GOVERNMENT RELATIONS


with a degree of policy and regulatory certainty. During the first iteration of cap and trade, the California Air Resource Board (CARB) added additional regulatory burdens to industry on top of those from the original program. Under AB 398, the CARB will look to the legislature for more direction than it has before. For all sectors of industry, a cap and trade system is preferred to a command and control environment where emissions are capped and taxed. As part of the negotiations to


pass the measure, several deal points were reached to win support from the


business community. Tey include:  Local air districts will no longer be able to promulgate rules on stationary emitting sources that are currently regulated by cap and trade.


 A sales tax exemption for manufac- turers and energy utilities that purchase equipment towards complying with AB 398.


 Programs for the agricultural industry will be considered in the expenditure plan for cap and trade.


 Te elimination of the fire prevention fee for rural property owners.


Two additional bills were passed


in order to win support for the cap and trade extension from left leaning Democrats and centrist Republicans:


 Assembly Bill 617 - requires increased fence line monitoring of localized sources of air pollution in communities where air quality is the worst. It requires local plans for industry and factories to retrofit for technologies that pollute less.


 Assembly Constitutional Amendment 1 – gives Repub- lican legislators a say in how the revenues derived from the program are spent. In 2024, a supermajority of the legislature must ratify the expenditure plan for revenues generated by the cap and trade program.


www.AGC-CA.org WHERE SEDGWICK’S CONSTRUCTION CLIENTS SET THEIR EXPECTATIONS


Renowned for its construction and government contracts expertise, Sedgwick’s nationally recognized construction lawyers know no boundaries. In partnership with its contractor, owner, architect, and engineer clients on maters large and small, complicated and routine, Sedgwick’s singular goal is to exceed expectations. To this end, Sedgwick construction lawyers deliver.


What It Means for Industry With support from Democrats


and Republicans, AB 398 passed the legislature with two-thirds vote in both houses. While there was not unanimity on either side on the aisle, industry was a large reason why the bill was able to achieve the votes for passage. Scores of trade associations from agriculture, oil, utilities, manufacturing and business lobbied legislators to support the bill. Understanding that California’s


elected leadership will continue to push for increased environmental legislation, the business community strongly preferred a market place system that mitigates the increasing costs of doing business in the state. Labor, regulatory and energy costs are embedded in every aspect of our supply chain. Cap and trade should help industry constrain some of its costs as it supplies its goods and products for the construction industry. 


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