Assembly Standing Committee on Natural Resources

Good afternoon. Welcome to the Assembly Natural Resources Committee hearing. Please note the following agenda changes. AB 9114. Friedman has been added to the agenda for today. AB 1554 by Joe Patterson, has been pulled by the Committee. AB 1591. Wallace has been pulled by the author. We have 20 measures remaining on the agenda today. The following four measures are proposed for consent. Item two, AB, three, by spur, item eight, AB 841. Berman.

Item 14, AB 1526, by the Natural Resources Committee, and item 20, AB 1711 by Juan Carrillo. I believe we do have a quorum, so, secretary, please take role. [Roll Call] We have a quorum. The bills today are in being heard in sign in order. So if there are any authors in the room, please make sure you sign in with the sergeants. First up is. zero, yes.

Thank you, Assembly Member Wood, for reminding me. We have a motion and a second for the consent calendar. Secretary, please call the roll. [Roll Call] 19, AB 1633.

Thank you, Madam Chair. First, let me just thank you as well as your Committee staff. I know we had a number of meetings on this legislation dating back to last year. It's a continuation of a Bill that we. Wait what we had last year. This Bill, AB 1633, builds on my AB 2656 which strengthens the Housing Accountability act to ensure that redundant environmental review does not stall the development of housing in key geographic areas.

As you all know, housing is a major crisis in our state, and this issue came to light in a very stark example of my city around the property at 469 Stevenson street, which is used as a valet parking for the nearby Nordstrom's Department store. Unfortunately, this project was held in housing purgatory for a number of months by our county Board of Supervisors, and their clearance was pulled even after their environmental impact report was certified by the Planning Department. Right.

Now, this Bill would create a remedy for critical projects that are unfairly denied approval and ensures that they are not held in endless cycle of baseless environmental review. We also want to make sure that there's a set time frame. We lengthened the time frame thanks to the recommendation of your Committee staff to make sure that local governments also had enough time to fully review and to address all the environmental concerns as well. Really appreciate also the collaboration that we have with opposition.

I really do feel like we want to achieve the same things. We're not quite there yet in terms of the language of the legislation, but we obviously will continue to keep talking to them and keep working with them. With that, I have Michael Lane. Thank you. Michael Lane. And Louis Marante.

Madam Chair Members. Michael Lane, with spur of public policy think tank in the San Francisco Bay Area. We really want to take a very targeted and modest approach with this Bill. We want to respect the CEQA statutes and those timelines that exist and the environmental review process.

It's just that once that has been done and we have a legally sufficient document that could be adopted by the governing body, that there is a call for additional study, that there's substantial evidence in the record that demonstrates that need, so that we have clarity about that and transparency throughout that process. And that's really what we're asking for today. And we respectfully request an I vote.

Good afternoon, Madam Chair Members. My name is Lewis Morante. I'm Vice President of public policy for the Bay Area Council, which represents about 330 of the Bay Area's largest employers. Housing is, as you know, an incredibly important issue to the Bay Area and across the state. I think my colleague and Mr. Ting have done this Bill justice, though, so I'll answer any technical questions your Committee has. Thanks.

Thank you. Are there additional witnesses in support.

Madam Chair Members? Michael Gunning here with Lighthouse public affairs on behalf of Habitat for Humanity, in support.

Thank you. Next. Are there witnesses in opposition?

Thank you, Madam Chair Members of the Committee. Jeremy Smith here. On behalf of the State Building and Construction Trades Council, I'd like to first start. We are in opposition. I'd like to first start thanking your staff here on the Committee, as well as Assembly Member King and the sponsors, and Linda from Assembly Member King's office. We have had countless conversations on this Bill. We're very grateful for that and maybe we'll get somewhere and I know we're going to keep talking, so thank you for that.

While we appreciate the Committee's amendments to the Bill, which do address a few of its technical problems, we don't believe the amendments resolve the bill's fundamental problems, which appear to give developers greater rights than the rest of the public and creates major inconsistencies with Sequa's environmental and public health requirements.

The Bill uses the Housing Accountability act as a weapon to let private developers file a lawsuit in the middle of the project approval process if they disagree with the agency's decisions to do environmental review or public health studies. The Bill lets developers essentially jump ahead the legal process that the rest of the public must follow before filing a land use lawsuit. This is before the administrative remedies are exhausted. As pointed out in the analysis as well, we believe the bill's benefits are questionable at best.

The sponsors have presented very little evidence that filing more lawsuits over housing projects will speed up housing production. Let me say that again. This is going to allow more lawsuits, something that many of you on this dais have said is a problem. More lawsuits. In the sequel process, it's likely to do the opposite, as I mentioned, because the Bill will cause housing projects to get tied up in court before they are even approved.

Finally, the Bill interferes with CQA's requirements to analyze and mitigate projects'environmental and public health impacts before they are approved. We look forward to seeing the amendments that are discussed today when they're in print. But we just believe the Bill may therefore result in a hasty approval of new, large scale housing developments that put people in harm's way because the impacts have been mitigated, not only people who will live there, but the workers that we at the state building trade represent.

For those reasons, we do urge a no vote today. Thank you.

Thank you. Are there additional witnesses in opposition? Good afternoon.

Christina. Scarring with the Center for Biological Diversity. We look forward to seeing the amendments, but we remain in opposition at this time. Thank you. Next, I'll bring it back to the Committee. Any questions or comments from Committee Members? Assemblymember Zbur.

Hi it's nice to see you today. Obviously, I think the goals of the Bill are good ones, and I think some of the, I just have a lot of questions about how practically this is going to work. Actually having practice in this area for a period of time, it's hard for me to understand how you're going to reconcile these lawsuits under the HAA and the CEQA process and how it seems like you're actually giving litigants the ability to substitute their judgment for that of a local agency.

I know that this is geared towards agencies that are not taking steps in good faith under CQA, but it also seems like it picks up tons of cases where an agency may just decide they need more environmental review. They have to do more studies. And at some point, any place in the process seems like someone can come in and force a decision by filing a lawsuit that totally undermines the CEQA process.

So I'm just wondering if you can sort of talk a little bit about how you envision this happening and how you can prevent, how this Bill prevents, I think, sort of undermining CEQA for those jurisdictions that are using it in appropriate ways, which I think most jurisdictions do. To me, it seems like what's happening in San Francisco is a bit of an outlier.

It wouldn't be unusual that we would be outliers, but you're probably right. So I would say just a broad basis, and I'll turn over to Michael.

The idea is really in the Bill to also ask local governments that if they are asking for more time or have issues with that particular development, that they start to actually be a little more specific, tell the developer what they want to address, make sure that it's actually tied to secret, that it's not some sort of ancillary issue or that's not some sort of political issue. So I think that's what we are also trying to make sure we're getting at.

I'll let Michael talk about the various laws.

We're really focused on abuse of discretion. And to your point, there are some of those outliers. Developers are not racing to go to court and to sue jurisdictions where they're trying to build housing. And so we just want to make sure that if there's not evidence in the record that demonstrates any traditional study, then we have this opportunity to notice and to work that out before we even end up in court. And that's important why that noticing requirement is in there as well.

And it has to be the project applicant and not a third party to try to work out those differences. But we maintain the framework of deference to the lead agency and the local jurisdiction, which is already in the sequel statute, and we continue that process. It's just that if it's a dilatory tactic to just continue to study without evidence in the record demonstrating that need, then you could call the question, but that's after the sequest statute timelines have expired.

And if you have a legally sufficient document that otherwise could be adopted.

But who then determines whether it's a legally sufficient document? It means like, you're transferring that authority from the local jurisdiction to the developer, aren't you?

Well, there again, if it's even a close call, the developer is not going to race to court. Detroit has solved that because we know that the court would likely just remand it to the lead agency for additional study.

It's really in those most egregious cases where we do have an example where, for example, studies that aren't even required under the CEQA statute, might be called for by the governing body who wants to delay a decision and not run afoul of the Housing Accountability act by avoiding that decision through more environmental study.

But what about the situation where you've got a city that has, as part of the secret process, that you've got the public identifying potentially significant impacts on the environment? The jurisdiction decides it wants to do more studies. It's legitimate. And at some point then the developer basically says, I'm calling the question, and they bring a lawsuit. The lawsuit is now under the standards in this Bill. It sort of undermines the CEQA standards.

And that's the concern I have about this, about how the HAA and sqwa, how you preserve the robust protections that don't, you know, and I can envision cases where you have, because remember, even though the lead agency prepares most secret documents, essentially it is actually the developer who contracts with a consultant to prepare a secret document. And that could be something that's a very thin document.

And at some point on its face, someone can say, okay, I've got a document that has an air quality section and it has a traffic section and it has all of this. So on its face, it looks like it's okay. And the planning Commission and the city look at it and say, you haven't studied all of these impacts. It's a thin process. They decide that they aren't going to approve it, and then a lawsuit is brought.

When you actually, it seems like it's a way that you can get around the protections of that's, I don't know if you could respond to that, but I'm nervous about it because when I look at the standards in the Bill, it doesn't seem like there's any protections that reconcile maintaining the strengths of cequa.

Our intent was by using that evidentiary standard of substantial evidence that that would get at that question, that if the agency is able to demonstrate that there truly is a need for additional study, that that could happen with the language that we have in the Bill.

Okay, I'll look at it more carefully, but I'm nervous that it needs to be tightened up pretty significantly. To me, it feels like it's advancing a very appropriate goal, which is where you've got jurisdictions that are not basing their decisions based on CQA and the environmental impacts and just refusing to do something. But they also are elected officials, obviously, who are responding to the public and the community.

And so it seems hard to me to sort of where you're drawing lines between what is a legitimate set of concerns and what is an abuse of discretion.

But appreciate, again, any thoughts you have a further tightening? We're totally happy to. But again, this is an issue across the board in all of our communities. What we're seeing is that local jurisdictions, local city councils, local planning commissions, they are struggling to approve enough units of housing simply because they are being responsive to the community. And in General, the people who want housing don't live in those communities. They live somewhere else. And the people who are opposed to housing, our constituents, our voters, our neighbors.

And so you're absolutely right. They are being completely responsive to those neighbors who say, no housing, not in my backyard. And that's what's happening. And so you're right, the elected officials are merely doing their job to listen to their constituents. But we're also doing our job. If we don't build more housing, we're going to have a generation of young people who are unable to afford to live in California. They're going to be moving outside of California.

And this is what the studies, this is what all the polling, all the data, if you look at what PPIC does, all this research on data, that's the number one reason why people are moving out. We have a homelessness crisis because we haven't built enough affordable housing. I mean, if housing prices were at an all time Low, if affordable housing was plentiful, we would not need this legislation plus so many others.

But the fact that local government has completely failed us as a state, unfortunately has forced us to get more involved.

I was just going to say last thing, and I'm taking too much time. But to me, I get very worried about having a lawsuit that comes in under a separate statute rather than actually dealing with this as part of CEQA, streamlining, CEQA reform for kinds of projects that we want to build. And I do think that SQA does end up sort of capturing a lot more projects than it needs to that don't really have significant impacts.

And so I share that very, I'm nervous about how this is going to work and how it doesn't undermine the protections of SQL, which are sort of broader than in this area. So thank you.

Thank you.

And Assembly Member Hoover.

Thank you. I just want to say thank you for bringing this Bill forward. I greatly appreciate what you're trying to do here. And I think there's an entire generation that needs housing. And so I look forward to supporting the Bill today. But also it would be interested in being added as a co author if you'd have me.

Thank you. Happy to.

Any other questions or comments? Assemblymember Marisucci?

Thank you. You know, I'm listening with great interest to my colleague from Santa Monica, given that you had litigated SQl cases and yet I'm referring back to last week's meeting where we just passed a categorical CEQA exemption for all affordable housing projects for the City of. I'm just, I continue to wrestle what is the relevance of CEQA when we're just carving it up like Swiss cheese?

And Mr. Ting, I know that when you were describing how local officials respond to their constituents, I know you were thinking about my district. And so I don't know if you can help me.

I was thinking about every district in the state, not just yours.

I'm just concerned that every meeting, every session, we just seem to be gutting CEQA more and more. And I'm just concerned about the direction we're.

Mean. This Committee has cared about CEQA for a long, long time. I think the Committee asked us to take amendments that were going to make sure that this did not have a significant impact on CEQA. Again, this does not touch the CEQA statute. I'm happy to talk to our colleague from Santa Monica to address some of his concerns, especially given his longtime practicing, in particular as a practitioner in this area.

But again, I'll just say what I say to my constituents, because I have a lot of constituents that don't want to build housing in my neighborhood. And I will say then what we should do is we should have a state law banning jobs. We should just ban jobs because then nobody will come to California because that's exactly what we're doing. We are not allowing companies to create jobs because there's nowhere for their employees to live. That's why they're on the street.

That's why you have people who get paid a living wage living in their cars. That's where we're at in this state. And for me, I know that my constituents don't necessarily love it, but I think it's the right thing to do for our state. I think it's the right thing to do for our economy, and I know it's the right thing to do for our kids. So.

Any other questions or comments? Okay, Mr. Ting, will you be accepting the Committee's amendment?

Absolutely.

And would you like to close?

I'll just use that as my close. Thank you.

Thank you. We have a motion. I need a second. So we have a motion by assemblymember Mathis. Second by Assemblymember Flora. Secretary, please take the roll. The motion is do pass as amended to appropriations. [Roll Call]

Next, we have Assembly Member Bennett AB 1743, he has first. Okay. You have two bills? That's right, yeah. I assume you want to start with 1743, based on the sign in sheet?

Yeah, that's correct. Please go ahead. Thank you very much. Thank you very much. Madam Chair. I want to start by accepting the Committee's amendments listed in the analysis. Commend Committee staff. I know they've worked with the sponsors recently to try to address recent concerns. The ports are faced with the challenge of trying to clean up the ports, and it's a big issue for lots of people in the state and particularly the communities, the people that live in the communities around the ports.

And, for example, the port of my district wants to electrify, but they also want to take action now to try to invest in equipment that overall will produce fewer emissions than waiting until the standards come in and new equipment comes in. So this Bill sets a very high bar, but it says that if they can purchase equipment that shows it will decrease emissions total over between now and 2037, that they would be guaranteed they could keep the equipment till 2037 and not have a stranded asset.

And with that, I really appreciate that the sponsors have Mike Jacob here from the Pacific Merchant Shipping Association, who are the sponsors of the Bill, to testify in favor of it very much.

Thank you. Good afternoon. Mike Jacob with PMSA. We represent ocean carriers, marine terminal operators, and other folks doing business at California's seaports, and we appreciate the consideration. Today, Mr. Bennett's Bill, as he said, we are in a transition period. All of our equipment is regulated now to a best available control technology standard by the California Resources Board. But we know from the scoping plan update that was adopted last year that we'll be transitioning to zero emissions technologies between now and 2037.

In the meantime, we have the question facing us of whether or not we exist in transitional technologies, hybridization, uses of alternative fuels. And those questions are highly capital intensive.

So without, as Assembly Member Bennett stated, without some certainty with respect to how that works, we are asking the Air Resources Board to put together a program that would certify the equipment as providing lower emissions than just waiting and doing nothing, following just the best available control technology standards that are in place, and we think it would be a really tremendous win win, but also allow us to invest in technologies that are mature and that are available now and will provide missions benefits immediately. Thank you.

Thank you. Are there additional witnesses in support? Casey? None. Are there witnesses in opposition?

Chair, I'm Marvin Pineda. On behalf of the International Longshore and Warehouse Union, we don't have an opposed position. We have worked out amendments with sponsors of the Bill to prevent automation. So we look forward to seeing those amendments before the Bill reaches the floor. Those get done in appropriations. Thank you.

Thank you. Are there additional witnesses in opposition? Secure Carter on behalf of Sierra Club California and respectful opposition. Thanks. Thank you. Any questions or comments from Committee Members? Assembly Member Marisucci.

Thank you. Mr. Bennett. I now represent half of San Pedro, including almost getting to the port of Los Angeles, and I'm very concerned with the issue of automation, the issues that the ILW raised. Could you reassure me and this Committee that the intent of the Bill is not to continue any trend toward automation that's going to take good union jobs?

I am very comfortable with the negotiations that took place between the sponsors and the Longshoremen's representatives. They have reached agreement. They just reached agreement. Too late for us to have the amendment and language here, but since they are both in agreement, I'll definitely be adding that to the Bill, and that certainly reflects the intention here.

Any other questions or comments from Committee Members? Seeing none. Is there a motion? Oh a motion by Assemblymember Chris Ward. Second by assemblymember Wood. Would you like to close?

Yeah, I just think the Bill makes a lot of common sense, and I respectfully ask for an aye vote.

Secretary, please take the roll. The motion is do pass as amended to appropriations. [Roll Call] That Bill has 10 votes. We'll leave it open for absent. Absent Member. Those only ones. Next. AB 1550. Also by Assembly Member Bennett.

