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SB-1497 Polluters Pay Climate Cost Recovery Act of 2024.(2023-2024)

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Date Published: 04/25/2024 09:00 PM
SB1497:v97#DOCUMENT

Amended  IN  Senate  April 25, 2024
Amended  IN  Senate  March 20, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill
No. 1497

Introduced by Senator Menjivar
(Coauthor: Senator Stern)(Coauthors: Senators Gonzalez, Skinner, and Stern)
(Coauthor: Assembly Member Friedman)

February 16, 2024

An act to add Part 4.8 (commencing with Section 71370) to Division 34 of the Public Resources Code, relating to climate change, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


SB 1497, as amended, Menjivar. Polluters Pay Climate Cost Recovery Act of 2024.
The California Global Warming Solutions Act of 2006, until January 1, 2031, authorizes the State Air Resources Board to adopt a regulation establishing a system of market-based declining aggregate emissions limits for sources or categories of sources that emit greenhouse gases (market-based compliance mechanism) that meets certain requirements. Existing law establishes the Greenhouse Gas Reduction Fund and requires all moneys, except for fines and penalties, collected by the state board from the auction or sales of allowance as a part of a market-based compliance mechanism to be deposited into the fund and requires the Legislature to appropriate moneys in the fund for the purpose of reducing greenhouse gas emissions in the state, as provided.
Existing law, the California Climate Crisis Act, declares that it is the policy of the state both to achieve net-zero greenhouse gas emissions as soon as possible, but no later than 2045, and achieve and maintain net-negative greenhouse gas emissions thereafter, and to ensure that by 2045, statewide anthropogenic greenhouse gas emissions are reduced to at least 85% below the 1990 levels.
This bill would enact the Polluters Pay Climate Cost Recovery Act of 2024 and would establish the Polluters Pay Climate Cost Recovery Program to be administered by the California Environmental Protection Agency to require fossil fuel polluters to pay their fair share of the damage caused by the sale of their products during the covered period, which the bill would define as the time period between the 2000 and 2020 calendar years, inclusive, to relieve a portion of the burden from climate harms that is borne by California taxpayers. The bill would require the agency, within 90 days of the effective date of the act, to determine and publish a list of responsible parties, which the bill would define as an entity with a majority ownership interest in a business engaged in extracting or refining fossil fuel that, during the covered period, did business in the state or otherwise had sufficient contact with the state and is determined by the agency to be responsible for more than 1,000,000,000 metric tons of covered fossil fuel emissions, as defined, in aggregate, globally during the covered period.
This bill would require the agency, within one year of the effective date of the act, to conduct a climate cost study to, at a minimum, quantify the total damage amount, which the bill would define as all past and future climate harms and damages to the state through December 31, 2045. The bill would require the agency to update the climate cost study, not less frequently than every 2 years, through January 1, 2046. The bill would require the agency, within 60 days of the completion of the climate cost study, to determine and assess, as provided, a cost recovery demand for each responsible party listed, which represents the responsible party’s proportionate share of the total damage amount that is fairly and reasonably attributable to the covered fossil fuel emissions of the responsible party. The bill would require responsible parties to pay their cost recovery demand, as provided. The bill would require the collected cost recovery demands to be deposited in the Polluters Pay Climate Fund, which the bill would create in the State Treasury. The bill would continuously appropriate moneys in the fund to the agency would, upon appropriation by the Legislature, require moneys in the fund be expended for, among other things, qualifying expenditures, which the bill would define as expenditures for projects and programs to mitigate, adapt, or respond to the damages and costs caused to the state from climate change, thereby making an appropriation. change. The bill would require the agency to determine the initial implementation costs for the act, as provided, and would require the agency to assess an amount allocated equitably among responsible parties to cover those costs.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: YESNO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 This act shall be known, and may be cited, as the Polluters Pay Climate Cost Recovery Act of 2024.

SEC. 2.

