Senate Standing Committee on Environmental Quality

Okay. We are officially calling this meeting to order. This is the Environmental Quality Committee and tonight we will be hearing one Bill. I see that our author is here. Thank you Assemblymember Irwin for being here.

This is AB 1207 and following the Bill hearing we will hear three other bills, SB 237, SB 352 and SB 840 for informational purposes only. So we do not yet have a quorum, but we will start as a Subcommitee. So we would like to invite you to come Forward and present AB 1207.

Well, thank you and good evening, Madam Chair and Senators. Today I'm presenting AB 1207 which reauthorizes California's Cap and Trade program, one of the strongest, most cost effective emissions reduction programs in the world. The Bill reauthorizes the program through 2045 while making the following changes.

It renames Cap and Trade as the Cap and Invest Program to reflect the billions of dollars of program revenue invested in affordable hous transit infrastructure, clean drinking water, wildfire prevention, clean air grants and numerous other programs.

It aligns the Cap and Invest program with California's overall climate strategy to ensure an organized, steady path to achieving our statewide net zero goal by 2045. AB 1207 restructures the California Climate Credit which reduces all of our constituents utility bills.

It redirects funds that would have gone to natural gas suppliers to instead increase the electric climate Credit and to be distributed to the highest Bill months to provide affordability when it is most needed. AB 1207 will also direct a portion of the funds to provide a long term affordability benefit through public financing for transmission projects.

CARB will be required to distribute allowances to support the industries at the greatest risk of leaving California and ensuring that more California businesses thrive. The Bill maintains the 6% limit on offset usage, providing significant and reliable cost containment.

It maintains requirements to ensure offsets provide direct environmental benefits to Californians and places them under the cap, which means that one allowance is removed for every offset used, ensuring that the program pairs compliance flexibility with significant emissions reductions.

The Bill increases transparency and accountability for CARB by requiring that the Chair appear before the Legislature for up to three hearings during the regulatory update process on Cap and Invest.

It requires CARB to prioritize affordability and consumer protections in designing the program and it requires an economic analysis of regulations to provide to the to be provided to the Legislature.

Finally, the Bill establishes an annual oversight hearing on how the greenhouse gas reduction funds are spent to ensure that these investments are meeting the outcomes that we have promised that summarizes the changes to this program.

Cap and Invest has proven to be both an efficient and an effective way to reduce greenhouse gases, while providing a roadmap for other states and countries to follow suit. And with that I would like to introduce my witnesses from the Environmental Defense Fund and the Coalition for Clean Air.

Thank you very much. Good evening. I'm Kaitlyn Rudner Sutter California Director for Environmental Defense Fund. I'm also the Assembly appointee to the Independent Emissions Market Advisory Committee, though speaking on behalf of EDF here today. And I'm very pleased to be here in support of AB 1207, reauthorizing California's landmark climate policy and renaming it Cap and Invest.

This program is the cornerstone of California's suite of climate policies. It is an essential program to ensure emission reductions and to generate revenue for myriad state priorities, both of which it has done successfully for over a decade. Cap and Invest is also the most cost effective climate policy that the state has.

Leaning on this program to continue to deliver emission reductions and revenue to address affordability, climate resilience and environmental justice is essential and urgent. The Bill before you reflects months of work from many policymakers, staff and stakeholders and I'm grateful for all of those efforts. This Bill is a compromise.

No one loves all of it, but it is a good compromise and it is imperative to pass AB 1207 now to provide certainty of emission reductions, certainty for business investment and certainty for revenue.

Crucially, AB 1207 ensures alignment of the emissions cap with California's 2045 greenhouse gas emission reduction targets, and it preserves free allocation of allowances to prevent leakage and contain costs, but enables CARB to do so in a way that reflects real economic conditions, not a one size fits all approach.

It also enables the transition of allowance allocation from natural gas utilities to electric utilities, which helps to lower electricity costs and support affordable household electrification. Importantly to EDF, AB 1207 preserves the offset program which is essential to driving financial support for tribal communities and investments in nature based climate solutions.

This Bill also includes, though an important update to the offset program which helps to steadily increase climate ambition and preserve environmental integrity. This balances the concerns about preserving all of the benefits of offsets while responding to potential environmental concerns.

EDF is very pleased to support AB 1207 and we deeply appreciate Assemblymember Erwin and Senator Limone's tireless leadership in establishing the future of this program. Thank you very much.

Good evening. Bill Magavern with the Coalition for Clean Air in support of AB 1207 and with our thanks to all of you who worked so hard on this. As you know, Cap Invest is one of a suite of programs that California has to bring down the greenhouse gas emissions that are altering our climate.

And it's an important one. And with this Bill, we set it on a track to meet the net zero target that this Legislature has set for 2045. It would also return the allocation process to what we hope will be a merit based system based on who really needs those allocations.

Importantly, it will Fund investments that bring affordable clean transportation and clean energy to Californians, especially those that face the most challenges in making the transition to a zero emission economy. And it uses charges on our greenhouse gas emissions to help households and small businesses to lower their electric bills. We didn't get everything we wanted in this package.

We would like to see stronger community air protection. We hope that you'll come back next year and do that. But I don't think anybody got everything that they wanted from this. What's important is that this Bill moves us forward. We actually did not support the reauthorization in 2017. We think this is better.

And at a time when the Trump Administration is attacking California's air and our water and our public health, it's especially important that California move forward and protect the health of our residents. We urge your support.

Okay, thank you very much. Now we will go to anybody else in the room who would like to come forward and express support. Please state your name, the organization you represent and your position.

Thank you, Madam Chair. Keith Dunn here on behalf of the State Building and Construction Trades Council as well as the District Council of Ironworkers, I just really quickly want to say what a compromise. It's a pleasure to be here. None of us got what we wanted. It's been a lot of work to get there. But we're very, very pleased with the outcome and very pleased to support this effort. Thank you very much.

Thank you.

Good evening. Paul Mason with Pacific Forest Trust also very pleased to support.

Steve Hanson on behalf of SPUR and the SF Chamber in support. Thank you.

Chair Members. Keshav Kumar with Lighthouse Public Affairs on behalf of Heirloom Carbon. And strong support except. Excuse me.

Good evening, Madam Chair and Members. Michael Pimentel here on behalf of the California Transit Association representing 220 Member organizations including 85 transit rail agencies in the state, urging your aye vote. Thank you.

Michael Jarred on behalf of the Nature Conservancy in support. Thank you.

Merrian Borgeson with Natural Resources Defense Council in strong support. Thank you.

Allison Hilliard on behalf of the Climate Center in strong support. Thank you.

Audrey Slaughter on behalf of NextGen Policy and strong support.

Anthony Sampson on behalf of the Southern. California Public Power Authority, Charm Industrial and EBB Carbon in support.

Good evening, Madam Chair and Members. Matt Cremins here on behalf of the California Nevada Conference of Operating Engineers in support. Thank you.

Good evening. Marina Espinoza with the California Housing Consortium in support.

Good evening. Alfredo Redondo on behalf of Conservation International, Tree People, the Green Hydrogen Coalition, HCycle and OrangeV all in support.

Will Brieger for Climate Action California and 350 Sacramento in support. Thank you.

Good evening. Mary Sulecki on behalf of Clean Air Task Force in support.

Good evening. Melanie Law, here on behalf of E2 in support. Thank you.

Felipe Fuentes here on behalf of the Associated General Contractors of California in support.

Trent Smith on behalf of the California Municipal Utilities Association in support.

Gregory Kramer on behalf of the California Alliance for Jobs, the Climate Safe Infrastructure Coalition and the California State Council of Laborers in support.

Good evening. Valerie Torella Vlahos, Pacific Gas and Electric Company in support.

Reid Addis on behalf of Ceres and 23 of its Members, as well as CalStart in support.

Jake Schultz on behalf of Building Decarbonization Coalition, in support. Thank you.

Good evening. Noam Ellroy on behalf of the California Compost Coalition and Rethink Waste, in support. Thank you.

Daniel Brod on behalf of Union of Concerned Scientists in support.

Mikhail Scovarli here on behalf of the California Council for Environmental Economic Balance and support.

Bruce Mignani on behalf of California Cement Manufacturers, in support.

Dylan Finley on behalf of the Pacific Steel Group, in support.

Clayton Munnings, Clean and Prosperous California, in strong support.

Okay, thank you. Thank you to everybody who stayed late on a Thursday to come and listen to this and express support. Looks like we have a few more coming in. You're welcome to come up to the microphone if you'd like to express support. State your name, organization and position.

Jeanie Ward-Weller on behalf of Greenlining in support.

Brian Shob on behalf of the California Climate and Agriculture Network in support.

Eduardo Martinez on behalf of Brightline Defense Project in support.

Fatima Belsaveir with California Environmental Voters in support.

Kerry West with NPH and All Home in support.

Okay, great. Anybody else wishing to come forward and express support, now is your moment. Yes. Okay, no problem. No, it's okay.

Brady Van England, here on behalf of Southern California Edison, in support.

Thank you. Okay, anybody else going once, twice, three times. Okay. Anybody here in opposition who would like to come forward as lead witness in opposition. Let's make room for him at the table. Thank you.

And you're both welcome to proceed when ready.

Got it. It's been a long week. Good evening Chair Blakespear and Members Ben Glumbeck on behalf of the California Chamber of Commerce, since 2017, the cap and Trade program has been California's workhorse climate tool, cutting emissions cost effectively, providing compliance flexibility and keeping industry here rather than pushing jobs out of state.

Cal Chamber evaluates every program design choice through the lens of affordability and the program success has always depended on a careful balance between climate ambition and economic feasibility.

We while AB 1207 tries to strike that balance by preserving much of the existing cap and trade architecture, we applaud the effort of Assemblymember Irwin and I would be remiss if I didn't mention the countless hours she and her staff have spent working on this effort.

And while we were proud to support the reauthorization of the program in 2017, unfortunately AB 1207 falls short by exacerbating the affordability crisis for those least able to electrify. Therefore, we must respectfully oppose AB 1207 unless amended.

California currently has some of the highest energy costs in the nation and AB 1207 would worsen the affordability crisis by shifting allowance value from gas utilities to electric utilities, stripping away the annual residential gas climate credit that helps offset cap and trade costs. In other words, it penalizes families, restaurants and small businesses who cannot afford to electrify.

And this is especially true for low income households and renters who rely on natural G for heating and cooking without affordable alternatives in place. This is simply a regressive cost shift, not a just transition.

Cap and trade underpins California's economy and is a multi $1.0 billion market mechanism that affects the price of energy goods and services throughout the state.

It should not be reauthorized through last minute bill in print mere hours in fact actually sort of after the print deadline I think if we're technical about it, but we can leave that for another day. The program does not expire until the end of 2030.

The Legislature has time to do this right next year or in 2027 or 2028 through hearings and a more robust stakeholder process. We urge you to take more time and get this right. We must urge you to oppose unless amended. Thank you.

Good evening. Raquel Mason with the California Environmental Justice Alliance here in respectful opposition to AB 1207.

CEJA works directly with communities that are hit first and worst by climate change and pollution from oil and gas operations, from underinvestment and from high utility and transportation costs that are worsened by the way cap and trade compliance costs are passed down.