Thank you very much, Madam Chair. I want to be clear right from the beginning that this Bill is a work in progress Bill, but it needs to move for it to be a work in progress that will have sufficient work done to it. A number of stakeholders need to come together, and one of the challenges is to have people fully vet the definition of green hydrogen. It gets thrown around really easily. We need to really vet that and have robust conversation.

If you don't have a Bill moving. You just don't get the stakeholder engagement that you really need to fully vet that. And so I appreciate the fact that the Utilities Committee came up with a definition for green hydrogen as a starting spot. And that definition of green hydrogen has been out there. But the definition that the Utilities Committee has added to this means that fossil fuel can't be used, nor steam methane reform.

Currently, that's what the definition says to produce hydrogen, and that is the starting spot. I already have environmental organizations that have submitted what they would like to have as a definition. Industry has been talking mostly about carbon intensity definitions. Environmentalists have been talking more about uses and focus on the production, but not just the production, but how the hydrogen is used. And the utility Committee, I think, came up with the renewable fuel standards, which is the standard we're using for the electric grid right now.

And the fundamental motivation here in my mind is to extent that we can say in General what's good for the electron is good for the element, that that's going to help everybody as we move forward, number one. Number two, right now there is no standard. And so hydrogen could be produced in any way. And we risk the possibility of having an enormous amount of money invested in technology that maybe is technology we don't want to have in the long run.

And then you're going to have jobs created around that and people frustrated with that by giving people certainty early in the process, but taking our time while we develop that, I think it just helps California all the way around. And again, the goal here is not a pro hydrogen goal or pro battery technology goal. It is what is the best way for us to make this complicated transition from a carbon economy to a carbonless economy.

Hydrogen plays an important role in that simply because of its storage capacity alone. It's a significant added benefit that battery technology is having trouble coming up with. And so there are many things I'd love to talk with you about in terms of this, but we have an ambitious goal to get to 100% clean by 2045, no carbon emissions.

To reach that goal, I think we have to not just set the goal, but we have to start work thinking through what are the hard steps that have to be taken. One of those hard steps is working on this definition. And so I really appreciate the fact that we have had quite a bit of engagement on this and we have our stakeholder representative here. Bill is going to testify. And I'm just trying to get to my last page for Bill McGavin.

And he's from the Clean Air Coalition speaking in favor of, in support of the Bill.

Good afternoon, Madam Chair Members. Bill McGavin with the Coalition for Clean Air in support. I think your analysis does a good job of noting a lot of the pros and cons of hydrogen energy. And one statement that is particularly important to my organization is it notes that if you make hydrogen with zero carbon energy, use it in zero emission applications, replacing diesel, you clearly have clean air and climate benefits.

And that's why we have strongly supported the use of hydrogen in fuel cell engines for applications like trucks, trains, ships, where we badly need to get out of diesel, both for air quality and for climate reasons. So to make hydrogen successful, we need to make it green. And I think that's really what this Bill is getting at.

Back in 2006, Senator Lowenthal authored SB 155 and I spoke for that Bill at the time, and it set the initial renewable energy requirements for hydrogen production in California. Well, that was 17 years ago, and it's in need of an update. And this Bill really would accomplish that by requiring that we get to truly green hydrogen, but allowing 21 years to get there, which really is a long time, and it's the same time frame as we're giving for the grid.

So it's really putting them on a level playing field which we think is appropriate. We support both as zero emission technologies and urge you to approve this Bill. Thank you.

Thank you. Are there additional witnesses in support? Sakura Carter, on behalf of Sierra Club, California, with the support is amended position, we look forward to working with the author to make it clear that biofuel is not included in the list of potential resources. Thank you. Good afternoon.

Caitlin Roadner Sutter on behalf of Environmental Defense Fund and also California enviro voters today in support of this Bill, we really appreciate the direction and look forward to working with you on more details, but would ask for your support today. Thank you. Thank you. Are there any witnesses in opposition?

Thank you.

Chair Members, my name is Mikhail Scovarli. I'm here on behalf of the California Hydrogen Coalition and the California Hydrogen Business Council. While we share the desire and the principle for decarbonization of hydrogen by 2045, AB 1550 is still not ready to be moved and with previous Committee amendments, creates a significant financial risk to current major projects and the federal funding in the California hydrogen hub.

There's too much at stake, including California's competitiveness and the known private sector investments totaling over $10 billion, and not enough to be gained by hastily moving this Bill as amended today, all the projects that we're talking about are renewable and would fail to meet the hyper specific definition of green in this Bill. While we appreciate the author's commitment to make this a two year Bill and to work with us, we in turn have made that commitment to work with him.

But this is not the time to move this Bill. The work that needs to take place has failed to make muster in this Committee multiple years in a row. I think the first Bill we brought forward was 2019 for renewable hydrogen standard, and we were not able to get a Committee hearing.

And so while the Legislature did the right thing in passing SB 1075 last year to investigate the various aspects of renewable hydrogen and green hydrogen, we believe that the information from that report from CARB, the CEC, and CPUC should be in this discourse prior to moving ahead and taking this Bill across. The Bill in print additionally adds a standard that no other renewable resource would be able to meet.

We're holding hydrogen to a differential aspect at an early point in its deployment, and we should probably examine how to do that and do that under the context of what we're going to receive out of SB 1075. So, as an example, it's kind of odd that while we could use RPS eligible biomethane to burn at a power plant to create electricity, to then make electrolytic hydrogen, that would be considered eligible under this definition.

But I couldn't just take the biomethane to make the hydrogen a more efficient and cost effective pathway with lower carbon emissions. Same goes for biomass. So at this time, we urge this Committee, the author, and the Legislature to continue to focus on renewable attributes and carbon intensity with the overlay of the grid. But please hold this Bill today so that we don't risk the hydrogen hub.

Hello. Good afternoon. Two minutes? Two minutes. Yes, hello. Chair Rivas, Members of the Committee, my name is Ryan Kenny with Clean Energy. Our company is the largest provider of renewable natural gas transportation fuel, and we are the leaders in the future for hydrogen for heavy duty transportation in California. We believe this Bill is premature, and we do appreciate the author's leadership on this issue, and we do appreciate his interest in making this a two year Bill.

But we ask that the Bill be held here in the Assembly, in this Committee for a couple of reasons. One, the Bill does not include a definition of green hydrogen for vehicles, even though it's a requirement in the Bill. Also, the question has been asked, this is a 2045 deadline. Why now? What's the issue with the opposition at this point for transportation? But the issue is it's a nascent industry just getting off the ground. Setting a long term goal will disincentivize investment and innovation.

In the near term, our industry in the heavy duty space looks at hydrogen as more like the EV space. Maybe in the 1990s. We're trying to get this off the ground and any sort of premature goal will inhibit that. Also, SB 1075 was adopted just last year by this Committee and also requires three the CARB, TUC and PUC, to conduct an evaluation of hydrogen by June 1 of 2045. We think this Bill is premature for that reason as well.

We also urge that the Bill include all Low carbon fuel pathways based on a carbon intensity framework and not a color scheme. And we ask again that this Bill be held for further consideration. Thank you.

Thank you. Next we'll move to additional witnesses in opposition. Just name organization and position on the Bill. Julia Levin, Bioenergy Association of California we are opposed unless amended because of the exclusion of RPS eligible organic waste. It doesn't make sense to allow it to be converted to electricity and then to hydrogen instead of converting it directly to hydrogen, which is less expensive, lower carbon intensity and far more efficient. Thank you.

Good afternoon. On behalf of Hcycle, opposed unless amended for reasons already stated. And we thank the author and staff for all the engagement and looking forward to continuing that engagement as well.

Madam Chair Members, Chris Bauer, on behalf of Oberon Fuels, in respectful opposition to the Bill. Look forward to having continued conversations with. You, Sir. Janet Cox, on behalf of a 350 Humboldt in opposition. Thank you.

Jackie. On us, on behalf of the Coalition. For Renewable Natural Gas and respectful opposition. Thank you. Madam Chair Jeremy Smith here, on behalf.

Of the state Building and Construction Trades. Council, also in opposition. Thank you. Next we'll bring it back to the Committee. Any questions or comments from Committee Members? Assembly Member Ward I just want to.

Thank the author for bringing this forward. I know appreciate work in progress because it's a pretty big area that we are trying to get some good goal setting around and good definitions about what we want to do. It sounds like there might be some ground to work on and to help bridge some of that concern from opposition. And I know that you'll be taking that very seriously.

And I know this is also going to intersect with some of our other hydrogen related bills that we're working on at this Committee and through this session. And so to every extent that we're setting good green oriented goals into what I still see as a two year, 23 year time horizon, I think is a great sort of marker to lay down and how these all thread together.

And the work that you do that intersects with some of these other bills as well is going to be very laudable. So I'm happy to move the Bill and look forward to your continued work on this.

Assembly Member Hoover.

Thank you.

And thank you to the author. I do appreciate your comment that I think you and I both share that hydrogen does play an important role in the future of our clean energy economy, and I'm very excited about the role that it's going to play. I think one of your witnesses said something about, or your witness said something about to make hydrogen successful, it needs to be green. I would actually flip that. I think to make hydrogen green, we need to make sure it's successful.

We need to make sure that we have a successful hydrogen industry. We need to solve that problem first, and then we need to move forward with making it as clean as possible. I think my concern at this point, and I'm happy to continue, I appreciate your willingness to continue these discussions. My concern at this point is that the Bill is written. I think my fear is that it will suffocate the hydrogen industry in its infancy.

And I think that because of that, I'm just not going to be able to support it today, but I will definitely keep an eye on it as moves forward. Thank you.

Any other questions or comments? Assembly Members Zbur.

So I want to thank the author for, I think, sort of tackling a set of issues that I've been grappling with and frankly don't quite understand well yet. And I think one of the positives about the Bill is really, I think, getting into the weeds and developing a definition for what clean hydrogen, green hydrogen, good hydrogen is. And so I applaud you for doing that.

I was wondering, I did have one question, which was, and then the other thing I guess I'll say is I'm convinced that while I do still believe that electrification is the cleanest fuel source, I also recognize that there's a lot of issues with the full lifecycle for battery technology that we have to also recognize.

I do believe that there are going to be some applications where hydrogen is going to be, where just electrification and the technology is not going to get there in time or at all potentially. And so I do think we need to continue focusing on hydrogen. My question was related to the one that the building trades brought up in their letter, which has to do with a concern they're raising about the $8 billion in funding on the hydrogen hubs.

I was wondering if you can respond to that, whether you think that this has an impact or not.

Thank you for the question. I really appreciate it. I was the Assembly Member on the floor that gathered the signatures for support for the hydrogen hub, and I appreciated the fact that there was bipartisan support for that. And we had a surprising number of Members in a very, just only two days sign on to that, well over the majority of the Assembly. So I wouldn't be doing something that I think could risk $1.0 billion investment from the Federal Government.

And I don't believe that that's the case. And the reason, a number of reasons why I don't believe that's the case. I think I had conversations and I don't want to share them with some of the people in the top of the Administration who said, we think this actually helps us because it shows this Legislature is serious about hydrogen, serious about having these conversations. And so that kind of interest actually helps.

And there are other places that you just don't have the Legislature that focused on it. One of the hydrogen hubs is supposed to be a clean hydrogen hub, a focus on clean hydrogen hub. And certainly there are a lot of reasons why California might qualify for that, and we may qualify for two hydrogen hubs as a distinct think that. I appreciate the letter, but I don't think that in my mind, I can't see the connection that it's going to cost us.

I think it theoretically will help us. Nobody knows for sure until we hear from Washington.

I'm assuming, though, I mean, you're making this a two year Bill, and part of that is in order to sort of address some of the issues related to the definition of green hydrogen.

Absolutely. In the utility Committee hearing, they asked if I would be willing to consider making this a two year Bill. And yes, for this Bill, for us to have the stakeholder meetings that I think we need to have to address the issues that have been raised here about the standards, about a perception of inconsistency on biomass and those things all take conversation. They take time. They also take active engagement by the stakeholders.

And I would offer, that's the major reason to move the Bill rather than to delay the farther you are from moving it. But if we can move the Bill and demonstrate there's General interest in getting this definition, I think that you get a much more active engagement as we move forward. So, yes, it would be the summer and the fall when I hope that we would have time to actually pull everybody together and have those in depth back and forth conversations.

I've talked to folks in the environmental community and they've mentioned that you've been working with them very closely, and it's good to sort of see they've come to a position of support, I think understanding the intent of the Bill, and I'm hopeful that you'll continue working with the building trades and understanding this issue with the hydrogen hubs and the opponents here as the Bill moves forward. So I'm planning on supporting it.

Given that, I think that this is an important conversation that needs to happen and just want to thank you for engaging all the stakeholders.

Thank you. If I could, Madam Chair, if I could add, I feel like I've worked equally actively with the industry representatives also, and while they had a different reaction, that definition that we have came from the Utilities Committee, I started with no definitions, partially to maintain sort of an ability to have honest conversations back and forth with both sides. So that's where we are in terms of starting this. So certainly on both sides, I want to continue to engage as we move forward.

Thank you. Assembly Member Pellerin.

Want to thank the author for bringing this Bill forward. I think that we have a lot to learn about hydrogen. I remember last year getting the news story about UC Santa Cruz researchers when they found a way to produce hydrogen using a unique aluminum nanoparticles that reacted with water at room temperature. And it was just a lot to explore here.

And I'm very grateful for you working with the opposition and all the stakeholders and moving it forward, and I'm hopeful that we'll get some good resolution the next two years. So thank you for that. Thank you, Assemblymember Mathis.

Thank you, Madam Chair. When it gets to hydrogen, and I know we talked a little bit in utilities, I think the important part to understand is that we're storing electrons in an element. Whether we're storing electrons in lithium or storing electrons in hydrogen, we are storing electrons.

And my concerns with this Bill and with some of the definitions that are being discussed is that, and I'd really like the opposition to expand on this so we can all understand it better because you're generating electricity to store it in an element, to store those electrons. And when we get to doing that, there's a cost associated with that. So when we're talking about doing it in a green way, doing it in the most mechanically efficient way, to me, is the greenest way to do it.

I'd love to hear from Mikhail, and if you guys would expand on those mechanical processes on that generation, I think that would help us kind of understand how this is actually mechanically, physically done through the chair.

I just wanted to be brief. I don't want a long explanation, just we want to continue to move.

Madam Chair. I think the mechanics on how it's generated are extremely important.

With regard to renewable hydrogen, there's three principal pathways. The most predominant is the conversion of biogas from wastewater treatment plants and landfills and whatnot, as required by Sara Laura's SB 1383. We inject steam and crack the carbon molecule off of the methane that way, and end up with two hydrogen molecules for that process. That's one of the most efficient ways to get hydrogen. And it can be done with fossil or it could be done with renewable gas.

In California, though, last year in transportation space, we were 65% renewable with the carbon intensity of zero, using predominantly that pathway. The other pathway is biomass paralysis, which is non combustion conversion of thermochemical conversion, where we were able to capture the hydrogen and use that. That's actually pretty important for our forestry management issues and will help us create a circular economy to avoid the wildfires. And then the third is electrolysis, which could be done with grid power or renewable electricity.

The issue with this definition in this Bill is the no tradable wrecks kind of precludes hydrogen from balancing the grid in times of over procured excess renewable electricity, and then curtailing the electrolyzer at times of peak electrical demand. So you remove the cost benefit that is baked into the California hydrogen hub proposal. By requiring dedicated wind and solar to be, we're not able to capture what is excess procured.

As we get closer to 45,50,60% renewable in the RPS, we're going to need tens of hours of storage. Hydrogen is one of the most cost effective ways to create that storage. And so those are kind of the three principal path.

Thank you.

Any other, just with that on that RPS getting to 2045 Zero carbon.

Because this. Is where this really goes. We've got to make sure there's a way to store solar and wind and we know there's just not enough lithium in the planet to be able to do. And so you're saying hydrogen is kind of the solution to that?

Yeah, absolutely. I think it's been well studied by the University of California that the cost savings to the public could be in the hundreds of millions this year. We curtailed enough electricity last summer to power almost 200,000 fuel cell electric vehicles with electrons that the ratepayers have paid for just lost to the grid forever. And that happens on an annual basis. The ability of hydrogen to be a grid service is tremendous.

And so the way the Bill is today bars that from being a resource.

Yeah. The inability to use tradable wrecks and the requirement of directed wind and solar continue.

Move on. I mean, you had an opportunity to. Thank you, madam. Repeating what the opposition presented.

Well, I think it's important for the Committee to understand that this Bill stops our ability to use hydrogen as electron storage. And if we're going to make our 2045 goals, it is imperative that we have that as an option.

Thanks, Assembly Member Marisuchi.

Thank you. I want to be respectful of the Committee's time, but I just want a clarification. My understanding is that you want to define green hydrogen. The direction you're headed is to make green hydrogen without using fossil fuels. So clearly, like using wind and solar to make hydrogen would fall in the.

