions limit equivalent to the statewidegreenhouse gas emissions level in 1990 to be achieved by 2020 and toensure that statewide greenhouse gas emissions are reduced to at least40% below the 1990 level by 2030.
The act requires the state board, when adopting rules and regulationsto achieve greenhouse gas emissions reductions beyond the statewidegreenhouse gas emissions limit and to protect the state’s most impactedand disadvantaged communities, to follow specified requirements,consider the social costs of the emissions of greenhouse gases, andprioritize specified emission reduction rules and regulations.
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This bill would additionally require the state board to consider andaccount for the social costs of the emissions and greenhouse gases whenadopting those rules and regulations. The bill would authorize the stateboard to adopt or subsequently revise new regulations that establish amarket-based compliance mechanism, applicable from January 1, 2021,to December 31, 2030, to complement direct emissions reductionmeasures in ensuring that statewide greenhouse gas emissions arereduced to at least 40% below the 1990 level by 2030.
This bill would require the state board, in ensuring that statewidegreenhouse gas emissions are reduced to at least 40% below the 1990level by 2030, to adopt the most effective and equitable mix of emissionsreduction measures and ensure that emissions reduction measurescollectively and individually support achieving air quality and otherenvironmental and public health goals.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
The people of the State of California do enact as follows:
line 1 SECTION 1. The Legislature finds and declares all of the line 2 following: line 3 (a) It is a primary objective of the state to reduce greenhouse line 4 gas emissions, which is critical for the protection of all areas of line 5 the state but especially for the state’s most disadvantaged line 6 communities, which will be disproportionately impacted by climate line 7 change and emissions from sources of greenhouse gases, including line 8 short-lived climate pollutants, as well as criteria pollutants and line 9 toxic air contaminants.
line 10 (b) While low-income communities and communities of color line 11 in the state suffer from some of the worst air quality in the nation, line 12 the state has been and must continue to be a leader in making line 13 investments in historically disadvantaged communities. line 14 (c) Achieving the state’s climate and air quality goals in an line 15 equitable and effective manner will require a mix of direct line 16 regulations and incentives that hold major emitters accountable line 17 for the social costs of their emissions, protect the state’s economy, line 18 and direct investments to communities across the state. line 19 SEC. 2. Section 38562.5 of the Health and Safety Code is line 20 amended to read:
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line 1 38562.5. (a) When adopting rules and regulations pursuant line 2 to this division to achieve emissions reductions beyond the line 3 statewide greenhouse gas emissions limit and to protect the state’s line 4 most impacted and disadvantaged communities, the state board line 5 shall follow the requirements in subdivision (b) of Section 38562, line 6 consider and account for the social costs of the emissions of line 7 greenhouse gases, and prioritize both of the following: line 8 (a) line 9 (1) Emission reduction rules and regulations that result in direct
line 10 emission reductions at large stationary sources of greenhouse gas line 11 emissions sources and direct emission reductions from mobile line 12 sources. line 13 (b) line 14 (2) Emission reduction rules and regulations that result in direct line 15 emission reductions from sources other than those specified in line 16 subdivision (a). paragraph (1). line 17 (b) The state board may adopt or subsequently revise new line 18 regulations that establish a market-based compliance mechanism line 19 developed pursuant to Part 5 (commencing with Section 38570), line 20 applicable from January 1, 2021, to December 31, 2030, to line 21 complement direct emissions reduction measures in ensuring the line 22 reductions in greenhouse gas emissions required pursuant to line 23 Section 38566. line 24 SEC. 3. Section 38567 is added to the Health and Safety Code, line 25 to read: line 26 38567. In furtherance of ensuring the reductions in greenhouse line 27 gas emissions required pursuant to Section 38566 and consistent line 28 with this division, the state board shall do all of the following: line 29 (a) Adopt the most effective and equitable mix of emissions line 30 reduction measures to achieve the 2030 goal. line 31 (b) Ensure that emissions reduction measures collectively and line 32 individually support achieving air quality and other environmental line 33 and public health goals.
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To: Silicon Valley Leadership Group Environment Committee
From: Lauren Boyd, Water Resources Associate, Silicon Valley Leadership Group
Re: AB 388 (Mullin) – Greenhouse Gas Reduction Fund: wetland restoration projects
Date: April 7, 2017
Issue: Should some greenhouse gas reduction fund moneys be allocated to the reuse of dredged
material for wetland restoration projects?
Recommendation: Support.
Summary:
This bill would specify that the legislature may appropriate greenhouse gas reduction fund moneys to the
“reuse of dredged materials for wetland restoration projects,” including those projects that provide “flood
protection” and “carbon sequestration,” as an investment that reduces greenhouse gas emissions.