 (a) The Legislature finds and declares all of the following:
(1) Climate change, resulting primarily from the combustion of fossil fuels, is an immediate and grave threat to the communities, environment, natural resources, and economy of the state.
(2) Severe consequences of climate change, including rising sea levels, increasing temperatures, extreme weather events, flooding, heat waves, loss of biodiversity, and other climate change-driven ecosystem threats, have already materialized and constitute an emergency for the state, which must now take urgent action to prevent further damage, protect communities, and transition to clean renewable energy.
(3) California’s most vulnerable populations, including low-income communities and communities of color, children, and the elderly, are disproportionately harmed by the climate emergency.
(4) The state must develop and implement protective measures to counteract the adverse effects of climate change.
(5) Protective measures necessary to mitigate the adverse effects of climate change and help expedite the transition away from fossil fuels will require significant new investment.
(6) Peer-reviewed research has determined with great accuracy the share of carbon dioxide and methane released into the atmosphere by the operations and products of specific fossil fuel companies.
(7) The fossil fuel industry should now contribute its fair share to government expenditures to protect the state from climate disaster.
(b) In enacting this act, it is not the intent of the Legislature to do either of the following:
(1) For this act to be a determination of fault.
(2) For this act to have any impact on the ability of any person or entity to hold polluters accountable for harms caused.

SEC. 3.

 Part 4.8 (commencing with Section 71370) is added to Division 34 of the Public Resources Code, to read:

PART 4.8. Polluters Pay Climate Cost Recovery Act of 2024

CHAPTER  1. Definitions

71370.
 For purposes of this part, the following definitions apply:
(a) “Agency” means the California Environmental Protection Agency.
(b) “Annual payment date” means the date, as determined by the agency, not later than September 30 of the calendar year, by which a responsible party is to pay its cost recovery demand.
(c) “Climate cost study” means a study conducted pursuant to Section 71371.3 to establish the quantifiable costs to the state from climate change.
(d) “Cost recovery demand” means a charge assessed against a responsible party for compensatory cost recovery payment, as determined pursuant to Section 71371.4.
(e) “Covered fossil fuel emissions” means the quantity of greenhouse gases released into the atmosphere during the covered period, expressed in metric tons of carbon dioxide equivalent, resulting from the extraction, production, refining, or sale sale, or combustion of fossil fuels or petroleum products.
(f) “Covered period” means the time period between January 1, 2000, and December 31, 2020, inclusive.
(g) “Covered period damage amount” means the portion of the total damage amount fairly and reasonably attributable to covered fossil fuel emissions, as determined by the agency pursuant to Section 71371.4.
(h) “Fossil fuel” means coal, crude oil, petroleum products, or fuel gases. gases, or their byproducts.
(i) “Fuel gas” includes, but is not limited to, methane, natural gas, liquefied natural gas, and manufactured fuel gas.
(j) “Fund” means the Polluters Pay Climate Fund established pursuant to Section 71372.
(k) “Greenhouse gas” means a chemical or physical substance that is emitted into the air and that the agency may reasonably anticipate is causing or contributing to climate change, including, but not limited to, carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride. has the same meaning as set forth in Section 38505 of the Health and Safety Code.
(l) “Notice of cost recovery demand” means a written communication informing a responsible party of the amount of cost recovery demand payable to the fund.
(m) “Petroleum products” means a liquid hydrocarbon at atmospheric temperature and pressure that is the product of the fractionation, distillation, or other refining or processing of crude oil and that is used as, usable as, or may be refined as, a fuel or fuel blendstock, including, but not limited to, gasoline, diesel fuel, aviation fuel, bunker fuel, and renewable fuels containing more than 5 percent of petroleum products.
(n) “Program” means the Polluters Pay Climate Cost Recovery Program established pursuant to Section 71371.
(o) (1) “Qualifying expenditures” means expenditures for projects and programs to mitigate, adapt, or respond to the damages and costs caused to the state from climate change, as well as ongoing operation and maintenance for those projects or programs that satisfy the regulations adopted pursuant to Section 71373.1.
(2) Qualifying expenditures include all reasonable costs incurred by the agency and other public agencies for administering and implementing projects or programs financed by the fund.

(p)“Responsible party” means an entity, including, but not limited to, an individual, trustee, agent, partnership, association, corporation, or other legal organization that holds or held a majority ownership interest in a fossil fuel business during the covered period, or a successor in interest to the entity, that, during any part of the covered period, did business in the state or otherwise had sufficient contact with the state to satisfy the due process requirements of the United States Constitution and is determined by the agency to be responsible for more than one billion metric tons of covered fossil fuel emissions, in aggregate globally, during the covered period.

(p) “Responsible party” means an entity, including, but not limited to, an individual, trustee, agent, partnership, association, corporation, or other legal organization, that satisfies all of the following conditions:
(1) The entity holds or held a majority ownership interest in a business engaged in extracting or refining fossil fuel during the covered period, or is a successor in interest to the entity.
(2) During any part of the covered period, the entity did business in the state or otherwise had sufficient contacts with the state to give the state jurisdiction over the entity pursuant to Section 410.10 of the Code of Civil Procedure.
(3) The agency determines that the entity is responsible for more than one billion metric tons of covered fossil fuel emissions, in aggregate globally, during the covered period.
(q) “Total damage amount” means the monetary amount determined by the agency in its climate cost study that quantifies all past and future climate harms and damages to the state through December 31, 2045.