Direction so you can store it. So we do have a backup when the sun goes down and the wind isn't blowing. Yes, exactly.

And so the opposition statement that the central premise of the hydrogen hub is to rely on wind and storage to store that energy in the form of hydrogen fuel is consistent with your Bill. Is that correct?

I believe so.

Thank you.

Thank you. Any other questions or comments? Okay, thank you, Mr. Bennett, for bringing this measure forward. I know we've had several conversations about this Bill and your commitment to continue working on it with all stakeholders. I know that's one of the first things you told me when you told me that you were introducing this Bill. So I am supporting this Bill today. Would you like to close? And we have a motion and a second.

I appreciate the interest in a difficult subject you already heard just in some of the opposition comments. Those are technical issues that you just have to spend the time and roll up your sleeves on. And the support of this Committee would be helpful in terms of us bringing everybody to the table for serious conversations about this. And I think this is better than where we were before, when, quite frankly, there were people out there that wanted to kill hydrogen in the crib.

And there are other people that wanted hydrogen sort of at any cost, and neither one of those were going to be able to move forward. And this is an attempt to try to actually move hydrogen forward. So with that, I respectfully ask for an aye vote. Thank you very much.

Thank you. We have a motion by Assembly Member Ward, second by Assembly Member Addis. Secretary, please call the roll. Motion is due past to the Appropriations. [Roll Call]

Thank you very much, Bill.

The bill has seven votes. We'll leave it open for absent members. Next we have item nine, AB 985, by Assemblymember Arambula. You have a motion and a second. Whenever you're ready.

Thank you, Madam Chair and Members. I would like to start by acknowledging the great work that the Committee has done. I've included the suggested amendment in a mock up of proposed amendments submitted to the Assembly Appropriations for that Committee's consideration if the bill gets out of this Committee today. AB 985 will begin to restore the community's faith in the district's governance by bringing much needed transparency to the San Joaquin Valley Emission Reduction Credit program.

ERC programs were based on the notion that polluters could be motivated to voluntarily use a system of pollution credits that would result in a reduction of emissions beyond those achieved through direct regulation. Over the past decades, the validity of some of the credits granted over the years has been cast into doubt. This has left local communities unable to trust that their local governments are meeting their obligation to protect public health.

In 2020, CARB released its review of the volatile organic compounds and oxides of nitrogen, VOCs and NOx ERC banks. At the air district, CARB found so many problems that the air district lost its special exemption from the US EPA to value credits in these two banks differently than other air districts. CARB invalidated the credits that should have never been issued. It then ran the equivalency demonstrations for the VOC and NOx banks without those credits.

Because these demonstrations failed, CARB directed the air districts to convert all of these credits in these banks to time of use evaluations, and this was a review of only two out of the 10 total credit banks. The remaining eight banks include credits for pollutants that are impacted in severe adverse or, excuse me, are implicated in severe adverse health impacts. Particulate matter 2.5 and 10 has been shown to accumulate in fetal tissue during gestation with links to low birth weight and infant mortality.

Carbon monoxide reduces the capacity of the body to pump oxygenated blood to the heart. Oxides of sulfur, SOx, may increase the risk of children developing asthma and worsen respiratory symptoms among those children that do develop asthma. There are also credit banks for acetone, ethane, sulfate, and hydrogen sulfide, each with its own set of health and environmental impacts. The San Joaquin Valley Air Pollution Control District has continued to issue ERCs in violation of federal and state laws, rules, and regulations.

Many of the permits utilized by these sources are based on ERCs that should never have been issued. This has resulted in decades of exposure by our constituents to excess pollution that should have never been permitted. Despite all of this, CARB has no public plan to continue its review of the eight remaining banks. It is essential that credits be based on emission reductions that were real, properly quantified, permanent, enforceable, and surplus. This is not a new standard. It has always been the standard.

This bill simply requires that credits currently up for sale meet this standard. For these reasons, CARB must ensure that credits are real and that the system is functioning as intended, transparently and fairly. Testifying in support of AB 985 are Sasan Saadat with Earth Justice and Jesus Alonso with Clean Water Action.

All right, good afternoon, Chair and Committee Members. I am Jesus Alonso, the community organizer for Clean Water Action, and I'm here in support of AB 985. As a lifelong resident of Lamont in Kern County and a six year local environmental advocate, I have seen, heard, and experienced firsthand the failures of the emission reduction credit program. Our communities, low income communities of color, bear the impact of harmful, dangerous contaminants and the policies in place that are supposed to protect our communities.

If policies are not properly executed, whether willfully or accidentally, it is our communities, our families, that pay the price. The price for the ERC program's failures take the form of our family members at an increased risk of developing any number of respiratory and cardiovascular diseases, including cancer. It manifests as the one in four children in our communities developing asthma.

The multiyear streaks of having several of our cities in the State of the Air report's top 10 most polluted cities in the nation, and in our air district's inability to meet air quality standards. After the 2020 CARB report was concluded and it was found that for 10 years there was not only a lack of public transparency, but a pattern of mismanaging and over-crediting applicants, I, along with several other advocates, joined the participatory advisory workgroup.

Meeting after meeting, our input was rejected and ignored. The air district and the workgroup were unwilling to reform or quantify any of the prior errors that led to this dysfunctional program. It was clear that our presence on the work group was being tokenized and that they had no intention to quantify the discrepancies or compensate our disadvantaged communities for the severely mismanaged credit.

As a result of these failures, we are now here before the Committee. As an organizer, a community leader, and as a father of two small children, I urge you to support AB 985. The emission reduction that we were promised is long overdue. Thank you.

Hello, my name is Sasan Saadat, a senior policy analyst with Earth Justice, in strong support of AB 985. The bill is fairly straightforward. It essentially requires industries to follow the rules of the Clean Air Act in the most polluted air basin in the country. When a district is severely out of attainment for health based air standards, as the valley has been for decades, the ERC program is supposed to ensure that new sources of pollution are offset with reductions that are real, surplus, and permanent.

After pressing the issue for years, residents were successful in getting CARB to do a sample audit. A small but representative fraction of the credits in the bank and the results of that audit speak for themselves. Almost all of the credits were from over 30 years old. Using the district's raw data, CARB could not backup the district's claims of reductions for half of the projects they examined, and the district did not have any additional documentation to explain their math.

CARB found cases where inflated credits were awarded for required pollution reductions in violation of federal and state law. In one instance, the district over-credited an orphan oil well shut down with more than 500 tons of VOCs. CARB determined the project should have reserved zero tons. CARB found that electrification projects were consistently over-credited, and what's more, they were never even eligible to generate credits in the first place, since they were funded through separate state funding sources like the Carl Moyer program.

The glimpse from this sample audit is enough to be outraged, but it's not enough to understand the full scope of harm to valley residents' air. AB 985 tells the district to do what any logical observer would do given this information. Keep going. Finish the review. Rest of the pollutant banks still need to be reviewed. Quantify the amount of invalid credits that still remain in the bank today.

We need to know that no significant new pollution in the valley can occur unless it's offset by reductions that are actually real actually surplus and verifiable, as has always been the law. In summary, this bill is just ensuring the ERC programs as it was intended to function, and that the industry in the most polluted basin in the country is playing by the rules because the audit we have so far proves that's not been the case.

And when you hear Saber rattling about job losses whenever communities demand accountability, remember, this bill just brings the industry closer to having to comply with basic health protections that they have managed to subvert for decades. It's not too much to ask that industry figure out how to run their businesses in ways that don't require evading the law. Thank you.

Thank you. Next, are there additional witnesses in support?

Good afternoon. Dr. Catherine Garoupa with the Central Valley Air Quality Coalition, proud sponsor and in strong support.

I've also been asked to read me too's into the record for Pesticide Action Network, Little Manila Rising Leadership Council for Justice and Accountability, the Climate Center, Valley Improvement Projects Friends Committee on Legislation of California Mi Familia Vota Elders, Climate Action Northern California and Southern California chapters, Central California Environmental Justice Network, Climate Action California 350 Humble, Mi Familiar Vota Sorry, California Environmental Justice Coalition, Natural Resources Defense Council and Central California Asthma Collaborative. Thank you. Thank you.

Bill McGovern with Coalition for Clean Air in support.

Fatima Iqbal-Zubair with California Environmental Voters in support.

Thank you. Next. Are there witnesses in opposition? Just a reminder, two minutes each. Up to two minutes each. You.

Good afternoon. Chair Rivas, Members of the Committee, my name is Tom Jordan. I'm with the San Joaquin Valley Air Pollution Control District, and we must respectfully oppose AB 985 and the changes that are proposed for our emission reduction credit program. The changes proposed by this Bill threaten the district's ability to continue to issue permits to essential public services, including hospitals, wastewater treatment facilities, compost facilities, electric generation, and for expanded businesses.

Over the decades, the district has adopted nearly 650 rules and regulations that have reduced stationary source emissions by about 90%. The district has significant air quality challenges, and this work continues. We continue to reevaluate those rules and tighten them, and as a matter of fact, CARB, USEPA, and a three-judge panel have all found that our rules are the most stringent rules in the country.

When someone requests a permit at the air district, they come in and the very first thing we do is we compare their project to those rules that we have adopted. So we go equipment by equipment and make sure whatever they're stalling meets those standards. And because of our air quality challenges, those are the most stringent challenges in the country.

The next step we take is we compare their project to any project known anywhere and see if anybody's installed equipment that's cleaner than that or if there's equipment that has been developed that's cleaner than that. It's called best available control technology. If someone else has used that equipment, they're required to install it, no matter what the cost is.

The very last step in the permitting process requires under both federal law and state law that the sources offset any emissions that are left after they've installed all those control equipment. And that's where emission reduction credits come into play in the San Joaquin Valley. Because of our challenges, sources are required to offset their emissions at a rate of 1.5 to 1. So they have to over offset the emissions that they create. There are three basic provisions of this Bill that create problems.

One, and I understand this may be amendment you're taking. The Bill proposes an arbitrary time frame for ercs to expire that comes from other states. What this ignores is that in looking at this 30 seconds, this program, if I may, I'm going to take a little bit of my colleagues time and then let him finish.

Okay, go ahead. Thank you.

Thanks. It's a very complex issue. I apologize.

You're at two and a half minutes.

It doesn't look at the fact that in California, our program is more stringent than other states. We require offsets for sources that aren't required to get federal permits. So we require across the board offsets. That's where the equivalency system comes into play. It's not specific to the San Joaquin Valley. Another number of air districts in California use that system.

And CARB did do an analysis of our system, and there were some policy decisions that were made in the past, including a couple of the emission reductions from electrification and other things that CARB asked us to take out. We actually went to our board last month and made all those changes to our programs. The review of the audit did not call into questions the ercs that were banked.

In addition, this Bill asked that for our other banks that it be switched to a federal program where admission reduction credits are reduced at the time of use. This ignores the fact that in these other banks we actually exceed federal requirements because we require offsets of more sources than are required under the federal program. So that would actually be a less stringent program.

In conjunction, those two provisions expiring the time frame of credits and then the discounted time of use, given the scarcity of credits in the valley, because people have to exceed our regulations to generate new credits, it would make credits so scarce, it'd be difficult to issue any new permits. And that's why we say it would be difficult to permit these other facilities. Additionally, there's a requirement to a look back four minutes for all of our permits. ARB has commented on all these projects in the past.

This look back are projects they've already seen and would be extremely time consuming and likely wouldn't result in any new mission reductions. We respectfully oppose the Bill.

Okay, you're a very brief comment, Madam Chair. We've given you a lot of time.

We very much appreciate that. Brendan Tuig, on behalf of the California Air Pollution Control Officers Association, that's the Executive Officers from all 35 local air districts. One thing I did want to point out for context is that mobile sources account for 85% of the emissions in the valley, give or take, depending on the pollutant. And stationary sources are 15%.

So I want you to think about the context of that, is that air districts are doing all they can to get reductions, but there's only so much you can do. The fastest way to be getting reductions and cleaning the air in the valley and other air districts is to be incentivizing clean transportation so we can get them faster. And also, we object to the precedent that this sets as well. Thank you, Madam Chair.

Additional witnesses in opposition.

Good afternoon, Madam Chair, and we apologize. Several may not be noted in the analysis, but we are here in opposition. Taylor Roshan, on behalf of the California Walnut Commission, Cotton Ginners and Growers Association, Western Ag Processors, African American Farmers of California, California Women for Agriculture, California Fresh Fruit Association, Far West Equipment Dealers, Nissay Farmers League, and Western Plant health and respectful opposition. Thank you.

Chair Members. Dean Tally with the California Manufacturers and Technology Association, respectfully opposed.

Hello. Ada Waelder, on behalf of California State Association of Counties and the Rural County Representatives of California, in a respectful opposition.

Good afternoon. Chair and Members Victoria Rodriguez with Nielsen Merksamer, on behalf of the Milk Producers Council, in opposition.

Good afternoon. Katie Little with California Farm Bureau, in opposition.

Good afternoon, Madam Chair and Members. Tricia Geringer with Agricultural Council of California, respectfully opposed.

Good afternoon. Aaron Norwood, on behalf of the Almond Alliance, also in respectful opposition.

Thank you, Madam Chair and Members Paul Deiro, representing The Western States Petroleum Association, in opposition.

Anna Ferrera, on behalf of the Wine Institute, in opposition.

Izzy Swindler, Shaw Yoder Antwih Schmelzer and Lange, on behalf of the Board of Supervisors of Fresno, Madeira, Merced, San Joaquin, and Stanislaus County, in respectful opposition. Thank you.

Thank you. Next, we'll bring it back to the Committee. Any questions or comments? Assemblymember Ward?

Thank you. I just wanted to thank you, Dr. Arambula, for bringing this forward. I know this has been one of your priority passion issues, certainly stemming from your work in community health in the valley and the disparate impact that we see for many of your residents and the sources that really aligns from, I think, through the work that you're doing right now, and they've done in the last session as well.

Trying to really push for reforms that will be able to more fairly achieve those better health outcomes is really the intent of this Bill. I know. Should this be able to move forward, you'll be even more empowered to try to work with all stakeholders to be able to achieve that. So, Madam Chair, happy to move the Bill, and thank you for your continued work on this. Thank you.

Thank you, Assemblymember Mathis.

Thank you. My question goes to our airborne folks. I just wanted to make sure I heard you right. You're saying 85% of the bad air that we're getting in the valley is coming from other sources from outside, is that correct?

Actually, the statistic was 85%, and in particular, it's the NOx emissions which drive our ozone formation. And PM formation in the valley is from mobile sources. So that would be cars, trucks, off-road equipment, things that are under the regulatory authority of the State of California and the EPA.

So as you guys are going out trying to do these programs, trying to reduce emissions, 85% of the sources you can't touch.

That's correct. Our only lever to get emission reductions from those categories is through incentive programs. And air districts are often in front of the state Legislature looking to generate resources for that purpose. Thank you.

Any other questions or comments from Committee Members? Assemblymember Muratsuchi.

I mean, we all appreciate how you've been championing this issue for years to stand up for your communities, but it does make me a little nervous that our AQMDs throughout the state are saying that this is the wrong approach. I especially heard the comment about how they're issuing permits for your hospitals. And I know as a physician that's got to be close to your heart. Can you help me feel, address my discomfort here?

I believe it's important that credits which were given were deserved, and that means we have to have a transparent process to make sure that we are evaluating those credits to ensure that they're valid. What we found from the audit of the first two banks is that many of those credits did not have documentation that appropriately allowed us to have confidence that they were validated and should have been given.

Because of that, ultimately the standard was changed to what the Federal Government prefers, which is time of use versus time of issuance, and would ask for us to continue evaluating the remaining eight banks to ensure that we have validity within those banks as well.

Okay, any other-? Assemblymember Zbur, do you have a question?

I share the concern about the air districts having such concerns about. I've practiced a lot before the South Coast Air Quality Management District, and I think there really are, the level of expertise there is very high, and so it makes me really nervous. Can you tell me a little bit about how this doesn't sort of disrupt new source review rules. And what would happen as a result of this? Is it just an audit of the credits? I mean, what happens to the current set of rules that guide new sources in all these air districts?

Originally, when they looked at NOCs and VOCs, they were not able to determine that they had enough documentation for them. Because of that, they then invalidated a number of credits. After they used. Invalidated those credits, they ran the district's equivalency study and couldn't make the math work out. They couldn't show that it was equivalent or better than if we would use time of use. And so CARB decided to go to time of use.

And I believe it's important to then show that it was 18% of the credits after that shift to time of use, which were allowed to be continued. Now, that doesn't prohibit any organization that would like to start to purchase those credits. It just means that we have the right number of credits out in the system because we have the validation from the paperwork. And what we're finding after looking at what CARB did is over 50% of the credits didn't have the documentation when we evaluated it.

