Greenhouse gas emitter Chevron could get AB 32 funds

June 20, 2013

By Katy Grimes


A legislative irony came to light Wednesday: The Chevron oil company, loathed by many in the environmental community as a polluter, could receive AB 32 cap-and-trade revenues. Because Chevron is a greenhouse gas “emitter,” a new bill would make money from the cap-and-trade fund available to refineries to work to reduce greenhouse gas emissions.

Or to put it another way, Chevron could get its own money back, but then be forced to pay prevailing wages on jobs they don’t need.

When everything is regulated by government to the point of regulations having regulations, special interests turn on one another, as evidenced by the ramifications of AB 32, California’s Global Warming Solutions Act of 2006.

Assembly Bill 26

AB 26, by Assemblywoman Susan Bonilla, D-Concord, was heard in the Senate Environmental Quality Committee Wednesday. It showed that upcoming cap-and-trade revenues are already causing special interest groups to fight at the trough. And the proposal has not a thing to do with reducing greenhouse gas emissions.

This bill would require projects involving construction, alteration, demolition, installation, repair and maintenance work paid for from the Greenhouse Gas Reduction Fund to be considered public works. And public works projects require business owners to pay the prevailing wage to workers.

According to the bill’s language, AB 26 would specifically authorize that moneys from the Greenhouse Gas Reduction Fund, through the cap-and-trade auctions, “be made available to the owner or operator of a refinery to perform work to reduce greenhouse gas emissions if all work at the refinery related to reducing greenhouse gas emissions that is not performed by the owner’s or operator’s own employees and that falls within an apprenticeable occupation, as defined, will be performed by skilled journeypersons, as defined, and registered apprentices, as defined.”

This means AB 26 would order union labor be hired to work on refinery projects to reduce greenhouse gas emissions, and only union laborers residing in California.

Cap-and-trade funds: ill-gotten gains?

There’s a problem with Bonilla’s bill. There is a major lawsuit pending by the Pacific Legal Foundation,  California Chamber of Commerce and a broad spectrum of California businesses, trade associations and individuals harmed by the regulation against the California Air Resources Board and its plan to withhold carbon allowances for the purposes of generating revenue for the state.

PLF filed a lawsuit in April challenging California’s cap-and-trade auction regulation. The regulation creates a quarterly auction program requiring many California employers to bid significant amounts of money for the privilege of continuing to emit carbon dioxide — or be faced with closing their doors in California, laying off their employees, and moving their businesses to other states.

The Greenhouse Gas Reduction Funds may be ill-gotten gains. Dorothy Rothrock of the California Manufacturers and Technology Association explained at the hearing that AB 32 explicitly prohibited the California Air Resources Board from raising revenue beyond the administrative costs of the program. Rothrock explained that CARB was not authorized by AB 32 to conduct cap-and-trade auctions.

Union sponsored gang fights

AB 26 is just the first shot over the bow pitting special interest groups against one another. In this case, union labor will be fighting environmental groups supportive of AB 32 goals.

The bill is sponsored by the State Building and Construction trades Council, AFL-CIO, and supported by California Teamsters Public Affairs Council and the International Association of Heat and Frost Insulators Local 5.

Environmentalists want cap-and-trade revenues to only go to projects to reduce greenhouse gas emissions. The labor unions are looking at increasing wages for their workers, getting more jobs and increasing the number of union members.

But the cap-and-trade auction revenues acquired, legally or not, are limited. And lawmakers involved in getting AB 32 passed in 2006 had ideas of their own about how and what the money should be spent on.

Another irony


Sen. Loni Hancock, D-Berkeley, whose district includes the Chevron refinery in Richmond, said she didn’t think AB 26 was the best use of cap-and-trade money. “Giving cap-and-trade money to a highly paid corporation that does not pay its fair share of taxes, in my opinion, doesn’t appear to me…” Hancock said, trailing off. “However, I understand the slippery slope.”

Hancock told the story of a problem a few years ago in her district of people living out of their cars, and eating at the local soup kitchen. Her constituents were upset by this. When they looked into it, Hancock said they discovered the people living in cars were actually out-of-state Chevron workers, brought in to work for a few months. Rather than spend the money on a place to live for the short term, they instead saved money by living out of their cars and eating at the soup kitchen.

Hancock said she was angered with the discovery that Chevron was using non-California workers.

Chevron’s profits are too high already

Sen. Hannah-Beth Jackson, D-Santa Barbara, asked Bonilla to explain exactly what the intent of the bill was.

“It’s a first step for clarifying monies collected by the state to go toward investing in a well-trained California workforce,” Bonilla said.

“With Chevron making tremendous profits, we want to make sure they don’t get more,” Jackson said. “We’re giving money to refineries under cap and trade…. This is the last place we want the money to go.”

“And high emitters should be part of that,” Bonilla said.

“I’m looking to make sure we aren’t putting refineries in place to receive this money,” Jackson said again.

But Committee Chairman Sen. Jerry Hill, D-San Mateo, reminded committee members, “Industrial is part of this classification, if the CARB does consider refineries as part of that.”

Jackson was unrelenting: “I don’t want to encourage that.”

The bill passed, 7-0.

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