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<ns0:ActionText>CHAPTERED</ns0:ActionText>
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<ns0:ActionText>APPROVED</ns0:ActionText>
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<ns0:ActionText>FILED</ns0:ActionText>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Committee on Budget (Assembly Members Gabriel (Chair), Addis, Ahrens, Alvarez, Bennett, Bonta, Connolly, Fong, Haney, Hart, Jackson, Lee, Muratsuchi, Ortega, Patel, Petrie-Norris, Quirk-Silva, Ramos, Rogers, Schiavo, Schultz, Sharp-Collins, Solache, Ward, and Wilson)</ns0:AuthorText>
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<ns0:Committee>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Committee on Budget</ns0:Name>
<ns0:Members>Assembly Members Gabriel (Chair), Addis, Ahrens, Alvarez, Bennett, Bonta, Connolly, Fong, Haney, Hart, Jackson, Lee, Muratsuchi, Ortega, Patel, Petrie-Norris, Quirk-Silva, Ramos, Rogers, Schiavo, Schultz, Sharp-Collins, Solache, Ward, and Wilson</ns0:Members>
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<ns0:Title>An act to amend Sections 38532 and 38533 of the Health and Safety Code, relating to greenhouse gases, and making an appropriation therefor, to take effect immediately, bill related to the budget.</ns0:Title>
<ns0:RelatingClause>greenhouse gases, and making an appropriation therefor, to take effect immediately, bill related to the budget</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Greenhouse gases: climate corporate accountability: climate-related financial risk: regulations: California Environmental Quality Act exemption.</ns0:Subject>
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<ns0:DigestText>
<html:p>
(1)
<html:span class="EnSpace"/>
The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report (EIR) on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment.
</html:p>
<html:p>Existing
law, the Climate Corporate Data Accountability Act, requires, on or before July 1, 2025, the State Air Resources Board to develop and adopt regulations to require a reporting entity, defined to mean a corporation, partnership, limited liability company, or other business entity with total annual revenues in excess of $1 billion, as specified, to annually disclose to the emissions reporting organization, as defined, or the state board all of the reporting entity’s scope 1 emissions, scope 2 emissions, and scope 3 emissions, as defined. Existing law requires the state board to adopt regulations that authorize it to seek administrative penalties for nonfiling, late filing, or other failure to meet the requirements of the act, as provided.</html:p>
<html:p>This bill would exempt those regulations from CEQA.</html:p>
<html:p>Existing law requires, on or before January 1, 2026, and biennially thereafter, a covered entity, defined to mean a
corporation, partnership, limited liability company, or other business entity with total annual revenues in excess of $500,000,000, as specified, to prepare a climate-related financial risk report, as specified, and to make this report available to the public on its own internet website. Existing law requires the state board to adopt regulations that authorize it to seek administrative penalties from a covered entity that fails to make the report publicly available on its internet website or publishes an inadequate or insufficient report.</html:p>
<html:p>This bill would exempt those regulations from CEQA.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
This bill would appropriate from the Greenhouse Gas Reduction Fund $1,000 to the State Air Resources Board for purposes of implementing the above-described
provisions relating to climate corporate accountability and climate-related financial risk, as provided.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.
