BILL NUMBER: SB 696INTRODUCED BILL TEXT INTRODUCED BY Senator Wright FEBRUARY 27, 2009 An act relating to emission reduction credits. LEGISLATIVE COUNSEL'S DIGEST SB 696, as introduced, Wright. Air quality: regional districts: emission reduction credits. Under existing law, every air pollution control district or air quality management district in a federal nonattainment area for any national ambient air quality standard is required to establish by regulation, a system by which all reductions in emissions of air contaminants that are to be used to offset certain future increases in the emission of air contaminants are banked prior to use. This bill would state that it is the intent of the Legislature to enact legislation to ensure that there are sufficient credits available for the South Coast Air Quality Management District to issue permits for essential public services and new clean efficient power plants. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The legislature finds and declares all of the following: (a) Under existing law, new or modified sources of air pollutants within a federally designated nonattainment area that result in emission increases over specified thresholds are required to provide emission reduction credits from other sources so that, in aggregate, there is no net increase in emissions. (b) The air basins regulated by the South Coast Air Quality Management District are designated nonattainment areas for PM2.5, PM10, and ozone, the majority of which is due to mobile sources. (c) Due to strict emission limits on stationary sources and the inability to create material amounts of new emission reduction credits without shutting down businesses and losing jobs, there is a severe shortage of emission reduction credits for sources of PM2.5 and PM10 in the air basins regulated by the South Coast Air Quality Management District. (d) In the South Coast Air Quality Management District, certain emission sources, including essential public services, rely on emission credits contained in the district's internal accounts. The district obtains credits for its internal bank from surplus emission reductions not otherwise used for credits. Emission reduction credits have to be real, surplus, enforceable, quantifiable, and permanent. (e) The South Coast Air Quality Management District recently amended Rule 1309.1 to make emission credits from its internal bank available to new clean, efficient power plants. The South Coast Air Quality Management District also enacted a new rule governing the accounting and tracking of offsets. (f) A recent court decision invalidated the South Coast Air Quality Management District rule specifying how the district accounts for and calculates the amount of emission reduction credits available. As a result of that court decision permits that rely on credits from the district internal bank cannot be issued. (g) The South Coast Air Quality Management District regulates more than 28,000 stationary sources, and administers more than 80,000 permits. The Legislature needs act to avoid business shutdowns and job losses, and to ensure electric system reliability. SEC. 2. It is the intent of the Legislature to enact legislation to ensure that there are sufficient real, surplus, enforceable, quantifiable, and permanent emission reduction credits available so that essential public services, and new clean efficient power plants needed to maintain system reliability and integrate renewable resources can be permitted by the South Coast Air Quality Management District.