Assembly Bill 32

Assembly Bill 32
Title	Assembly Bill 32
Enacted by	California State Legislature
Signed by	Arnold Schwarzenegger
Date signed	November 27, 2006
Status	in force

Assembly Bill 32 is a California statute enacted in 2006 establishing statewide greenhouse gas emissions limits and mechanisms to reduce emissions. The law set a target to return statewide emissions to 1990 levels by 2020 through regulatory programs, market mechanisms, and sectoral interventions. The statute has intersected with numerous California Air Resources Board regulations, Cap-and-Trade Program (California) design decisions, and subsequent executive actions by Governor Jerry Brown and Governor Gavin Newsom.

Background and Legislative History

The measure emerged from policy discussions involving California Air Resources Board, Union of Concerned Scientists, Natural Resources Defense Council, Environmental Defense Fund, and legislative leaders such as Fran Pavley and Dianne Feinstein who engaged with stakeholders including California Chamber of Commerce, California Federation of Labor, and municipal actors like City of Los Angeles and City of San Francisco. The bill was debated within committees populated by members of California State Assembly and California State Senate with testimony from representatives of Chevron Corporation, Shell Oil Company, Pacific Gas and Electric Company, and Southern California Edison. Public hearings referenced reports from Intergovernmental Panel on Climate Change, studies by Lawrence Berkeley National Laboratory, and analyses from California Energy Commission and Stanford University scholars. The statute was signed by Arnold Schwarzenegger after negotiation with agencies including California Environmental Protection Agency and advocacy from groups such as Sierra Club and The Nature Conservancy.

Provisions and Objectives

The statute established emissions targets anchored to historical inventories compiled by California Air Resources Board and directed development of regulations covering sectors including transportation in California, electric power industry in California, industrial pollution, and refineries in California. Key components authorized the adoption of regulations, development of market-based mechanisms like a cap-and-trade system, creation of a statewide emissions reporting program, and mechanisms for carbon offset protocols. The law mandated coordination with agencies such as California Public Utilities Commission, Department of Water Resources (California), and California Energy Commission to align energy efficiency standards, renewable portfolio standards championed by California Solar Initiative, and land-use policies affecting California Environmental Quality Act compliance. It set objectives linking to international frameworks such as referenced in Kyoto Protocol discussions and domestic policy debates involving Clean Air Act implementation.

Implementation and Compliance

Implementation tasks fell primarily to California Air Resources Board, which promulgated regulations, compliance timelines, and enforcement mechanisms including allowance allocation, monitoring, reporting, and verification systems. The Cap-and-Trade Program coordinated with regional initiatives like Western Climate Initiative and market participants including BP plc, ExxonMobil, and utilities such as San Diego Gas & Electric. Compliance options included facility-level reductions, project-based offsets, and trading of allowances administered through auctions and secondary markets influenced by entities such as European Union Emissions Trading System participants. Reporting frameworks drew on methodologies from U.S. Environmental Protection Agency, International Organization for Standardization, and academic groups at University of California, Berkeley. Enforcement actions invoked administrative hearings, civil penalties, and coordination with California Attorney General offices.

Economic and Environmental Impacts

Analyses by California Department of Finance, Economic Policy Institute, Pew Charitable Trusts, and university researchers at University of California, Davis documented effects on California economy sectors including agriculture in California, automotive industry, manufacturing in California, and tourism in California. The statute influenced investment in renewable energy in California, stimulating projects involving Tesla, Inc., SunPower Corporation, NextEra Energy Resources, and infrastructure upgrades by utilities like Pacific Gas and Electric Company. Environmental outcomes included reported reductions in carbon dioxide, methane, and hydrofluorocarbon emissions measured against inventories maintained by California Air Resources Board and compared with national reporting to the U.S. Environmental Protection Agency. Studies debated job impacts referencing Employment Development Department (California) data and economic modeling from Resources for the Future and National Bureau of Economic Research.

Legal Challenges and Amendments

The statute prompted litigation including cases brought before California Supreme Court and federal courts by industry groups such as California Chamber of Commerce, Western States Petroleum Association, and municipal actors. Challenges addressed administrative rulemaking, allowance allocation, and preemption arguments referencing Commerce Clause jurisprudence and comparisons to Massachusetts v. Environmental Protection Agency. Legislative and executive amendments over time involved actions by California State Legislature and governors including Jerry Brown who extended and tightened targets and Gavin Newsom who supported further executive rulemaking. Regulatory adjustments responded to court rulings, market performance, and legislative additions such as linking with regional markets and adjusting offset protocols.

Reception and Political Debate

Reception varied across political actors: environmental organizations like Natural Resources Defense Council and Sierra Club generally supported the ambition of the statute, while business groups such as California Manufacturers & Technology Association voiced concerns over costs and competitiveness. Labor organizations including AFL–CIO and California Federation of Labor engaged on job-creation guarantees and revenue use from allowance auctions. Debates in media outlets such as Los Angeles Times, San Francisco Chronicle, and policy forums at Brookings Institution and Hoover Institution reflected divergent views on effectiveness, equity, and regulatory design. The law has remained a focal point in California’s policy identity, intersecting with initiatives championed by public figures like Gavin Newsom, Jerry Brown, Arnold Schwarzenegger, and legislators such as Fran Pavley and John Laird.

Category:California statutes