</html:p>
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<ns0:Appropriation>YES</ns0:Appropriation>
<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
<ns0:LocalProgram>NO</ns0:LocalProgram>
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<ns0:ImmediateEffect>YES</ns0:ImmediateEffect>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_D2776BFA-697B-4FD4-9376-3CF408258274">
<ns0:Num>SECTION 1.</ns0:Num>
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Section 38532 of the
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is amended to read:
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<ns0:Num>38532.</ns0:Num>
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<html:p>
(a)
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This section shall be known, and may be cited, as the Climate Corporate Data Accountability Act.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For purposes of this section, the following terms have the following definitions:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Emissions reporting organization” means a nonprofit emissions reporting organization contracted by the state board pursuant to paragraph (3) of subdivision (c) that both:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Currently operates a greenhouse gas emissions reporting organization for
organizations operating in the United States.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Has experience with greenhouse gas emissions disclosure by entities operating in California.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Reporting entity” means a partnership, corporation, limited liability company, or other business entity formed under the laws of this state, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States with total annual revenues in excess of one billion dollars ($1,000,000,000) and that does business in California. Applicability shall be determined based on the reporting entity’s revenue for the prior fiscal year.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Scope 1 emissions” means all direct greenhouse gas emissions that stem from sources that a reporting entity owns or directly controls, regardless of location, including, but not limited
to, fuel combustion activities.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
“Scope 2 emissions” means indirect greenhouse gas emissions from consumed electricity, steam, heating, or cooling purchased or acquired by a reporting entity, regardless of location.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
“Scope 3 emissions” means indirect upstream and downstream greenhouse gas emissions, other than scope 2 emissions, from sources that the reporting entity does not own or directly control and may include, but are not limited to, purchased goods and services, business travel, employee commutes, and processing and use of sold products.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
On or before July 1, 2025, the state board shall develop and adopt regulations to require a reporting entity to annually disclose all of the reporting entity’s scope 1 emissions, scope 2 emissions, and scope 3 emissions, and obtain an
assurance engagement performed by an independent third-party assurance provider. Those regulations shall require the reporting entity to make the annual disclosure to either of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The emissions reporting organization, if contracted for services.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The state board.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The state board shall ensure that the regulations adopted pursuant to this subdivision require all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
That a reporting entity, starting in 2026 on or by a date to be determined by the state board, and annually thereafter on or by that date, publicly disclose to the emissions reporting organization, if contracted for services, or the state board, all of the reporting entity’s scope 1 emissions and scope
2 emissions for the reporting entity’s prior fiscal year.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
That a reporting entity, starting in 2027 and annually thereafter, publicly disclose its scope 3 emissions on a schedule specified by the state board as part of the regulations developed pursuant to this subdivision for the prior fiscal year.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
A reporting entity shall, beginning in 2026, measure and report its emissions of greenhouse gases in conformance with the Greenhouse Gas Protocol standards and guidance, including the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard developed by the World Resources Institute and the World Business Council for Sustainable Development, including guidance for scope 3 emissions calculations that detail acceptable use of both primary and secondary data sources,
including the use of industry average data, proxy data, and other generic data in its scope 3 emissions calculations.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Reports may be consolidated at the parent company level. If a subsidiary of a parent company qualifies as a reporting entity pursuant to paragraph (2) of subdivision (b), the subsidiary is not required to prepare a separate report.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
Starting in 2033, the state board may survey and assess currently available greenhouse gas accounting and reporting standards. At the conclusion of this assessment the state board may adopt a globally recognized alternative accounting and reporting standard if it determines its use would more effectively further the goals of this section. This review process shall include consultation with the stakeholders identified in paragraph (5).