As many of you may know, environmental justice communities have fundamental issues with cap and trade programs. We do not believe that this is the mechanism that equitably and effectively delivers on our emission reduction goals.

When a program allows for training trading, this means you're allowing stationary polluting sources to buy their way into compliance rather than requiring them to actually reduce emissions. The frontline communities that we represent live by these stationary pollution sources and breathe these emissions.

Their air quality is not improving despite the promises made when AB617 was passed in 2017, the last time this body discussed cap and trade renewal, EJ groups approached that discussion much differently. We advocated for a whole different approach this year.

We came to this discussion much more practically and engaged in good faith in this seeking meaningful air quality improvements within this policy or in a complimentary vehicle. We came to the discussion with a lot of hope.

We were urging for common sense reforms to tighten the program and reduce compliance loopholes which the Legislature's own research has clearly identified as necessary to meet our state climate targets.

We were urging for equitable relief for low income ratepayers via the climate Credit so that we could help our community Members who refused to turn on their AC during 110 degree days in the Central Valley because of high utility bill concerns. And finally, our North Star in this entire conversation was air quality improvements.

At the end of the day, can we look back to the communities that we are accountable to and say that this deal will bring the air quality improvements that they deserve? Unfortunately, there is nothing in AB 1207 or the complementary bills that will make the promises made to our communities in 2017 when AB617 was passed real.

We do see some small improvements with this bill. We appreciate the authority given to CARB around the leakage rate and moving assets under the cap. We are also immensely appreciative of the hard working staff and Members that were that we engaged with throughout this process. We urge that this not be the end of the conversation.

As the cap and trade conversation comes to a close, our collective responsibility to improving air quality and overburdening communities will remain. We look forward to continued work this in 2026. Thank you.

Okay, thank you to both of you for your testimony. I'd like to encourage all Members of the Environmental Quality Committee to come to room 2100. We will be voting on this soon when we establish a quorum so we are near that point.

So I encourage you to come down to room 2100 if you are up in your office watching this on telev. So with that, we'll invite anybody who is here in opposition who would like to come forward to the microphone and express your opposition to do so now.

Asha Sharma, on behalf of Leadership Council for Justice and Accountability, the Central Valley Air Quality Coalition, Physicians for Social Responsibility LA, the Asian Pacific Environmental Network, Center on Race, Poverty & Environment, Communities for a Better Environment, all in opposition and would like to align our comments with those of Raquel Mason at ceja. Thank you.

Okay, thank you. Is that the only comment in opposition? Nobody else in the room or outside the room wishing to express? No. Okay. Well then we'll bring it back to the Committee. Would anybody like to make any questions or comments? Yes. Senator Menjivar.

Thank you so much. Before I go into my questions, I think as a Member when you first proposed your skeleton bill on this in Committee, I shared some sentiments and I think it's the same sentiment. I don't think Californians should get used to this kind of process. I don't think this is full transparent.

I don't think this benefits California for us to vote on a bill that we have no ability to amend to provide actual input through a Committee. It's not what Californians want us to do.

I think with my short three years here is I think it's a limit of frustration of how this big policy deal came together within hours of the end of the legislative session and we're expected to vote to vote on it. If not, you're a seam.

You're seem to not be part of the team or not want to be a team player where only a handful of individuals get to decide for 15 years to lock us into a program I think is not beneficial to the community. While I recognize that and not everyone got wins here, that's a compromise. That's. I get that.

But I also am frustrated that people really did. We did not have a say. The Actual Committee that is in charge of these types of bills had no say in this bill. Maybe our chair who was involved in the working group had a little bit of say.

But for a bill to come through our Committee and none of the other Committee Members to actually have a voice on it. It's not democracy and it's really frustrating. Besides that, I do have some question as to how we got to some certain things. Specifically the California Climate Credit.

I represent a district that has both is covered by munis and their gases on IOU and I know we're shifting everything from gas to electric in thinking about affordability and thinking about the communities that I represent, they're mostly communities of color.

We it's really hard to switch over from gas to electric and if we're switching over the rebate, I'm wondering what exists and protections for my constituents and a lot of constituents like my district, are they going to see a rebate in their electric bills since they're a muni? Is it going to be a clear.

And then I felt like it was a little bit elitist to say that the climate credit is needed just for electrification given the fact that again, most people are still on the gas because they can't afford to switch over. Or in my district I only have one. I mean I can get rand, but never mind. I digress.

That's my first question and I don't know if Assembly Member you. I should direct the question to you or to the supporters.

No, you can direct it to me. So first of all, we on the Assembly side have been meeting since January. We had a working group of 18 people and then a smaller group. I do not like the way this came together.

We actually did release bill at language a number of weeks ago and we would have preferred a more transparent process but this is what we have right here. I can assure you that we had a number of stakeholder meetings.

We've had people meeting in the office with staff and so we have tried to listen to everybody, a number of presentations in caucus and but that's kind of inside baseball and I share your frustration. I think a more transparent process would have been very helpful for the climate credit.

So what we were looking at is that there is no household that only has gas. Every household has gas and electric. So let's say There is a $10 credit on the gas bill. All we're doing in that household is moving it to the electric bill.

So that household gets the same credit but they get it on their electric bill because we are encouraging electrification and we are also putting an additional 10% off all the climate credit money into that pot.

So the average household will be getting during the hottest summer months, during those four months their climate credit will be almost twice what it is now.

And that is whether it is a lower income household on the care and fare plan already, so already a subsidized household or whether it's somebody just above the poverty line or middle class, everybody will be getting that climate credit money. So we don't think that it's not equitable.

But the bigger policy of cap and trade is to move toward an emission free future. So putting that subsidy on the gas bill didn't make sense for us. And I would also like to. I'm sure you heard, but also I'd like to acknowledge that PG&E did speak in support and Edison spoke in support.

And PG&E has both gas and electric. And we also have for the municipals, they will also get the gas credit if they're just electric. And that will be used to put a climate credit on the municipal bill.

I saw in the language that is requirement for IOUs to put specifically on their front bill. The first page of the bill that this is a climate credit rebate. Is that the same requirement for a Muni?

The. We wanted. We wanted to make it equal across the board. So I imagine that it is, you know, if it's not specifically in there, that was certainly the intention we want. Because right now the municipals, they take their climate credit and they use it for. They don't use it. Yeah, they use it for projects.

And my concern, and I haven't found the language, or maybe I just didn't, you know, we didn't have a lot of hours here. I didn't find where it was a requirement for a Muni to do the same thing that an IOU was going to do. So I worry about my.

I worry that constituents will stop getting that climate credit from SoCal. I get that email. It's very, it's very obvious. And they won't see it on their Muni Bill. I worry that it won't be captured or what accountability do we have?

Because I know it's a requirement for our use to pass that down and it's not a requirement for munis to pass that down. And I think we're trying to make it a requirement through this, what enforcement. If they've never done this before, what accountability is in place to ensure that does actually go through?

The point is they are not getting a climate credit right now, but they will. And you're absolutely right. I think one of the biggest things we need to do is better advertise to our constituents that they're getting benefits from cap and trade. And that is not the situation over the last decade.

Most people, including me, had no idea that that was on the Bill. So we think it's, you know, really important to do a, you know, a larger advertising campaign so that everybody understands the benefits of cap and trade.

And as a Member, it's directing CARB to develop regulations that focus on affordability. Do we know or have anticipated what kind of regulations and what in the realm of affordability they're going to be working on.

Well, a lot of the affordability stems from the offsets and from so you want the right balance with offsets and with allowances. You want to make sure that the emitters, all the covered entities, reduce emissions at a regular pace. And we don't want to.

And we want that certainty that they make our 2030 goals and that certainty that they make our 2040-45 goals. The affordability is in making sure that those offsets stay there and that when companies can't meet their goals that they can pay for the offsets or, you know, they use their allowances.

Maybe you would like to add some more about.

So what this is asking. I obviously agree with everything Assemblymember Irwin said. And I think what you see in here is direction to CARB to continue implementing the program with these updates, but in a manner that prioritizes affordability and cost effectiveness.

So when there are specific examples like with the industrial assistance factor and reallocating that that is done in a way that is intended to improve affordability and cost containment. And I guess the other thing I would say, zooming out maybe just a little bit, this is inherently the most cost effective climate policy that we have.

So from an affordability perspective, we want to lean on the programs that are going to have the lowest cost of compliance. And that is, I mean, that is what the cap and trade program, if.

Gas prices have skyrocketed during the time that cap and trade has been in place now, and we're extending a very similar plan, how do we continue to say that this is a program that helps with affordability?

So if you look at cap and trade compared to other climate policies that California has on a per ton of greenhouse gas emission basis, this is the least expensive. So per ton of emissions abated, this is the lowest cost. So that's what I mean, when it's cost effective, that's what you're saying. Okay.

And then I just wanted to add one other thing. We were very, very focused on accountability, especially of CARB, because we heard loud and clear from our Members and from Senators that they want more accountability from CARB.

So one of the, one of the, in the new language, when CARB is going to start a rulemaking process for, you know, when they're going to have new regulations, they need to come to the Legislature beforehand and we need to have an economic impact study so that we understand, you know, before, during and after how much a new regulation is going to cost.

So it's, it's the same as we were just hearing, we are asking in the language that everything they do, they look at what is the, you know, how do we keep. How do we keep these regulations cost effective?

Assembly Member, would that allow us, the Legislature, flexibility to move things? Or does this program lock us into 2045? Or if carp finds something that we need to tweak, can we tweak that before 2045? You can always run legislation.

So with that, that was a big piece for me, ensuring that we had some accountability in terms of if we need to change something, we would be able to come back, like you mentioned. I guess you're right. It doesn't 100% lock us in. We'd be able to come back. Okay, that's all I have for right now.

Okay, thank you. I'll just make a few comments and then I'll turn it to the rest of my colleagues. But would you like to establish a quorum? We do have a quorum, so we're going to establish that now.

[Roll Call]

Thank you. So first I'll say that I was grateful to be able to serve on the Subcommitee on the Senate side that was tasked with cap and trade, but I want to acknowledge the validity of what Senator Menjivar was saying about the frustrations with the process that we applied to this.

And I think it's just really important to publicly say that one of the most egregious things that the Senate did was that we did not release a proposal at all. And I think that that what that means is that we were publicly never clear on what our position was.

And so when we went into our negotiations, you know, we were. Many of us were very unclear about where we were going or what our bottom lines were or what things were most important, because we'd had generalized conversations both in the Cap and Trade working group and in caucus, but we never actually came out with a proposal.

And my hope is that we do not repeat that in any future situation, no matter if it's negotiating something that lasts for one year or lasts for 20 years. But, you know, I think of that as something that really was.

It's really a breach of the rules of engagement that govern the way that our bodies negotiate with each other. And that's just something that all of us should recognize as something that is unacceptable, and we don't want to repeat all that being said.

We, I think many of us in the Legislature and the governor's office communicated that we wanted to get cap and trade accomplished this year. And we saw that the GGRF funds were precipitously declining every month that we didn't reauthorize cap and trade.