CHAPTER  2. Polluters Pay Climate Cost Recovery Program

71371.
 (a) There is hereby established the Polluters Pay Climate Cost Recovery Program to be administered by the agency.
(b) The purpose of the program is to require fossil fuel polluters to pay their fair share of the damage caused by the sale of their products during the covered period, thereby relieving a portion of the burden from climate harms that is currently borne by California taxpayers.

71371.1.
 (a) A responsible party shall be liable for a cost recovery demand, as determined by the agency pursuant to Section 71371.4, as a compensatory payment to remedy damages to the state caused by the responsible party’s covered fossil fuel emissions.
(b) Beginning January 1, 2025, a responsible party shall pay to the agency the cost recovery demand pursuant to Section 71371.4.

71371.2.
 Within 90 days of the effective date of this part, the agency shall determine and publish a list of responsible parties that are subject to this part on its internet website. The agency may update the list from time to time, as necessary.

71371.3.
 (a) Within one year of the effective date of this part, the agency shall conduct and submit to the Legislature a climate cost study to quantify the costs incurred by the state as a result of climate change. The climate cost study, at a minimum, shall include an assessment of the total damage amount. The climate cost study shall also include an assessment of potential qualifying expenditures to mitigate the effects of, or to adapt to, climate changes caused by covered fossil fuel emissions through December 31, 2045.
(b) The agency shall periodically update the climate cost study not less frequently than every two years, through January 1, 2046.
(c) The agency shall, in accordance with Section 9795 of the Government Code, submit to the Legislature the climate cost study and update.

71371.4.
 (a) Within 60 days of the completion of the climate cost study, the agency shall determine and assess a cost recovery demand for each responsible party listed pursuant to Section 71371.2 by doing all of the following:
(1) Quantify covered fossil fuel emissions attributable to each responsible party based on publicly reported data on the operations and production of the fossil fuel industry and the best available and most up-to-date United States Environmental Protection Agency emissions factors for greenhouse gas inventories.
(2) Establish the proportionate share percentage of each responsible party as equal to the ratio of the responsible party’s covered fossil fuel emissions to all covered fossil fuel emissions.
(3) Determine the portion of the total damage amount, as determined by the climate cost study, that is fairly and reasonably allocated to the covered period. In making this determination, the agency shall consider the ratio of covered fossil fuel emissions to all anthropogenic emissions of greenhouse gases through December 31, 2020, using the best available science and methodology and considering shall consider other factors as may be necessary to determine a fair and reasonable allocation.
(4) Establish a cost recovery demand for each responsible party in an amount equal to the proportionate share percentage of the responsible party as determined pursuant to paragraph (2) multiplied by the amount as determined pursuant to paragraph (3).
(b) (1) Within 60 days of the completion of the initial climate cost study, the agency shall issue a written notice of cost recovery demand notifying each responsible party listed pursuant to Section 71371.2 of its cost recovery demand established pursuant to paragraph (4) of subdivision (a).
(2) Within 60 days of an update of the climate cost study, the agency shall update and adjust, as necessary, the quantification and determination made pursuant to subdivision (a).
(c) (1) The notice of cost recovery demand shall inform the responsible party of its obligation to remit the cost recovery demand, or any adjustment to the cost recovery demand, in full, on or before the annual payment date of the calendar year in which the notice is issued or the next calendar year if the notice if is issued after the annual payment date.
(2) (A) A responsible party may elect to pay its cost recovery demand in 20 installments by providing written notice of its election and submission of at least 10 percent of the cost recovery demand on or before the annual payment date of the calendar year in which the initial notice is issued, or the next calendar year if the notice is issued after the annual payment date. The remaining balance shall be paid in equal installments that are due on or before the annual payment date of each calendar year after the initial payment.
(B) If an update to the climate cost study results in an adjustment of that responsible party’s cost recovery demand, the agency shall issue a revised written notice of cost recovery demand notifying the responsible party of the adjusted payment.

71371.5.
 (a) The agency shall establish procedures for an entity to challenge its designation as a responsible party or its cost recovery demand established pursuant to Section 71371.4.
(b) The agency shall adjust a responsible party’s cost recovery demand if the responsible party establishes, to the satisfaction of the agency, that its covered fossil fuel emissions or a portion of those emissions, as determined by the agency, is attributable to another responsible party.

