California Democrats capture supermajority. Will climate get a boost?

Source: Anne C. Mulkern, E&E News reporter • Posted: Tuesday, December 6, 2016

California Democrats have clinched a two-thirds supermajority in the state Legislature, a win that’s expected to breathe new life into the drive to bolster a landmark climate program.

Democrats secured a two-thirds margin in the Senate last week when final vote counts showed Democrat Josh Newman defeated Assemblywoman Ling Ling Chang (R) in a district located mostly in Orange County, south of Los Angeles. The party had nabbed the supermajority in the Assembly a week earlier.

That means Democrats, without Republican help, theoretically have the votes needed to pass new taxes or fees. Under state law, those require a two-thirds margin.

Getting two-thirds agreement on anything controversial will be difficult, several familiar with state legislative history said. But Gov. Jerry Brown (D) and his supporters are likely to see it as an opening to cement into law the authority of the state’s market-based, cap-and-trade program for carbon emissions. Passing it through legislation could resolve court challenges and boost confidence that it would remain in effect past 2020, green group advocates said.

“There’s no question that the governor is going to make a major push for legislation reauthorizing cap and trade,” said Bill Magavern, policy director for the Coalition for Clean Air. “He would much rather go the legislative route because it provides more certainty for the program going forward.”

Cap and trade, which auctions pollution permits to businesses with the highest carbon emissions, has generated several billion dollars in state revenues. Those are funding development of a high-speed rail line, affordable housing near transit, programs to get people into cleaner cars and other efforts.

Legislature leaders did not say exactly what’s on their new agenda but said they’re committed to defending California priorities as Republican President-elect Donald Trump takes office. He’s called climate change a “hoax” and has said he’s planning to dismantle the Obama administration’s climate policies.

“With this election result, the voters of California are sending a historically robust Democratic majority to the Senate and have sent a loud and clear message they want us to continue California’s exceptional progress,” Anthony Reyes, spokesman for state Senate President Pro Tem Kevin de León (D), said in an email.

“The world changed on Election Day and now we need every Senate Democrat stepping in and speaking out to defend the people and progress we’ve made in California from a Trump Administration that appears hell bent on threatening our values and prosperity,” he added. “We intend to act quickly, decisively and as a united front to face down any threat to the values Californians hold dear.”

Those familiar with legislative priorities said cap and trade or some alternative that targets emissions is likely to be on the table. The exact option that would be pursued isn’t clear.

“There’s a lot of interest in getting a consistent and predictable revenue stream for climate mitigation in California secured,” said Alvaro Sanchez, director of environmental equity at the Greenlining Institute, which focuses on racial and economic justice.

There have been questions, he said, about whether raising money by selling allowances under cap and trade is legally sound, and whether the money is funding the right programs.

“The two-thirds [vote] removes all of that uncertainty and makes it a bulletproof approach,” Sanchez said.

Earlier vote count fell short

The California Air Resources Board (ARB) originally approved cap and trade as a mechanism to meet the state’s greenhouse gas reduction goals through 2020. It requires companies with the biggest greenhouse gas emissions to submit allowances for their pollution. Those are sold in quarterly auctions. The California Chamber of Commerce and others have filed suit to stop it, arguing the auctions are a tax that needed a two-thirds vote. It also contends ARB lacks the authority to hold the auctions. That case is pending.

Brown earlier this year looked at the option of passing cap and trade as law. It came as the Legislature approved S.B. 32, which set greenhouse gas targets through 2030. It requires the state to reduce its carbon emissions to 40 percent below 1990 levels by 2030, the most aggressive target in the country.

But lawmakers balked at amending the bill to specifically authorize the use of market-based programs to get to those new goals. As a result, S.B. 32 does not explicitly approve continuing the cap-and-trade program. Brown at the time said he hadn’t decided yet whether to aim for a separate Legislature vote on cap and trade or to take it directly to the voters via a ballot measure in 2018 (Climatewire, Aug. 25).

Aides to the governor said they weren’t ready yet to talk about their plans for the supermajority.

“There’ll be more from us on the year ahead and priorities when the budget is released and state of the state remarks are delivered in January,” said Brown spokesman Evan Westrup.