And so, you know, here we are near the very end of this legislative session and we seem to have come up with what is a very solid proposal and I'm happy to be able to support it today.

And I think you recognize that although we had people who were opposed who spoke here at this hearing, the vast majority of people who came forward to speak were in favor of it. And we were able to find a balance between the different interests.

And some of the things that I think are important just to recognize is how really consequential and important the cap and invest policy framework is and in the way that it's embedded in California's overall economy and our efforts to transition away from fossil fuels.

So when we pull just any one policy lever, we aren't able to accomplish our goals. But taken together, we are charting this course toward affordability and also reaffirming California's climate leadership and also investing in, we're in this midterm transition, but investing in the long term transition away from fossil fuel.

So this proposal today, it's not a full scale overhaul of the program and it is also not a clean reauthorization. So you know, there were discussions on both sides of how aggressive or how conservative to be in that way.

It's also not a blank check to CARB, and it's also not a full throated endorsement of the first decade plus of their Administration of the program.

So, so charting that course forward, I think it's important to recognize that we will be able to reestablish this flagship climate program and proceed with certainty to 2030 and past 2030 and that we will be able to provide tangible benefits through restored market certainty and auction revenues.

I also think that it's really important that we are clearly linking our future and our partnership. Outside of California, we are the fourth largest economy and we are tremendously powerful and proud of that.

But it's also important that we recognize that we will lose the fight against climate change or win when we are acting together with other partners.

So linking more clearly with Washington, the State of Washington, and also with Quebec is a really, was really important to me in the final and I was happy to see that we were able to accomplish that. So thank you.

I want to say again, thank you to the Assembly and to Assemblymember Erwin for working on this and for all the people, the stakeholders who were engaged from the beginning, because together we were able to get ourselves to this position, even if there were some very unsatisfactory parts of getting ourselves here.

We are here now and we are having this hearing and hopefully we will be able to pass it through and vote on this. And I expect that that will be the case. So with that, I'll turn it to my colleagues to make any comments that they would like to make. Vice Chair thank you.

I have lots of questions.

So and I'm just going to preface or reiterate the frustration that I have and to agree with my colleagues here that this bill has been in print for 33 hours now and I've been hearing since being sworn in this past December that we were going to most likely reauthorize cap and trade this year.

So this conversation has been going on for a long time. We all knew it was coming down. And I want to thank the author for releasing some language a little early on. I share your sentiments in that the Senate never released language. They released a very flimsy framework at best of what they wanted to do.

And what is most frustrating to me is the problem solvers caucus engaged really early in this process. We've met with various agencies and stakeholders. Thank you for listening and meeting with our caucus and taking some of our suggestions and putting them into the language.

We took a fair number of.

A number of conversations with Assembly Member Alvarez.

You did.

Assembly Member Alvarez was very engaged. Her whole caucus was very engaged. I want to thank you for that. But we're still I'm still incredibly frustrated because when you released your your language, it was here. Senate framework was here.

Problem solvers were way over there because our sole focus was on affordability. And unfortunately, I feel like the reality of this bill right now is it's all ambition and no affordability.

And I have lots of questions about what went into actually getting the language into print and what the process and consideration was for the hard working people of California that are struggling. So I would like if I can make sure that Cal Chamber comes up here because I'm going to have some some questions for the opposition.

So can can first either the author or the sponsors explain to me the changes in allowances from the current cap and trade? And I'm not calling it the cap and gouge because it's too expensive. What are the changes in allowances?

The allowances are the same and there, but there's some subtlety to that.

I think. Are you referring to the allocation of allowances to industry? Correct. Okay, so a tiny bit of history for you prior to AB398. In 2017, California Air Resources Board issued free allowances to industry on the basis of their leakage risk. There's a formula, but leakage risk is a main part of that.

And that is, you know, how what is the risk of this business or sector leaving the state and taking jobs and pollution elsewhere, which obviously none of us want to have happen? With AB398, that system was changed so everybody, every industry was assumed to have the same leakage risk and it doesn't change at all.

This essentially goes back to the original system where CARB says the okay, this sector has high leakage risk, this sector has medium risk, and this sector has low leakage risk. Now they need to implement that. So I, you know, we will see how they implement it.

But the idea is that you are doing that allocation based on actual leakage risk and not like a one size fits all inflexible system that we've had under AB398.

So I sit here agreeing with you that, you know, we need to preserve free allocation of allowances because it is essential to prevent leakage risk, but it also needs to be based on real economic conditions. And that is what I see in this bill.

So I think we need to expand and enhance allowances that clearly did not happen in the bill. And it's my understanding that the bill is actually reducing allowances for industries like refining and agriculture. And ultimately that means that the price of fuel and gas is going to go up when it's already pretty exorbitant.

So my question to the opposition is, how do you think the new language is going to affect allowances and costs?

Well, you know, I think I'd like to take a step back first. When you're looking at this program, the existing. And you did a very good job of explaining some of the history there. All of the cost containment and leakage protections that are in this program were built for our 2030ambition.

And one problem here is that we have a program that is becoming massively more stringent by stepping up to a 2045ambition. So, you know, Cal Chambers position on this was we initially, you know, we've been communicating this all year, we supported a reauthorization, but we wanted to see enhancement of cost containment and leakage protection.

We don't necessarily see that here. So I do agree that I would love to see more allowances. I mean, if you look at the acid rain program, which is one of the first market based programs, there was no auction component, there was no revenue component. It was just allowances freely given and traded amongst the entities.

So cap and trade does not necessarily have to raise revenue and I would like to see more allowances in the program.

So when it comes to gas prices in the State of California, we know that cap and trade over the years has already added about 23 cents a gallon. And according to the LAO analysis, this, what we're doing in this language, in this bill, we can see gas prices raise or rise as far as 74 cents a gallon.

That is up to $700 a year for families that are already struggling to pay for groceries, for diapers, for formula right. California families can't afford $700. Additionally, on top of all the other cost.

So was there any economic analysis or impact analysis on how this language, this bill, this new cap and gouge is going to impact gas prices?

So I guess I want to take that at a slightly higher level to start with. So if we look at the data that the California Energy Commission has collected from industry about what goes into gas prices, there is a contribution from environmental programs.

I can't tell you there's not, but it is minimal compared to other contributions to gas prices, including the global price of oil. So I. Yes, there is a contribution, but it is steady and it is small. So I think our concern about gas prices is not driven by cap and trade.

And I think the next item on your agenda here, we'll get more into what is driving some of our gas price concerns.

So to the opposition, are we going to see increased gas prices?

Without updated cost containment and leakage protection, it could increase gas price.

I mean, we already know that the bill is reducing allowances for refineries.

So I can actually, respectfully, Senator, it does not say that it asks. Well, indirectly it's going to. Well, what we have all been hearing for months is how the refining sector is at significant risk of leaving the state. So I mean, based on that analysis, it would seem like the refineries would be quite high leakage risk.

Okay, so in terms of natural gas credit, the elimination again, the bill is eliminating climate credits for natural gas customers. So supposedly you're going to find that credit on some other bill, but you're losing it for people who use more gas for energy purposes.

And when you live in rural areas, you rely on gas and propane for a lot more than you're even able to when it comes to access to energy Right. So what was, why was that decision made? And again, what was the economic, was there an economic impact report or what was utilized?

I will, and I've answered that. So again, there is no home that just has natural gas or we have not found any. If you have $10 on your natural gas Bill, it's just moving over to your electric bill. No matter where you are in the state, you are not losing that money.

It is just going to lower the cost of your electric bill instead of lowering the cost of your gas bill. So this is not affecting poor communities, rich communities, it's not affecting any communities. You're going to end up lowering the cost of your electric bill.

And that's because we have a policy to move toward electrification and away from fossil fuels. So having a climate credit on your gas bill doesn't necessarily make sense.

And when you again, when you add, and I'm sorry for interrupting there, but when you add the gas credit and the electric credit and the additional 10%, you are going to double the price, double the benefit to households during the summer months.

So unfortunately that's not accurate for my district. And the reason why is because I live majority of my district is rural and in a high wildfire zone. So what happens in most summers for my district is your power is shut off and then you need to use a generator generator to power your house.

So we're actually going to be seeing more in the areas where it's hotter, where you need electricity for air conditioning. We're using more gas right now because of public safety, power shutoffs because of how hot it gets and because of a weak energy grid.

So while I can understand that's not going to work for my community, it's going to cost my community more money. Now, when it comes to transparency here. Were. Was there, I guess, I mean there's no, there was no option for amendments. There was no option to make this bill better. Right.

I voted on a bill earlier today where the author took 50 amendments. That is good legislation when you bring together every stakeholder. You were talking earlier about how no one is happy.

I understand that you can't always get what you want, but the fact that there was no opportunity for a single amendment is a disgrace to democracy and representation in California.

And it's a sad day when a program as big as this is being debated and moved forward for a vote in days when the amount of people that it's going to impact is really given no consideration. And it baffles me that we're at this point in California and here's the truth about this bill. I said it earlier.

It's all about ambition and not about affordability. Gas prices are going to go up. Families who are struggling in this economy. In California, a fourth of the state lives in poverty. $700 is a lot of money. A lot of money.

Maybe the elitist who can afford Teslas and who can afford solar panels, you know, spend that a day at the spa. But the families in my district, they don't have that type of money. The people that this is going to hurt is moms and parents just trying to heat their homes and cook on their gas stove.

It's going to drive our electricity prices even higher. Working families are getting stuck with the bill right now. And if climate action means higher prices, fewer jobs, and less transparency, then California is not leading. We're just making life harder for Californians. I can't vote for this.

This was supposed to be the year of affordability, and it's the year of increased cost and an unserious Legislature.

Okay, thank you for your comments. Do we have anybody else on the Committee wishing to make comments? Are you raising your hands? No. Okay. Senator Menjivar.

Okay. Okay.

You are recognized.

I had one other follow up question. Some Member, can you share the changes? What changes we have in the Cap and Invest that is going to improve the AB617 program. And I know we have a separate Bill we are going to hear later on but what in this Cap and Invest is related to AB617.

So AB617 has not had steady funding. It's not in the continuous appropriation category right now and that the other programs are, you know, funded depending on what the budget is and especially this year with CalFire in there, there's very little discretionary money left and so AB617 would be fighting with everything else.

So what we have done in the Bill together with the Senate colleagues and remember this is a three party deal and is to fund it at the full 250 million and make it more of an ongoing continuous appropriation for five years.

And given the climate of the budget over the next few years that is much more certainty than it ever would have gotten if it was part of the discretionary policy.

Absolutely. Definitely recognize the $250 million investment in that that we haven't seen. They'll have some consistency there. I'm wondering if we did anything to enhance within Cap and Invest the program to make it to improve on the program to better protect our communities with dealing with a lot of air pollution.

Was there anything in there on that? There were some. There were some policy changes in that Bill but the decision was made because there was so much going on in such a short period of time that this should be more thoroughly vetted in a policy Bill.

There's irony in there.

Look, I have said that I completely agree with you. We had language out three weeks ago. I am not sure.

So it sounds like those talking about said there needs to be more protections here, enhancement of AB617 but it's not going to be in 1207.