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
If the state board adopts an alternative accounting and reporting standard, the state board shall develop and adopt new regulations, pursuant to paragraph (1), to ensure full conformance with the new standard and reporting of scope 1 emissions, scope 2 emissions, and scope 3 emissions and other requirements of this section.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
During 2029 the state board shall review, and on or before January 1, 2030, the state board shall update as necessary, the public disclosure deadlines established pursuant to clause (i) to evaluate trends in scope 3 emissions reporting and consider changes to the disclosure deadlines to ensure that scope 3 emissions data is disclosed to the emissions reporting organization, if contracted for services, or the state board, as close in time as practicable to the deadline for reporting entities to disclose scope 1 emissions and scope 2 emissions data.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
The reporting timelines shall consider industry stakeholder input and shall take into account the timelines by which reporting entities typically receive scope 1 emissions, scope 2 emissions, and scope 3 emissions data, as well as the capacity for an independent assurance engagement to be performed by a third-party assurance provider.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
That a reporting entity’s public disclosure maximizes access for consumers, investors, and other stakeholders to comprehensive and detailed greenhouse gas emissions data across scope 1 emissions, scope 2 emissions, and scope 3 emissions, as defined by this section, and is made in a manner that is easily understandable and accessible.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
That a reporting entity’s public disclosure includes the name of the reporting entity and any fictitious names, trade names, assumed names, and logos used by the reporting entity.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
That the emissions reporting is structured in a way that minimizes duplication of effort and allows a reporting entity to submit to the emissions reporting organization, if contracted for services, or the state board, reports prepared to meet other national and international reporting requirements, including any reports required by the federal government, as long as those reports satisfy all of the requirements of this section.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Reporting entities that are required to report mandatory industrial emissions pursuant to regulations adopted pursuant to Section 38530 may provide that data with the disclosure required pursuant to this section.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
That a reporting entity’s disclosure takes into account acquisitions, divestments, mergers, and other structural changes that can affect the
greenhouse gas emissions reporting, and is disclosed in a manner consistent with the Greenhouse Gas Protocol standards and guidance or an alternative standard, if one is adopted after 2033.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
That a reporting entity obtains an assurance engagement, performed by an independent third-party assurance provider, of their public disclosure. The reporting entity shall ensure that a copy of the complete assurance provider’s report on the greenhouse gas emissions inventory, including the name of the third-party assurance provider, is provided to the emissions reporting organization, if contracted for services, or the state board, as part of or in connection with the reporting entity’s public disclosure.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The assurance engagement for scope 1 emissions and scope 2 emissions shall be performed at a limited assurance level beginning in 2026 and at a reasonable
assurance level beginning in 2030.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
During 2026, the state board shall review and evaluate trends in third-party assurance requirements for scope 3 emissions. On or before January 1, 2027, the state board may establish an assurance requirement for third-party assurance engagements of scope 3 emissions. The assurance engagement for scope 3 emissions shall be performed at a limited assurance level beginning in 2030.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
A third-party assurance provider shall have significant experience in measuring, analyzing, reporting, or attesting to the emission of greenhouse gasses and sufficient competence and capabilities necessary to perform engagements in accordance with professional standards and applicable legal and regulatory requirements. The assurance provider shall be able to issue reports that are appropriate under the circumstances and independent with respect to the reporting
entity, and any of the reporting entity’s affiliates for which it is providing the assurance report. During 2029 the state board shall review and, on or before January 1, 2030, shall update as necessary, the qualifications for third-party assurance providers based on an evaluation of trends in education relating to the emission of greenhouse gases and the qualifications of third-party assurance providers.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The state board shall ensure that the assurance process minimizes the need for reporting entities to engage multiple assurance providers and ensures sufficient assurance provider capacity, as well as timely reporting implementation as required under clause (i) of subparagraph (A).
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
That a reporting entity shall pay an annual fee to the state board for the administration and implementation of this section.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The state board shall set the fee established pursuant to clause (i) in an amount sufficient to cover the state board’s full costs of administrating and implementing this section. The total amount of fees collected shall not exceed the state board’s actual and reasonable costs to administer and implement this section.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The proceeds of the fees imposed pursuant to clause (i) shall be deposited in the Climate Accountability and Emissions Disclosure Fund, which is hereby created in the State Treasury. Notwithstanding Section 13340 of the Government Code, the money in the fund is continuously appropriated to the state board and shall be expended by the state board for the state board’s activities pursuant to this section and to reimburse any outstanding loans made from other funds used to finance the initial costs of the state board’s activities pursuant to this section. Moneys in
the fund shall not be expended for any purpose not enumerated in this section.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
The state board may adjust the fee in any year to reflect changes in the California Consumer Price Index during the prior year.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The state board may contract with an emissions reporting organization to develop a reporting program to receive and make publicly available disclosures required by this section pursuant to paragraph (1).