It was also 29% that had been granted in violation of the air district's own banking rule, 19% that had been granted that had been shifted from one facility to another, and 8% that lacked clarity on whether the emission reductions were surplus. I believe that audit screams that we need to take a look at those other banks and determine whether there are similar concerns and would then make sure that we have the appropriate amount of credits in those banks going forward.

Madam Chair if we could have an answer from. Yeah, hold on. Sorry.

Would you like to hear? 30 seconds.

Yeah. Just three quick things. One, every one of these credits is publicly noticed when they're issued. They're also noticed when they're used. And EPA and Arb comment on every time an emission reduction credit is used. Second, CARB made recommendations for our program. CARB didn't choose to go away from discount, go to discount at time of use, the federal system. We actually did that.

We took their recommendations and we changed our program, and we looked at the recommendation they made to shore up our documentation and did that across all of our banks. We didn't just stop at BOCs and NOx. So the work has already been done to make the other banks consistent with what CARB was asking for.

Madam Chair, if I can, then what's to fear about studying and auditing and ensuring that those banks are consistent with? If you've already done the hard work to listen to CARB. Why are we afraid of studying and looking at those other banks?

Can I test one more question? So is this just an audit and a study? I mean, does it change the rules, or is it. We're learning from this, and then it guides future action on the credits?

It instructs CARB to make a determination based on what it finds, similar to what occurred prior, and believe that if ultimately, they insist, ask, force the district to be able to go to time of use, that what we're actually doing is ensuring that these credits are real and that they're valid when we have the worst air basin in America.

Thank you. Appreciate it.

Any other questions or comments from Committee Members?

Madam Chair, if we can just get a little more from the opposition.

Than I've ever given anyone an opposition.

Last thing I'll say, this is a very technical.

Hold on. I've given you, like, four and a half minutes. And also, we can't continue going back and forth. We want to move on. And I know this is important, but you had plenty of time and you used way more. Five and a half minutes. The support didn't get that much. So I'm just letting you know I don't want to continue back and forth.

The only other thing I want to say is the Bill requires a look back at all the permits that have been issued at the air district, which is over 10,000 pieces of equipment. And that's the piece that's extremely costly and is not likely to lead to any emission reductions.

I'm going to support the Bill. I think that it's important, given the concerns that have been raised in the air base, that we support this. I do have respect for the air district, but I think this is isolated San Joaquin. You've got CARB involved in this as well. That is a regulatory agency that is measured and thoughtful and based on facts. So I will be supporting the.

Thank you. We have a motion from Assemblymember Addis. Second by Assemblymember Pellerin. I'm in support of the Bill. Thank you for bringing this measure. Would you like to close?

Thank you. Madam Chair, I respectfully ask for an aye vote.

Thanks. Secretary, please call the roll.

Motion is due pass to Appropriations. [Roll Call]

Thank you, Madam Chair.

That bill has seven votes, we'll leave it open for absent Members. Next. Assemblymember Wicks, AB 1319.

Thank you.

Can we have a motion and a second?

Perfect. Thank you very much, Madam Chair, Members of the Committee, and thank you for your staff for their work on this. AB 1319 in X targeted modifications to state law governing the Bay Area Housing Finance Authority, also known as BAHFA. This was passed, as some of you may recall, in 2019 by our dear friend, former housing chair David Chiu, of which I was a proud co author. It was created to help the Bay Area take a regional approach to housing affordability.

BAHFA is governed by MTC and ABAG, who are the sponsors of this bill. In getting BAHFA up and running, they and partners in the affordable housing community noticed that there were a handful of places where the law lacked clarity, made implementation challenging, or didn't reflect the recent evolution in best practices such as the homelessness prevention techniques we learned during the pandemic. The bill includes the modifications necessary to address the existing issues.

One such issue, and the reason we are in this Committee, is to exempt BAHFA's finance related administrative actions from CEQA. This provision is similar to the long standing exemption from the same actions taken by the state's Department of Housing and Community Development. This exemption does not apply to the affordable housing development projects that BAHFA's actions may support. The lead agency for CEQA for such projects would be the relevant city or county.

Here with me to talk about the bill and to testify on behalf is Julie Snyder, a principal legislative advocate for MTC and ABAG. Respectfully ask for an aye vote.

Madam Chair and Members, Julie Snyder with MTC and ABAG, in the interest of time and noting that the bill's been already moved, I'll just ask for your aye vote, and I'm here to answer any questions. Thank you.

Thank you. Are there any additional witnesses in support?

Madam Chair and Members, Graciela Castillo-Krings here on behalf of All Home, on behalf of SV Silicon Valley Action Fund, and on behalf of Enterprise Community Partners in strong support. Thank you.

Madam Chair. Niccolo De Luca, on behalf of Nonprofit Housing of Northern California, in strong support.

Michael Langwood, SPUR strong support.

Thank you. Are there any witnesses in opposition? Seeing none. Any questions or comments from Committee Members? Seeing none. We have a motion from Assemblymember Addis, second by Assemblymember Wood. Would you like to close?

Respectfully ask for an aye vote.

Thank you. Secretary, please take the roll.

Motion is due passed to Appropriations. [Roll Call]

That bill has five votes, we'll leave it on call.

Thank you.

Next we have Assemblymember Alvarez. Is he in the room? We're waiting for authors. We have Alvarez, Reyes and Garcia.

Okay, we'll go with Assemblymember Muratsuchi. This is item four. You're doing AB 9?

Yes.

AB 9 by Assemblymember Muratsuchi. Whenever you're ready.

Thank you very much, Madam Chair. I'm here to present AB 9, which is a transparency measure to make sure that our cap and trade system is working as it's supposed to be working. This bill is based on recommendations and findings of the Legislative Analyst Office, as well as the Independent Emissions Market Advisory Committee, of which we have two members of the Committee here to testify in support of this measure.

The recent LAO report on the 2022 scoping plan update clearly states, we find that cap and trade is not currently positioned to ensure the state meets its 2030 GHG goal. The program is not stringent enough to drive the additional emission reductions needed because there are more than enough allowances or pollution credits available for the entities to continue to emit at levels exceeding the 2030 target.

Simply, this measure is needed to make sure that we have a public accounting of all the pollution credits as well as the carbon offsets in order to make sure that our cap and trade system is working as it's supposed to be working. Here to testify in support of this measure is Katelyn Roedner with the Environmental Defense Fund and Danny Cullenward with American University.

Thank you very much. Good afternoon, Chair and Members of the Committee. Katelyn Roedner Sutter, California Director for Environmental Defense Fund, also a member of IEMAC, though these comments reflect Environmental Defense Fund's position today. Thank you very much for the opportunity to provide testimony in support of AB 9. California's cap and trade program is an essential part of the suite of climate policies the state relies on to meet its greenhouse gas reduction goals.

Precisely because of its importance to California's success as a climate leader, it is imperative that the program be designed to ensure the state can actually meet its greenhouse gas reduction goals. And that's where AB 9 comes in. First, by ensuring that the California Air Resources Board updates the program based on the final 2022 scoping plan no later than January 1, 2025.

This is a timeline that CARB has already committed to, but I'm sure we have all experienced at many agencies that these sort of timelines can easily slip. So we urgently need to ensure that the cap and trade program is fit to help deliver the reductions the scoping plan finds we need by 2030 in order to be on track to achieve net zero greenhouse gas emissions by 2045. The second way AB 9 will help ensure the program will support California meeting its goals is by creating a triennial program review.

This is meant to be a regular, predictable opportunity to review key aspects of the program and ensure that it remains fit for purpose of achieving our goals, that the program is adapting to scientific advances and adaptively responding to new data and information. Think of it this way. Hopefully we all go to the doctor every year for a checkup. Whether we are sick or not.

The doctor takes our blood pressure, probably tells us we need to exercise more, and we go on our way. If there's a concern, there's an opportunity to raise it with the doctor. If your doctor has concerns, she can bring them up with you. And if they find something, that is the time to address it.

The triennial program review is this regular physical for cap and trade. The Regional Greenhouse Gas Initiative, European Union Emissions Trading System, and the Washington State Cap and Invest Program all have, or in Washington's case will soon have some form of program reviews. AB 9 is meant to ensure the program is and remains fit for purpose, including ensuring the level of ambition is aligned with our greenhouse gas goals. And with that, I respectfully ask for your aye vote.

Good afternoon, Madam Chair, Members of the Committee. My name is Danny Cullenward. I'm a researcher with American University and I'm the Senate's appointee to the Advisory Committee my colleague Katelyn referenced. I'll add, in the interest of time, just to keep things short, it's been six years since the last cap and trade regulatory process was implemented. There's been a lot of information identified by the Advisory Committee set up by the 2017 extension bill that suggests there are issues that need to be worked on.

Those concerns have been corroborated in independent academic studies and by the Legislative Analyst Office report. So we have lots of good information that suggests there's work to be done to make this program stronger and contribute to getting the state on track for its existing goals. The last thing I want to emphasize, in addition to creating predictability with the schedule, is that this doesn't prescribe particular outcomes. It simply identifies a process and a set of concerns that have been well documented by the bodies and studies referenced.

And I'd be delighted to answer any technical questions you all might have. Respectfully ask for your aye vote.

Thank you. Are there additional witnesses in support?

Sakereh Carter on behalf of Sierra Club California, in strong support. Thanks.

Crystal Kidos on behalf of the City of Santa Monica, in support,

Janet Cox for Climate Action California. Thank you, Mr Muratsuchi.

Next, are there witnesses in opposition? Seeing none. Any questions or comments from Committee Members. We have a motion by Assemblymember Addis, second by Assemblymember Zbur. Would you like to close?

Thank you very much. I would welcome any and all co-authors to this bill. I respectfully ask for aye vote.

Thank you. Secretary, please call the roll.

The motion is due pass to Appropriations. [Roll call]

That bill has six votes. We'll leave it open for absent members.

Thank you very much.

Next, we'll go back to sign-in order since we have authors in the room. Next on the list was Assemblymember Alvarez, AB 678.

Thank you, Madam Chair and Members of the Committee, appreciate the opportunity to come before you to talk about AB 678. Colleagues, in 2018, the Legislature authorized the California Public Utilities Commission to consider adopting biomethane procurement targets or goals for utility companies, recognizing the importance that biomethane will play in the state's net zero emission goals. Since then, the PUC has set procurement standards for gas utilities, which will display some of the fossil fuel natural gas that utilities currently supply to their customers.

As many of you know, biomethane is a gas produced from biomass waste, such as decaying organic matter like wastewater treatment sludge, food waste, animal manure, landfill gas, dead trees that can be used to create new energy, renewable energy. Importantly, biomethane can be used interchangeably with conventional natural gas, the need for any changes in transmission and distribution infrastructure or end user equipment.

However, the procurement requirements from 2018, when the Legislature authorizes, did not extend to Core Transport Agents, which are non utility gas suppliers that purchase gas on behalf of the residential and small commercial and use customers, sort of like the CCA equivalent or community choice aggregators for electric consumers, this is on the gas side.

At its core, AB 678, this bill, supports the state's net zero emission goals and levels the playing field by requiring the California PUC also consider biomethane procurement standards for Core Transport Agents, not just utilities. Appreciate your time. Respectfully ask for your aye vote, and I have two individuals who I'd like to introduce for witness and support, Lourdes with government affairs manager with San Diego Gas Electric and Julia with Executive Director at Bioenergy Association of California. Take it away.

Thank you, Chairman and Members, I'm Lourdes Ayon with SoCal Gas. Thank you so much for considering this bill today. Appreciate your time and also the Committee's time in analyzing the bill. Thank you. As Assemblymember Alvarez mentioned, this is a very simple bill that closes a loophole on incurrent law related to renewable gas standard that was established through the passage of SB 1441, Wessel bill a few years back, and that bill. 1441. Sorry, 1440. My apologies. 1440. Thank you, Julia.

The bill authorized PUC to establish renewable gas standard for all natural gas utilities delivering natural gas to California customers, but it inadvertently left out Core Transport Agents, and we're hoping that this bill can apply the renewable gas standard rules to CTAs, as they have for utilities as well.

Good afternoon. Julia Levin with the Bioenergy Association of California. We represent about 100 public agencies, local governments, nonprofits, community groups, and private companies that are working to convert organic waste to meet the state's climate change, air quality and clean energy goals.

I think you all know climate science is very clear now that the most urgent thing we can do to address climate change is to reduce short lived climate pollutants, particularly methane and black carbon, which are overwhelmingly emitted from organic waste, methane from landfills, wastewater treatment facilities, dairies and compost facilities, and black carbon from burning either wildfires or controlled burns of forest and agricultural waste.

And we can reduce all of these sources of short lived climate pollutants by converting that waste to biomethane and hydrogen back to the earlier bill. More than 80% of our black carbon and methane come from organic waste. This bill will help to reduce short lived climate pollutants and will help to protect air quality by providing Low carbon and carbon negative biomethane in the place of fossil fuels. It can also provide carbon negative emissions, which only organic waste to energy projects can provide.

According to the Air Resources Board and the Legislative Analyst's Office, these investments in converting organic waste to energy are by far the most cost effective of all the state's climate investments. And as I said, they can provide carbon negative emissions. The CEC has called for increasing renewable gas, including biomethane. The Air Resources Board and the 2022 Climate Change Scoping Plan called for an increase in biomethane and other forms of bioenergy as a way to provide carbon negative emissions and reduce short lived climate pollutants. So for all these reasons, we respectfully request your aye vote. Thank you.

Thank you. Any additional witnesses in support of the bill?

Good afternoon. Bridget McGowan, on behalf of the Los Angeles County Sanitation Districts in support. Thanks.

Jack Yanos, on behalf of the Coalition for Renewable Natural Gas, in support.

Are there witnesses in opposition?

Thank you, Madam Chair and Members. Michael Boccadoro, on behalf of the AG Energy Consumers Association, this is not a question about the goals of the bill, trying to level the playing field is fine. A lot of the amendments that needed to be taken were taken in the Energy Committee. One big outstanding issue, it's identified in the analysis is item three. Simple, straightforward amendment would remove our opposition. We have an opposed unless amended.

And that amendment is to spread the existing procurement targets that the Commission has already established to include not just the investor owned utilities, but also the CTAs. The other alternative, which the bill leaves open is to actually increase procurement that would add costs for consumers. We all saw what happened with natural gas rates, they spiked. The Commission has already established a very aggressive biomethane procurement target.

We're saying just spread that evenly to all the players now, not just the three investor owned utilities rather than additional procurement. With that amendment, we would be able to go neutral on the bill.

Thank you. Are there additional witnesses in opposition?

Chair and Members Dean Talley with the California Manufacturers and Technology Association. Respectfully opposed.

Christina Scaringe with the Center for Biological Diversity in opposition.

We'll bring it back to the Committee. Any questions or comments from Committee Members? Assemblymember Mathis.

Just curious because the opposition brought up a possible amendment. What are your thoughts on that? So first of all, I'd like to say that we've taken amendments on bills to move things forward again. We'll continue to listen to that. On the issue of procurement, I don't know if the Legislature would like to be the one who takes the lead on that. That's possible, but the Commission could as well. I assume they could create new requirements for increased that.

Julia, can you maybe talk about that?

Yeah.

The bill doesn't require an increase in procurement. It just asks the PUC to consider. It doesn't actually even require that the PUC include the Core Transport Agents. It just is you should consider, and that's what the Legislature told the PUC to do with biomethane procurement. I think it's highly unlikely that the PUC is going to mandate a higher procurement level because the program is starting very, very slowly. And as Mr. Boccadoro said, we are a long way off from the current targets.

So I think this is more leveling the playing field between Core Transport Agents and the investor owned utilities. I don't think the goal right now is to increase the procurement target when we're a long way off, but I think it leaves it up to the Public Utilities Commission to figure out the trade offs and the cost benefits. It just asks them to consider it.

Thank you.

Any other questions or comments?

I'll move the Bill.

Thank you. Okay, we have a motion by Assemblymember Zbur, second by Assemblymember Muratsuchi. Would you like to close?

Appreciate your support. Thank you.

Secretary, please call the roll.

The motion is due pass to Appropriations. [Roll Call]

The bill has six votes. We'll leave it open up for additional for Members that are absent for now.

Thank you.

Thank you so much. Appreciate your time. Okay, so we're going to move to Assemblymember Reyes, AB 241.

Thank you, Madam Chair, Members. AB 241 will modernize the Clean Transportation Program at the California Energy Commission and the Air Quality Improvement Program at the California Air Resources Board to support zero emission vehicles and infrastructure deployment for all vehicle classes, required dedicated funding to low income and disadvantaged communities, and reauthorized the fees that support these programs.

As we know, the funding that supports these programs was sunset January 1, 2024, leaving these critical programs unfunded and unable to continue to help Californians and the transportation sector with the planning and execution of our zero emission transition. AB 241 will do a number of things.

