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AB-1236 Public resources: greenhouse gases: recycling: California Environmental Quality Act.(2019-2020)

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Date Published: 04/11/2019 09:00 PM
AB1236:v97#DOCUMENT

Amended  IN  Assembly  April 11, 2019
Amended  IN  Assembly  April 01, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1236


Introduced by Assembly Members Lackey and Flora

February 21, 2019


An act to amend Sections 38562 and 39719 of add Section 38591.5 to the Health and Safety Code, and to add Section Sections 21080.06 and 42999.1 to, and to add Chapter 13.2 (commencing with Section 42660) to Part 3 of Division 30 of, the Public Resources Code, relating to use of waste products, and making an appropriation therefor. products.


LEGISLATIVE COUNSEL'S DIGEST


AB 1236, as amended, Lackey. Public resources: greenhouse gases: recycling: California Environmental Quality Act.
(1) 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 act authorizes the state board to include the use of market-based compliance mechanisms. The act authorizes the state board to adopt a regulation that establishes a system of market-based declining annual aggregate emissions limits for sources or categories of sources that emit greenhouse gases, applicable from January 1, 2021, to December 31, 2030, as specified. Existing law establishes the Compliance Offsets Protocol Task Force to provide guidance to the state board in approving new offset protocols for a market-based compliance mechanism.
This bill bill, no later than January 1, 2022, would require the state board for a market-based compliance mechanism applicable from January 1, 2021, to December 31, 2030, to develop and adopt, in consultation with the Compliance Offsets Protocol Task Force, investigate the potential for a carbon offset compliance protocol for recycled product manufacturing no later than January 1, 2022. manufacturing.
(2) Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. Existing law continuously appropriates 35% of the annual proceeds of the fund for transit, affordable housing, and sustainable communities programs and 25% of the annual proceeds of the fund for certain components of a specified high-speed rail project.
This bill, beginning in the 2019–2020 fiscal year, would continuously appropriate bill would authorize $200,000,000 from the annual proceeds of the fund to be subsequently appropriated to the Department of Resources Recycling and Recovery for the department’s Recycled Fiber, Plastic, and Glass Grant Program.
(3) Existing law, the California Environmental Quality Act (CEQA), requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA exempts certain projects from its requirements.
This bill would require the Department of Resources Recycling and Recovery, no later than January 1, 2030, 2023, to prepare a program environmental impact report for organic waste composting facilities, as specified. The bill would require the Office of Planning and Research, in consultation with the department, to identify and report to the appropriate fiscal and policy committees of the Legislature on the regulatory barriers and opportunities to streamline local and state approval processes to help facilitate the achievement of the state’s recycling and renewable energy generation goals.
(4) The California Integrated Waste Management Act of 1989, which is administered by the department, generally regulates the management and recycling of solid waste.

The Administrative Procedure Act generally governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law.

This bill would establish the Recycled Materials Innovation Grant Program to be administered by the department, in collaboration with the Office of Planning and Research, to offer competitive grants to create innovative uses for recyclable materials that have not historically been recycled domestically, as specified. The bill would require the department to award no more than 5 grants of $20,000,000 each, with moneys made available from the General Fund upon appropriation. The bill would require the department to develop administrative guidelines and other requirements for the administration of the program, and would exempt the program from the requirements of the Administrative Procedure Act. program.
Vote: TWO_THIRDSMAJORITY   Appropriation: YESNO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 This bill shall be known, and may be cited, as the Recycle It Here Act.
SEC. 2.Section 38562 of the Health and Safety Code, as amended by Section 4 of Chapter 135 of the Statutes of 2017, is amended to read:
38562.

(a)On or before January 1, 2011, the state board shall adopt greenhouse gas emissions limits and emissions reduction measures by regulation to achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions in furtherance of achieving the statewide greenhouse gas emissions limit, to become operative beginning on January 1, 2012.

(b)In adopting regulations pursuant to this section and Part 5 (commencing with Section 38570), to the extent feasible and in furtherance of achieving the statewide greenhouse gas emissions limit, the state board shall do all of the following:

(1)Design the regulations, including distribution of emissions allowances where appropriate, in a manner that is equitable, seeks to minimize costs and maximize the total benefits to California, and encourages early action to reduce greenhouse gas emissions.

(2)Ensure that activities undertaken to comply with the regulations do not disproportionately impact low-income communities.