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The state board may adopt or update any other regulations that it deems necessary and appropriate to implement this section.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
In developing the regulations required pursuant to this subdivision, the state board shall consult with all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The Attorney
General.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Other government stakeholders, including, but not limited to, experts in climate science and corporate carbon emissions accounting and reporting.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Investors.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Stakeholders representing consumer and environmental justice interests.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Reporting entities that have demonstrated leadership in full-scope greenhouse gas emissions accounting and public disclosure and greenhouse gas emissions reductions.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
This section does not require additional reporting of emissions of greenhouse gases beyond the reporting of scope 1 emissions, scope 2 emissions, and scope 3 emissions required pursuant to the Greenhouse Gas Protocol standards and guidance or an alternative standard, if one
is adopted after 2033.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
On or before July 1, 2027, the state board shall contract with the University of California, the California State University, a national laboratory, or another equivalent academic institution to prepare a report on the public disclosures made by reporting entities to the emissions reporting organization, if contracted for services, or the state board, pursuant to subdivision (c) and the regulations adopted by the state board pursuant to that subdivision. In preparing the report, consideration shall be given to, at a minimum, greenhouse gas emissions from reporting entities in the context of state greenhouse gas emissions reduction and climate goals. The entity preparing the report shall not require reporting entities to report any information beyond what is required pursuant to subdivision (c) or the regulations adopted by the state board pursuant to that subdivision.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The state board shall ensure the report required by this subdivision is posted publicly by either of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The emissions reporting organization, if contracted for services, to be made publicly available on the digital platform required to be created by the emissions reporting organization pursuant to subdivision (e).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The state board on its public internet website.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The state board, or the emissions reporting organization, if contracted for services, on or before the date determined by the state board pursuant to clause (i) of subparagraph (A) of paragraph (2) of subdivision (c), shall create a digital platform, which shall be accessible to the public, that will feature the
emissions data of reporting entities in conformance with the regulations adopted by the state board pursuant to subdivision (c) and the report prepared for the state board pursuant to subdivision (d). The state board, or the emissions reporting organization, if contracted for services, shall make the reporting entities’ disclosures and the state board’s report available on the digital platform no later than 90 days after receipt.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The digital platform shall be capable of featuring individual reporting entity disclosures, and shall allow consumers, investors, and other stakeholders to view reported data elements aggregated in a variety of ways, including multiyear data, in a manner that is easily understandable and accessible to residents of the state. All data sets and customized views shall be available in electronic format for access and use by the public.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Any contract
for services with a reporting organization shall be considered a noninformation technology services contract for procurement purposes.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The emissions reporting organization, if contracted for services, or the state board, shall submit, within 30 days of receipt, the report prepared for the state board pursuant to subdivision (d) to the relevant policy committees of the Legislature.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Section 38580 does not apply to a violation of this section.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The state board shall adopt regulations that authorize it to seek administrative penalties for nonfiling, late filing, or other failure to meet the requirements of this section. The administrative penalties authorized by this section shall be imposed and recovered by the state board in administrative hearings
conducted pursuant to Article 3 (commencing with Section 60065.1) and Article 4 (commencing with Section 60075.1) of Subchapter 1.25 of Chapter 1 of Division 3 of Title 17 of the California Code of Regulations. The administrative penalties imposed on a reporting entity shall not exceed five hundred thousand dollars ($500,000) in a reporting year. In imposing penalties for a violation of this section, the state board shall consider all relevant circumstances, including both of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The violator’s past and present compliance with this section.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Whether the violator took good faith measures to comply with this section and when those measures were taken.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A reporting entity shall not be subject to an administrative penalty under this section for any misstatements with regard to scope 3 emissions
disclosures made with a reasonable basis and disclosed in good faith.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Penalties assessed on scope 3 reporting, between 2027 and 2030, shall only occur for nonfiling.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
A regulation adopted by the state board pursuant to this section is exempt from the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
This section applies to the University of California only to the
extent that the Regents of the University of California, by resolution, make any of these provisions applicable to the university.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 38533 of the
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is amended to read:
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<ns0:LawSection id="id_8ADB3E56-B109-452B-9B0E-5FC84EC05A0C">
<ns0:Num>38533.</ns0:Num>
<ns0:LawSectionVersion id="id_CA64975B-5F3C-47B5-A7D0-3588DCB7E005">
<ns0:Content>
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(a)
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For purposes of this section, the following definitions apply:
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(1)
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“Climate reporting organization” means a nonprofit climate reporting organization contracted by the state board pursuant to subdivision (d) that both:
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(A)
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Currently operates a climate reporting organization for organizations operating in the United States.