There's some. I don't know exactly what the legislate. There definitely are some policy changes that everybody could agree with but because it needed much more of a discussion, the rest are being postponed till next year. But again having steady funding in this budget environment I think is a big win for the EJ community.

Was there anything you'd like to add to that or if you have any at the top of your mind on any of the policy changes in this area?

I mean I think the continuous appropriation for AB617 is extremely important. That is a really big deal.

The AB617 Community Air Protection program is a separate program from cap and trade designed to address local air pollution, of course, whereas cap and trade is focused on global air pollution, climate pollution, and they're just, they're different pollutants and so they are regulated differently.

So I think there is a lot to do on AB617 and I will pass it to my colleague Bill in a moment to talk about that. But it doesn't necessarily go in a climate program that's focused on greenhouse gas emissions.

Yeah. Senator Mengvar, I think you're right. This is unfinished business and I really. Hope the Legislature will get back to. It in January of improving that community air protection program. There needs to be more accountability, more enforcement and the environmental justice community has put forward some excellent recommendations.

I'd like to note on the record that the two items that we punt into the next year are the two items that are related to EJ and cleanup. You know, the cleanup to SB131 and this. Those are the only two items that actually got punted. Just I guess those were too hard to do in 72 hours.

That was the last one. And a three party. And a three party deal within 72 hours. Yes, you had to. That was a trick. And I also want to. There are some statistics that, you know, EJ communities do benefit also from the broader cap and trade.

Besides the investment in 617, the study shows that particular particulate matter and knocks were reduced by 3 to 9% annually due to the cap and trade program. So there has been from cap and trade itself, there has been benefit to the EJ community. Thank you for the stat.

And I'll just say there are actually a lot of things that were punted. It wasn't just EJ things like for example, 125 million for transit passes is not defined. Is that going to be for what age, how is it distributed? Is it competitive? You know, so. And then also the parts about what are the legislative priorities.

That's another thing that's not that needs for follow up which is substantial. The GGRF part. So that's. That's in the next one, right? Correct. No, that's in cap and invest.

Is that isn't that. Well, a lot of those. A lot of the GGRF, a lot of those GGRF funding decisions are going to be made through the budget process.

But it is in number 840. 840. Yeah. Okay. Yes, Senator Reyes, thank you.

Actually, SB 352 is the AB 617 language that was taken from the EJ community, unfortunately, and we'll be talking about that shortly. Many things were not included because it is a three part agreement. It is the Administration, the Senate and the Assembly and each has an equal voice.

I do want to applaud the hard work though of our Pro Tem, Senator Limon, Speaker Rivas, Assemblymember Irwin, for getting us to this moment. That's a lot of hard work. And although we may not have seen the proposals in print, we certainly had discussions about it and I appreciate those discussions and the input.

Perhaps we weren't part of the group, but to be able to say, well, you know, here's a question I have or I'd like to suggest that this be included. You have a group for a reason. The bigger the group, the less you're going to get done. So I do appreciate all that hard work.

I also want to uplift the concerns of the opposition and Senator Menjobar began with that regarding the premise that this cap and trade or cap and invest program in the end becomes a pay to pollute model. You know, if you've got the money and you're going to pollute, well, you're just going to have to pay.

And that has been my number one concern since we reauthorized the cap and trade program, Cap and Invest program. Now in 2017, we were just elected and that was the first thing we had to vote on and try to understand it.

So at least now I may understand it and be able to ask more of the questions that are pertinent to cap and trade or cap and invest. But starting out, being elected in 2016 and then having to vote our very first votes, quite frankly, and I remember that pressure, especially to some of our colleagues.

But in the eight years since, I've learned that while cap and trade isn't a perfect program, and that was mentioned earlier, it is impactful and has been a critical asset in advancing environmental policies over the last decade. Echoing what has been said, no one received everything they wanted.

But it is incredibly important to know that the negotiations with stakeholders has brought us here to this moment. Environmental protections have been increased through the capping of offsets to ensure that we are doing better to phase out pollution of stationary sources.

It's also important to recognize that moving forward in 2031, CARB will distribute industrial allowances in a manner that minimizes emission leakages, the risk of emission leakages.

As I mentioned earlier, I will be speaking, speaking on SB 352, but I do want to emphasize, especially to the environmental justice community that the Conversation regarding addressing air pollution through AB617 and other environmental investments is not over. You have my word on that. This is not a perfect Bill. None of our bills ever are.

But between stabilizing the cap and trade market, increasing environmental protections, and putting into place accountability for air quality improvements, I believe the program has improved. Given the dip in auction proceeds, it has been incumbent upon us to send a signal to ensure that the program can continue.

And certainly, if there are deficiencies, we as legislators can be vigilant with CARB on ensuring that concerns we hear are addressed in the future, as was mentioned, and Senator Menjivar asked the question. And certainly we recognize we can and we will introduce legislation to address the shortcomings. That's our responsibility. That's what we're here for.

We have to be able to hear what the community has to say. And since being elected, my biggest concern, as you know, has been the environmental justice community, and knowing that our communities that are dumped on the most usually have less voice than many other communities. And I have.

It's been my honor to be able to be a voice for our EJ community. And even though I never get everything that I request on their behalf, I will continue to fight for that.

And I appreciate working with you, Assemblymember Irwin, and with the others to try to get solutions that really are more impactful for our communities that are most impacted by the pollution, by the air quality, the negative air quality. We have to work on that. We have to find ways to really address that.

And I look forward to working with you on it.

Thank you. And you have been a champion since your first day in the Assembly and appreciate that you're continuing that good work in the Senate.

Thank you.

Well, would you like to close? Assemblymember Irwin? Oh, okay. Great. Yeah, go ahead. Senator Perez.

Thank you, Madam Chair. You know, a couple of things. One, I do want to highlight and agree with what my Republican colleague just mentioned and shared, which is the short timeline that we were given, you know, to review such a significant piece of legislation. Unfortunately, there are several items that are running quite late.

I was actually in this very same room until almost 11:30 last night, along with my colleague here, Senator Eloise Gomez Reyes. Really kind of limiting my ability to dive deep into this and as you know, Assemblymember Irwin, I represent one of the areas that was hit hardest by the LA fires.

And so I think these conversations around greenhouse gas emissions and really the ultimately the environmental impact that that's having on our communities are very real. You know, I've been very clear in calling what happened, particularly in Altadena, a climate disaster, because that's what it was.

The Santa Ana winds blew in the opposite direction, which is why the San Gabriel Mountains have burned before. But that is a large part of the reason why we suddenly saw catastrophic fires hitting the town of Altadena. And it has left folks devastated.

And I think overall, as we've continued to have these conversations about, you know, reducing greenhouse gas emissions, and I'm sure you've experienced this as well, given that you represent parts of the Palisades that were impacted by the fires, people do want to see us do more.

They want to know what the answer is to making sure that these events don't happen again. And we are watching. Unfortunately, these environmental disasters drive up the cost of everything, including our homeowners insurance that many of our residents that have been displaced are not even sure that they'll be able to get again as they're looking to rebuild.

So I highlight all of that because I realize that this is so directly connected to that work. I know I do often hear concerns from the EJ community about this potentially being a pay to pollute program and wanting to see us do more, particularly on air quality protections and other pieces to actually reduce greenhouse gas emissions.

And I'm not going to sit here and pretend like I have all the answers either. But I do know that this is a very, very important measure that we can use to do some of those things, but it has to be one of many.

I know in talking with some of the other Senators that were a part of that negotiation that they share, there will be some refinement come next year, and we'll continue to have some discussions around these pieces, which I really look forward to, because I do think that it's important that we be able to describe to our communities what we're doing meaningfully to reduce greenhouse gas emissions and ultimately to prevent the kind of disasters that we've seen before and recognize, as others have mentioned, you know, the costs and the affordability issues as well.

It's a hard balance. Right. Folks want to see us make significant environmental reforms at a time when prices have skyrocketed for everything and particularly our utilities, electricity and gas. We hear it every single day.

So I look forward to continuing to partner with you as well as many on this Committee on that and hope in the future that we'll be able to have some more time to have some of those deeper discussions, especially when we know this has just such significant impacts and implications for communities that have really been devastated by these major climate events.

Well, thank you very much. Thank you to all the Senators who spoke. And we'll turn it back to you to close.

I couldn't have said it better than most of the Senators. Than the Senators. Look, we approach this with an eye on affordability while making sure that we kept reducing emissions, that we kept to our audacious goals.

California is the fourth largest economy in the world, and we need to make sure that we have a model that the rest of the world can follow, because we can't go at it alone. We really need to make sure.

So, for instance, with the conversation on linkage, we want to make sure that we are linking with Washington, that we're linking with Quebec, and that we show other states that you can fight climate change in an affordable way. And we think that we have done it with this proposal. So I respectfully ask for your aye vote.

Okay, thank you. I would entertain a motion. Okay, we have a motion. Assistant, please call the roll.

[Roll Call]

4-1. We will leave that on call. Thank you very much. All right, so our next. We now have three informational hearings. I do see that we have Senator Reyes in the room, and I don't see Senator Grayson. Oh, good. Okay, perfect. Senator Grish, you're welcome to come forward.

And if we could ask everyone to transition quietly so we could move on to the next thing, because it's quite late, we'd appreciate it. Senator Gryson, go ahead.

Thank you so much. Madam Chair and Members of the Committee, good evening. It's been a long day for you. In the evening, I will be expeditious but thorough. I am pleased to present SB 237, a Bill to address the state's high fuel cost and overall market stability.

And a Bill that is the result of months of negotiations between both houses of the Legislature and the Governor. Many Californians see the high cost of living, the economy, and inflation as the most important issues facing our state today. One of the major factors contributing to these high costs is California's retail prices of gasoline.

California drivers consistently pay higher than any other state in the continental United States, often exceeding the national average by more than $1 a gallon. A number of elements contribute to a higher California gasoline price relative to the rest of the country.

In addition to state and federal taxes, California also mandates a special blend of gasoline designed to reduce pollution and. And improve air quality. This special blend is more expensive to produce because it requires more processing steps and expensive blending components.

Refiners outside the state only make this blend to supply California's market, meaning that California primarily relies on in state refineries for its gasoline supply. Lastly, supply side issues also contribute to higher California prices.

Most of the gasoline consumed in California is refined within the state due to a lack of petroleum infrastructure connections, meaning that the state is geographically isolated from US Refining centers because no pipelines supply California from across the Rocky Mountains and only a limited number of pipelines delivered to the West Coast from the Gulf Coast.

With recent refinery closures in the state and more closures on the horizon, California faces severe supply chain issues and ultimately price volatility. Volatility SB237 seeks to address some of the issues that contribute to the high cost of fuel that California consumers pay at the gas pump by taking a number of steps to stabilize markets.

As the state enters a mid transition phase in its ongoing goal to reduce the use of fossil fuels in California, this mid transition challenge is an especially crucial one, as was noted in a recent report by the California Energy Commission that was commissioned by Governor Newsom in an effort to look for ways to reduce fuel costs for consumers and stabilize gas supplies to avoid price spikes.