Maintain technology neutrality among zero emission fuels, prioritize CTP to address the gaps in the light duty zero emission vehicle infrastructure deployment and support medium and heavy duty zero emission vehicle infrastructure deployment, require 50% of the funding to go towards low income and disadvantaged communities and reauthorize the fees that support the programs through 2035. Here to testify in support of this bill are Orville Thomas with CALSTART and Bill Magavern with the Coalition for Clean Air.

Thank you, Ms. Reyes. Thanks, Committee Members and Chair. Orville Thomas, State Policy Director for CALSTART, California based nonprofit with over 30 years of experience in zero emission vehicle technology and administer of several of the state's ZEV and ZEB infrastructure grants. Talking about the importance of the CTP and the Air Quality Improvement Program, these have been foundational programs to fund our state's ambitious climate goals and transition to ZEV and ZEB infrastructure. Over the last decade, it's provided over $1.5 billion.

Some key highlights include installing approximately over 23,000 chargers for plug in electric vehicles, funding 86 regional readiness planning grants, funding 78 publicly available hydrogen fueling stations, and approving funding for an additional 74 stations, along with general fund dollars that would help meet the state's 200 station goal. And we just ask that you all consider this as important as I do and continue to help move this along and help these programs get reauthorized so that we can continue our path towards our ambitious climate change goals.

Madam Chair, Members. Bill Magavern with Coalition for Clean Air, in support. As you've heard, this bill reauthorizes existing funding. It also updates the programs in important ways, particularly to focus on the heavy duty engines that are the biggest source of air pollution in California, and crucially, to add equity requirements so that at least half of the funding in the California Clean Transportation Program will go to disadvantaged and low income communities.

And since you will be hearing opposition from the hydrogen industry, I want to point out that the bill actually is technology neutral. It does not have carve outs for battery electric or hydrogen fueling. The discretion is left to the Energy Commission, which currently does fund both battery charging and hydrogen fueling. The Energy Commission would continue to do that under this bill.

And just to give a sense of the scope, though, for every hydrogen fuel car, light duty vehicle in the state, there are about 100 battery electric cars. So I think that we all understand we need to provide more stations for both. But if you carve out too much money and allocate it to hydrogen fueling, that will mean less opportunity for grid charging for all of those battery electric cars that your constituents are driving and will drive in the future. Thank you.

Thank you. Are there any other witnesses in support?

Good afternoon, Madam Chair, Committee Members. Roman Vogelsang with Aprea and Micheli, on behalf of ChargePoint, in support.

Good afternoon. Christina Scaringe with the Center for Biological Diversity, in support.

Janet Cox for Climate Action California, in support.

Erika Romero, on behalf of Valley Clean Air Now and the Green Lining Institute, in strong support.

Hello. Mikayla Elder on behalf of the Electric Vehicle Charging Association, the California Electric Transportation Coalition, and FLOW, in support. Thank you.

Good afternoon. Cameron Demetre, on behalf of Blink Charging, in support.

Thank you. And are there any witnesses in opposition?

And you have two minutes.

Great. Thank you. Good afternoon, Madam Chair and members. Rosanna Carvacho Elliot here on behalf of the California Hydrogen Coalition and the California Hydrogen Business Council, in respectful opposition to AB 241 unless it is amended, to allocate 30% of program dollars to create a statewide self-sufficient, hydrogen fueling network of 1000 fueling stations.

This request aligns with the airborne's 2021 hydrogen selfsufficiency analysis, which states that self sufficiency can be achieved in most representative scenarios by 2030 with $300 million beyond the current Clean Transportation program funding. This will also create a statewide fueling network providing access to 94% of the geographic state and 97% of disadvantaged communities. Hydrogen is a critical part of California's transition to zero emission vehicles. The state will not be able to meet the ambitious 2035 and 2045 goals with just one technology.

CARB's Advanced Clean Cars package recognizes this by stating that California will need a minimum of 17% of zero emission vehicles to be fuel cell by 2034, which is a total of 1.7 million vehicles, which will necessitate well over 1000 fueling stations. The Clean Transportation authorizing legislation 10 years ago specified that 20% of dollars be dedicated to hydrogen infrastructure. Unfortunately, that money was delayed in getting out the door for five years by the California Energy Commission.

By building on the promise to hydrogen made 10 years ago in AB 8, we can assure that self sufficiency becomes a reality in California. We're seeing large investments in new vehicles from car manufacturers utilizing hydrogen technology, but we need to ensure that the state shows their commitment to fuel cells by investing in the necessary fueling infrastructure.

It is important to note that for every dollar California spends on zero electric vehicle infrastructure, less than four cents is directed toward hydrogen infrastructure, and this includes fueling for heavy duty vehicles. Additionally, this massive investment is even investment disparity, excuse me, is even with the 20% hydrogen allocation mandated in current law.

Therefore, given that California cannot meet the zero emission vehicle goals with one technology alone, and we cannot rely on the clean transportation program, that does not continue to specifically allocate funding for hydrogen, we look forward to continuing to work with the committee and the author to ensure that the reauthorization of the clean transportation program fully funds the statewide hydrogen network.

But at this point, unfortunately, we must remain opposed unless the Bill is amended to allocate 30% of the program dollars and put in place the 1000 fueling station target. Thank you.

Are there any other witnesses in opposition?

Good afternoon, madam chair and members. Victoria Rodriguez, Nielsen Merksamer on behalf of the Alliance for Automotive Innovation in respectful opposition, unless amended.

Members, are there any questions or comments? Seeing none, would you like to close?

I respectfully ask for your aye vote.

Is there a motion? There's a motion and a second from Addis, seconded by Pellerin. So we'll call the roll.

The motion is due pass to appropriations. [Roll Call]

That has three votes, so we'll leave it on call. Now we'll hear Assembly Member Alvarez with AB 1287.

Thank you. Thank you very much committee. Appreciate the opportunity to come before you to talk about AB 1287. AB 1287 requires that a city, a county, or city and county to grant additional density and concessions if an applicant agrees to include additional moderate income units on top of the maximum amount of units for lower, very Low and moderate income units.

As you all know, we're in the midst of a housing crisis, and in response, we, as a legislature, have rightly taken a number of essential steps to increase the supply of very Low and Low income housing to support vulnerable low income populations. However, a true holistic approach to the housing crisis requires that we also tackle housing unaffordability for middle income families.

The UC Berkeley Turner Center for Housing Innovation found that 40% of middle income earners who are renters spend more than 30% of their income on housing, while 10% are severely cost burdened by housing, meaning that they spend more than half of their monthly income on housing alone. This cost burden has continued to grow as we have failed to build enough middle income housing units to reduce prices and release pressures on the overall housing market.

By giving developers an additional incentive under the density bonus law to build more moderate income units for middle income families, AB 1287 is a critical step toward resolving our housing crisis.

As noted, I firmly believe in supporting the development of very low income and Low income housing, which is why this Bill was written, so that the existing incentives for very low and low income housing must be maxed out first before you can take advantage of this new incentive and have added amendments that would include an additional incentive for very low income units.

Therefore, AB 1287 not only incentivizes the creation of moderate income units, but it also creates new incentives and new economic reasons to maximize deeply affordable unit production throughout California. Nowhere is this bill more important than in the coastal zone, where housing costs are higher than anywhere else in the State of California. That is why removing the blanket exemption from the coastal zone, I believe is unnecessary.

I appreciate that there are certain aesthetic and environmental factors that make the coastal zone unique, which make allowing density bonus law without limitation in the zone complicated. However, a blanket exemption is not the answer. I will reference the letter that we received from the Coastal Commission on some of the concerns related to coastal areas, which I actually agree with on page two, which is probably in the background of the Coastal Commission letter to believe this committee, it was sent to me.

It says that density bonus law could be used to waive bluff talk, setback standards, build into riparian or wetland buffers, encroach on public access waste or agricultural areas, or block significant scenic views. I just want to reiterate to you that that is not the intent of this language, and if we need to make that clear, we will do so with amendments in the future.

The letter also states that the bill will allow development in wetlands and sensitive habitats, again, something that's not intended by this bill, and if need to, we will make that clear with additional language. Again, agricultural lands are threatened in other sensitive areas with no recourse by local governments to avoid such damage, is stated in the letter of opposition from the Coast Commission. Again, none of those are intended with this bill, and we will definitely take up amendments to clarify that if needed.

With that said, we have Michael Lane, state policy director, with SPUR to share some testimony. And I also have Louis Mirante, thank you. Give me your card, I'm sorry. Will also testify. Thank you very much.

Madam Chair, members. Michael Lane with SPUR. State density housing bonus law has been on the books for decades now, and its original intent was to actually create an incentive for market rate developers to include affordable units in their developments and to be able to make the project feasible. It's also often, nearly always used by affordable housing developers as well to make those projects feasible. And just to reiterate, it has to be on a site that's already been zoned for housing.

For you to be able to use the state density bonus law, that's just a requirement that you have that under that base zoning in place when you come and ask for that. As a developer, as the Member had noted, in our coastal areas, this is the most expensive real estate in the state and beyond.

Construction costs are highest, rents are highest, and lower income workers, particularly in the hospitality industry and other industries that need to be in the interiors, find it very difficult to rent because of the scarcity of housing and the high costs of rent. So we think it's appropriate to have this discussion about why we're exempting the most expensive part of the state, some of the most segregated communities, from key parts of state housing law. And we've done that over decades.

It's not just with this law in particular. And so we'd like to try to revisit that to see if there are ways within the existing construct. We could make sure we're building the affordable market rate housing we need in these communities as well as in other parts of the state. And we respectfully request that you consider working with us and the author on potential amendments. Thank you.

Good afternoon, Madam Chair, Members. Louis Mirante, on behalf of the Bay Area Council. As I mentioned earlier, the Bay Area Council represents some of the Bay Area's largest employers. Housing is a huge issue for our region as it is for the rest of the state. Many people think about the coastal zone in particular. I think I'll just add slightly to my colleagues' remarks. Many people think about the coastal zone as a rural program.

But large swaths of Santa Monica, San Francisco, San Diego, Santa Cruz, many urban portions of California where anyone on this Committee would regard the housing as infill housing are also governed by the coastal zone. A blanket prohibition against applying density bonus law removes one of our most valuable tools for incentivizing low income housing production in these areas from the places where they're needed the most. So I appreciate the Members' comments on working out some of the technical details here from the Coastal Commission.

But I urge your support for the bill as it's currently written with regard to the coastal zone.

Okay. Any additional witnesses in support?

Good afternoon, Madam Chair and Members. Graciela Castillo-Krings here on behalf of California YIMBY in strong support. Thank you.

Holly Fraumeni De Jesus, the White House Public Affairs here today, in support on behalf of the San Diego Housing Commission, Sandhill Properties, Civic Well, and Bob Naylor couldn't be here today, but I'm here on his behalf, in support on behalf of Fieldstead and Company. And that's Howard Amundsen, Jr. A philanthropist in Orange County who supports all legislation that is helping increase the housing supply in California. Just like this bill. Thank you.

Okay, next. Do we have witnesses in opposition?

Good afternoon, Madam Chair and members. Sean Drake with the California Coastal Commission. The commission currently has an opposed and less amended position on this bill due to the bill's proposed changes to subsection M of the density bonus law. Although we would remove this opposition if the author were to take the proposed committee amendments because density bonus law exceptions are awarded by right with no discretionary review, the legislature enacted the savings clause to ensure that the resource protection policies of the Coastal Act are not superseded.

The result for the last 20 years has been that residential projects in the coastal zone successfully incorporate the multitude of exceptions afforded by density bonus law while also avoiding significant and unnecessary impacts to coastal resources. In 2018, in response to the Colnell Gardens Decision, the legislature provided additional clarity by adding language emphasizing that density bonus law in the Coastal Act shall be harmonized. Unfortunately, this bill would remove that language and establish that density bonus law supersedes the Coastal Act.

This would have the effect of exempting density bonus projects from the resource protection policies of the Coastal Act and from local government's local coastal programs. As you already heard, density bonus projects on the coast could waive sea level rise setback standards, build into riparian or wetland buffers, encroach on public accessways, or block significant scenic views.

These resource losses can be avoided by continuing to harmonize coastal resource protection with building more housing, and the commission is working closely with local governments throughout the coastal zone to add policies to their LCPs that identify methods for harmonizing the two statutes, which provides greater regulatory certainty for developers. Ultimately, housing and coastal resource protection are not mutually exclusive. Coastal resource policies make housing projects safer, more resilient, and more sustainable without increasing costs or interfering with density bonus law incentives.

The commission certainly does not oppose this bill lightly, and we are in agreement with the broader goal of increasing density in the coastal zone. But in the commission's nearly 50 year history, the legislature has never exempted an entire class of development from the Coastal Act. To do so now would set a dangerous precedent. So for these reasons, the commission respectfully opposes unless amended, although, as I mentioned, if the author were to take the committee amendments, the commission would remove its opposition. Thank you.

Good afternoon, Chair Rivas and honorable committee members. My name is Christopher Mouawad and I am a legal and policy intern with the Environmental Action Committee of West Marin, or EAC. I am speaking today on behalf of the groups that submitted an oppose unless amended letter on 417. We oppose AB 1287 unless it is amended to restore subdivision Government Code Section 6591 M, also known as the Coastal Act Savings Clause. Maintaining this provision in the density bonus law preserves our important coastal resource and public access protections.

The Coastal Act Savings Clause makes it clear that the density bonus law does not supersede or lessen the effect of the Coastal Act and that any density bonus concessions, incentives, waivers, or reductions of development standards which the applicant is requesting shall be permitted in a manner that is consistent with the act. The Coastal Act protects public access and lower cost recreational opportunities, wetlands, agricultural activities, scenic view-sheds, and the biological productivity of our ocean waters.

Because of the act, the California coast is the state's number one tourist draw and the reason that anyone can go to the beach regardless of where they live. AB 1287 would repeal long standing language in the Government Code and replace it with a statement that density bonuses shall be permitted non-withstanding the act. This would be the first time that any type of development has been exempted from the act. There is no reason for removing the Coastal Act Savings Clause.

The Coastal Commission has never denied an affordable housing project in its long history. It has approved numerous density bonus projects over the last decade and has worked with several local governments to incorporate density bonus policies into certified local coastal programs. This bill would set a dangerous precedent, as the Coastal Act Savings Clause can be found in many statutes that apply to other types of ministerial approvals and buy right development.

Repealing the savings clause for density bonus projects would likely lead to repeals elsewhere in statute, eliminating valuable coastal and public access protections. We fully acknowledge the need for more affordable housing in the coastal zone, but we strongly disagree that exempting density bonus law from the act is the way to achieve this goal. Rather, we suggest reinstating the Coastal Act's affordable housing provisions, which were appealed in 1981.

We urge you to reject the repeal of Section 65915 M and stand firm on the principle that affordable housing and coastal resource protection can go hand in hand. Please vote no on this bill unless it is amended. Thank you.

Thank you. Additional witnesses in opposition.

Sakereh Carter on behalf of Sierra Club California, we have an opposed unless amended position unless the author accepts the committee's amendment.

I'm also registering and opposed a less amended position for West Marin Environmental Action Committee, California Coastkeeper Alliance Turtle Island Restoration Network, Eco San Diego Humboldt Bay Keeper, California Coastal Protection Network, Coastal Environmental Rights Foundation Orange County Coastkeeper Planning and Conservation League, Environmental Defense Center San Diego Coastkeeper Resource Renewal Institute, Azul Friends, Artists and Neighbors of El Corn Slu SoCal 350 Climate Action Public Trust Alliance, Citizens preserving Venice Ocean conservation research and that's the last of the list. Again, unless the author accepts this committee's amendments. Thank you.

Thank you. I have to go vote in another committee pretty soon, so I'm going to go ahead and start with questions. This morning you told me you were going to take the committee's amendments. Are you taking the committee's amendments? If you don't, my record will change to no.

Yeah, no, I understand your recommendation will be a no without the amendments. I think what I shared with you earlier is what I hope happens here is that we discuss what we believe should be allowed in coastal and what shouldn't.

So are you taking the committee's amendments? I have to go down and I want to register whether I'm supporting or not before I go vote in another committee. Yes or no?

I would like to hear some comments from, and I understand your position. I'd like to hear how we can move forward in a way that we can get support.

We can move forward if you accept the committee's amendment. We had the conversation this morning. I asked you if you had met with the Coastal Commission. You had said no. You said you would continue to talk to them, and you said you would take this committee's amendment this morning. And then suddenly today, a few hours later, you are not. So I just want to know, yes or no? Sorry, I have to go and vote.

And I don't like that you told me this morning that you would take the amendment and then you are not. Right now. We had a great conversation and I believed you.

What I'm saying is I like to take the amendments with the understanding, again with this conversation of how to fix it on a going forward basis so that we don't just exempt coastal areas from building affordable housing.

So you are taking the committee's amendments.

I'd like to take the amendments with the feedback that we're going to have alternative language. That's not this language, but not that we will always exempt the coastal area from being part of an affordable housing program. I was clear about that with you as well.