71371.6.
 The agency shall establish funding criteria and guidelines in accordance with the climate cost study for programs and projects to mitigate the effects of, or to adapt to, climate change that are eligible as qualifying expenditures for financial assistance from moneys collected pursuant to this chapter.

CHAPTER  3. Polluters Pay Climate Fund

71372.
 (a) There is hereby established the Polluters Pay Climate Fund in the State Treasury. Notwithstanding Section 13340 of the Government Code, moneys Moneys in the fund are hereby continuously appropriated to the agency shall, upon appropriation by the Legislature, be used to implement the program pursuant to Chapter 2 (commencing with Section 71371), including qualifying expenditures, and to reimburse any outstanding loans made from other funds used to finance the initial costs of the agency’s activities in implementing this part. Moneys in the fund shall not be expended for any purposes not specified in this part.
(b) Moneys collected pursuant to Chapter 2 (commencing with Section 71371) or Chapter 4 (commencing with Section 71373) shall be deposited into the fund.

71372.1.
 Moneys in the fund shall be expended on qualifying expenditures in accordance with the findings of the climate cost study such that:
(a) Not less than 40 percent of the moneys are expended for projects and programs that directly benefit environmental justice populations, disadvantaged communities, as defined by the agency, facing climate impacts.
(b) Programs and projects funded by the fund include the assessment and implementation of strategies to increase employment opportunities and improve job quality.
(c) Programs and projects funded by the fund are designed to avoid, mitigate, repair, or adapt to negative impacts caused by climate change.

CHAPTER  4. Miscellaneous Provisions

71373.
 To facilitate the use of the best available science and data, in implementing this part, the agency shall conduct regular consultations with the State Air Resources Board, the State Water Resources Control Board, the Natural Resources Agency, the State Energy Resources Conservation and Development Commission, the Office of Emergency Services, the Strategic Growth Council, the State Department of Public Health, the Office of Environmental Health Hazard Assessment, and other appropriate public agencies and nongovernmental entities.

71373.1.
 (a) Within 180 days of the effective date of this part, the agency shall adopt all regulations, including those establishing requirements for projects and programs eligible for funding from the fund, necessary to carry out this part.
(b) The agency may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this part. Emergency regulations prescribed, adopted, or enforced pursuant to this part shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding any other law, the emergency regulations adopted by the California Environmental Protection Agency may remain in effect for two years from adoption.

71373.2.
 (a) Within 120 days of the effective date of this part, the agency shall determine the initial implementation costs, including the costs of the initial climate cost study, the development and adoption of regulations to implement this part, and other appropriate initial program implementation costs.
(b) The agency shall assess the amount determined pursuant to subdivision (a) equitably among entities listed as responsible parties pursuant to Section 71371.2.
(c) Within 180 days of the effective date of this part, each responsible party shall remit the assessment determined pursuant to subdivision (b) to the agency for deposit into the fund.

71373.3.
 The agency and the Attorney General shall have the authority to enforce the requirements of this part and to assess penalties for late payment of the cost recovery demands pursuant to Chapter 2 (commencing with Section 71371) or the assessment required under Section 71373.2. The late penalty shall accrue daily, assessed at the rate of 10 percent per annum on the amount remaining due.

71373.4.
 (a) This part does not do either of the following:
(1) Relieve the liability of an entity for damages resulting from climate change, as provided by law.
(2) Preempt, displace, or restrict any rights or remedy remedies of a person, the state, units of local government, or tribal government under law relating to a past, present, or future allegation of any of the following:
(A) Deception concerning the effects of fossil fuels on climate change.
(B) Damage or injury resulting from the role of fossil fuels in contributing to climate change.
(C) Failure to avoid damage or injury related to climate change, including claims for nuisance, trespass, design defect, negligence, failure to warn, or deceptive or unfair practices and claims for injunctive, declaratory, monetary, or other relief.
(b) This part does not preempt or supersede any state law or local ordinances, regulations, policies, or programs ordinance, regulation, policy, or program that does any of the following:
(1) Limit, set, or enforce standards for emissions of greenhouse gases.
(2) Monitor, report, or keep records of emissions of greenhouse gases.
(3) Collect revenue through fees or levy taxes.
(4) Conduct or support investigations.

71374.
 The provisions of this part are severable. If any provision of this part or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SEC. 4.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
To fund and implement measures to address the immediate and ongoing threats to the public safety, health, and welfare of the people and environment of the State of California from climate change, it is necessary for this act to take effect immediately.