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Senate Bill 535 is a California bill that was introduced by Senator Kevin De Leon of Los Angeles and signed into law on September 30, 2012 by Governor Jerry Brown. SB 535 is largely based on the actions introduced by AB 32. AB 32 was passed in 2006 and it’s goal is to reduce pollutants by implementing a cap-and-trade system in California. Companies must purchase extra credits when they exceed their allotted amount for the cap and trade. Each year, the money generated from companies purchasing extra credits is expected to generate about $1 billion of state revenue. SB 535 requires that 25% of the fund is spent on projects that benefit disadvantaged communities, while at least 10% of the 25% is spent on projects located in disadvantaged communities. Cal Enviroscreen is a screening methodology that identifies disadvantaged communities that the funds will be directed into. The money will be spent on projects that have been approved by the Legislature.

Cap-and-Trade
SB 535 uses profits from the cap-and-trade policy, which went into effect in California in 2013, to fund projects that are beneficial for disadvantaged communities. The cap-and-trade came about as a way to lessen the environmental impact of companies on the community. The system is relatively simple and easy to put into action. A regulatory agency sets up a cap on the amount of pollutants any one company can put into the environment. Once the amount of allowed pollution is determined, companies can sell these allowances to other companies. The funds collected from the cap-and-trade go into the Greenhouse Gas Reduction Fund. Studies have indicated that “cap and trade has been a principal part of the US Environmental Protection Agency’s efforts to reduce US emissions of sulfur dioxide under the Clean Air Act.” By placing a cap on the amount of pollutants a company can produce, the system encourages companies to be innovative a look for cleaner production habits. The goal of this system is to reduce a company’s harmful impact on the environment and community. Similarly, the goal of SB 535 is to take 25% of the funds from the sale of the allowance credits and invest them into projects aimed at helping disadvantaged communities with a minimum of 10% of the profits being funneled directly into Environmental Justice communities.

Some qualities that have contributed to the success of the cap-and-trade are the ease and accuracy of measuring pollutants and the fact that allowances are much less expensive to pay for than the fee for going over the allotted amount of pollution. Additionally, the cap-and-trade is significantly cheaper than other regulatory approaches. On the other hand, some challenges arise when it comes to fulfilling the cap-and-trade’s main goal of reducing environmental pollutants. Since there is no nation wide system, some states with less strict regulations will end up emitting more pollutants than states with stricter regulation and some people claim that in the end, the pollution will just be spread differently across the country. Some groups claim that this system isn’t very affective in reducing emissions, but it is supported because of the amount of revenue it generates for the state.

Advocacy
SB 535 was signed into law by Governor Jerry Brown on September 30, 2012. The sponsoring organization is the Coalition for Clean Air, and the bill has gained support from a number of groups, including:
 * Breathe California
 * California League of Conservation Voters
 * California Pan-Ethnic Health Network
 * Catholic Charities
 * Stockton Diocese
 * Coalition for Clean Air
 * Environment California
 * Environmental Defense Fund
 * Greenlining Institute
 * Los Angeles Bicycle Coalition
 * Natural Resources Defense Council
 * Sierra Club California
 * TransForm
 * The Trust for Public Lands

Groups opposing the bill include:
 * American Council of Engineering Companies
 * California Building Industry Association
 * California Chamber of Commerce
 * California Farm Bureau Federation
 * California Manufacturers & Technology Association
 * The California Retailers Association

The Coalition for Clean Air has been the main supporter of SB 535. The group has offices in Los Angeles, Sacramento, and Fresno, and they have “worked to restore clean air to California since 1971.” The Clean Air Coalition, along with many other groups, wrote a letter to Mary Nichols, the Chairman of the California Air Resources Board on March 8, 2013. In the letter, the coalition wished to “express support for the CalEnviroScreen as a tool to inform the identification of disadvantaged communities, provide more detail on the use of the overarching and “SB 535 Principles” that our coalition has developed and previously shared with the Administration, identify the priority AB 32 programs that will effectively serve these communities and legal mandates, and provide additional comments on the implementation considerations.” The coalition has worked closely with the state to ensure that disadvantaged communities are properly identified and funds are being appropriately used to help these communities have better air quality and less environmental pollutants.

Many individual organizations have held workshops and meetings to discuss SB 535 and its implications within California communities such as the Luskin Center at UCLA and the Public Health Alliance of Southern California. Discussion topics range from identifying disadvantages communities to helping the state develop new reinvestment options.

History
De Leon introduced AB 1405, a bill that it very similar to SB 535. It was vetoed by Governor Schwarzenegger in 2010, because the Governor stated that “funds have yet to be realized by AB 32.” SB 535 was introduced by Senator De Leon on February 17, 2011. After the bill’s introduction, an analysis that addressed some concerns was posted on April 29, 2011. Initially, opponents of the bill were concerned with the fact that “a regulatory fee must have a nexus between fee payers, the fee amount and the revenue use.” SB 535 does not meet this standard “because the amount of fee revenue is arbitrary (10% of the total amount raised), the purposes in SB 535 are unrelated to harm caused by the payers, and there is no demonstrated connection between the proposed recipients and harm caused by the payers of the revenues.” Other opponents noted that it was impossible to know how much money was necessary to meet the requirements of AB 32 of reducing emissions to the 1990 level by the year 2020. If SB 535 was passed, it might be detracting from the original goals of AB 32. After three Committee readings, the bill was passed on to the Assembly on June 2, 2011. After three Assembly readings and amendments, it was passed on to the Senate. The Senate floor voted on the bill on August 31, 2012. The bill passed with 25 people voting “yes,” 14 voting “no,” and 1 person abstaining. On September 30, 2012 Governor Jerry Brown signed the bill and passed it into law.