Yeah, but that is not something I'm committing to. I'm just saying whether you are accepting our committee's amendments.

I will accept the amendments, but I'm hoping that going forward we're able to have that conversation. That's all I'm asking for.

That's what I told you earlier today.

Okay.

Okay. So thank you for accepting the committee's amendments. Any other questions or comments, Assemblymember Zbur? Because I know he has to go, too.

So I'm glad you're accepting the committee's amendments because I would not have been able to support it without that. I do think that obviously there needs to be a discussion about density bonuses in the coastal zone, but the amendment is just like runs right through the Coastal Act and I think really eviscerates a lot of the important protections of the Coastal Act. And so I would sort of say I don't think this is something that can happen. Sort of this year.

Yeah.

I think this is something that probably needs to be some engagement on a separate bill with the Coastal Commission about the role of density bonuses in the coastal zone. And I think that is an important tool that isn't used enough in the coastal zone. In some cases, it's because of the local jurisdictions not wanting density when they probably, we want to encourage it more.

In other cases, it's because when the Coastal Commission is basically focusing on other coastal goals that they want to protect, one way is just reducing densities, and that happens a lot. So I'm glad you're taking the amendments. It will support it by taking the amendments. I would not have been able to support it without the amendment. So I just want to thank you for doing that.

Well, I would just respond that I'd like to continue to hear, especially from this committee, what are the things that how can we get to. Yes. Affordable and density bonus programs in coastal areas? Because essentially the way with this amendment, we're removing the coastal area from participating in that. And so I appreciate feedback as we go forward on this bill to do that and just to clarify that that's the intent and that's what we wanted this discussion to be about.

Thank you, Senator Pellerin.

So it's my understanding that the Coastal Commission has never denied a single affordable housing project in its history, evidence that the Coastal Act is not an inhibition to affordable housing in the coastal zone. Is that correct? As far as you understand either the author or the.

Thank you. Yes, that is correct. And if I may offer 1 point of clarification. The coastal zone is not exempt from density bonus law. This is something that we explained when we did meet with the author's office upon seeing this introduced language.

I think the legislature affirmed that point in 2018, most recently by passing AB 2797 by Bloom, which added additional language to subsection M to clarify that density bonus law and the Coastal Act shall be harmonized, which is to say that both laws apply in the coastal zone and shall be implemented in a way where projects are realizing the intended objectives of both.

If I may respond, as well as someone who approved local plan amendments on the City Council, in a coastal city, you don't see projects come before you that require amendments for local coastal plans because the high likelihood of that getting approved by a Coastal Commission. So nobody even takes that risk.

So, of course, there hasn't been any rejections of projects because those projects haven't really come forward, because if you're looking to amend the coastal plan, get appealed to the Coastal Commission, and that's a really huge hurdle that a developer is just not going to take on that risk of the unknown factor of, if I propose a project, will it then die at Coastal Commission? I'm not going to take on that risk and that liability.

So I like to see how many projects actually have gone to the Coastal Commission and how many they've approved. I think that data is more significant than just saying nothing's ever been denied.

Thank you. Any other members have any comments?

You know my understanding, if I'm wrong, I apologize and go ahead and correct me. But the coastal zone in some areas can be pretty broad, pretty large. I represent 300 plus miles of coastline, and my memory, if I served you right, in some cities, the coastal zone goes quite a ways into the city. Is that correct?

The coastal zone is a legislatively drawn boundary. It was drawn by the Legislature when the coastal act was passed back in the 70s. It varies in terms of its width. I think if I could just broadly characterize it, though, in urbanized areas, the coastal zone tends to be narrower because the coastal environment is already built up. You see a coastal zone that's as narrow as 300ft.

On the other end of the spectrum, in more rural, less developed areas, an example that comes to mind is Elkhorn Slough, which is a large watershed with minimal development. The coastal zone can extend up to 5 miles inland, but it varies within that range. And the differentiation tends to be between more urbanized and rural areas because my.

Recollection, like in Eureka, that I represent coastal zone expands pretty far into the city limits. So. The. I guess what I struggle with here is that when we're talking about density bonuses, we're talking about land that's already been approved for housing.

That's correct.

So we're not taking away from marshland and other areas. This is land that's already been approved for housing. That's my interview.

The bill does not authorize you to build where housing is not allowed to be built already. That's correct.

So we're walking a delicate balance here. Don't want density in some areas where it's clearly defined that you can have housing, because that's kind of what it feels like at this point. We've already said you can have housing, but you just don't want to apply the density bonuses so that low income and very low income people can actually live there. That's what it feels like to me, and you're welcome to answer.

Thank you. Yeah. To your point about a delicate dance, what we're seeing on the coast, when we're thinking about properties that front beaches, for example, and the associated habitats is that we have areas that are zoned for housing and also contain or are adjacent to sensitive coastal resources. And so when we're talking about a delicate dance, that is what the current language of subsection M calling for harmonization allows.

It allows the local government to look at the nuances of how can we realize affordable housing and the various exceptions that are afforded by density bonus law and configure them into a project that is also mindful of the sensitive coastal resources that may be on site or adjacent. So again, it provides us with an avenue for reaching a conclusion that satisfies both principal objectives here.

Well, it is challenging. I mean, look, my district is struggling with housing, housing issues just like every district in California. I'm supporting the bill today. I guess at times I'm just frustrated by our drastic need for housing in some areas and issues like this. So I'd be interested in the data that the author has or can put together if projects haven't been denied, but how many just haven't got very far?

Because the inclination or the idea was that they weren't going to get very far based on the projects that they were putting forward. This is a really challenging issue. We want poor people to have access to housing, too, and to tell them that they can't live in the coastal zone because we're not going to allow the density there doesn't feel very good to me, quite frankly, recognizing that we want to protect land as well. That's the delicate balance here. And you're saying you want to harmonize.

I'm hearing from him. There's not much harmony.

If I may, through the chair. Something that I noted in my testimony that I just want to reemphasize is that the Coastal Commission has been working since this language was introduced to the government code on partnering with local governments to introduce detail into their lcps so that it provides regulatory certainty about what harmonization looks like in that jurisdiction. So it's not just a mystery that creates a chilling effect on developers wanting to introduce projects in the coastal zone.

I will note to my colleague's point from his testimony, the commission doesn't have the regulatory authority to require local governments to undertake such LCPs to introduce that regulatory certainty. And so in terms of pursuing additional conversations in the future, that could be one avenue for furthering affordable housing in the coastal zone is to reinstate that authority, which the commission had previously to require local governments to incorporate affordable housing policies into their LCPs. That is separate, of course, from the language in M.

Assemblymember if I may, Louis Mirante with the Barry Council. The Bay Area Council represents about 60 or 70 development firms or people with interest in development, like law firms. Many of them regard developing in the coastal zone to be professionally irresponsible, given the ambiguity of the law in the coastal zone in general, not just with regard to the density bonus law. I'll also point out that this bill only applies to the density bonus itself. The Coastal Commission can still review the project.

It just cannot deny the project on the sole basis that it receives a density bonus consistent with this section. And I'll also point out that this bill not only applies to places where local governments have identified the land as suitable for housing, but where they've identified it as suitable for multifamily housing. Because nothing about the density bonus law says you can go from single family to multifamily.

So what we're talking about here is a bill that will allow you to go from maybe a three story building to a four story building by offering low income housing, moderate income housing, or very low income housing, which I think is a very suitable goal for this Legislature to advance and one that it has in other areas of the law, even within the coastal zone. So I agree. There are definitely cases where the Coastal Act and its environmental mine should control.

It's hard for me to accept that there would be no situations in cases like in downtown Arcada or in downtown Eureka, where you wouldn't want to reward a project that's bringing forward a substantial amount of Low income housing as a part of a density bonus law application.

Like I said, this is a delicate balance. My communities want to protect the coastline. They want to protect our natural resources, but they also want places to. And you've got a University in Cal Poly Humboldt that's starving for housing for students, starving for housing for faculty members and all the people that go along with that. And regions are struggling with this issue, and it means it's a difference whether they're going to survive in this economy or in this era or not.

This is a really difficult discussion, but I support the mission of the Coastal Commission. I also support the mission of trying to find housing for people. So thank you.

Thank you very much. Assemblymember Addis.

Well, I want to applaud you for being such a champion for housing. You've brought a number of things forward, and I very much appreciate it, and it resonates with me how hard this conversation is. I, too, sat on a local council that was in the coastal zone. I think almost the whole city was probably in the coastal zone. We were able to approve what I would call affordable housing, 100% low income and very low income housing. It wasn't without its challenges.

I will say when you asked what would make this work for me, the hard stop is not superseding the coastal act in whole. And I've heard you say you'll take those amendments. This was also very difficult for me to watch, to see that there was a conversation that happened that maybe was understood in two different ways. So I'm concerned, as this moves on, that we don't go back to that situation where I think that I've supported something with the amendments in there.

All of a sudden it flips and it's a different bill that I see on the floor. So while I'm going to support today, I will say I'm going to reserve that right for the floor and that the Coslac piece is incredibly important. But again, I do want to applaud that you're pushing on this issue because it's very real issue for every Californian.

And so I would like to be there with you as we go through this conversation, knowing that this is a backstop for me, knowing that this is sort of a very important piece for my district.

I really appreciate that. That's exactly why I was asking the chair to have this conversation, because I like to see where people are, and some people are comfortable with going to a certain length and others are not. And the intent is to try to bring, obviously, a bill that's going to be successful. You've made it really perfectly clear that this is an amendment that must be there on the final day for you to support this.

That's the kind of feedback that I told the chair I'd like to see happen from this conversation. And if that's where folks are, that's where folks are, we will move forward respecting what the amendment was in this committee, but hopefully continuing to talk to other colleagues to see if there is a pathway so that we can create opportunities for affordable housing in coastal areas. That might not be exactly the removal of this entire language. Maybe it's some tweak of it.

So I want to be really upfront because I think it was represented, unfortunately, that maybe I wasn't being upfront, although again, misunderstanding there. So I want to be really upfront with you now that I'd like to see how we can have more affordable housing opportunities in coastal areas. That's my bottom line, but also just affordable housing everywhere. And if this is going to threaten the fact that we can create affordable housing in other places.

That's unfortunate that the Coastal Commission is taking this position, but that's what we'll have to accept. Thank you. I appreciate your feedback.

Thank you, Ms. Pellerin.

And I'm in that same boat as far as the Coastal Act is concerned. So I'm hoping that this will continue to have that amendment. I'm very grateful you're taking it today, so I am able to vote for it, but I also reserve my right to.

I appreciate the clarity. Thank you so much.

Thank you. Any other comments for committee members? I do have a couple of comments, and I thought I heard the Coastal Commission say that the Coastal Commission has not denied a housing project. Is that what I heard?

That's correct.

Okay, so that's super interesting, because while we were sitting here, I googled that, and right here is a project in Venice Beach, an apartment project, that says in the headline that the Coastal Commission denied. So I think we need to be real careful about what facts we're using here, because this is a project that had 39 units for affordable housing, 19 set aside for chronic homelessness, 20 for transitioning youth from 18 to 24.

So to sit here on this dyess and say that the Coastal Commission has not denied this is factually inaccurate. Unless this article is BS, I don't think it is. So I think this is the reason why the author is bringing this bill forward, because the Central Valley, we are desperate for housing, and it's not fair for the coastal people to be exempt from that. So if you're going to have these kind of arguments in this committee, I think we should come with facts, and I will.

Just happy to second the bill. Appreciate the author bringing this forward. Would you like to close?

No. Thank you all for the feedback. This is exactly the conversation I was hoping to achieve in terms of getting a better understanding of where people stand on whether coastal areas should participate in solving our housing crisis. I believe that they should. I think that they have a bigger role to play. If there are other ideas from the commission, I'm interested in talking about them.

But we're asking the rest of the state to participate in a program that will help create affordable housing, not just low income, but for middle income families. That's what this Bill is about, and that's why I appreciate your support. I also just have to say I heard a statement that coastal access is important and that people should have the opportunity to visit the coast. People should also have the opportunity to live on the coast, not just visit the coast.

And that's what the intent of this bill was. And I hope that going forward, maybe we come up with other solutions that everyone can support so that the coast has access for affordable housing for all income levels. Thank you.

Thank you very much. Madam Secretary. Please call the roll.

The motion is do pass as amended to appropriations. [Roll Call]

Bill has five votes. We'll leave it for for absent members.

Thank you very much.

Assembly Member Garcia Presenting AB 1567

Thank you Members of the Committee. 1567 is a Bill that focuses on climate resiliency. This is the climate resource bond that intends to to invest $15 billion in proven strategies to respond to the range of impacts of climate change. If approved by the voters, the proceeds of the bond sold and issued under the act shall be allocated in the areas of wildfire risk reductions, protection of coasts, bays, oceans and sea level rise.

We're talking about water infrastructure focused on safe, clean drinking water, drought preparation and flood protection. Also looking at Fish and Wildlife and adaptation investments. Along with investing into our agricultural communities, we also have a couple of sections that focus on extreme heat and lastly looking at investing to prepare our communities throughout the State of California. I don't need to tell you how important these investments are given the current circumstances that are reducing our climate investments from the last two years in our budget.

With me today, I have two individuals that will be testifying Ana Alvarez with the East Bay Regional park district as well as Isabella Gonzalez Potter with TNC. Respectfully ask for your aye vote at the appropriate time.

Thank you so much. Thank you very much. Two minutes, please.

Good afternoon. My name is Dr. Ana Alvarez and I'm honored to share my perspective as a deputy General manager of the largest regional park system in the United States, the East Bay Regional Park District, and as a public servant with nearly 30 years of experience in parkland management and removing barriers for public access to nature while resolving for climate equity.

I also serve on the California's biodiversity Network Steering Committee and the state's 30 by 30 partnership planning Committee under the leadership of Natural Resources Secretary White Crowfoot. I would like to take this opportunity to express my deepest appreciation for your courage and leadership in supporting California's unprecedented call to action to protect 30% of its lands and waters of what I like to think what remains of California's natural world.

Importantly, I would like to emphasize that while public parklands and open spaces serve as the backbone of California's public health infrastructure by providing outdoor spaces for physical wellness activities, they are equally critical for building resilience to the changing climate through their ecological systems that support life on earth and contribute to the quality of life to local communities.

By a way of background, I've earned a doctoral degree in policy planning and development from the University of Southern California with a focus on establishing climate challenge resilience strategies through nature based solutions found in public lands. My cultural heritage and lived experience in the intersection of these issues also frames my approach, which at the core, speak to climate smart land management and climate equity and environmental justice.

I have used this experience to guide my work in benefit of local communities and the environment, including the East Bay Regional Park District, a public agency that stewards over 125,000 acres of open space in Alameda and Contra Costa counties in the San Francisco Bay Metro Area, neighboring nearly 3 million residents and supporting over 25 million visits per year.

In many ways, these regional public parklands serve as a critical line of resilience against the impacts of the climate crisis by providing the wildfire mitigation barriers, sea level rise buffers, and protect critical watersheds, public lands also provide equitable access for essential outdoor activity fundamental to public health and wellness. For almost 90 years, the park district has protected wildlife corridors in the East Bay. And also for over 90 years, the park district has also maintained a carbon sink and continues to sequester carbon.

The governors ,in conclusion, I would like to say that the park district serves as a demonstration project or the demonstration of what AB 1567 envisions in a new model of conservation and that centers equity like never before by crystallizing the use of public resources that meaningful benefit marginalized communities and bringing climate resiliency. We appreciate Assembly Member Garcia and the colleagues of this important, much needed climate preparedness and we support AB 1567.

Thank you so much for that. Any other witnesses in support?

I'm going to be super brief. Good evening. Isabella Gonzalez Potter with the Nature Conservancy in strong support and thanking Assembly Member Garcia for his ongoing leadership on climate bonds. I just want to quickly uplift one sentence from the analysis that really speaks to the urgency of the moment and the budget crisis before us. In the analysis, it recognizes that the state is facing a $22.5 billion deficit and multibillion dollar deficits over the next several future fiscal years.

Additional witnesses in support Madam Chair Members.

Governor Newsom's proposed budget, we'll see what may revise looks like for fiscal year 2023 and 24 proposes to cut $6 billion from the natural resources budgets. That's 27% of the total cuts from the climate package. So we really appreciate this as maintaining that backstop that is so needed and we request your vote and appreciate the early motion. And second thank you.

Scott Wetch on behalf of the California State Association of Electrical Workers, California State Pipe Trades Council, Western States Council of Sheet Metal Workers, California Coalition of Utility Employees and the Elevator Constructors Union in support. Thank you.

Good afternoon, Madam Chair. Alfredo De Rodondo, on behalf of two clients, tree people in strong support really appreciative of the extreme heat chapter and the ongoing conversations around including school greening in the bond as well as the Irvine Ranch Water District. Really would love to see the addition of dam safety funding in the Bill in the bond as well as water recycling and other components that can help us secure additional water supply in California. Appreciate it, in support.