(3)Ensure that entities that have voluntarily reduced their greenhouse gas emissions prior to the implementation of this section receive appropriate credit for early voluntary reductions.

(4)Ensure that activities undertaken pursuant to the regulations complement, and do not interfere with, efforts to achieve and maintain federal and state ambient air quality standards and to reduce toxic air contaminant emissions.

(5)Consider cost-effectiveness of these regulations.

(6)Consider overall societal benefits, including reductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health.

(7)Minimize the administrative burden of implementing and complying with these regulations.

(8)Minimize leakage.

(9)Consider the significance of the contribution of each source or category of sources to statewide emissions of greenhouse gases.

(c)(1)Unless otherwise required by context, terms in this subdivision shall have the definitions that apply pursuant to Section 95802 of Title 17 of the California Code of Regulations, as they read on January 1, 2017.

(2)The state board may adopt a regulation that establishes a system of market-based declining annual aggregate emissions limits for sources or categories of sources that emit greenhouse gases, applicable from January 1, 2012, to December 31, 2030, inclusive, that the state board determines will achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions, in the aggregate, from those sources or categories of sources. In adopting a regulation applicable from January 1, 2021, to December 31, 2030, inclusive, pursuant to this subdivision, the state board shall do all of the following:

(A)(i)Establish a price ceiling. In establishing the price ceiling, the state board shall consider, using the best available science, all of the following:

(I)The need to avoid adverse impacts on resident households, businesses, and the state’s economy.

(II)The 2020 tier prices of the allowance price containment reserve.

(III)The full social cost associated with emitting a metric ton of greenhouse gases.

(IV)The auction reserve price.

(V)The potential for environmental and economic leakage.

(VI)The cost per metric ton of greenhouse gas emissions reductions to achieve the statewide emissions targets established in Sections 38550 and 38566.

(ii)To implement the price ceiling, the state board shall develop a mechanism that consists of both of the following:

(I)Allowances remaining in the allowance price containment reserve as of December 31, 2020, shall be utilized solely for the purpose of sale at the price ceiling established by this section.

(II)If the allowances from the allowance price containment reserve are exhausted, the state board shall offer covered entities additional metric tons at the price ceiling if needed for compliance. All moneys generated pursuant to this clause shall be expended by the state board to achieve emissions reductions, on at least a metric ton for metric ton basis, that are real, permanent, quantifiable, verifiable, enforceable by the state board and in addition to any greenhouse gas emission reduction otherwise required by law or regulation and any other greenhouse gas emission reduction that otherwise would occur.

(B)Establish two price containment points at levels below the price ceiling. The state board shall offer to covered entities nontradable allowances for sale at these price containment points. The price containment points shall be established using two-thirds, divided equally, of the allowances in the allowance price containment reserve as of December 31, 2017.

(C)Require that current vintage allowances designated by the state board for auction that remain unsold in the auction holding account for more than 24 months to be transferred to the allowance price containment reserve.

(D)Evaluate and address concerns related to overallocation in the state board’s determination of the number of available allowances for years 2021 to 2030, inclusive, as appropriate.

(E)(i)Establish offset credit limits according to the following:

(I)From January 1, 2021, to December 31, 2025, inclusive, a total of 4 percent of a covered entity’s compliance obligation may be met by surrendering offset credits of which no more than one-half may be sourced from projects that do not provide direct environmental benefits in the state.

(II)From January 1, 2026, to December 31, 2030, inclusive, a total of 6 percent of a covered entity’s compliance obligation may be met by surrendering offset credits of which no more than one-half may be sourced from projects that do not provide direct environmental benefits in the state.

(ii)For purposes of this subparagraph, “direct environmental benefits in the state” are the reduction or avoidance of emissions of any air pollutant in the state or the reduction or avoidance of any pollutant that could have an adverse impact on waters of the state.

(F)(i)Develop approaches to increase offset projects in the state considering guidance provided by the Compliance Offsets Protocol Task Force, established pursuant to Section 38591.1.

(ii)Develop and adopt, in consultation with the Compliance Offsets Protocol Task Force, established pursuant to Section 38591.1, a carbon offset compliance protocol for recycled product manufacturing no later than January 1, 2022.

