California Senate Bill 535 (2012)

De Leon introduced AB 1405, a bill that it very similar to SB 535. It was vetoed by Governor Arnold Schwarzenegger in 2010, because the Governor stated that “funds have yet to be realized by AB 32.”[5] SB 535 was introduced by Senator De Leon on February 17, 2011. After the bill's introduction, an analysis that addressed some concerns was posted on April 29, 2011. Initially, opponents of the bill were concerned with the fact that “a regulatory fee must have a nexus between fee payers, the fee amount and the revenue use.”[5] SB 535 does not meet this standard “because the amount of fee revenue is arbitrary (10% of the total amount raised), the purposes in SB 535 are unrelated to harm caused by the payers, and there is no demonstrated connection between the proposed recipients and harm caused by the payers of the revenues.”[5] Other opponents noted that it was impossible to know how much money was necessary to meet the requirements of AB 32 of reducing emissions to the 1990 level by the year 2020. If SB 535 was passed, it might be detracting from the original goals of AB 32.[5] After three Committee readings, the bill was passed on to the Assembly on June 2, 2011. After three Assembly readings and amendments, it was passed on to the California Senate. The Senate floor voted on the bill on August 31, 2012. The bill passed with 25 people voting “yes,” 14 voting “no,” and 1 person abstaining. On September 30, 2012 Governor Jerry Brown signed the bill and passed it into law.[6]

People who live in communities of color, low-income, and disadvantaged communities face health disparities due to poor air quality. Many of these communities are located near industries and means of transportation that cause a large amount of pollution to affect these areas. There is a greater abundance of harmful particulate matter in air pollution around these non-white and poorer communities than in white and wealthier communities.[7] People who live near refineries are more likely to breathe in nickel and vanadium, and those living near coal power plants are more likely to breathe in contents of high sulfate.[7] Also, those who live near means of transportation such as busy highways are exposed to nitrates from vehicle exhaust.[7] SB 535 is an example of environmental justice because it creates a solution to help these communities that have been affected by health disparities from the high exposures of “not only carbon dioxide, but also soot, methane, carbon monoxide and ozone. Many of these pollutants are associated with cancer, low birth weights, heart attacks, as well as respiratory problems like asthma and chronic obstructive pulmonary disease.” [8] In addition, SB 535 guarantees that 10% of the 25% of money collected from the revenue can be directed towards reducing pollution and lessening the harmful health impacts from greenhouse gas emissions.[9] Supporters of the SB 535 bill such as the American Lung Association and Regional Asthma Management and Prevention (RAMP) are making efforts to fight the health disparities that are a result from the polluting air. [10]

SB 535 uses profits from the cap-and-trade policy, which went into effect in California in 2013, to fund projects that are beneficial for disadvantaged communities. The cap-and-trade came about as a way to lessen the environmental impact of companies on the community. The system is relatively simple and easy to put into action. A regulatory agency sets up a cap on the amount of pollutants any one company can put into the environment. Once the amount of allowed pollution is determined, companies can sell these allowances to other companies.[14] The funds collected from the cap-and-trade go into the Greenhouse Gas Reduction Fund.[15] Studies have indicated that “cap and trade has been a principal part of the US Environmental Protection Agency’s efforts to reduce US emissions of sulfur dioxide under the Clean Air Act.”[16] By placing a cap on the amount of pollutants a company can produce, the system encourages companies to be innovative a look for cleaner production habits.[17] The goal of this system is to reduce a company's harmful impact on the environment and community. Similarly, the goal of SB 535 is to take 25% of the funds from the sale of the allowance credits and invest them into projects aimed at helping disadvantaged communities with a minimum of 10% of the profits being funneled directly into Environmental Justice communities.[4]

Some qualities that have contributed to the success of the cap-and-trade are the ease and accuracy of measuring pollutants and the fact that allowances are much less expensive to pay for than the fee for going over the allotted amount of pollution. Additionally, the cap-and-trade is significantly cheaper than other regulatory approaches. On the other hand, some challenges arise when it comes to fulfilling the cap-and-trade's main goal of reducing environmental pollutants. Since there is no nationwide system, some states with less strict regulations will end up emitting more pollutants than states with stricter regulation and some people claim that in the end, the pollution will just be spread differently across the country. Some groups claim that this system isn't very effective in reducing emissions, but it is supported because of the amount of revenue it generates for the state.[18]

SB 535 was signed into law by Governor Jerry Brown on September 30, 2012. The co-sponsoring organizations are the Asian Pacific Environmental Network, Coalition for Clean Air, Greenlining Institute, and Public Advocates, and the bill has gained support from a number of groups, including:

• Breathe California
• California League of Conservation Voters
• California Pan-Ethnic Health Network
• Catholic Charities
• Stockton Diocese
• Coalition for Clean Air
• Environment California
• Environmental Defense Fund
• Greenlining Institute
• Los Angeles Bicycle Coalition
• Natural Resources Defense Council
• Sierra Club California
• TransForm
• The Trust for Public Lands

Groups opposing the bill include:

• American Council of Engineering Companies
• California Building Industry Association
• California Chamber of Commerce
• California Farm Bureau Federation
• California Manufacturers & Technology Association
• The California Retailers Association[26]

The Coalition for Clean Air has been the main supporter of SB 535. The group has offices in Los Angeles, Sacramento, and Fresno, and they have “worked to restore clean air to California since 1971.”[27] The Clean Air Coalition, along with many other groups, wrote a letter to Mary Nichols, the Chairman of the California Air Resources Board on March 8, 2013. In the letter, the coalition wished to “express support for the CalEnviroScreen as a tool to inform the identification of disadvantaged communities, provide more detail on the use of the overarching and “SB 535 Principles” that our coalition has developed and previously shared with the Administration, identify the priority AB 32 programs that will effectively serve these communities and legal mandates, and provide additional comments on the implementation considerations.”[28] The coalition has worked closely with the state to ensure that disadvantaged communities are properly identified and funds are being appropriately used to help these communities have better air quality and less environmental pollutants.

Many individual organizations have held workshops and meetings to discuss SB 535 and its implications within California communities such as the Luskin Center at UCLA and the Public Health Alliance of Southern California. Discussion topics range from identifying disadvantages communities to helping the state develop new reinvestment options.[29][30]

In May 2013, CA Governor Jerry Brown borrowed $500 million of the year’s cap and trade revenue.[31] The governor intended to use the $500 million, coming from the Greenhouse Gas Reduction Fund, to fund the state’s general expenses. Opponents of Brown’s decision, such as The Greenlining institute, the Sierra Club and other environmental groups argue that this money should solely go towards programs that were intended to help low-income and disadvantaged communities.[31] Brown said that he would pay back the borrowed money with interest.[31]

In early January, Brown proposed to return $100 million of the $500 million borrowed, and added an additional $600 million to his budget of $154.9 billion, that would go towards “efficiency retrofits and solar installations for low-income communities, low-carbon transportation, transit-friendly planning and other programs.” [32]

Governor Brown also proposed a plan for a high-speed rail project with a budget of $68.4 billion, a third of the proceeds from the cap and trade revenue, that would provide transportation from San Francisco to Los Angeles by 2028.[32] This project is raising concerns from both environmentalists and lawmakers because they have criticized whether the project would help meet the goal of AB 32 intending to cut greenhouse gas emissions by 2020.[32] Instead, Sierra Club California Director Kathryn Phillips states "The best use of the cap-and-trade funds is to invest them in projects that are out there now" — such as improving energy efficiency — "that can get us near-term emission reductions."[33]