Background:
Greenhouse Gas Reduction Fund
California’s landmark climate legislation, AB 32 (Pavley), created the Greenhouse Gas Reduction Fund.
This fund is comprised of moneys gathered by the State Air Resources Board through market-based
compliance mechanisms – currently, the auction proceeds from cap-and-trade – to reduce greenhouse
gas emissions. The Legislature and Governor are able to appropriate moneys from the fund to reduce
greenhouse gas emissions through investments in several areas, including water use and supply, land
and natural resource conservation and management, forestry, and sustainable agriculture. In Fiscal Year
2016-2017 the Legislature and Governor appropriated $900 million to programs that support
transportation and sustainable communities, clean energy and energy efficiency, and natural resources
and waste diversion.
Beneficial Reuse of Dredged Materials
The “beneficial reuse” of dredged materials is a priority for the San Francisco Bay Region. Dredging is the
removal of sediment and debris from waterways, and is predominantly used by the U.S. Army Corps of
Engineers (ACOE) and other Federal entities to ensure safe navigation channels for boats and ships.
These dredged materials were placed at in-Bay disposal sites for most of the 20th Century, but a Long
Term Management Strategy (LTMS) program for the SF Bay Region is reducing in-Bay disposal and
increasing the beneficial reuse of dredged materials.
Dredged materials can be beneficially reused for wetland creation and restoration, as well as upland
levee maintenance and construction fill. Tidal wetland restoration requires sediment, such as the
sediment dredged from the Bay, to restore damaged wetlands to their appropriate height. These healthy,
restored wetlands can then provide many benefits to the economy and the environment, including
adjusting to sea level rise and reducing the impacts of storm surges. From 2001 to 2013 the LTMS
program achieved 44% beneficial reuse of dredged materials at large habitat restoration sites in the SF
Bay as they transitioned from in-Bay disposal to beneficial reuse.
This reuse is often and increasingly economically infeasible. The distance from dredging sites to
beneficial reuse sites, as well as the lack of offloading equipment at sites, poses economic problems.
Additionally, ACOE requires costs exceeding their Federal Standard, or the least costly dredged material
disposal option, to be paid by a non-Federal entity, which is often a state or local agency or nonprofit.
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These additional costs mean that dredged materials are disposed of 55 miles off-shore in the ocean
rather than employed for beneficial reuse.
Fiscal Impact:
No additional state costs. Moneys would be appropriated from the Greenhouse Gas Reduction Fund.
Analysis:
This bill would further the Leadership Group’s goal of supporting wetland restoration and flood mitigation
efforts in the SF Bay through increased funding for restoration projects. Specifically, moneys from the
Greenhouse Gas Reduction Fund would allow for restoration projects to continue relying on the beneficial
reuse of dredged materials for sediment. This is critical given that sediment levels in the SF Bay have
dropped dramatically over the past decade and reduced the sediment available for wetland restoration.
Without sediment from the beneficial reuse of dredged materials, it may be difficult for restoration projects
to restore wetlands.
The Leadership Group’s support for wetland restoration is founded on its tangible benefits for quality of
life and economic health in the region. Wetland restoration not only restores habitat and provides
increased recreational opportunities along the SF Bay shoreline, it also provides protection from sea level
rise and the associated increased flood risk to businesses. The Bay Area Council Economic Institute
estimates $10.4 billion in infrastructure damages to the SF Bay Area during the next 100-year storm
event, and these damages will be exacerbated by sea level rise. Healthy, restored wetlands can help
lessen the impacts of these storms by absorbing flood water and absorbing the impacts of storm surges.
Additionally, this bill would help further the Leadership Group’s goal of mitigating the effects of climate
change. Tidal wetlands have the potential to sequester greenhouse gases from the atmosphere and store
carbon, which can help reduce the impacts of greenhouse gas emissions on the environment. Although
allowing greenhouse gas reduction funds to be used for the beneficial reuse of wetland restoration will
necessarily mean that other investments will receive fewer allocations, the bill does not specify an amount
of continuous appropriations to this item. Instead, the bill adds language to the existing Health and Safety
Code to clarify that beneficial reuse qualifies for greenhouse gas fund investments.
Status: Ordered to third reading in Assembly on April 6, 2017.
