The Nickel Report

Recent developments could impact implementation timing and compliance obligations under California’s landmark climate emissions disclosure and financial risk reporting laws that were enacted last year.

In challenges to California development projects, the “usual suspects” typically include environmental NGOs or neighborhood organizations.  However, that’s not always the case, as illustrated by a new lawsuit filed by the South Coast Air Quality Management District (“SCAQMD”) against the Port of Los Angeles.

On October 14, 2020, the California Air Resources Board (ARB) issued an enforcement alert entitled “Self-Disclosure of Non-Compliance Software and Other Violations by December 31, 2020.” The alert states that ARB will provide up to a 75% reduction in penalties for timely self-disclosed violations where the company “expeditiously” settles the matter.

The South Coast Air Quality Management District’s (SCAQMD or the District) Regional Clean Air Incentives Market (RECLAIM) made history as California’s first emissions cap-and-trade program. But the District’s decision to sunset the program has resulted in significant uncertainty surrounding RECLAIM’s transition for local communities and industry alike.

Widely acclaimed at its 1993 inception, the program was intended to promote more efficient emissions reductions by allowing facilities to meet their annual cap either by adopting pollution controls directly or by purchasing RECLAIM trading credits (RTCs) from other facilities able to install controls at lower cost and achieve emissions below their caps. In its early years supporters praised RECLAIM as a success, pointing to significant reductions across the South Coast Air Basin. But in more recent years, the US Environmental Protection Agency (EPA) and other stakeholders criticized RECLAIM as falling short of expectations, pointing to periods of RTC price spikes reducing the program’s coverage and a subsequent glut of RTCs from plant closures that critics claim lowered the incentive for pollution reductions at remaining RECLAIM facilities.

Policy makers in California have pledged to resist Trump administration policy changes on environmental and other issues. Senate Bill 1 (SB 1), proposing the California Environmental, Public Health and Workers Defense Act of 2019, is the California legislature’s current preemptive response to the administration’s attempts to modify certain federal environmental and worker safety laws.

SB 1 has passed the California Senate. It is awaiting a final hearing in the State Assembly’s Appropriations Committee, likely sometime in mid‑to‑late August. After that, it moves to the Assembly floor, where a final vote is required by the end of California’s legislative session on September 13, 2019.

As noted in previous blog posts, Assembly Bill 617’s (AB 617) Community Air Protection Program (CAPP) is limited in effect to specific, named communities included in it. Thus, stationary sources not located in a CAPP included community are not regulated by CAPP. However, AB 617’s new requirements are not limited to CAPP. AB 617 also requires the California Air Resources Board (CARB) to develop new regulations for criteria pollutant and toxics emissions reporting. The new regulation, titled “Regulation for the Reporting of Criteria Air Pollutants and Toxic Air Contaminants” (CTR Regulation) is not yet finalized, but the current draft will apply to stationary sources throughout California, regardless of whether they are located in a CAPP community.

The implementation of California’s ambitious Assembly Bill 617 (AB 617) is well under way, but it is still very uncertain whether it can or will achieve its intended outcome. Despite the long process to select the initial list of communities to be included in the in the first year of CARB’s Community Air Protection Program (CAPP) (CARB’s AB 617 implementation program), the hard work to ensure AB 617 is a success remains—namely the development and implementation of the emissions monitoring/reduction plans in the selected disadvantaged communities. In the end, the biggest impediment to AB 617’s successful implementation might be the law’s own requirements, specifically its accelerated implementation schedule, which may not provide California’s air quality management districts (air districts) with enough time to achieve the law’s goals.

When California Assembly Bill 617 (AB 617) was signed into law, California ambitiously announced a new “community focused” strategy to improve air quality in California. AB 617’s stated goal is to improve air quality in environmental justice communities through local, community-specific strategies focused on the individual needs and issues particular to each community. The development and implementation of this “community focused” strategy is largely the responsibility of California’s local air quality management districts (AQMDs) because AB 617 places new, explicit responsibilities on AQMDs so that they take the lead in improving the air quality in their environmental justice communities.

This article was originally published in the May 1, 2017, online edition of The Recorder.

“I’m mad as hell and I’m not going to take it anymore!”  Movie aficionados will recognize this classic line from the 1976 movie, “Network.”  For many Californians, the line captures the feeling in the state just before Proposition 13 (Prop 13) was passed by about 65 percent of voters in 1978 to amend the state constitution.  For a state that is used to sizable earthquakes, Prop 13 was a truly seismic event in California, restructuring the state property tax system.  It was enacted in response to frustration over California’s decades-old method of paying for government, which allowed property taxes to increase dramatically year to year, often resulting in senior citizens on fixed incomes being unable to afford to stay in their homes.  On top of cutting and restricting increases in property taxes, Prop 13 contained language requiring a two-thirds majority in both legislative houses for future increases of any state tax rates or amounts of revenue collected, including income tax rates and sales tax rates.

In the latest of a series of moves reflecting the state’s intention to double down on its climate change agenda in the wake of President Trump’s inauguration, the California Air Resources Board (CARB) recently approved a new regulation aimed at curbing methane emissions from oil and gas operations. This measure, characterized by CARB as “the most comprehensive of its kind in the country,” comes on the heels of several actions recently announced by the United States Environmental Protection Agency (US EPA) to reassess the climate change programs of the previous administration, specifically those targeted at oil and gas sector emissions.