Bill Text: CA AB985 | 2023-2024 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: San Joaquin Valley Unified Air Pollution Control District: emission reduction credit system.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed) 2023-09-13 - Motion to reconsider made by Assembly Member Arambula. [AB985 Detail]

Download: California-2023-AB985-Amended.html

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Amended  IN  Assembly  April 10, 2023

Amended  IN  Assembly  March 23, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill

No. 985

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Introduced by Assembly Member Arambula

February 15, 2023

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An act to add Sections 40714 and 40714.2 to the Health and Safety Code, relating to air pollution.

LEGISLATIVE COUNSEL'S DIGEST

AB 985, as amended, Arambula. San Joaquin Valley Unified Air Pollution Control District: emission reduction credit system.

Existing law imposes various limitations on emissions of air contaminants for the control of air pollution from vehicular and nonvehicular sources. Existing law generally designates the State Air Resources Board as the state agency with the primary responsibility for the control of vehicular air pollution and air pollution control and air quality management districts with the primary responsibility for the control of air pollution from all sources other than vehicular sources.

Existing law requires the board of every air district to establish by regulation a system by which all reductions in the emission of air contaminants that are to be used to offset certain future increases in the emission of air contaminants be banked prior to use to offset future increases in emissions, except as specified. Existing law requires the state board to develop and adopt a methodology for use by air districts to calculate the value of credits issued for emission reductions from stationary, mobile, indirect, and areawide sources when those credits are used interchangeably, consistent with certain requirements. Existing law also requires the state board to periodically update the methodology as it applies to future transactions, if necessary.

Existing law provides for the establishment of the San Joaquin Valley Unified Air Pollution Control District vested with the authority to regulate air emissions from stationary sources located in the San Joaquin Valley Air Basin.

This bill would require the district to revise the regulation establishing its emission reduction credit system by requiring to require existing and future emission reduction credits to expire after a specified time period and by requiring an emission reduction credit to be valued at its time of use. period. The bill would provide that this revision of the emission reduction credit system is subject to disapproval by the state board within 60 days after adoption by the district.

This bill would require the state board and the district, in collaboration with community groups and the federal Environmental Protection Agency, to conduct an analysis of each emission reduction credit included in the district’s registry. As part of the analysis, the bill would require the state board to ensure that emission reduction credits are deemed invalid if they do not meet certain requirements. The bill would require the analysis to be completed no later than January 1, 2027, and would require, upon completion of the analysis, the state board to submit a report to the Legislature that includes a summary of the results of the analysis and other specified information.

This bill would require the district to prepare a map of, and make available on a publicly accessible and searchable database, the locations of the original source of emissions of all active emission reduction credits in its registry.

This bill would require the state board, except as provided, to conduct an analysis of the San Joaquin Valley Unified Air Pollution Control District’s emission reduction credit banks for particulate matter below 10 microns (PM10), carbon monoxide (CO), and oxides of sulfur (SOx) and to complete the analysis no later than January 1, 2027. As part of the analysis, the bill would require the state board to ensure that emission reduction credits are deemed invalid if they were issued in violation of state, local, or district laws, rules, regulations, or procedures in place at the time of original issuance. If the invalidation of those credits leads, or would have led, to the district’s program failing to meet applicable federal emission reduction requirements, the bill would require current and future credits to be valued at the time of use. The bill would also require the state board to conduct a stationary source analysis for all permits in the district that use a credit for oxides of nitrogen (NOx) or volatile organic compounds (VOCs), as provided. The bill would require, upon completion of the analyses, the state board to submit a report to the Legislature that includes a summary of the results of the analyses.

By adding to the duties of the district, this bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the San Joaquin Valley Air Basin.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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Bill Text

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

SECTION 1.

The Legislature finds and declares all of the following:

(a)The United States Environmental Protection Agency is responsible for establishing national ambient air quality standards for a number of pollutants, including ozone and particulate matter below 10 microns (PM10) and below 2.5 microns (PM2.5) in size.

(b)Poor air quality is intimately linked with negative health impacts, including respiratory illness and premature deaths, with recent studies estimating air pollution as the cause of over 100,000 premature deaths in the United States in 2011.

