April 29, 2021
TO: Members, Senate Committee on Judiciary
SUBJECT: SB 260 (Wiener) Climate Corporate Accountability Act
Hearing Scheduled – April 27, 2021
Oppose – As Amended on April 19, 2021
We must respectfully OPPOSE SB 260 (Wiener), as amended on April 19, 2021, which seeks to require all publicly traded domestic and foreign companies and privately held companies in California to track and report their greenhouse gas (GHG) emissions, whether generated directly or indirectly, regardless of location.
This bill is a burdensome set of duplicative and likely unconstitutional regulations. As reported by Bloomberglaw.com, California Business Roundtable President Rob Lapsley pointed out that the bill “sends another message to the business community that California is the highest-cost state to do business.”
SB 260 Will Impact Small and Medium Businesses: Requiring reporting emissions associated with a company’s entire supply chain will necessarily require that large businesses stop doing business with small and medium businesses that cannot meet stringent carbon emission requirements, leaving these companies without the contracts that enable them to grow and employ more workers. Growing companies must then increase their costs, limiting their access to larger market shares. Forcing companies to make these decisions would have the effect of consolidating market share in the largest of companies rather than fostering competition and growth of smaller industries.
This Bill Is Half-Baked, Authorizing Unelected Bureaucrats to Develop and Impose Administrative Penalties on Companies with Little to No Oversight: SB 260 authorizes the California Air Resource Board (CARB) to “adopt regulations relating to enforcement of this section, including the imposition of administrative civil penalties for violations of this section.” Unelected regulators (i.e. bureaucrats) should not be developing and implementing administrative civil penalties as they see fit. All penalties imposed on companies should be developed by legislators through the legislative process. That way, legislators can be held accountable for their actions. As written, SB 260 would cede the lawmaking process to CARB.
This Bill Would Duplicate Reporting and Caps Under Cap-and-Trade: Entities subject to cap-and-trade already collect, report, and cap their emissions, in accordance with AB 398, which still governs the cap-and-trade program. This bill would duplicate that effort for entities already subject to cap-and-trade. Moreover, this program will greatly expand the need for additional Air Resources Board staff in order to create the reporting, database, monitoring, and enforcement mechanism SB 260 anticipates, as would be expected for such a drastic expansion of the cap-and-trade program to the many thousands of companies that you anticipate being covered by the bill.
This Bill Would Subject Companies to Unavoidable, Costly Third-Party Auditing Costs: SB 260 requires a reporting entity’s public disclosure to be “independently verified by a third-party auditor, approved by the state board.” This subjects companies to unavoidable, costly third-party auditing costs. No entity, whether they are an individual or a company, should be subject to a financial shakedown of this nature.
This Bill Is an Attempt to Expand California’s Onerous, Costly Emissions Reporting Requirements to the Entire Country: SB 260 requires companies to report on their GHG missions,
both direct and indirect, regardless of location (i.e. no matter whether the emissions occur inside or outside of California’s regulatory jurisdiction). California’s regulatory bodies do not have the authority to regulate emissions outside their jurisdiction. Furthermore, it seems likely that out-of-state or non-California companies would challenge such authority. Because of this uncertainty, the burden will fall on California-based companies, giving out-of-state and foreign companies a market advantage, driving production out-of-state and increasing the cost of goods for California residents.
Additional Clarity Is Necessary on Many Issues Before Delegating Authority to CARB to Create this Wide-Ranging Program: Questions about the bill and definitions must be addressed. For example, what accounting methodologies are acceptable, and what are the expectations around companies that will qualify? Who will decide, and upon which criteria will consultants conduct third party verification? Will companies that already internally track emissions be required to scrap their plans and re-design accounting to meet an unknown regulatory requirement? How does the state intend to ensure that its regulatory reporting scheme is consistent with other global reporting requirements?
For these reasons we must respectfully OPPOSE SB 260 (Wiener).
On behalf of the Citrus Heights Chamber of Commerce Board,