Proposition 23: Suspension of AB 32 Air Pollution Control Law

The Question

Should the AB 32 air pollution control law be suspended until unemployment drops to 5.5 percent or less for a full year?

The Situation

Assembly Bill 32 (AB 32):  In 2006, the state enacted the California Global Warming Solutions Act of 2006 (AB 32). AB 32 established the target of reducing the state’s emissions of greenhouse gases (GHGs) by 2020 to the 1990 level of emissions, resulting in an estimated 30 percent reduction in GHGs. California is the second largest emitter of GHGs in the United States. AB 32 requires the state Air Resources Board (ARB) to adopt rules and regulations to achieve this reduction and in developing these rules and regulations, to take advantage of opportunities to improve air quality, thereby creating public health benefits. In December 2008, the ARB released a “Scoping Plan” on how AB 32’s GHG emission reduction target would be met. The Scoping Plan includes traditional regulatory measures such as energy efficiency standards for buildings and market-based measures such as a “cap-and-trade” program (a system that allows companies with GHG emissions that are higher than the cap to trade for an “emission allowance” from companies whose emissions are lower than the cap).

 Unemployment:  Since 1970, the state has had only three very short periods when the unemployment rate was at 5.5 percent or below for four consecutive quarters or more. For the first half of 2010, the unemployment rate was above 12 percent. Economic forecasts for the next five years have estimated that the state’s unemployment rate will remain above 8 percent during that entire period.

The Proposal

Prop 23 would suspend the implementation of AB 32 until the unemployment rate in California is 5.5 percent or less for four consecutive quarters. During the suspension period, state agencies would be prohibited from adopting new regulations, or enforcing previously adopted regulations, to implement AB 32. Some laws regulating greenhouse gases and air pollution would remain in effect.

Fiscal Effect

It appears likely that AB 32 would be suspended for many years. Suspension of AB 32 could result in a modest net increase in overall economic activity, resulting in an unknown but potentially significant net increase in state and local government revenues. There could be lower energy costs for state and local governments.

Conversely, there could be a potential loss of state revenues by precluding the state from collecting potentially billions of dollars in new payments from businesses. Suspension of AB 32 could halt air quality improvements that would have public health benefits, thus increasing costs to government and businesses for health care.

Supporters Say

  • Prop 23 saves over a million jobs, while preserving California’s clean air and waters.
  • Other states postponed their global warming laws to protect their economies; California should, too.
  • Prop 23 saves billions of dollars in higher energy taxes and costs.          

Opponents Say

  • Prop 23 was written by Texas oil companies to kill our clean energy and air pollution standards.
  • Prop 23 will kill hundreds of thousands of jobs in the clean energy industry.
  • Prop 23 will harm efforts to reduce our dependence on foreign oil.          

Official Contact Information

 Supporters:  Yes on 23 • www.yeson23.com

Opponents:  No on 23–Californians to Stop the Dirty Energy 
                     Proposition  www.StopDirtyEnergyProp.com

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