Madam Chair Members Michael Gunning here on behalf of Santa Clara Water District in support if amended, just like he said, dam safety is important too.

Good afternoon chair and Members Alfredo Medina here on behalf of the Imperial Irrigation District and would like to thank the author for his continued dedication and leadership in advocating for the Sultan Sea and the New river.

Thank you Jamie Miner on behalf of the California Stormwater Quality Association, support and if amended, would love to know just given the State of affairs with flooding stormwater capture projects included in the Bill. Thank you.

Madam Chair Mark Fenstermaker here on behalf of the Santa Clara Valley Open Space Authority as well as the Coachella Valley Conservation Commission in support. In addition, here on behalf of Sonoma Water, we are in a support if amended, we'd love to see more investment in the integrated Regional Water Management program. Thank you.

Oracio Gonzalez on behalf of the City of Coachella, I want to thank the author for including chromium six compliance funding. The included funding will go a long way towards allowing cities like Coachella to comply with the forthcoming standard while keeping rates affordable. We all want access to clean drinking water, but it cannot come at the cost of affordability. And on behalf of the Salton Sea Authority, I want to thank the author for his unwavering commitment to the Salton Sea. Thank you.

Madam Chair and Members Beth Olhasso on behalf of water reuse, California appreciate the inclusion of recycled water, but we can spend a lot of money on recycled water to help climate resilience. Also on behalf of the Santa Ana Watershed Project Authority in support of increased funding for integrated regional water management and finally Serrano Water district in support of funding for dam safety. Thank you.

Good afternoon Mikayla Elder on behalf of the California Association of Local Conservation Corps in strong support, we want to thank Assembly Member Garcia for the most recent amendments which will ensure that there are green career pathways for California's young adults. Thank you.

Janet Cox for Climate Action California and the Climate Reality Project California Coalition in support. Thank you.

Good afternoon Madam Chair and Members Eric Turner on behalf of Eastern Municipal Water District, Santa Margarita Water District and Monterey One Water support, if amended, respectfully request additional funding for water recycling projects. Thank you.

Fatima Iqbal-Zubair with California Environmental Voters in support.

Good morning or good afternoon, Ms. Chair. And Members Kristin Olsen, California strategies, on behalf of the San Diego County Water Authority and United Water Conservation District, appreciate these bond conversations moving forward and appreciate the author's interest, including dam safety in the future. Thank you.

Thank you. Next, are there witnesses in opposition? Seeing none. Next, questions or comments from Committee Members? Assembly Member Pellerin?

Great Bill. And I'd like to be added as a co-author. Thank you.

Assembly Member Addis.

Same thing. I just, if you could talk a tiny bit about the water recycling project, a comment that was just made, if there's thoughts about bringing in more financing there, and I only ask this coming from a city where we did a very large water reclamation project, very difficult, very expensive.

Yeah, we definitely have received quite a bit of interest in increasing the amount of money into water recycling, and I think we have some room to add some additional resources there.

Thank you. And would also like to be added as a co-author.

Any other questions or comments? Assembly Member Wood, you would like to be added as a co-author, right? Okay. I didn't hear that. Okay. Assembly Member Muratsuchi too? Did you have a comment? I just saw your hand.

He wants in. He said.

Okay. I just want to make sure that we're clear that I'm not missing any comments from Committee Members. Okay. Thank you for bringing this forward. I know that there's more conversations that you will continue as we move along this process, but I am definitely in support and also would like to be added as a co-author.

Absolutely. And again, we're having conversations with folks regarding dam safety, recycling, stormwater capture, and the integrated regional water management sections. So we definitely will see some movement there. And we'll also start talking to our friends in the Senate who also have a climate pond that they're moving and want to make sure that we integrate these priorities as much as possible. So respectfully ask for your I vote. And we are accepting a handful of amendments that were carried over from the water Parks and Wildlife Committee. So thank you.

Thank you. My next question was whether you were accepting those amendments. Thank you. Do we have a motion and a second? We do. Okay, motion from Assembly Member Pellerin, second by Assembly Member Addis. Secretary please call the roll.

The motion is do pass as ammended to appropriations. [Roll Call]

That bill has 6 votes. We'll leave it open for absent members.

Next, Assembly Member Pacheco AB 324.

Thank you. Good afternoon, Madam Chair and members of the committee. Today I come before you to present Assembly Bill 324. The state's recently adopted scoping plan, as well as a litany of academic and scientific institutions have all concluded that renewable hydrogen is crucial for us to meet our climate goals.

The Federal Government passed legislation supporting this conclusion through billions of dollars in funding for grants to states with a supportive renewable hydrogen policy framework like the one proposed in this bill. AB 324 will help us take a small step forward in establishing state utility policy on renewable hydrogen by simply requiring the California Public Utilities Commission to consider adopting renewable hydrogen procurement goals for gas utilities. Because the bill's language only authorizes the PUC to consider, no new mandate is being established by this bill.

AB 324 would also require the PUC to weigh costs, cost effectiveness, safety, and environmental concerns before adopting goals or targets. For safety, the bill goes even further and specifically requires the PUC to establish a pipeline safety and monitoring program for renewable hydrogen. AB 324 expands Senate Bill 1440, the Wessel Bill, to also include renewable hydrogen, and with me today, I have two witnesses in support, Jared Liu-Klein, public policy manager and strategic planning at SoCal gas, and Scott Wetch from the California State Pipe Trades Council. I'm going to hand it over to my witnesses, who will now testify.

Good afternoon, committee chair and members. My name is Jared Luiu-Klein. I am a public policy manager at SoCal gas. Thank you very much for the opportunity to speak. In 2018, SB 1440, which authorized the PUC to consider establishing biomethane procurement targets, was passed by the Legislature and signed into law by the Governor. AB 324 makes a simple but important change to that policy or that program by authorizing the commission to consider establishing renewable hydrogen targets.

AB 324 maintains the safety and the benefits of the current program by simply authorizing the PUC to consider another renewable fuel option to help us meet our GHG goals as well as to achieve carbon neutrality. Since the signing of 1440, it's become increasingly apparent to all of us that renewable hydrogen is an important tool in the toolbox and something that's seriously needed in order for us to achieve our ghg goals, especially those in the hard to electrify sectors.

Additionally, through legislation and budget allocations, the Legislature has seen the importance of renewable hydrogen, as well as the importance of procurement mandates and the effect that they have on emerging technologies. This is very similar to the RPS. The RPS has driven down the cost of wind and solar that's what we're trying to attempt to do here. We've established clean electrons, now let's do clean molecules. Finally, this bill does three things before the PUC can establish any goals. It requires cost effectiveness.

It requires the injection of hydrogen to be safe, and it also requires no new air emissions as the result of the program. With that, I respectfully request your aye vote.

Thank you very much, Madam Chair and members. Scott Wetch, on behalf of the California State Pipe Trades Council, the State Association of Electrical Workers and the California Coalition of Utility Employees, my colleague here did an admirable job describing how modest this bill is. I'd just like to put a little historical perspective.

My clients have been at the forefront of supporting our push towards decarbonization despite the fact that we have tens of thousands of jobs in the gas industry. We sponsored the very first expansion of the RPS to 33%. We sponsored the bill that took us to 50%. We sponsored the bill to 60%. We supported SB 100 that took us to 100%. We last year supported the climate package despite the fact that many folks in the fossil industry that we work with were not pleased with that.

All because we've been promised that there would be these green jobs that would come to follow. If you are one of my 4000 gas workers at PG and E, or one of my tens of thousands of plumbers and pipe fitters throughout the state. There are only several types of renewable energy where you have jobs, right? There's not a lot of plumbers and pipe fitters doing solar work. This is a promise that this institution has made, that there will be these jobs.

If we can't support this modest renewable hydrogen build, there's not going to be any hydrogen build that you'll ever be able to support. So let's be honest, let's move this forward. It doesn't do anything but authorize the PUC to consider this if it's safe and if it's sustainable. I would just like to point out that the opposition's arguments about the cost of hydrogen being higher than other renewable hydrogen being higher than other energy sources. This is exactly how we got the solar industry off the ground.

We authorized the investor owned utilities to invest ratepayer money into a technology that was not competitive with other types of energy. And now look, today we have a robust photovoltaic solar industry that is cheaper than any other form of energy. And that's exactly what we have to do with this nascent industry. So I would strongly implore you for an aye vote. Thank you.

Thank you. Any additional witnesses in support.

Mikail Scavarro, here, on behalf of the California Hydrogen Coalition and the California Hydrogen Business Council, in support.

Julia Levin, Bioenergy Association of California, in support.

Dorian Omar's Rincon Band of Luiseño Indians, in support.

Bridget McGowan, on behalf of the Los Angeles County Sanitation Districts, in support.

Jack Yanos, on behalf of the Coalition for Renewable Natural Gas, in support.

Next. Are there any witnesses in opposition.

Good evening, Madam Chair. I'm Mark Fenstermaker. I'm here for Earth Justice. We are respectfully opposed to AB 324, and we oppose this bill because we oppose blending hydrogen into the gas system as it is an expensive, dangerous, and inefficient use of what can be a really important resource for achieving our clean air and climate goals.

What we're talking about with renewable hydrogen is using renewable electricity to power electrolysis and create this renewable hydrogen, then injected into the gas pipeline to be used in homes for heating purposes. We're currently moving on using that same renewable electricity to do that same heating process in our homes and in businesses. And the studies show that utilizing this renewable electricity directly is three to seven times cheaper than using renewable hydrogen in this aspect.

But this bill would set the CPUC forward to go ahead and create procurement mandates for renewable hydrogen. To make matters worse, the climate benefits are negligible at best. As the analysis points out, the amount that can be safely blended into the gas pipeline is about 5%. So we're still delivering 95% gas blend with just 5% hydrogen. Some other studies have shown that up to 20% might be safe. This is really the ideal amount of hydrogen that can be blended into the gas system.

So at that 20% blend, we get a six to 7% GHG benefit. So we're talking about a resource that's going to be three to seven times more expensive than electrification with only a 6 to 7% ghg benefit. Now, we just heard that we need to do this so we can levelize the cost for hydrogen. We are already consuming vast amounts of hydrogen in California, mostly in oil refining processes and ammonia production for fertilizer. And this is all being done with gray hydrogen.

So we need to ask ourselves, shouldn't we be targeting our renewable hydrogen for those processes first before we start injecting it into the gas pipeline? One last point. Hydrogen is the smallest molecule on earth. It's going to leak from this gas system. It's also going to be vented from this gas system, which means we're going to have uncombusted hydrogen being released up into the atmosphere. Emerging science is showing that when we have uncombusted hydrogen, it will mix with methane up in the atmosphere.

It will bond to it. It will make its lifespan last longer. Methane is a short lived climate pollutant. The key is that it's short lived. So if we're going to allow hydrogen to exacerbate and prolong that lifespan, we're actually potentially moving against solving our climate goals with this application.

30 seconds. Please. Wrap up.

Hydrogen can have a positive impact for our climate goals going forward, but not in this application. And we ask you to please vote no on AB 324.

Thank you, Madam Chair. Michael Boccadoro, on behalf of the Ag Energy Consumers Association, I want to be very clear, and I testified earlier, we're not opposed to hydrogen, and we supported Senator Weso's 1440 biomethane. This is not a simple little addition to Senate Bill 1440. This is an entirely different molecule. As you just heard Mr. Fenstermaker make the point.

I want to focus on two things. As I said, we're supportive. We see a use for hydrogen in the transportation sector. See a use for hydrogen in power plants and blending and industrial settings, other uses. We don't see a use for hydrogen in the existing pipeline system for many of the reasons that Mark mentioned. I want to focus on two issues for you. Premature nature of this, which is well outlined in the Committee analysis.

The Energy Commission, the CPUC, and the CARB are all analyzing what is the proper role for hydrogen. They'll make the determination. This bill gets far ahead of that process. We haven't even determined through the pilot projects that were ordered by the Public Utilities Commission a year and a half ago. If it's safe to put into the pipeline system at any significant level, we should allow that to happen first before we tell the PUC to begin having the utilities procure hydrogen.

I do want to focus on cost, because hydrogen is very expensive today. And we all saw, as I mentioned earlier, what happened to natural gas prices this winter. This bill will lock in higher natural gas prices for all of your constituents. It's going to add to the costs of the biomethane procurement. Now we've got hydrogen procurement. And do not lose sight of the fact that SoCal gas company is asking for a 46% rate increase, 46% before the Public Utilities Commission today on top of all this procurement they want to do. That alone will add $4.9 billion to Southern California residents in just the next several years, if granted by the PUC. We're quickly seeing our natural gas prices, which are already four times higher, the national benchmarks exceed. At the end of the day, this bill is about one company who wants to create a new market for itself in hydrogen, and it's doing so on the backs of ratepayers.

Semper energy, SoCal gas's private parent company, could easily make investments in hydrogen to bring down the cost of hydrogen. They're not choosing to do that with shareholder dollars. They're putting this all on the backs of their ratepayers. All these costs get passed through to ratepayers 100%. Thank you. Respectfully request a no vote.

Thank you. Are there additional witnesses in opposition?

Fatima Iqbal-Zubair with California environmental Voters in opposition to AB 324.

Sakereh Carter on behalf of Sierra Club California, in opposition. Thank you.

Chair and members Dean Talley with the California Manufacturers and Technology Association, respectfully opposed.

Janet Cox for 350 Humboldt, 350 Sacramento, and Climate Action California in opposition.

Thank you. Next, we'll bring it back to the committee. Any questions or comments from Committee Members? Assembly Member Pellerin.

Thank you for bringing this bill forward today. Can you tell me more about how the PUC would ensure safety before requiring the procurement goals that you have in the bill?

So I don't work for the PUC, but part of the process of the pilots are to establish not only safety thresholds to address safety concerns through these pilots and to make sure that in these independent pilot programs where the injection is safe, that is one way to do it. We've done independent analysis. UC Riverside has done it as well at the direction of the PUC. So in addition to both the pilots and the UC Riverside study, I think that will be well on our way. The PUC may go above and beyond that, but they have not alluded to anything with any open proceeding currently.

Any other Assembly Members Zbur.

So I'm looking at the bill, and it doesn't look to me like, so, first of all, what is the time frame on the PUC regulatory process? Is it, so it took three years to implement 1440. So it looks to me like when I look at the regulatory process that this says, I mean, there's not timing on it, but it just says that there will be a regulatory process. And then it says that we'll open a proceeding.

Consider establishing renewable hydrogen procurement goals for each gas corporation. Consider requiring each gas corporation to annually procure proportionate share of renewable hydrogen to meet procurement goals established pursuant to paragraph one.

Before establishing these goals, they need to determine that they're cost effective, that the targets comply with applicable state laws that the safety risks of using renewable hydrogen in pipelines will be appropriately regulated, mitigated, and monitored, and hydrogen shall not be transported in pipelines until the commission acts to set safety standards and the pipelines meet those standards. So it looks like, I just wanted to ask if folks from the environmental community, I sort of shared the concern about whether or not the green hydrogen definition is correct.

And I've talked to the author about whether or not she would be willing to meet with the environmental community about that piece of it. But I also think that hydrogen is something that is going to be part of the future. And so to me, the regulatory structure doesn't seem like it's a big deal.

I mean, these take a long period of time, and it seems like the concerns that you're raising are sort of addressed, are addressed in the criterion that have to be met before they do anything, and it doesn't mandate anything. So I just wonder if you could respond to that.

I would go back to my comments that even if we have the most preferential form of hydrogen being made, so you have solar powering electrolysis to split the hydrogen model molecule off of the water. You put that into the gas system, you are only going to get a six to 7% ghg benefit out of that. And that is because hydrogen is not as energy intensive of a molecule as gas.

And so we're still delivering large amounts of gas into people's homes for combustion to utilize a water heater or utilize a space heater. And so we're going to set these procurement mandates where the gas corporations are going to be out there procuring this hydrogen, but still prolonging the delivery of gas. And at the same time, we are transitioning and spending millions, hundreds of millions of dollars on electrification.

And so why are we distracting ourselves from electrifying these processes in people's homes to deliver something that really isn't going to have great GHG outcomes? And again, this gas system is going to end up putting hydrogen into the atmosphere uncombusted. And I don't want to overstate because it still is emerging science, but we really need to figure out what that's going to do to the atmosphere.

Just as a theoretical framework, I tend to like regulatory processes over us legislating here because we have to make a bunch of decisions based on a seven page report and sort of some very high level argument. So to me, I like regulatory processes, and it looks to me like a lot of the things you're concerned about are things that would be taken into consideration as part of the regulatory process. And so that's, I think, what I'm grappling with.

