BILL NUMBER: AB 2563INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Smyth FEBRUARY 24, 2012 An act to add Part 8 (commencing with Section 38600) to Division 25.5 of the Health and Safety Code, relating to climate change, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 2563, as introduced, Smyth. California Global Warming Solutions Act of 2006: offsets. The California Global Warming Solutions Act of 2006 requires the State Air Resources Board to adopt regulations to require the reporting and verification of emissions of greenhouse gases and to monitor and enforce compliance with the reporting and verification program, and requires the state board to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020. The act requires the state board to adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions. The act authorizes the state board to include use of market-based compliance mechanisms. This bill would require the state board to consider adopting specified compliance offset protocols. The bill would require the state board to review annually the offset protocol process and to consider the implications of international, national, state, and local regulation of offsets on the ability to create offsets and sector-based offsets. If the state board adopts regulations regarding offset credits, the bill would require those regulations to permit offset credits to account for not less than 15% of a covered entity's compliance obligation and would require sector-based offset credits to be able to account for up to 4% of a covered entity's compliance obligation. The bill would require the state board to consider additionality only in the context of greenhouse gases. The bill would require the state board to compile specified reports by specified dates. This bill would declare that it is to take effect immediately as an urgency statute. Vote: 2/3. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Part 8 (commencing with Section 38600) is added to Division 25.5 of the Health and Safety Code, to read: PART 8. Offsets 38600. (a) On or before September 1, 2012, and in accordance with Section 38571, the state board shall consider adopting compliance offset protocols for the verification of each of the following: (1) Projects for methane collection at mines, landfills, and natural gas systems. (2) Projects involving fugitive emissions from the oil and gas sector that reduce greenhouse gas emissions that would otherwise have been flared or vented. (3) Projects for nonlandfill projects that involve collection, combustion, or avoidance of emissions from organic waste streams that would have otherwise emitted methane into the atmosphere, including, but not limited to, composting projects. (4) Projects for forest management resulting in an increase in forest carbon stores, including, but not limited to, harvested wood products. (5) Projects for forest-based manufactured products. (6) Projects involving recycling and waste minimization. (7) Projects to abate the production of nitrous oxide at stationary sources not subject to regulation under this division. (8) Projects for biochar production and use. (9) Projects relating to agricultural, grassland, and rangeland sequestration and management practices, including all of the following: (A) Altered tillage practices, including, but not limited to, the avoided abandonment of conservation practices. (B) Winter cover cropping, continuous cropping, and other means to increase biomass returned to soil in lieu of planting followed by fallowing. (C) The use of technology or practices to improve the management of nitrogen fertilizer use, including, but not limited to, slow and controlled-release fertilizers, such as absorbed, coated, occluded, or reacted fertilizers, and stabilized nitrogen fertilizers, such as including urease, nitrification inhibitors, and nitrogen stabilizers, that are recognized by state regulators of fertilizers. (D) Reduction in methane emissions from rice cultivation. (E) Reduction in carbon emissions from organically managed soils and farming practices used on certified organic farms. (F) Resource-conserving crop rotations. (G) Practices that will increase the sequestration of carbon in soils on cropland, hayfields, native and planted grazing land, grassland, or rangeland. (10) Projects for changes in carbon stocks attributed to land management change, including all of the following: (A) Improved management or restoration of forest land, cropland, grassland, and rangeland, including, but not limited to, grazing practices. (B) Reduced deforestation. (C) Management and restoration of peatland or wetland. (D) Urban tree-planting, landscaping, greenway construction, and maintenance. (E) Projects to restore or prevent the conversion, loss, or degradation of vegetated marine coastal habitats. (11) Projects that reduce the intensity of greenhouse gas emissions per unit of agricultural production. (b) If the state board adopts an offset protocol process pursuant to this division, the state board shall review annually the offset protocol process and shall consider the implications of international, national, state, and local regulation of offsets on the ability to create offsets and sector-based offsets. (c) If the state board adopts regulations regarding offset credits pursuant to this division, both of the following shall apply: (1) Those regulations shall permit offset credits to account for not less than 15 percent of a covered entity's compliance obligation. (2) Those regulations shall permit sector-based offset credits to account for not less than 4 percent of a covered entity's compliance obligation. (d) If the state board adopts regulations regarding additionality pursuant to this division, the state board shall consider additionality only in the context of greenhouse gases. (e) If the state board adopts an offset protocol process pursuant to this division, the state board shall present at a board meeting no later than July 1, 2013, an economic assessment of the role of offsets in reducing the cost of complying with this division for the state's economy and a report considering the advantages and disadvantages of an expanded offset supply. (f) (1) The state board shall provide, no later than January 1, 2013, a report to the appropriate committees of the Legislature on the current and future supply potential for each compliance offset protocol reviewed pursuant to subdivision (a), including, but not limited to, proposed and rejected compliance offset protocols. (2) The requirement for submitting a report imposed under this subdivision is inoperative on January 1, 2017, pursuant to Section 10231.5 of the Government Code. (3) A report to be submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code. (g) (1) The state board shall provide, no later than July 1, 2013, a report to the appropriate committees of the Legislature on which compliance offset protocols and offset projects could be used for early action purposes in the first compliance period and identify opportunities to increase the potential for additional greenhouse gas reductions through offset project opportunities. (2) The requirement for submitting a report imposed under this subdivision is inoperative on July 1, 2017, pursuant to Section 10231.5 of the Government Code. (3) A report to be submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code. SEC. 2. 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 Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to obtain additional flexibility, certainty, and accountability with regard to the implementation of compliance offset protocols by the State Air Resources Board under the California Global Warming Solutions Act of 2006, it is necessary for this act to take effect immediately.