(G)Set industry assistance factors for allowance allocation commencing in 2021 at the levels applicable in the compliance period of 2015 to 2017, inclusive. The state board shall apply a declining cap adjustment factor to the industry allocation equivalent to the overall statewide emissions declining cap using the methodology from the compliance period of 2015 to 2017, inclusive.

(H)Establish allowance banking rules that discourage speculation, avoid financial windfalls, and consider the impact on complying entities and volatility in the market.

(I)Report to the Legislature, by December 31, 2025, on the progress toward meeting the greenhouse gas emissions reduction targets established pursuant to Sections 38550 and 38566 and the leakage risk posed by the regulation. The state board shall include recommendations to the Legislature on necessary statutory changes to the program to reduce leakage, including the potential for a border carbon adjustment, while maintaining the state’s ability to reach its targets.

(J)(i)Report to the Legislature, in consultation with the Independent Emissions Market Advisory Committee, established pursuant to Section 38591.2, if two consecutive auctions exceed the lower of the price containment levels established pursuant to subparagraph (B). The report shall assess the potential for allowance prices to reach the price ceiling for multiple auctions.

(ii)A report submitted to the Legislature pursuant to this section shall be submitted in compliance with Section 9795 of the Government Code.

(K)Report to the relevant fiscal and policy committees of the Legislature, including the Joint Committee on Climate Change Policies, on all of the following:

(i)Updates to the scoping plan prepared pursuant to Section 38561 prior to adopting the update.

(ii)Updates on the implementation of the scoping plan prepared pursuant to Section 38561.

(iii)Updates on the implementation of the market-based compliance mechanism adopted pursuant to this subdivision.

(d)Any regulation adopted by the state board pursuant to this part or Part 5 (commencing with Section 38570) shall ensure all of the following:

(1)The greenhouse gas emission reductions achieved are real, permanent, quantifiable, verifiable, and enforceable by the state board.

(2)For regulations pursuant to Part 5 (commencing with Section 38570), the reduction is in addition to any greenhouse gas emission reduction otherwise required by law or regulation, and any other greenhouse gas emission reduction that otherwise would occur.

(3)If applicable, the greenhouse gas emission reduction occurs over the same time period and is equivalent in amount to any direct emission reduction required pursuant to this division.

(e)The state board shall rely upon the best available economic and scientific information and its assessment of existing and projected technological capabilities when adopting the regulations required by this section.

(f)The state board shall consult with the Public Utilities Commission in the development of the regulations as they affect electricity and natural gas providers in order to minimize duplicative or inconsistent regulatory requirements.

(g)The state board may revise regulations adopted pursuant to this section and adopt additional regulations to further the provisions of this division.

(h)This section shall remain in effect only until January 1, 2031, and as of that date is repealed, unless a later enacted statute which is enacted before that date, deletes or extends that date.

SEC. 3.Section 39719 of the Health and Safety Code is amended to read:
39719.

(a)The Legislature shall appropriate the annual proceeds of the fund for the purpose of reducing greenhouse gas emissions in this state in accordance with the requirements of Section 39712.

(b)To carry out a portion of the requirements of subdivision (a), the annual proceeds of the fund are continuously appropriated for the following:

(1)Beginning in the 2015–16 fiscal year, and notwithstanding Section 13340 of the Government Code, 35 percent of the annual proceeds of the fund are continuously appropriated, without regard to fiscal years, for transit, affordable housing, and sustainable communities programs as follows:

(A)Ten percent of the annual proceeds of the fund is hereby continuously appropriated to the Transportation Agency for the Transit and Intercity Rail Capital Program created by Part 2 (commencing with Section 75220) of Division 44 of the Public Resources Code.

(B)Five percent of the annual proceeds of the fund is hereby continuously appropriated to the Low Carbon Transit Operations Program created by Part 3 (commencing with Section 75230) of Division 44 of the Public Resources Code. Moneys shall be allocated by the Controller, according to requirements of the program, and pursuant to the distribution formula in subdivision (b) or (c) of Section 99312 of, and Sections 99313 and 99314 of, the Public Utilities Code.

(C)Twenty percent of the annual proceeds of the fund is hereby continuously appropriated to the Strategic Growth Council for the Affordable Housing and Sustainable Communities Program created by Part 1 (commencing with Section 75200) of Division 44 of the Public Resources Code. Of the amount appropriated in this subparagraph, no less than 10 percent of the annual proceeds of the fund shall be expended for affordable housing, consistent with the provisions of that program.