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(B)
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Has experience with climate-related financial risk disclosure by entities operating in California.
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(2)
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“Climate-related financial risk” means material risk of harm to immediate and long-term financial outcomes due to physical and transition
risks, including, but not limited to, risks to corporate operations, provision of goods and services, supply chains, employee health and safety, capital and financial investments, institutional investments, financial standing of loan recipients and borrowers, shareholder value, consumer demand, and financial markets and economic health.
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(3)
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“Climate-related financial risk report” means a report required by subdivision (b).
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(4)
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“Covered entity” means a corporation, partnership, limited liability company, or other business entity formed under the laws of the state, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States with total annual revenues in excess of five hundred million United States dollars ($500,000,000) and that does business in California. Applicability shall be determined based on the business
entity’s revenue for the prior fiscal year. “Covered entity” does not include a business entity that is subject to regulation by the Department of Insurance in this state, or that is in the business of insurance in any other state.
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(b)
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(1)
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(A)
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On or before January 1, 2026, and biennially thereafter, a covered entity shall prepare a climate-related financial risk report disclosing both of the following:
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(i)
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Its climate-related financial risk, in accordance with the recommended framework and disclosures contained in the Final Report of Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017) published by the Task Force on Climate-related Financial Disclosures, or any successor thereto, or pursuant to an equivalent reporting requirement as described in paragraph (3).
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(ii)
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Its measures adopted to reduce and adapt to climate-related financial risk disclosed pursuant to clause (i).
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(B)
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If a covered entity does not complete a report consistent with all required disclosures pursuant to clause (i) of subparagraph (A), the covered entity shall provide the recommended disclosures to the best of its ability, provide a detailed explanation for any reporting gaps, and describe steps the covered entity will take to prepare complete disclosures.
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(2)
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Climate-related financial risk reports may be consolidated at the parent company level. If a subsidiary of a parent company qualifies as a covered entity pursuant to paragraph (4) of subdivision (a), the subsidiary is not required to prepare a separate climate-related financial risk report.
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(3)
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Notwithstanding paragraph (1), a covered entity satisfies the requirements of paragraph (1) if it prepares a publicly accessible biennial report that includes climate-related financial risk disclosure information by any of the following methods:
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(A)
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Pursuant to a law, regulation, or listing requirement issued by any regulated exchange, national government, or other governmental entity, including a law or regulation issued by the United States government, incorporating disclosure requirements consistent with clause (i) of subparagraph (A) of paragraph (1), including the International Financial Reporting Standards Sustainability Disclosure Standards, as issued by the International Sustainability Standards Board.
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(B)
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Voluntarily using a framework that meets the requirements of clause (i) of subparagraph (A) of paragraph (1) or the International Financial Reporting
Standards Sustainability Disclosure Standards, as issued by the International Sustainability Standards Board.
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(4)
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To the extent a climate-related financial risk report contains a description of a covered entity’s greenhouse gas emissions or voluntary mitigation of greenhouse gas emissions, the state board may consider the covered entity’s claims if those claims are verified by a third-party independent verifier.
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(c)
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(1)
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On or before January 1, 2026, and biennially thereafter, a covered entity shall make available to the public, on its own internet website, a copy of the report required by this section.
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(2)
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(A)
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On or before January 1, 2026, and annually thereafter, a covered entity shall pay a fee to the state board for the administration and implementation of this
section.
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(B)
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(i)
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The state board shall set the fee described in subparagraph (A) at an amount adequate to cover the state board’s full costs of administrating and implementing this section. The total amount of fees collected shall not exceed the state board’s actual and reasonable costs to administer and implement this section.
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(ii)
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The state board may adjust the fee in any year to reflect changes in the California Consumer Price Index during the prior year.