After Trump’s election, Brown asserted that, “as Californians … we will protect the precious rights of our people and continue to confront the existential threat of our time — devastating climate change.”

ARB, meanwhile, just released a draft proposal for how to reach the 2030 goals. It recommends extending cap and trade, though it said that the agency should also look at a carbon tax or more direct regulations as options. Those direct rules could include emissions standards for industrial sources, refineries, and the rest of the oil and gas sector (see related story).

There’s the hope that the existence of the supermajority would put pressure on business interests to negotiate on legislation. If they sense it might pass, they’ll want to help shape a measure, said Ann Notthoff, California advocacy director for the Natural Resources Defense Council.

“If you see that there’s a strong chance that a price on carbon is going to extend beyond 2020, you’re going to want to be at the table,” Notthoff said.

The Western States Petroleum Association, a trade group for oil companies, opposed S.B. 32. A spokesman did not respond to inquiries about the supermajority and whether WSPA would fight efforts to pass cap and trade as law.

The California Chamber of Commerce opposes the auction component of the state’s cap-and-trade program. The state could set a carbon cap and give away allowances. The cap would drive greenhouse gas emissions cuts, said Loren Kaye, president of the California Foundation for Commerce and Education, a project of the chamber.

The auction part, with the state keeping revenues, is a tax, he said.

“What we disagree with, and what our lawsuit reflects, is that you can’t have an auction without a two-thirds vote,” Kaye said. If there is a proposal next year to pass cap and trade with an auction in it, “we would look at it on the merits.”

Will all in Democratic two-thirds Legislature agree?

Democrats in California’s Legislature had supermajorities in both houses for a brief period in 2012. But on some environmental votes, moderate Democrats with businesses interests in mind wouldn’t go along with the liberal wing.

Getting a two-thirds vote will be a tough haul, the Coalition for Clean Air’s Magavern said. It will mean getting every Democrat in the Senate and all but one in the Assembly to vote yes. There is a two-thirds-plus-one Democratic majority in that chamber. The other option is to persuade a few Republicans to agree.

Sanchez, however, said he sees reasons to feel optimistic. The revenue from cap and trade has funded new trees, transit, affordable housing and other investments in communities all over the state.

“These policies are delivering tangible benefits to all communities,” Sanchez said.

What’s not clear yet is whether lawmakers will see a relationship between cap and trade and those projects, he said.

Those wanting to make cap and trade law via legislation could be helped by the fact that S.B. 32 is law, Magavern said. That means California has to reach the tougher emissions-cut targets, and oil companies would prefer that happen through cap and trade rather than direct regulations.

In the recent election, some seats went to more progressive Democrats over ones that previously voted more conservatively, said Steve Maviglio, a Democratic strategist in California.

They include Democrat Eloise Reyes, who in an Assembly race defeated incumbent and fellow Democrat Cheryl Brown. Last year, Brown was among the Democrats who opposed a provision in a measure, S.B. 350, that would have ordered cutting petroleum use in motor vehicles in half by 2030. It was eventually dropped from the bill due to lack of support.

“She was very vocal about opposing that element,” said Kathryn Phillips, director of the Sierra Club’s California chapter.

Oil interests backed Brown in the race. The Coalition to Restore California’s Middle Class, Including Energy Companies who Produce Gas, Oil, Jobs and Pay Taxes spent more than $1 million in support of her re-election. It received money from Chevron Corp., Tesoro Cos. Inc., Valero Energy Corp. and Occidental Petroleum Corp. Brown also took direct campaign funding from Chevron, Tesoro and the California Independent Petroleum Association political action committee.

Gas tax adjustments

Democratic leaders are also likely to look at using the supermajority to pass a bill funding transportation infrastructure. The state, like many others, has found that revenues from gasoline and diesel taxes have been falling.

People are driving more efficient cars, and there are more electric vehicles. Efforts to raise the tax and come up with an alternative or supplemental funding mechanism haven’t worked.

Notthoff with NRDC said any funding package would have to align with climate goals and “make sure we’re not just putting more cars on the roads” and that there’s also money going to additional public transit options.