Speaking on the challenges of this mid transition, Sivagunda, Vice Chair of the California Energy Commission, wrote this in the recently released report and I quote, if a lack of proactive management during this phase of the transition leads to rising energy prices and less reliable fuel supplies, that instability could erode support for continued decarbonization.

Over the past decade, California has led the nation in adopting some of the nation's most aggressive climate policies aimed at reducing reliance on fossil fuels.

These efforts include major investments in clean energy infrastructure, zero emission vehicle mandates, and regulatory programs such as cap and trade and the low carbon fuel standard we know as LCFs protecting decades of climate goals and environmental actions taken by the state.

However, California remains heavily dependent on gasoline, especially as the state moves through the mid transition phase in its energy transformation.

As we transition away from the fossil fuels and give Californians cleaner, more reliable and more affordable energy choices, we must ensure a stable fuel supply to meet the needs of California's existing vehicle fleet and prevent undue hardship on residents who can leave afford the most expensive gas prices in the United States.

SB 237 seeks to bring stability to fuel costs while providing certainty that refineries will stay in the state as we continue transitioning to zero emission vehicles.

Specifically, this Bill will do the validate the Kern County Environmental Impact Report, which would increase the supply of gas in our state with the following a sunset of 2035 with a requirement to revise the EIR by January 1st of 2036, ensuring that SB 11372002 setbacks apply, and then a cap of 2000 wells.

In addition, this Bill will advance the offshore provisions of SB542 by Limon and AB 1448 by Hart, applying new pipeline safety requirements and revising permitting requirements for the Sable pipeline.

And the Bill will also require the Governor to suspend the summer fuel blend requirements under certain conditions if the Governor determines that it's in the best interest of the state.

It will also examine a regional fuel blend as part of the next Transportation fuels assessment to expand the supply of fuel available and protect against price spikes when a refinery goes down. And then it will also formalize the work of the CEC to coordinate across agencies to stabilize fuel supply in the near term.

Ultimately, the goal of SB237 is to help to ensure that California continues to meet its bold climate standards and provide the state with the energy supply it needs to grow and thrive as we transition away from fossil fuels.

SB237 will allow this important work to continue in order to provide relief from the rising gas prices that affect Californians as the state addresses the challenges of mid transition and prevent a scenario where much of our state's forward thinking climate policies are undone at the ballot box due to legislative inaction.

With me to testify today in support of this measure and answer any questions are Siva Gunda, Vice Chair of the California Energy Commission, Jennifer Lucchesi, Director of California Department of Conservation, and then Lorelei Oviatt the recently retired Director of the Kern County Planning and Natural Resources Department.

Okay, thank you, Senator Grayson. Before we go to the lead witnesses, we're just going to quickly open the call on AB 1207. So assistant, please call the roll.

AB 1207. The motion is do pass. The current vote is four to one with the chair voting aye and the. Vice Chair voting no. Senators Dahle, Gonzalez. Gonzalez, aye. Hurtado. Five to one on call. Okay, that's five to one. We'll keep that on call. And now we'll go to you for your testimony. Thank you.

Thank you. Thank you, Senator Grayson. Thank you, Chair, Vice Chair and the Members of the Committee. I'm Siva Gunda, currently serving as the Vice Chair of the California Energy Commission. And thank you for the opportunity to speak to you today.

Over the past two decades, California has embarked on a transformative effort to decarbonize its economy and has been a global leader through its policy and technological innovations to fight climate change. Thanks to these successes, demand for petroleum based fuel sources has steadily decreased in the state.

This decrease in demand, combined with the impacts of COVID 19 pandemic economic factors and volatility of the international petroleum market have introduced uncertainty in the in state petroleum industry. We have been experiencing higher gasoline retail prices and in state petroleum refinery conversions and exits and a growing reliance on fuel imports to meet consumer demand.

In recent years, thanks to the authority and tools granted to us by the Legislature, the CEC has been able to better understand the causes behind these gasoline price spikes and develop strategies to protect consumers.

We now understand that we are in mid transition stage and it is defined by demand for the incumbent petroleum based fuel system, though declining, remains substantial as the clean alternative fuels continue to scale and have not reached its full scale in the marketplace.

In this stage, the state must not only support the growth of new clean system, it might also manage an orderly decline of the fossil system. Investments in both legacy and emerging infrastructures is essential to continue serving needs during the transition.

However, the confidence to support investments in the fossil system that are still needed to support a smooth transition can wane during this mid transition phase. Proactive management is critical to support fuel reliability and economic stability, protect communities, workers and the environment and retain support for continued decarbonization.

Since receiving the letter from the Governor in April, we our office has engaged with industry, impacted communities and stakeholders and state and local governments. Through this effort we have developed a framework to guide holistic consideration of challenges and solutions and a set of recommendations to support a safe, managed transition away from fossil fuels.

We have identified three buckets in the response that we wrote to the Governor to pursue concurrently and it's not or and it's an and in order to support a holistic, affordable, reliable, equitable and safe transition.

Number one Address volatility and risks of the fuel in the state by addressing import capacity and ensuring retaining the in state refining capacity. 2.

Improve Improve Investor confidence system wide across the ecosystem of the industry by bolstering crude oil supply in California, ensuring safe and timely infrastructure of refining, import, storage and delivery and finally develop a holistic managed transition strategy to further the state's commitments to protect public health, workers, communities, consumers and the environment.

The proposal today seeks to address these strategies in part by bolstering the supply of crude oil in our state and ensuring safe and reliable supply. I'm grateful for the opportunity to share what we have learned and look forward to Your questions today. Thank you so much.

Good evening. Chair, Vice Chair Members. My name is. My name is Jennifer Lucchesi. Thank you. I'm the Director of the Department of Conservation.

As the state's oil and gas regulator, SB237 will help us support the managed transition strategy, stabilize crude oil production in California and supply in state refineries, while ensuring that production is consistent with critical health and environmental protections, including preserving the public health and safety objectives built into SB 1137.

Specifically, this statutory validation of the Kern County EIR will provide timely and predictable permitting outside of health protection zones in Kern County and provide for significant, highly beneficial new investments in community water systems, air pollution mitigation and agricultural land conservation funded by mandatory mitigation fees from the oil industry.

Importantly, SB237 will continue to prohibit oil and gas permitting within 3200ft of sensitive receptors and caps the total number of permits for new wells that CALGEM can issue in Kern County unless the Energy Commission makes a finding that additional permits are needed to meet refinery demand.

The Bill also includes a sunset provision acknowledging that this policy change is necessary for California's immediate needs. And a new environmental impact analysis will be needed to be undertaken within 10 years for the oil and gas ordinance to continue operating beyond the sunset date of this plan Bill.

For these reasons, SB237 is critical to stabilizing production in California, which is a substantial effort in keeping access to energy for all Californians safe, affordable and reliable. I look forward to your questions. Thank you.

Thank you. I'm Lorelei Oviatt. I am here on special assignment from the Kern County Board of Supervisors representing them. I am recently retired as the Kern County Director of Planning and Natural Resources. It's an honor to be here today to support SB237, contribute a real world solution to stabilize in state production.

I've led the team for the last 15 years on the development, adoption, litigation, defense and implementation for the Kern County Zoning Ordinance and Environmental Impact Report. It provides enhanced environmental protection on all portions of oil and gas abandonments, reworks, new drilling that is unprecedented any other place in California.

While doing that, it streamlines permitting to allow for investor confidence and certainty in understanding that they will be getting a permit. But they will have to do all of these mitigation measures, including extensive air quality mitigation. This is not a shortcut to ceqa. This is how CEQA should be implemented.

I would like to express the Board of Supervisors and my own personal appreciation for everyone who has been interested in this solution, who understands that in order to plan for a transition, we have to stabilize affordability.

We have to provide that there is a way to work out how refineries and others are going to be here long enough for State of California's goals to be accomplished.

I'm sure everyone here knows, and I have led that team as well, that we produce 21,000 megawatts of solar and wind in Kern County and 15,000 megawatts of battery storage.

We are on all of the above energy and we would like to continue to honor the goals of the State of California and be a contribution not just to the people who work in the industry, but, but the people who use the fuel. I do want to clarify that it's 2,000 new drilling permits a year.

And during the time that we implemented this for the five years, there were never more than 1,800 permits issued. So 2,000 is a legitimate bottom and I do not believe that we will exceed that. But there is a provision that the California Energy Commission could analyze that. So that is something that we support.

Lastly, we will be respecting the 3200 foot health protection zones and it is not necessary for us to be in those zones in order to provide enough oil for the pipelines. Lastly, I'd just like to point out that the amount of mitigation, the 88 mitigation measures include working with the San Joaquin Air District.

There will be no increase in impacts to air quality because of the mitigation that we have put on. We did implement this for five years. We produced 11,000 permits and $140 million that was provided to the San Joaquin Air District for the eight counties. And it cleaned up school buses, it cleaned up fleets.

These are grants that are given to cities, communities, agricultural districts. It is a real world solution. So I want to thank the Committee for the Time I'm here to answer any technical questions. I'll be here through the end of session if Members still have other questions.

And I would like to just say that this solution, if not implemented, means that it will take another two years before permits could be issued in Kern County and oil provided for the pipelines that are so critical for the refinery stability. Thank you so much for the opportunity.

Well, thank you, Lorelei. I understand this is the first time that you've ever testified here. You did a great job. And we have Senator Grove as well in the audience offering moral support. I wanted to invite her forward to say any words at the microphone if she would like to.

I would like just to say thank you for the opportunity to present this package to you of thanks Senator Grayson for his hard work and diligence in Kern. County. We are the energy capital and we should be accessed by the State of. California for what we do with solar. Wind and obviously oil and gas because.

We are the only county that does it California compliant. We are net carbon increase for anything that we do. So if we're going to do it. Anywhere, we should do it in Kern. County. And I just thank you for the. Opportunity to see this happen this year.

Well, thank you. Anyone else in the room wishing to express support, now is the time. So please come forward to the microphone. State your name, organization and position.

Thank you. Keith Dunn here on behalf of the State Building Construction Trades Council as well. As the District Council of Iron Workers. This is the affordability side of the previous discussion. Thank you very much. Ask for your support.

Thank you Madam Chair and Members. Paul Deiro representing the Western States Petroleum Association. We have a support if amended position. Strong support for the Kern county provisions. Have concerns about the offshore and the other CEC provisions, but strongly support and I want to thank the Administration leadership in the Senate and the Assembly. And nobody has worked harder than Senator Grove.

Good evening Chair and Members. Matt Cremins on behalf of the California Nevada Conference of Operating Engineers in support. Thank you.

Good evening Chair and Members. Ethan Nagler on behalf of the City of Bakersfield, strong support. Thank you.

Will Brieger, Climate Action California and 350Humboldt. We support an affordable transition.

Kim Craig with ARC Strategies on behalf of Berry Petroleum in support. Thank you.

Daniel Barad, on behalf of Union of Concerned Scientists. We're aggressively neutral on this Bill. We recognize the real need for price stability as we transition to clean energy, but really want to uplift the Vice Chair's June letter. And I want to say that that letter is 24 pages long and this current provision that you all are voting on today is about half a page of that 24 page letter. So there's lots of work to do. We appreciate all the studies in this bill, the inclusion of our beloved non carbob fee study. We hope that will move forward. But there's a lot more work to do on this transition and I hope we'll take that seriously next session and over the interim. Thank you.