(c)The distribution of premature deaths is not equal. Low-socioeconomic status communities are at higher risk than higher income communities. Additionally, Hispanic, Asian, and Black individuals experience higher risk of premature death than White individuals.

(d)Specific to PM2.5, research has found that for elderly individuals enrolled in Medicare, it is estimated that reaching the World Health Organization’s standards, which are only slightly more stringent than the most recent national standards, would prevent nearly 140,000 early deaths of elderly individuals over the next decade. For the San Joaquin Valley, data suggests that PM2.5 exposure is responsible for 1,200 cases of premature death in the valley each year.

(e)Addressing this problem continues to be elusive. The San Joaquin Valley Unified Air Pollution Control District (district) is sandwiched among mountains that trap pollutants and weaken the flow of air and dispersion of pollution, has a growing population, and is crisscrossed by major transportation routes.

(f)In the midst of intensive industrial and agricultural development, socioeconomic vulnerability and health exposure hazards are interlinked and persistent.

(g)According to the district, the primary causes of the region’s particle and ozone pollution are motor vehicles, plant and animal agriculture, oil production, wood burning, and fugitive dust.

(h)While oil and gas production is on a downward trend in both California and the district, operators continue to drill, plan for more production, and hope that shifting market forces will work in their favor going forward.

(i)As persistently poor air quality and the push for more industrial development converge in the San Joaquin Valley, the effectiveness of voluntary emission reduction credits in actually reducing pollution is increasingly debated.

(j)The primary goal is to support companies wishing to pursue industrial projects, not to prohibit the creation of pollution.

(k)The volume of emissions offset is based on estimates developed for the purpose of obtaining a permit, which may or may not represent a facility’s actual emissions.

(l)Emission reduction credit banking is based on a static view of air quality and its impacts, with the volume of reduction at one point in time or in one location carried over to the future or a different location, regardless of actual, changing conditions or localized impacts.

(m)Emission reduction credits allow operators to release pollution even in areas where air quality standards are not being met.

(n)Despite an active emission reduction credit program, localized pollution impacts and regional pollution problems can persist and even increase.

SECTION 1.

 The Legislature finds and declares all of the following:

(a) Poor air quality is intimately linked with negative health impacts, including respiratory illness and premature deaths, with recent studies estimating air pollution as the cause of over 100,000 premature deaths in the United States in 2011. However, the distribution of premature deaths is not equal.

(b) Rural communities, farmworker communities, disadvantaged communities, tribal nations, young people, and those living at or below the poverty level often live adjacent to transportation corridors or commercial and industrial facilities with highly localized and severe pollution levels and are at the highest risk of adverse health outcomes.

(c) The United States Environmental Protection Agency is responsible for establishing national ambient air quality standards for a number of criteria pollutants, including oxides of nitrogen (NOx), volatile organic compounds (VOCs), carbon monoxide (CO), oxides of sulfur (SOx), and particulate matter below 10 microns (PM10).

(d) When facilities voluntarily control emissions to levels beyond current or future regulatory requirements, they earn emission reduction credits that new sources of pollution purchase to offset the pollution resulting from their operations. Unused emission reduction credits are stored by the San Joaquin Valley Unified Air Pollution Control District in banks organized by pollutant.

(e) In 2020, the State Air Resources Board discovered errors that invalidated some of the credits within the banks for oxides of nitrogen (NOx) and volatile organic compounds (VOCs). This caused the San Joaquin Valley Unified Air Pollution Control District to fail the equivalency demonstrations for these two banks and triggered the federal requirement that all credits in these two banks be valued at the time of use.

(f) It is likely that a similar analysis of the other three major banks, which are for particulate matter below 10 microns (PM10), carbon monoxide (CO), and oxides of sulfur (SOx), will reveal similar errors and should be reviewed.

SEC. 2.

 Section 40714 is added to the Health and Safety Code, to read:

40714.