The other piece of it, going back to the author, I do have concerns about the definition of the renewable hydrogen, and I'm just wondering if you're willing to work with the opposition and others about sort of that definition. We just had seen another hearings, talked a lot about the definition of renewable hydrogen, and I think there's a lot of work to be done in that area. But I was wondering if you'd be willing to meet with them.

I'm always willing to meet. I have an open door policy and always willing to have conversations.

Thank you. I'm done. Thank you.

Any other questions or comments from Committee Members? Seeing none. Thank you for bringing this bill forward. As you heard from questions from Committee Members, there's a lot of concerns. And from the environmental community, I hope that you continue those discussions and address some of these concerns. I know I don't think all of them can be right, because I think there's some maybe philosophical differences. But I appreciate that you're willing to continue the conversation.

I have some concerns over safety, but I know, Assembly Member Pellerin, I probably want to align my question with hers, but I will be supporting the bill today. Thank you. Would you like to close?

Yes. So I just want to thank you, Madam Chair and Committee Members, and also to the opposition. I respect everything that you're saying. I respect that you understand hydrogen is important, and it is important. And so this bill simply requires consideration. Again, there's no mandates.

It's just consideration of the use of renewable hydrogen in the utility pipeline system if determined by the CPUC. So, of course, it needs to be determined whether it's cost effective, whether it's even safe to do so. We're just asking for the CPUC to consider this. No mandates, just a consideration. And so I appreciate everybody's time, and I respectfully ask for your aye vote.

Thank you. Do we have a motion? Motion by Assemblymember Zbur. Is there a second? No. Assembly Member Mathis will second. Secretary, please call the role.

AB 324. The motion is do passed to appropriations. [Roll Call]

That bill has four votes. It's on call. We'll wait till absent members add on. Thank you.

Up next, we'll go to the committee members bills. We'll start with Assemblymember Muratsuchi, AB 1216.

Okay, great. You have a motion and a second.

Thank you very much, members. This is a district bill to address a very serious concern in one of the cities that I represent, the City of El Segundo, as well as other surrounding communities around the Hyperion wastewater treatment plant. Simply put, residents deserve to know that the air that they're breathing is safe to breathe. This bill is a simple measure that would require Hyperion wastewater facility to install a fence line monitoring system to track emissions of hydrogen sulfide, nitrogen oxides and volatile organic compounds.

The Los Angeles County Department of Public Health stated the urgent need for a robust fence line monitoring system, as recommended by both the Department of Public Health as well as the South Coast Air Quality Management District. This measure is being strongly supported and sponsored by the City of El Segundo. I am joined here today with the City of El Segundo's mayor pro tem, Chris Pimentel, as well as councilmember Ryan Baldino. Thank you.

Thank you, Madam Chair. Thank you, Assembly Members, for having us here today. We had a catastrophic failure at the hyperion water treatment plant a few years ago. In the recovery from that, we have been deluged by noxious gases, principally hydrogen sulfide. That captures a significant amount of the attention of residents because the smell. We're equally concerned, however, with the unknown gases that come from the industrial processes around it. Currently, AQMD measures the noxious gases, and to that effect, we have complaints of over 5500 residents and 65 notices of violation.

But for us, the fact that we cannot measure the volatile organics, the nitrous oxides, the potential for sulfur dioxide, is an equal concern. Now, fortunately, this body, under the leadership of Assemblymer Muratsuchi a few years ago, passed AB 1647, 1647 is the private sector equivalent of this bill that allows us fence line monitoring in El Segundo around our oil refinery.

It is efficient, it is effective, and it lets us partner with the refinery to instantly inform residents when we have an odor or a dangerous toxin issue. We simply do not have that tool currently for the public process. And with that, we send 100,000 people to work every day in El Segundo, Hawthorne, Lennox, Englewood, Westchester, under things that they do not know what they are breathing. And 17,000 El Segundo residents sleep next to this every night, not knowing what sort of toxins they are ingesting.

So we're here to ask for your help with this. We know there are concerns that there could be unintended consequences of bills of this nature. But we are confident that the narrow construction of this will apply only to this facility. And to that end, we thank you for your time, and I will turn the floor over to my coworker.

Thank you, Madam Chair. Thank you, Members of the Committee, for seeing us here today. I appreciate your time is important. This bill is desperately needed for the members, the community of the City of El Segundo. We are representing Maripo Tempanai, 17,000 individuals who live next to this treatment plant. We have lived next to this plant forever, and it has never been such a problem as has been since they've tried to come back from the catastrophe that happened. We appreciate what Hyperion is doing, but what we need is a little transparency.

And what we're asking for is real time fence line monitoring of the emissions from the plant, just so we can inform the community, our workers, and our residents what it is that we're breathing in the air. Now, Chris and I campaigned together. We attended a high school forum where the children got to ask us questions. And the one question that keeps me up at night is they asked, is our air safe to breathe? And I could not answer that question.

And so we're here asking you for help so that we can answer that question on behalf of our residents, our workers, and our surrounding communities. It's more than just El Segundo. Definitely, we bear the brunt, being the neighbor, but it affects a widespread of the South Bay region. So we're here to ask you for your help, and we thank you for that. Please vote yes.

Thank you. Any additional witnesses in support?

Sakereh Carter. On behalf of Sierra Club California, in support.

City manager of El Segundo in support.

Are there witnesses in opposition?

So we think decisions like this should be left to the appropriate local regulatory entities using their existing permitting and enforcement authority, those being the Regional Water Quality Control Board and the Air Quality Management District. It is our understanding that this type of monitoring required by the bill was deliberated by the local AQMD when they issued the current abatement order, and it was deemed unnecessary. So, again, we are concerned about the precedent of revisiting an existing enforcement action and how that could be perceived in future enforcement actions for this and other facilities. So for those reasons, we must respectfully oppose the bill. Thank you.

If I could respond briefly just so that. I'm sorry.

Yeah, we'll wait. We're going to move on to additional witnesses in opposition, seeing none. Any questions or comments from committee members? Assemblymember Zbur.

I know the Hyperion power plant is not too far outside of my district. It is very close to residential communities all around. I think all this does is require that fence line monitoring be established to understand whether there are issues and impacts on the community. So I'm supportive of this.

Thank you.

Any other questions or comments from committee members? Seeing none. You wanted to respond. I want you to respond.

Thank you. My only point is that they do currently have fence line monitoring. We're asking them to just expand what they're monitoring so we have a better understanding of what we're breathing. We're not asking them to do anything they haven't already done. We just want to know more information.

Thank you. I also had a question. I'm also a Los Angeles member. I'm very familiar with Hyperion, and I know that besides the South Bay, it also affects the City of Los Angeles, residents that don't live too far from the plant. The opposition had stated that the AQMD had deemed was it additional fence line monitoring unnecessary. When did they do that? And was it after the spill or after this?

Yes. As part of the abatement order, they did consider additional monitoring for toxic air contaminants and VOCs and determined that the only monitoring that needed to happen was for H2S, which they are currently doing.

Okay, well, I am supporting this bill. Like the support witness mentioned, this fence line monitoring is something that Hyperion already does, and we're just asking them to expand. So I will be in support. Thank you, Assembly Muratsuchi, for bringing this bill forward. I know you've done fence line monitoring in the past. I associate this with you. So thank you for bringing that solution to this issue. Do I have a motion? I don't. Motion by Assemblymember Zbur, second by Assemblymember Addis. Would you like to close?

Thank you very much. I appreciate all the comments raised. We did craft this bill so that it would only impact the Hyperion facility, which, Madam Chair, I wanted to share. If you missed the LA Times, when I came home on Thursday evening, I see the lead story, front page of the Los Angeles Times, that the State Water Board is alleging that Hyperion engaged in gross negligence that caused this massive sewage spill in July of 2021. They've proposing a record $21.7 million penalty.

And it just goes to show, as the waterboard official was quoted, the amount of the proposed penalty reflects the seriousness of the violations at the plant and the scale of the harm to our region. This is a simple transparency measure. Again, to assure the children of El Segundo, the citizens of El Segundo, that the air that the breathing is safe. I respectfully ask for your aye vote.

Before we move forward, will you be accepting the amendments?

Yes.

Thank you. I did read that LA Times article and thought of you because I had just been briefed on your bill and had made a decision. So thank you again for bringing this forward. So, we have a motion and a second. Secretary, please call the roll.

[Roll Call]

That bill has eight votes. That bill is out.

Thank you.

Next, Assemblymember Wood. This is AB 1489.

Good afternoon, Madam Chair, and members. I want to start by thanking the committee staff for their excellent work, not only on this bill but on SB 54 by our colleague, Senator Allen. And I'd also add that I am happy to accept the proposed amendments today. As we all know, SB 54, the Plastic Pollution Provider Responsibility Act, was a landmark piece of legislation and will be critical in advancing California toward a more sustainable future.

Critically, SB 54 ensures that covered materials sold, distributed, or imported into the state by 2032 is recyclable or compostable. As we transition away from fossil fuel plastics, we know that recyclable and compostable products may be a part of our future in California. To ensure that remains viable, AB 1489 clarifies that SB 504's 25% source reduction requirements do not apply to certified compostable products.

Members, this comes at a critical time when manufacturers of compostable products are looking for clarity about whether they have a future here in California or not. While the opposition would prefer we sit back and allow Cal Recycle to implement SB 54 without input, I believe that the very industry we will soon rely on for this transition deserves immediate clarity about the intent of SB 54.

To specifically address concerns about the compostability of products, we worked with the committee to ensure that manufacturers seeking eligibility from this exemption will absolutely meet California's carefully constructed compost standards. These standards include the closely negotiated language of assemblymember tings AB 121, which directed Cal Recycle to develop labeling requirements for compostable products to ensure that they are readily identifiable by both consumers and composting facilities. Colleagues, this clarification is needed as California transitions towards a more innovative, sustainable future. With me to provide testimony is Mark Herrema, the CEO of New Light Technologies, and Dr. Joseph Greene, professor of sustainable manufacturing and mechanical engineering at Chico State. That's a mouthful at this time of the day. Just saying so. Anyway.

Good evening, Chair and members of the committee, and thank you very much for the opportunity to testify today in support of AB 1489. It's my honor and privilege to be with you here today. My name is Mark Herrema. I'm co-founder and CEO of New Light Technologies. New Light is a California-grown company. We're headquartered in Huntington Beach and we have over 180 full-time employees here in California. New Light was founded in 2003 with a mission.

Our mission was to help end climate change by turning greenhouse gas into sustainable materials. Over 10 years of research, we discovered a naturally occurring microorganism right here in California that eats greenhouse gas and turns it into a material called PHB. PHB is a biomolecule made throughout nature, including every day in the ocean, estuaries and forests of California. And because we make it from greenhouse gas, we call it air carbon.

Air carbon is made by natural microorganisms from greenhouse gas and unlike traditional plastic, air carbon is certified home compostable by TUV Austria and carbon negative by Carbon Trust, amongst other environmental attributes. New Light is a technology company that can help California achieve its ambitious environmental goals and we manufacture right here in California. While SB 54 is an important framework to reduce single-use plastics, there are some elements of the bill that send mixed signals regarding the role of compostable materials.

Under the current language of SB 54, compostable materials fall under the source reduction requirements of the bill, meaning that we and other sustainable compostable material manufacturing companies will have to reduce our material by up to 25% from a 2023 baseline if compostable materials will be source reduced. It's hard to imagine how California can create viable alternatives to incumbent single-use plastics. AB 1489 will allow for the continued growth of compostable materials to serve as an alternate to plastic. California is a state that prides itself on innovation, and AB 1489 is a Bill that will signal to technology companies that they should continue to innovate in California to help improve California's environment and the world's environment. Thank you for your time today.

Hello. How are you guys doing? Hey, I'm Joe Greene. Professor Joe Greene. If you don't mind, I teach in mechanical engineering. SAM manufacturing, that's now called advanced manufacturing at Chico City University. I'm here because I left General Motors in '98. My bosses, I'm having a midlife crisis. But if I'm a midlife crisis, why not be in California, right? So here I am. Anyways, I've been teaching for 25 years, and I had 14 years, General Motors. So about 39 years I've been doing plastics. I love plastics.

I came to California because I wanted to help save the plastics industry, right? And then I found out in 2004, thanks to California Integrated Waste Management Board, they needed help on plastics, compostable plastic in particular. So I knew a little bit about plastics. So I helped them do that in 2004. And since then, I decided I want to help save the world. And to me, compostable plastics is the way to do that. I wrote a book, actually wrote three of them.

But one of them is called sustainable plastics because, as you know, a lot of people don't like plastics. I'm the bad guy. Sorry, but the book's intention was, how can plastics be sustainable? And the answer to the question is yes, it can be for two things. If you make plastics out of compostable plastics and biodegradable ones or recycle plastics, you, in fact, can create a sustainable product that is lower carbon footprint, lower waste, lower pollution. So, whatever. I'm very happy to be here.

I'm a very strong supporter of compostable plastics. To me, that's my vision. That's the future. Plastics can be great. We can't get rid of plastics. They're there, but we can make it better. And so I believe that we need to have compostable plastics. And the bll proposes that and helps that, ensures that in the future. So I'm very thankful for you to talk about that again. I have a PhD in chemical engineering. I'm an engineering geek. Before geek was cool. I'm the geek. That's okay.

I've been doing it for a lot of years. I love it. I wrote books on it. I have over 40 publications. This is what I do. I'm well known worldwide, so I'm glad to help you and support you. And I'm not being paid for any of this. This is just me being too talkative. I apologize. So thank you. Have a great day, and you're doing it greatly. So much. Madam Chairperson, thank you so much. You guys are wonderful. You have a tough job, so keep up the good work and save the world by California. Thank you.

Thank you. I'm an engineering geek, too, but not with a PhD. Right? Next, additional witnesses in support.

Chair and members, thank you. Bruce Magnani, on behalf of the Biodegradable Products Institute, one of the largest certifiers of compostable and degradable products in the United States, North America. We had some really great conversations with the author and his staff, and we were originally very concerned about the bill. We think it's going in the right direction. We look forward to working with the author once the language is in print, to support this moving forward. Thank you.

Thank you. Next, are there witnesses in opposition?

Good evening, Madam Chair and members. Jennifer Fearing, here tonight on behalf of the Ocean Conservancy, Monterey Bay Aquarium, and Oceana, respectfully opposed to AB 1489. We really do appreciate the work that the author and the Committee have contributed to address our concerns. But California should stay the SB 54 course by focusing first on reducing the production and use of all single-use foodware and packaging and moving toward a circular and reusable economy which is critical for reducing the harms of plastic pollution to people and nature.

Unfortunately, AB 1489 instead promotes a transition to other single-use materials. Compostable plastics already receive a preferential treatment within SB 54 that was carefully negotiated, and that happens by way of a reduced fee in SB 54's producer responsibility plan. Adding an exemption for compostable materials from the industrywide source reduction mandate further encourages existing and new producers to use compostable plastic material instead of prioritizing, reuse and refill.

Some certified compostable plastics contain fossil fuel components and some of the same problematic additives as fossil fuel derived plastics, which are known to contaminate waste streams. Many California composters won't take these materials. They picked them out in part because they cannot label the compost organic if it includes compostable plastics under the federal standard. We are generally wary, it's true of any substantive amendments this year to SB 54 because it would compromise Cal Recycle's swift implementation timeline and the robust stakeholder process.

And lastly, we would really appreciate the author's confirmation that AB 1489 does not allow switches from plastics, as defined in SB 54, to compostable covered materials to count as source reduction. So while we remain opposed to the bill, we would welcome further engagement with the author, and we thank you for your consideration.

Thank you. Additional witnesses in opposition.

Good evening, Madam Chair and members. Isabella Gonzalez Potter with the Nature Conservancy and very regretful opposition. Assemblymember Wood is someone we work with often and have great admiration for as a climate leader, but for the reasons already articulated by our colleague Jennifer Fearing, we too have concerns with the bill, but we look forward to ongoing conversations with the assemblymen as well as his staff, Annabelle. We appreciate their ongoing discussion. Thank you.

Thank you. Next, questions or comments from committee members. Assemblymember Friedman

Thank you. I have a lot of faith in this author and certainly know his work and his dedication. So I'm going to support the bill today. But I also think that the opposition makes a lot of good points. So I hope that you will continue working with them so that when it comes back in its final form, I can vote for it. Thank you.

Thank you.

Assemblymember Pellerin.

So I am definitely struggling with this bill and I just need some help understanding. So if a compostable plastic ended up in the ocean, how long would it take for it to break down? And does it break down entirely or what happens with it?

Yeah, I'm going to let the experts answer that one.

Thank you. I'm an expert in marine biodegradation. In fact, I'm one of the only one in the United States that actually tests for marine biodegradation and certifies it as such. However, you mentioned the compostable. Yes, that's a problem. You have a very good point here. He mentioned compostability. Most of the bioplastics that are compostable is PLA is the number one. That's over 250,000,000 pounds a year. It's the number one bioplastic out there that is compostable, but it's also bio-based.