Well, thank you very much. Okay, now we will invite forward anybody who is a lead witness in opposition who would like to come forward now. If we could just make some room. Yes. And then afterward you could come back up to answer questions, or you can just spread out here, whatever you prefer. But we'll let the lead witnesses sit there. Thank you. Yeah, that's great. Perfect. You're welcome to proceed when ready. You each have three minutes.

Chair and Members, my name is Fatima Iqbal-Zubair, Legislative Affairs Manager for California Environmental voters. We are in opposition to SB, respectful opposition to SB 237. We appreciate that this bill requires some additional review, permitting and pipeline testing before restarting California's offshore oil infrastructure. However, SB 237 ultimately intensifies pollution, undermines public engagement, and disproportionately harms frontline communities.

It gives away far too much to Big Oil while failing to address the most urgent piece of the climate puzzle. Investing on the scale that is needed on clean, affordable, and accessible energy and transfer clean energy and transportation options. Californians are exposed to high gas prices driven by corporate greed. Oil is a global commodity.

More drilling in Kern County does not guarantee lower costs at the pump. However, it does guarantee shortened lives and increased health impacts. It locks us into the dependence on a fuel source that is not only non renewable and disappearing, but that has reaped billions in profits while paying nothing into managing decline of oil and gas or funding support for oil and gas workers who have been impacted.

The real solutions are clean, affordable, and accessible transportation and clean energy options and robust investments in impacted workers and impacted communities. We hear the argument that we must increase supply to meet demand. However, without California's ingenuity and investment into a transition to affordable clean energy and transportation, Californians will continue bearing the brunt of both the economic and health impacts of dependence on fossil fuels.

Californians deserve long term sustainable solutions for affordability that reduce demand for oil and gas by expanding affordable clean energy and transportation, creating new union jobs and fully supporting workers and communities through this time of transition. And as Californians, we urge our state and elected leaders to serve the people, not Big Oil, with real lasting solutions that manage decline crisis. Thank you.

Thank you Chair and Committee Members. Faraz Rizvi with APEN, Asian Pacific Environmental Network. I'm commenting in opposition to SB 237. It is unfortunate that I have to be here to oppose this bill after engaging with the CEC and decision makers all summer to try to do right by extraction in refinery communities this session.

This bill, as it is written, is an unnecessary giveaway to the fossil fuel industry. Intended to stabilize fuel supply in the wake of ongoing refinery closures, this bill instead creates sweeping exemptions for oil extraction in Kern County and does little to nothing to protect communities and workers most directly impacted by refinery closures and increased extraction.

In the June Letter to the GO, CEC Vice Chair Gunda articulated a balanced three pronged approach to ensure a stable supply of fuel in California. Recognizing that the bind that the state was caught in, EJ advocates engaged in stakeholder conversations to ensure that community voices were uplifted.

Unfortunately, I do not believe this bill truly follows the roadmap laid out by the CEC. Among some concerns raised, this bill fails to include any meaningful limits on the expansion of oil drilling in Kern and creates no new improvements to air quality in order to protect public health and has no meaningful sunset.

It also completely ignores bucket three in the Vice Chair's letter to concurrently develop and execute a holistic transportation fuels transition strategy. While there is a nod to the need for refineries to disclose their closure and remediation costs in the intent language, there is no meaningful action to make such a disclosure a reality.

Nor is there any funding to ensure workers and communities are resourced through transitions which we were supporting through the Displaced Oil and Gas Workers Fund, also known as DOGWF. We need real solutions to navigate the challenges of what the bill terms the mid transition period. We cannot just hope to placate the fossil fuel industry.

This bill not only harms Kern county communities, it represents a lost opportunity to create a coherent, comprehensive, and proactive plan to continue our transition away from fossil fuels and ensure that the state is not caught off guard again with refinery closures. Therefore, we urge you to oppose this bill and look forward to create a real solution to ensure a stable supply of transportation fuels that does not sacrifice frontline communities. Thank you.

Okay, well, thank you very much. Now we'll invite anybody in opposition in the room to come forward and state your name, organization, and position.

Asha Sharma, on behalf of Leadership Council for Justice & Accountability, Center on Race, Poverty, & the Environment, and the Central California Environmental Justice Network, environmental justice organizations working directly with community members in Kern County. We are opposed to this bill and would like to align our comments with California Environmental Voters and APEN. Thank you.

Good evening. Raquel Mason with the California Environmental Justice Alliance. Also registering opposition for Communities for a Better Environment, Physicians for Social Responsibility Los Angeles, and Clean Water Action. Thank you.

Christina Scaringe with the Center for Biological Diversity referencing our opposition letter, including a study that was submitted with Dr. Paasha Mahdavi from September of this this month from UC Santa Barbara, joining academics from Stanford and Berkeley saying this will not work. Oil production has been declining for 40 years.

It even went down during those five years of unfettered permit access. Also, as a proud co sponsor on SB 542, we take issue with the idea that those provisions are in this bill. The hydrostatic testing requirements are weak and risk - they don't even live up to federal standards.

Thank you.

Thank you.

Thank you, Madam Chair. Mark Fenstermaker here for Earth Justice in opposition to SB 237.

Hello. Allison Hilliard with the Climate Center in opposition to 237. Thank you.

Merrian Borgesen with Natural Resources Defense Council in opposition.

Good evening. Jordan Curley on behalf of a Campaign for a Safe and Healthy California, in opposition.

Okay, thank you very much. Anybody else? Okay, we'll bring it back to the Committee and I'll ask anybody who would like to make any questions or comments or? Yes, does the Vice Chair want us to go for it? Okay. Okay. Okay, go ahead. Sorry about that.

Yeah, I had a couple of initial questions, I guess first, just to speak to his reading, you know, a little bit in the LA Times, just in response to kind of looking at this legislation for the first time. And again, this is another thing that came to us very last minute that seems to be a trend here, as I am learning in my first year.

You know, Michael Wara, who is the Director of Stanford University's Climate and Energy Policy Program, you know, is quoted as saying he doesn't think what's in this legislation is going to help with keeping refineries open, acknowledging that crude oil produced in California makes up a fraction of what refineries turn into gasoline.

So although increasing production may help stabilize the decline of local oil companies that won't benefit the refineries. And then Hollin Kretzmann, an attorney at the Center for Biological Diversity's Climate Law Institute, also mentioned that she believes it will have no impact on refinery closures or gas prices.

And so I would just love to hear from both of you because I know we've heard too from the opposition. You know, I'm very mindful, right, of obviously our affordability challenges and issues, but it's also pretty concerning when we have different folks in the space. Both those are that might be supportive and those that might be in opposition expressing concern about the impact that this is going to have overall gas prices. So would love to hear, you know, more of your thoughts around that.

So I'll take the high level. And as far as coming to you at last minute, it is coming to this Committee last minute, but it's definitely not a last minute issue for Senators who have sat through multiple meetings for multiple weeks and months and had ample opportunity through multiple briefings to be able to ask questions and to have input.

Having said that, there are multiple sources that state that there are three things that are top of mind for Californians right now, affordability wise. And that is being able to pay for the fuel to get back and forth to work, drop the kids off at school, and to be able to go to doctor's appointments.

Number two is to be able to put food on the table, groceries. And number three is to be able to pay the energy bill to keep the lights on in the house. Those three things are pressuring Californians all up and down the state. And with the pressures that we're feeling, as you mentioned, thank you so much, for the affordability challenges that each and every one of us are facing, this is one area that has become a crisis, crisis in the making, some would say, but a crisis that is very real in not just certain communities, but in every single household.

So having said that, the other issue about this bill that I want to highlight, not only is it addressing affordability, but it's also looking to protect the decades of work that California has done as a global leader in addressing our climate change and implementing environmental policies.

So having said that, I understand that many people will look at the bill or look at our efforts and have their opinions. But for every one opinion on one side, there are other opinions on other sides as well. So for a more holistic viewpoint and probably a lot better answer, I will turn to Mr. Siva Gunda, Vice Chair of the CEC.

Thank you, Senator. I did have a chance to review the LA Times article as well. Just want to note, I think from the Energy Commission's perspective, our number one duty to all of you is to transparently reflect the information that you have authorized us to gather through SBX 12 and ABX 21.

So just looking at the special session data that we have today, the reason for the Kern oil, the crude oil kind of stabilization, really links to the availability of crude oil through the pipelines. So I want to make sure that I kind of describe the whole issue. When we talk about refining and fuel supply at the pump and reliable fuel supply with the pump, we're talking about refineries, but we're also talking about the pipelines that bring crude oil to them and then where it's produced.

In California, based on the information, confidential information that we have today, the refineries that procured non California crude oil generally do it at a premium. So it just cuts into their operational costs. So that's One. Two, because of the refineries in California that are largely developed to use San Joaquin Valley crude, their performance suffers when they bring in non California crude. So based on the information we have, it's really important for the performance and the ability to cost effectively produce gasoline. Availability of San Joaquin Valley crude is important.

So second, based on the lower levels of San Joaquin Valley crude that's available in the pipelines today, some of the critical pipelines, whether it's the Crimson pipeline coming up to San Pablo, there's a couple other pipelines going from the coast to LA and Central Valley and the Valley to LA, all are at critically low levels today.

And when we think about the entire system, we think about the brittleness of the system, it's important to invest in all elements of it to ensure refineries actually stay here. So while I respect a lot of viewpoints that have been put out, from our point of view, based on the data we have, it's really important to stabilize California crude.

Okay, thank you. The other question that I had is in the bill, you know, describes allowing the Governor to suspend regulatory rules based on gas prices. So how will it be determined when the Governor is allowed to make those suspensions?

Yes, thank you. So we had extraordinary price spikes in '22 and '23, as the, as the Committee Members recognize. And both those years resulted in extraordinary action. But I also want to recognize that in 2024 there weren't any actions taken. And one of the reasons for 2024 to be a more stable environment is because we had the data and we had the opportunity to work with the industry collaboratively. Moving forward, if you use that, the tool of allowing a winter blend too often and too early, it could actually have negative impacts.

So what we will do at the Energy Commission and California Resource Board is we will be analyzing both the aid impacts, but also understand its impact on the market and the price. And we will be providing a recommendation to the Governor based on the data.

Okay, and then the final question that I have is something that was actually spoken to a little bit. You know, one of the things that I think, you know, particularly concerns me, especially as there's been conversations about, you know, refinery closures, is really the impact on workers overall.

You know, I think oftentimes when we talk about these issues, it is like, oh, this is so unfortunate that this refinery is having to close and all these folks are going to lose their jobs. But what actually happens to those workers? Like, are they actually being taken care of in terms of, you know, their retirement? Like, what is. We know that many of them are union workers as well, and so is that being budgeted for in those closures?

And so I was wondering, does this bill proactively allocate any funds or resources for public sector union workers in refinery communities who might be impacted by refinery closures or the hundreds of workers that we know are going to be impacted at Phillips 66 Los Angeles, who may lose their jobs or will lose their jobs this winter? Because we know that this is a big issue.