 (a) The Valley district shall revise its regulation adopted pursuant to Section 40709 by doing both of the following:

(1)Requiring 40709 to require existing and future emission reduction credits in all banks to expire after a time period that is equal to, or less than, the shortest expiration period in effect as of January 1, 2024, for emission reduction credits issued by any state or any other district.

(2)Requiring an emission reduction credit to be valued at its time of use rather than its time of issuance.

(b) The revision of the system made pursuant to subdivision (a) shall be subject to disapproval by the state board pursuant to Chapter 1 (commencing with Section 41500) of Part 4 within 60 days after adoption by the Valley district.

(c)The Valley district shall prepare a map of, and make available on a publicly accessible and searchable database, the locations of the original source of emissions of all active emission reduction credits in its registry.

(d)

(c) For purposes of this section, “Valley district” “district” means the San Joaquin Valley Unified Air Pollution Control District.

SEC. 3.

 Section 40714.2 is added to the Health and Safety Code, to read:

40714.2.

 (a) The state board and the Valley district, in collaboration with community groups and the federal Environmental Protection Agency, Except as provided in subdivision (c), the state board, building on the June 2020 report, shall conduct an analysis of each emission reduction credit included in the Valley district’s registry established pursuant to Section 40709. the district’s emission reduction credit banks for particulate matter below 10 microns (PM10), carbon monoxide (CO), and oxides of sulfur (SOx) established pursuant to Section 40709 to determine if any credits for those pollutants were issued in violation of state, local, or district laws, rules, regulations, or procedures in place at the time of original issuance. The analysis shall be completed no later than January 1, 2027.

(b) As part of the analysis conducted pursuant to subdivision (a), the state board shall ensure all of the following:

(1) An emission reduction credit issued in violation of state, local, or district laws, rules, regulations, or procedures in place at the time of original issuance shall be deemed invalid.

(2)If an emission reduction credit cannot be traced back to its original source of emission reduction, then the credit shall be deemed invalid.

(3)If an emission reduction credit is deemed invalid pursuant to paragraph (1) or (2), the credit shall be permanently removed from the Valley district’s registry.

(2) If an emission reduction credit is deemed invalid pursuant to paragraph (1), the credit shall be removed from the bank.

(3) If removal of credits from the banks for particulate matter below 10 microns (PM10), carbon monoxide (CO), or oxides of sulfur (SOx) leads, or would have led, to failing an equivalency demonstration for any of these banks, current and future credits in the bank or banks with the failed equivalency demonstration shall be valued at the time of use.

(c) The state board is not required to conduct the analysis described in subdivision (a) if it requires the district to value at the time of use all current and future emission reduction credits in the banks established pursuant to Section 40709 for particulate matter below 10 microns (PM10), carbon monoxide (CO), and oxides of sulfur (SOx).

(d) The state board shall conduct a stationary source analysis for all permits in the district that use a credit for oxides of nitrogen (NOx) or volatile organic compounds (VOCs). The review shall identify all of the following:

(1) The amount and source of emissions of oxides of nitrogen (NOx) and volatile organic compounds (VOCs).

(2) The type of pollution control equipment currently being used at each source.

(3) The emission reduction opportunities at each source, including the availability of a retrofit using best available retrofit control technology, and the cost.

(c)

(e) (1) Upon completion of the analysis, analyses pursuant to subdivision (a) and subdivision (d), the state board shall submit a report to the Legislature summarizing the results of the analysis. The report shall also include, but is not limited to, information regarding the quantification of additional emissions caused by overvalued or fake credits, including credits issued during the timeframe when the banks for oxides of nitrogen and volatile organic compounds would have failed the equivalency demonstrations if the emission reduction credit system had been managed properly, which resulted in permits being issued that used emission reduction credits at an inflated value. analyses.

(2) The report to be submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.

(d)

(f) For purposes of this section, the following definitions apply:

(1) “June 2020 report” means the report published by the state board in on June 4, 2020, reviewing the Valley district’s emission reduction credit system.

(2) “Valley district” “District” means the San Joaquin Valley Unified Air Pollution Control District.

SEC. 4.

 The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique need to address air pollution and environmental injustices in the San Joaquin Valley Air Basin.

SEC. 5.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.