(2)Beginning in the 2015–16 fiscal year, notwithstanding Section 13340 of the Government Code, 25 percent of the annual proceeds of the fund is hereby continuously appropriated to the High-Speed Rail Authority for the following components of the initial operating segment and Phase I Blended System as described in the 2012 business plan adopted pursuant to Section 185033 of the Public Utilities Code:

(A)Acquisition and construction costs of the project.

(B)Environmental review and design costs of the project.

(C)Other capital costs of the project.

(D)Repayment of any loans made to the authority to fund the project.

(c)In determining the amount of annual proceeds of the fund for purposes of the calculation in subdivision (b), the funds subject to Section 39719.1 shall not be included.

(d)Beginning in the 2019–20 fiscal year, notwithstanding Section 13340 of the Government Code, two hundred million dollars ($200,000,000) of the annual proceeds of the fund is hereby continuously appropriated, without regard to fiscal years, to the Department of Resources Recycling and Recovery for the department’s Recycled Fiber, Plastic, and Glass Grant Program, authorized pursuant to Section 42999 of the Public Resources Code.

SEC. 2.

 Section 38591.5 is added to the Health and Safety Code, to read:

38591.5.
 No later than January 1, 2022, the state board shall investigate the potential for a carbon offset compliance protocol for recycled product manufacturing for the purposes of subdivision (c) of Section 38562 and a regulation applicable from January 1, 2021, to December 31, 2030.

SEC. 4.SEC. 3.

 Section 21080.06 is added to the Public Resources Code, to read:

21080.06.
 (a) No later than January 1, 2030, 2023, the Department of Resources Recycling and Recovery shall prepare a program environmental impact report for organic waste composting facilities to be used as guidance by a lead agency for the purposes of this division.
(b) The Office of Planning and Research, in consultation with the Department of Resources Recycling and Recovery, shall identify and report to the appropriate fiscal and policy committees of the Legislature on regulatory barriers and opportunities to streamline local and state approval processes to help facilitate the achievement of the state’s recycling and renewable energy generation goals.

SEC. 5.SEC. 4.

 Chapter 13.2 (commencing with Section 42660) is added to Part 3 of Division 30 of the Public Resources Code, to read:
CHAPTER  13.2. Recycled Materials Innovation Grant Program

42660.
 (a) The Recycled Materials Innovation Grant Program is hereby established to be administered by the department, in collaboration with the Office of Planning and Research, to offer competitive grants to create innovative uses for recyclable materials that have not historically been recycled domestically.
(b) (1) The department shall award no more than five grants of twenty million dollars ($20,000,000) each.
(2) Moneys from the General Fund shall be available upon appropriation by the Legislature for the purposes of this section.
(c) Qualified applicants for a grant shall include all of the following:
(1) For-profit businesses.
(2) Nonprofit organizations described in Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Sec. 501(c)(3)) that are exempt from taxation under Section 501(a) of that code (26 U.S.C. Sec. 501(a)).
(d) When awarding a grant, the department shall consider all of the following:
(1) The extent to which an applicant’s project will lead to a clear, measurable impact on the waste stream through prevention, reuse, and recycling.
(2) The extent to which an applicant’s project would address a specific waste prevention, reuse, or recycling infrastructure or market need in the state.
(3) The extent to which an applicant’s project is economically viable and sustainable after grant funding is exhausted.
(4) The extent to which an applicant shows sufficient business planning and management experience to ensure that the project is likely to succeed.
(e) Eligible uses for a grant shall include all of the following:
(1) Operation costs.
(2) Equipment.
(3) Capital improvements.
(f) (1)The department shall develop administrative guidelines and other requirements for the administration of the program.

(2)The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of the Part 1 of Division 3 of Title 2 of the Government Code) does not apply to this subdivision.

SEC. 5.

 Section 42999.1 is added to the Public Resources Code, to read:

42999.1.
 Upon appropriation by the Legislature, two hundred million dollars ($200,000,000) of the annual proceeds of the Greenhouse Gas Reduction Fund, created pursuant to Section 16428.8 of the Government Code, may be appropriated to the Department of Resources Recycling and Recovery for the department’s Recycled Fiber, Plastic, and Glass Grant Program, authorized pursuant to Section 42999.