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(C)
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The proceeds of the fees imposed pursuant to this paragraph shall be deposited in the Climate-Related Financial Risk Disclosure Fund, which is hereby created in the State Treasury. Notwithstanding Section 13340 of the Government Code, the money in the fund is continuously appropriated to the state board and shall be expended by the state
board for the state board’s activities pursuant to this section and to reimburse any outstanding loans made from other funds used to finance the initial costs of the state board’s activities pursuant to this section. Money in the fund shall not be expended for any other purpose not described in this subparagraph.
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(d)
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The state board may contract with a climate reporting organization to do any of the following it deems appropriate:
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(1)
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Biennially prepare a public report that contains all of the following elements:
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(A)
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A review of the disclosure of climate-related financial risk contained in a subset of publicly available climate-related financial risk reports by industry.
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(B)
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Analysis of the systemic and sectorwide climate-related financial risks facing
the state based on the contents of climate-related financial risk reports, including, but not limited to, potential impacts on economically vulnerable communities.
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(C)
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Identification of inadequate or insufficient reports.
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(2)
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Regularly convene representatives of sectors responsible for reporting climate-related financial risks, state agencies responsible for oversight of reporting sectors, investment managers, academic experts, standard-setting organizations, climate and corporate sustainability organizations, labor union representatives whose members work in impacted sectors, and other stakeholders to offer input on current best practices regarding the disclosure of financial risks resulting from climate change, including, but not limited to, proposals to update the definition of “climate-related financial risk,” and the framework or disclosure standard of “climate-related
financial risk reports” that meets the requirements of clause (i) of subparagraph (A) of paragraph (1) of subdivision (b).
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(3)
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Monitor federal regulatory actions among agency members of the federal Financial Stability Oversight Council, as well as nonindependent regulators overseen by the White House.
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(e)
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Any contract for services with a reporting organization shall be considered a noninformation technology services contract for procurement purposes.
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(f)
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(1)
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Section 38580 does not apply to a violation of this section.
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(2)
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The state board shall adopt regulations that authorize it to seek administrative penalties from a covered entity that fails to make the report required by this section publicly available on its internet website or
publishes an inadequate or insufficient report. The administrative penalties authorized by this section shall be imposed and recovered by the state board in administrative hearings conducted pursuant to Article 3 (commencing with Section 60065.1) and Article 4 (commencing with Section 60075.1) of Subchapter 1.25 of Chapter 1 of Division 3 of Title 17 of the California Code of Regulations. The administrative penalties imposed on a reporting entity shall not exceed fifty thousand dollars ($50,000) in a reporting year. In imposing penalties for a violation of this section, the state board shall consider all relevant circumstances, including both of the following:
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(A)
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The violator’s past and present compliance with this section.
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(B)
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Whether the violator took good faith measures to comply with this section and when those measures were taken.
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(g)
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A regulation adopted by the state board pursuant to this section is exempt from the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
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</ns0:BillSection>
<ns0:BillSection id="id_D7212D19-27C1-420F-9370-9781DAEDAADF">
<ns0:Num>SEC. 3.</ns0:Num>
<ns0:Content>
<html:p>The sum of one thousand dollars ($1,000) is hereby appropriated from the Greenhouse Gas Reduction Fund to the State Air Resources Board for the 2025–26 fiscal year to implement Senate Bill 253 (Chapter 382 of the Statutes of 2023) and Senate Bill 261 (Chapter 383 of the Statutes of 2023).</html:p>
</ns0:Content>
</ns0:BillSection>
<ns0:BillSection id="id_E4A477FC-9E23-4B73-AAA6-4544E9B31195">
<ns0:Num>SEC. 4.</ns0:Num>
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<html:p>This act is a bill providing for appropriations related to the Budget Bill within the meaning of subdivision (e) of Section 12 of Article IV of the California Constitution, has been identified as related to the budget in the Budget Bill, and shall take effect immediately.</html:p>
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</ns0:BillSection>
</ns0:Bill>
</ns0:MeasureDoc>
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