Yes, I'll start and then hand it over to you again to really clean up my mess. But I will start with, back in, I think it was 2017, authored a bill, AB 44, that created the Green Empowerment Zone, a pilot project for Contra Costa County and Solano County. And it was to address the transition from fossil fuel to green and clean energy and manufacturing. So by establishing that zone, it drew interest to where we were starting to bring alternative fuels and or energy into the market area of the refineries.

So what happened was when we had a refinery closure, some of those workers were able to transition immediately over. They already had the training in our Union 342, the pipes and trades and steamfitters, they were able to transition over to H Cycle or not H Cycle, but Calpine and some other group green and clean energy and manufacturing stations that provided them the jobs that they were looking for.

I think you call out something that is so vitally important and something that is going to be a priority of mine moving into next year, and that is to make sure that we look for the funding for workforce training and transition. But creating that green empowerment zone created the vehicle to be able to provide that kind of training, the workforce training for transition. And with that, I'll hand it over to.

Thank you, Senator, for that question. And I want to use this opportunity to uplift the voices of the opposition here. One of the ways we tried to develop the response to the letter from the Governor was to create these roundtables that had impacted stakeholders in the room for several hours to just describe this.

So I want to faithfully represent the voices in the room and the need for what we need to do in bucket three. That includes asset retirement plans, workforce protections, long term transition, what do we do with land use? I think in the bill. Thank you to the authors of the bill.

There is a starting point of thinking through developing more strategies and operationalizing bucket three. But I think as a faithful advocate of those conversations, I think there is more to do there and we really need to think about the funding and the workforce transition.

Okay, that's helpful, I will say, and Senator Grayson mentioned this earlier. This is my first time seeing language in print and I think you recognize that as well.

When we had initial conversations about what some of our priorities were within this piece of legislation, this was something that I raised as a major concern is making sure that workers were taken care of. Because oftentimes we leave them basically holding the bag and just basically say, oh, well, and that's unacceptable.

And as somebody that came from a union family, all of whom were in the building trades, I find that deeply concerning. And so actually making sure that we're getting to the heart of that issue, I think is very critical.

In addition to that, I was a mayor of a city that had a superfund site in my location and it took so long, we were actually still going through that cleanup process through DTSC and everyone else. It is incredibly, incredibly challenging to go through that cleanup process when you have a toxic site.

And making sure that the company that is responsible or the responsible party is still around or alive when that determination is made is really critical. Because if not, and nobody wants to pay for the cleanup, then it's the community that's left holding the bag.

And so I want to make sure that that's happening as a conversation, you know, within this as well, that we're taking care of workers, we're thinking about some of those critical land use pieces. Because if not walking away and saying, oh well, and these folks are just going to figure it out, that's not okay.

And you know, I think there's a lot of folks that have brought up like just transition. We hear the word thrown around a lot. And frankly, I know for some workers it's like frustrating because it doesn't really mean anything.

So I think for us to really deliver on that promise, we need to build out like legislation and a real plan to make sure there's investments to support those workers.

Yeah. Thank you, Senator. I agree with you wholeheartedly. I think this is, you know, as I mentioned in my opening statement, it's really not an or, we need to like solve all this collectively.

And I think the intent language provided in the legislation gives us the opportunity to continue those roundtable conversations and bring back the strategies to the Legislature early next year. So we look forward to doing that.

Thank you.

Yes, just briefly. Yes, just brief.

Brief a little bit about the issue around communities and workers. And you know, thank you, Vice Chair Gunda, for uplifting the comments that we've made in the past.

One of the things that I've heard from some of the folks that are working at the Phillips 66 is that because of the fact that there is uncertain funding or jobs for some of those workers, they're working what are called turnaround schedules. And so those are basically 13 days, 12 hour shifts with one day off.

And that's because a lot of workers who can jump ship and go to another refinery will, which leaves them with skeleton crews.

And so that's one of the reasons we sort of supported, along with some of the other labor folks, the Displaced Oil and Gas Workers Fund, DOGWF, and you know, again, as Vice Chair Gunda said, this is hopefully a place that we can continue to have conversations around next session, especially around the remediation and cleanup costs too.

Great. Thank you so much. Okay, who else would like to make comments? Vice Chair?

Thank you, Madam Chair. So first of all, California families are really paying the price for failed policies coming out of this building. Out of California. Gasoline is unaffordable, refineries are shutting down and our fuel market is isolated really from the rest of the country. And this isn't going to fix everything, but it is critical.

So I want to thank you for working so diligently on this. And I have quite a few questions here. So in terms of refinery stability, how is this bill going to help prevent the refinery closures that we're looking at in Wilmington and Benicia? And then probably for, I don't know who might want to answer this question, sorry.

And can you explain how tying Kern production to meeting 25% of the in state refinery demand is directly going to keep these facilities viable? So I'm not sure who wants to take a stab at that.

Let's start with pipeline infrastructure and I'll hand it over to the experts there. But pipeline infrastructure, there's a direct connection between Kern county all the way up to San Pablo and Benicia facility.

Thank you, Vice Chair for the question. Just to take the first question setting the P66 announcement that we heard last year is already fully in process of converting to a marine terminal. That's what P66 has laid out. And they are continuing to work towards that end goal.

So the facility as a whole will not operate as a refinery, but rather as an import terminal and a product terminal which is typical to end of life refineries. That's, that's typically what they do. In terms of Valero Benicia, we continue to have discussions with them on, you know, pathways for them to continue the asset.

But one of the things that we need to continue to think through is regardless of the assets that are immediately announced their closures, the latter was really around what do we do to stabilize the market as a whole? Today we have nine refineries including P66 and Valero.

Our concern at CEC is for the other seven to begin with. How do we stabilize those seven immediately? Because the way we've done the analysis, if you think of 2025 as a test year for how next year looks, we currently have only two operating FCC refineries in the north today.

And when PBF Martinez comes back in January and if Valero were to leave, we are in that situation. So one of the things we really need to work through is thinking about backstop for those which is increasing imports, ensuring that imports can come in, you know, well, in a streamlined fashion.

As a, as an agency, we have mentioned prior that having multiple refineries in California will provide resiliency. And so we, you know, we continue to believe that having resilient refining infrastructure in California is the best way to stabilize prices. And we are continuing to work towards that.

And I think the number of things that we, that this legislation does, as Senator Grayson mentioned, crude oil having San Joaquin Valley crude oil is directly makes some of the refineries competitive to stay. One of the things we mentioned in other informational hearings, we're talking about refineries being different types of business models.

You have refineries that work in a vertically integrated fashion. So they have much more resiliency in the system because they're looking at profits from upstream all the way to the pump versus some refineries do not have that robust business plan. And some of the things we are trying to do right now is immediately protect those vulnerable refineries.

And I would love to hear a little bit more about how Kern county is a vital part of this plan.

So Kern county soil fields produce 80% of the oil, 57,000 active wells. And at the end of the day, CEQA is the gatekeeper for CalGEM being able to give out a permit. And the whole purpose of this 15 year program was to do a comprehensive environmental impact report at a project level on 2.8 million acres.

And that's what we did. And the court sustained the zoning ordinance and the ministerial. At the end, if you comply with all 88 mitigation measures, you can get a permit. And then it goes to CalGEM who does their technical permitting. So it's a two step process. The only difference is that it actually provides enhanced environmental protection.

And we've been in litigation for nine years and we've gone through a number of environmental impact reports. That's why we're at the second supplemental recirculated. And we've won in court each time. Brought it back. And something else has been brought up. We're at the last three issues. Those three issues have been resolved.

And we are asking that we, that we can put people back to work. I appreciate the concern for the workforce of the refineries. The workforce who keep those 56,000 wells safe and abandon them is also at risk right now. We have already had layoffs, three different layoffs, and the economic stability of Kern County is at risk.

We have not been able to get consistent permits for three years, which is why we have the problem with the pipeline. And so at the end of the day, this is the property tax that keeps the libraries open. These are the property taxes that provide for the welfare of foster children.

There are 900,000 people in Kern County and 40 million people in California who are dependent on what Kern County can provide. And we are not asking for a shortcut. We are asking for an opportunity to get back to work. And we are clear that this third bucket needs to be looked at.

I think we need to try to wrap this up a little bit.

So, I have two more questions.

We have two more panels and we also need to close the roll on the other.

I don't want to be here any longer than I have to be either. I get it.

If we could try to make our answers concise too, that would help. Thank you.

It's my understanding, or so the opposition witness said, that there was no environmental mitigation, that oil companies weren't doing any mitigation efforts. But there's my understanding there's over 60 different mitigation efforts. Can you talk a little bit about that?

That's an accurate representation. If they're talking about unincorporated Kern County permits, I can't speak for the rest of California. There are 88 mitigation measures that cover biology, cultural and every resource area.

And then my last, my last question, of course, is going to come down to affordability. With, do you know what the projected consumer impact of allowing the Governor to suspend Reid Vapor Pressure limits during price hikes? How much would is this going to reduce cost at the pump compared to CARB's current standards?

I'm not going to evade that question, Vice Chair, but just in kind of the basically what it does is increases the volume of a supply we have, so it should have a direct impact on the overall prices. The reason why I can't give you a number is because it depends on when you are releasing that.

You know, if you release it a little too early, we might actually have negative impacts at the pump because you use the butane up that's stored and you're not really having a positive impact.

And also you need to think about for that small gain in the price, would you accelerate more refinery sleeving because they have an uncertain market in California. So we have to make sure we think that through along with air quality impacts. But it will be a few cents that will have impact. But I just can give you a perfect number at the moment.

So when and will we get to gas prices that are like bordering states?

I don't think we ever would. And I think it's, you know, just on the data that we have. We do have, you know, environmental costs baked into our prices at the pump today, as previous panelists mentioned, it is there, you know, and then we also have, you know, higher state access tax.

All of those things contribute to our higher prices. What we at the CEC are concerned primarily around is the volatility of those prices and how high they can be.

Thank you.

I don't think so. I'm sorry. So the desk is asking for us to close the roll, so we will quickly return to that. Okay, so the vote on AB 1207 is 5 to 1. So that bill is out. Thank you. Okay, now we'll return to other questions and comments. Yes, Senator Reyes.

Thank you, Madam Chair. I do want to thank the author. This takes A lot of work to put something like this together, to meet with the stakeholders and put together the language and to discuss it with us even before it gets into print. So that again, to provide input that isn't always put in, but it's input.

I do want to very specifically note that Senator Shannon Grove and Senator Melissa Hurtado have been great representatives, along with Assembly Member Bains, to make sure that Kern County is always taken care of.

I know that especially for Senator Hurtado and Assembly Member Bains, they often are criticized more by their colleagues, but they will always put the residents of Kern County first as a personal point of privilege. I do want to thank Faraz and Fatima for being here.

I think the voice of the environmental justice community is so important and oftentimes it's not included. I appreciate that you had your discussions with the author and noting that many things that are offered are not included. As I said earlier, there's still time for more legislation because this can't be the end of this.

There are many other things that need to be addressed. Vice Commissioner Gunda, I appreciate it so much that you talked about protecting the health of the community, the workers, the consumers, and the environment, because that is the package. And we need to make sure that if that is what we're trying to do, that we do that.