Support: Audubon California; AZUL; Bay Planning Coalition; California Coastal Protection Network;
California Coastkeeper Alliance; California League of Conservation Voters; Citizens Committee to
Complete the Refuge; Coastal Environmental Rights Foundation; Defenders of Wildlife; Environmental
Justice Coalition for Water; Humboldt Baykeeper; San Francisco Baykeeper; Seventh Generation
Advisors; Trust for Public Land; WILDCOAST
Opposition: None on File
1
To: Silicon Valley Leadership Group Environment Committee
From: Lauren Boyd, Water Resources Associate, Silicon Valley Leadership Group
RE: AB 851 (Caballero) – Local agency design-build projects
Date: April 10, 2017
Issue: Should special districts that provide or operate specified services be allowed to use the design-
build process for certain public works projects?
Recommendation: Support.
Summary:
This bill would allow special districts that operate “flood protection,” “habitat restoration or enhancement,”
“groundwater recharge or storage,” “surface water storage,” “water treatment facilities,” “wastewater
facilities,” “solid waste management facilities,” “water recycling facilities,” or “fire protection facilities” to
use the design-build procurement process for projects related to those services.
Existing legislation is restricted to special districts that operate “wastewater facilities,” solid waste
management facilities,” “water recycling facilities,” or “fire protection facilities,” and are constructing “local
or regional” facilities for those services.
Background:
Design-Build Procurement Process
State and local agencies grant contracts for the construction of public works projects. Historically, the
most common type of contract is a design-bid-build contract, but there is an increasing shift toward
design-build contracts. In the design-bid-build procurement process, local agencies grant separate
contracts for the design of a project and the construction of a project. In the design-build procurement
process, there is one contract for both the construction and the design of a project. According to a study
commissioned by the Design Build Institute of America, 59 percent of the construction dollars spent in
California is on design-build projects. While there are advantages and disadvantages to each type of
contract, the design-build process is praised as conducive to projects that are on-schedule, cost-effective,
high-quality, and at reduced risks. These efficiencies are largely credited to the increased collaboration
between the integration of the design and construction components of the project.
Over the past fifteen years, legislation has enabled state and local agencies to use the design-build
procurement process for the construction of public works projects. SB 785 (2014) repealed and
condensed these laws to enable state and local agencies to use the design-build process provided that
they follow a specific procurement process and satisfy specific workforce requirements. According to SB
785 legislative bill analyses, there was opposition to SB 785 from several construction and build trade
associations regarding its workforce requirements.
Public Works Projects
Local agencies must be responsive to the state’s aging infrastructure and the state’s changing climate.
The American Society of Civil Engineers’s 2017 Infrastructure Report Card estimates that there are $44.5
billion in drinking water infrastructure needs and $26.2 billion in wastewater infrastructure needs over the
next 20 years. Beyond the 20-year investment time frame, there is also a need for nimble infrastructure
investments that respond to the state climate’s interchange between years of extreme drought and surges
of extreme storms. The recent disasters at Oroville Dam and Anderson Dam underscore these dual
needs: Both dams are dilapidated and were unable to adequately respond to an influx of rain after years
2
of drought. Local agencies will need to be responsive to these immediate and long-term needs for public
works projects.
Fiscal Impact: Unknown to date. Legislative bill analyses for SB 785 (2014) identified that overall cost
may increase due to a new bidding process or decrease due to increased efficiencies from the design-
build process. The bill would allow local agencies the option to choose design-build if it is deemed more
cost-effective than other delivery methods.
Analysis:
This bill would help advance several Silicon Valley Leadership Group priority items, including ensuring
safe and reliable water supplies for Silicon Valley and supporting wetland restoration and flood mitigation
efforts throughout the San Francisco Bay Area. Specifically, the bill would help advance these goals by
allowing the Santa Clara Valley Water District (SCVWD) – a special district that is responsible for or
involved in the provision of water supplies, flood protection, and habitat restoration for much of the Silicon
Valley – to enter into design-build contracts.
SCVWD, as well as other qualified special districts throughout the state, would be able to choose
between design-build and design-bid-build contracts as appropriate for a given projects. Design-build may
not be appropriate for every project, but they would be able to take advantage of the cost-effectiveness,
flexibility, timeliness, and reduced risk that can be associated with design-build projects. This option will
be critical as SCVWD approaches water supply, flood protection, and habitat restoration capital
improvement projects to make infrastructure improvements and adjust to climate change. For example,
SCVWD may look at the design-build process for capital improvements to Rinconada Water Treatment
Plant, Anderson Dam, or projects on the SF Bay Shoreline, which are major components of the Silicon
Valley water system.
Status: Assembly Committee on Local Government. Hearing on April 26, 2017.
Support: Santa Clara Valley Water District (Sponsor).
Opposition: None on file.