And while I was here, I have another friend from the environmental justice community who texted it and she said, please know that one of the worst things about this bill is that the toxic cleanup will impact communities for hundreds of years. And that is a reality. And unfortunately, it will be the community of Kern.

They will receive the benefit of the libraries and everything else from the property taxes. But the toxicity that is underneath the surface will be with us for many, many years. You talked about CEQA. It's crucial to get minimum protections. And I think that's something that perhaps we're missing.

And maybe it's for short term that we're asking for these exemptions, but nonetheless, these are things that are going to impact the environment and the community. This holistic approach that we all talk about, it has to be a holistic approach.

And a holistic approach can never be accomplished unless we include the environmental justice community, whose sole purpose is to protect those communities that are most impacted by exactly what we're doing here. And yes, you know, we're responsible for part of this because we depend on fossil fuels. We are in our cars.

We are not using transit the way we should. But for many of our communities, we don't have the transit because that investment has not been made for transit. But I appreciate all of the testimony that was given. I don't have a question, Madam Chair.

I just wanted to comment on that and very specifically to thank Faraz and Fatima for being here and for providing not just your thoughts on this, but you represent so many organizations and it was important to have your voice here. And I thank you for that. Thank you.

Okay, thank you very much. Senator Menievar.

First copy and paste. So I won't repeat it. Mr. Vice Chair, I wanted to clarify. Because it was very similar to what Senator Perez was asking because in the actual bill, the second finding quotes alLetter from you and talks about successful managed transportation fields, transition, proactive planning, resources necessary to prepare the communities for future without petroleum, including refineries. But do we take any action in this bill to your recommendations?

It does have intent language on trying to develop the strategies for that holistic transition. And in addition to that, we do have a transition plan that CARB and CEC are supposed to complete by the end of the year, which will also be coming out.

I think the importance, again, Senator, to your point, to faithfully represent the discussions on the roundtables and all the stakeholders, it is essential to take actions in supporting the workers and communities through funding, thinking about the liability of the land and all the other pieces.

I think we have a start in the bill to start thinking through those strategies and we are expected to bring it back to you early next year and we intend to do that.

Always appreciate intent, but it's hard to sound intent. It's not a promise. What happens? And Senator, I'll turn to you first and maybe if you want to punt it to your sponsors, the witnesses here. What happens if the protection's under SB 1137 with the 3200ft, since it's being litigated, goes away, what protections will be in place to supplement to supplant that if those are no longer in place?

I will punt that because of it. Thank you. Because I know that we purposely called it out because of that and because of the bill coming in after it's already being litigated.

We wanted to codify that language and into this bill to make sure that it was a part of the, the mitigation and part of the plan of the EIR and the, and the rollout of Kern County.

So we wanted to send a clear message that that was top of mind for us, that we were not just carelessly running in to Kern County to, to dig a well anywhere and that we could you know, find a place to put a hole. So with that, we'll turn.

Yeah, thank you for the question. That is an incredibly critical piece of this proposal. So the Kern County ordinance and its EIR specifically respects the state's law of SB 1137 in protecting the 3200 foot health protection zone.

So in the event that 1137 is deemed invalid by a judicial decision and through the judicial process, what would happen is if an operator wanted to apply for a permit to drill within the health protection zone area, they would need to apply to CalGEM, and CalGEM would be the lead agency, and we would conduct a very robust analysis under CEQA, including health assessments, in consideration of that permit application.

What is the assurance, though, you're going to consider. You're going to consider it, but is there an assurance that it's always going to be honored? What's the assurance?

Yeah, so the assurance is in the process and in compliance with existing state law, especially in particularly CEQA. The litigation is challenging the law passed by the Legislature and signed by the Governor. And so simply reflecting that in that, that language, that law in this bill doesn't actually do more to protect it in that litigation.

It just would essentially wrap this bill into that litigation. So what we're, we tried to do through this language is ensure that the process would remain with the state, and the state would be responsible for conducting a thorough environmental analysis, including health assessments under CEQA in the event the law is invalid.

I might need to clarify. You keep saying it's going to be built into CEQA, but there's going to be a CEQA exemption.

There's no CEQA exemption in this bill. This bill validates a certified environmental impact report, and it does not include an exemption from CEQA for any permits that would be applied for within a health protection zone.

Okay, so if?

It's up to the Senator, she's got her questions.

Yeah, that's what I thought, too. Maybe I need clarification. Projects that satisfy the requirements of C seriar and that are approved by the County of Kern under that ordinance are deemed sufficient for full compliance with CEQA. It doesn't go through CEQA, they're just deemed compliant.

Senator, if I may. We've already done CEQA, so we have an environmental impact report. What I want to clarify is if the concern is that the Kern County would give a permit inside the 3200. I understand that's your question. The adopted zoning ordinance by the Board of Supervisors says that that cannot happen. It says the setback is 3200ft.

So regardless if that gets litigated.

That's correct.

You have a local ordinance in the County of Kern that would adhere to 3,200ft?

That's right. And if the Board of Supervisors wanted to change that, they would have to go through a full public, you know, public hearings. And this would not protect them from litigation.

Okay, thank you for the clarification. Appreciate that. And then, Mr. Vice Chair, I have two follow up questions to the responses gave to Senator Perez. You mentioned the data collection that we passed with SB 1 X2. Can you remind me, didn't we just, didn't CARB just pause, do a pause for five years on that data collection? Or am I confusing that with something else they did on that basis?

Yeah, this is not related to CARB, Senator. It's purely the authorities you gave us. And we continue to collect the information.

So we will be able to continue collecting information to see if this bill, in fact, is going to help with reducing gas prices at the pump. Thank you so much for that. And then my other follow up was on the summer blend conversation.

I don't think I really understood how the Governor is going to be able to utilize that emergency power to relax the summer fuel. What parameters or, yeah, what parameters are we looking at to be able to implement that?

So I think the legislation currently, as it's written, says that the Governor consults with CARB and CEC. So CARB will be looking at through the air quality and ensures that doing that doesn't get us in jeopardy with the Federal Government or our air quality compliance.

So that's something that they'll be looking at and our job would be given when such a decision might want to be taken. We need to understand whether it truly does affect the prices and price spikes.

So we will conduct that analysis and based on the determination between us that it's actually beneficial, we will provide that recommendation to the Governor. Otherwise we wouldn't.

And what in terms of the health impacts, what considerations will be taken?

So the CARB will be. So the last couple of times when these conversations have come up, CARB has assessed that whether they're in compliance with the federal regulations or not, the attendment zones. So that assessment CARB will be doing and then they'll be providing that to the Governor.

Are there year, for accountability how often will we be checking if this bill is working as it's intended to be working?

Senator Men, we would always be ready to answer questions whether it's an oversight hearing or something you would like to like us to put in information. We do have obligations to put the assessment every three years. We do have requirements on our IEPR, the Integrated Energy Policy Report where we put this information out.

So we will try to do it through all statutory reports that we have to do and we'll be always available to provide that information to you.

Who do we then blame if next summer gas prices go up?

Sorry?

Who do we then blame next summer, once this bill passes, if the gas prices go up?

Senator, I think the. I understand the spirit of the question. Just to offer an example, as we went through the electricity crisis, you know, one of the questions we always got was can we ensure that the lights don't go off? The pieces that we as the agency is responsible to work for the Administration and work for all of you is to really ensure that we can do the best we can.

What we put in the letter faithfully based on the data we have, is the counterfactual of not stabilizing the market would be disastrous for California if we continue to lose investor confidence. And that investor confidence makes the investment in critical infrastructure gone in California. If we lose a couple more refineries in California, that will be disastrous. So I think the counterfactual is really how we compare our progress.

My last question, Madam Chair, is going to be to the opposition here. As concise as possible, not to repeat what you said in your opening statements. What are the leftover action items to protect the communities? Maybe three items. Most that you can just.

Okay. I would say there are a couple of things, but just to be concise, for the current county communities, ensuring that there are safeguards and sunsets and protections for those communities. For refinery communities, asset retirement obligations is something we've been talking about.

Ensuring that refineries disclose their claims, cleanup and remediation costs so that those are not, you know, passed over to consumers or taxpayers. And the third one possibly being DOGWF, which we talked earlier, which is funding for workers and communities that are going to be impacted by potential refinery closures.

Thank you so much.

Okay, thank you. Well, with that, we'll turn it back to the author and you're welcome to close.

Thank you so very much. And I want to also give recognition to Senator Grove and and Senator Hurtado for their incredible representation of the Valley and especially Kern County. I also want to thank my expert witnesses for doing a thorough job and helping provide the information.

But also just as much want to express my gratefulness to our environmental justice voices because without them and without the experts and without everybody at the table, we're not going to continue.

We're not going to be able to continue to be the global leader in addressing climate change and making sure that we have the right environmental policies in place. And if I could draw special attention to Senator Perez and her comments, especially with passion, of taking care of our workers, our laborers, and I really thank you for that.

That's a passion of mine as well. You mentioned a term that I've heard it was either one of you, Senator Reyes or Senator Perez, about just transition. I like to look at it more like job or job protection. In other words, not just any job.

It's not right to take someone from working on a pipeline to working on a keyboard. Not because working on a keyboard is bad, but because that's what their life's passion, that's their training, that's their family tradition, that they follow after footsteps.

And so being able to make sure that we have all of the components together, I would be the last to stand up and say that this bill is the panacea to all energy in California.

It is only a piece of the puzzle that comes together to create the fabric that California is looking for to be able to be affordable, to be able to have that dream and to be able to have the clean air and the beautiful environment what makes California, California.

And I don't think anyone around here is interested in trading any of that off for an extra dollar or for greater profits.

So thank you to our voices from environmental justice, thank you to the stakeholders who came to the table as well, and thank you to the voices of my colleagues for making sure that we stay on track.

And with that, I just appreciate the work that you're doing, Chair, in this Committee and look forward to working with you in the future as we move forward to find those other puzzle pieces to make this a holistic solution.

Well, thank you. And I'll just note that our next topic is Environmental Justice. So SB 352 from Reyes. We will be moving to that. But we want to say thank you to all of you for coming and staying up late, and thank you as well to the public who's still here. And we'll move on to our next panel. I don't know if you'd prefer to. Do Reyes or Ramon. Let me it.

Okay. Senator Limon, please come forward. We're actually going to do SB840 from Senator Limon, which is item number three. Do you have witnesses? I do have witnesses. And are they both. Are they here?

Our witnesses are here, yes. We have Marianne Bergensen from NRDC and Keith Dunn with the State Building and Construction Trades Council. Council, yeah.

All right. You're welcome to come forward. And if we could try to keep down the noise, we will turn it to you, Senator Limon, to start when ready.

Thank you so much. Madam Chair. Members. California enacted the Cap and Trade program with AB32 in 2006. It was the first large scale cap and trade program in the United States and made California a global leader on climate change. It has been a flagship program for reducing greenhouse gases while also being cost effective.

The program also invested billions of dollars in projects that led to improvements of air quality, public health, as well as good jobs. SB840 is one part of the reauthorization of the Now Cap and Invest program. You heard the first part by Assembly Member Irwin earlier in this hearing.