text: Each request for proposal shall contain, but not be limited to, the following information: the goals and objectives of the entire program, identification of the specific minimum range of services to be purchased related to those goals, quantitative as well as qualitative measures which will be used by the department to evaluate service outcomes, specific criteria and a description of the methodology and timetable which will be followed to review and approve bids, and all minimum performance standards any agency must meet prior to direct service contract approval.


kind: section

code: HSC

text: For each program identified pursuant to Section 38030, each department shall identify the following steps: time estimated for each step; specific staff names, office addresses, and telephone numbers for those responsible for each step; and legal requirements and signatory approvals required prior to final approval of any contract. Any conditions for advance or interim payments shall also be identified. All bidders shall receive, in writing, all information required pursuant to this section.

history: (History: Added by Stats. 1981, Ch. 794.)

chapter: 4. Direct Service Contract Procedure

path: 25. HEALTH AND WELFARE AGENCY—DIRECT SERVICE CONTRACTS REFORM ACT > 4. Direct Service Contract Procedure


text: For each program identified pursuant to Section 38030, each department shall identify and transmit to all agencies awarded direct service contracts forms required for contract payments, management information or reports required pursuant to contract objectives, and conditions and methods for contract evaluations. Methods and conditions for payment recoveries, withholding of payments, and contract terminations relating to nonperformance shall also be identified. This information shall be made available to each agency awarded a direct service contract prior to final approval of the contract.

division: 25. HEALTH AND WELFARE AGENCY—DIRECT SERVICE CONTRACTS REFORM ACT


text: Each department under the Health and Welfare Agency shall develop a grievance procedure for resolving disputes arising from the awarding or administering of direct service contracts.


text: Pursuant to Section 38030 through Section 38035, inclusive, all departments under the Health and Welfare Agency shall prepare an implementation schedule to develop the information required pursuant to this chapter. These schedules shall be transmitted within 90 days after the effective date of this chapter to the Joint Legislative Budget Committee and the Assembly and Senate Offices of Research for their review. The implementation schedule shall cover the period of one year from the effective date of this chapter.


text:
As used in this chapter:

(a) “Financial and compliance audit” means a systematic review or appraisal to determine each of the following:

(1) Whether the financial statements of an audited organization fairly present the financial position and the results of financial operations in accordance with generally accepted accounting principles.

(2) Whether the organization has complied with laws and regulations that may have a material effect upon the financial statements.

(b) “Public accountants” means certified public accountants, or state licensed public accountants.

(c) “Independent auditors” means public accountants who have no direct or indirect relationship with the functions or activities being audited or with the business conducted by any of the officials or contractors being audited.

(d) “Generally accepted auditing standards” means the auditing standards set forth in the financial and compliance element of the “Standards for Audit of Governmental Organizations, Programs, Activities, and Functions” issued by the Comptroller General of the United States and incorporating the audit standards of the American Institute of Certified Public Accountants.

(e) “Direct service contract” means any contract provided by a state agency pursuant to Chapter 4 (commencing with Section 38030).

(f) “Nonprofit organization” means an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 that is exempt from taxation under Section 501(a) of that code or any nonprofit, scientific or educational organization qualified under Section 23701d of the Revenue and Taxation Code.

history: (History: Amended by Stats. 2003, Ch. 185, Sec. 4. Effective January 1, 2004.)

path: 25. HEALTH AND WELFARE AGENCY—DIRECT SERVICE CONTRACTS REFORM ACT > 5. Direct Service Contract Audit Requirements


text:
(a) Annually, there shall be a single independent financial and compliance audit of nonprofit organizations that contract with the state under a direct service contract. Any such audit shall include an evaluation of the accounting and control systems of the direct service contractor and of the activities by the contractor to comply with the financial requirements of direct service contracts received by the contractor from the state agency. Audits carried out pursuant to this section shall be audits of the contractor, rather than audits of individual contracts or programs. In the case of any contractor that receives less than twenty-five thousand dollars ($25,000) per year from any state agency, the audit required by this section shall be conducted biennially, unless there is evidence of fraud or other violation of state law in connection with the direct service contract. The cost of such audit may be included in direct service contracts up to the proportionate amount that the contract represents of the contractor’s total revenue.

(b) A nonprofit organization shall have responsibility for financial and compliance audits of the nonprofit organization and any subcontractors. The audits shall be made by independent auditors in accordance with generally accepted auditing standards. The audit shall be completed by the 15th day of the fifth month following the end of the contractor’s fiscal year.

(c) (1) Nothing in this chapter limits the authority of state agencies to make audits of direct service contracts; provided, however, that if independent audits arranged for by direct service contractors meet generally accepted auditing standards state agencies shall rely on those audits and any additional audit work shall build upon the work already done.

(2) The state is responsible for conducting, or contracting for the conduct of, contract performance audits which are not financial and compliance audits.

(3) Nothing in this chapter limits the state’s responsibility or authority to enforce state law or regulations, procedures, or reporting requirements arising pursuant thereto.

history: (History: Added by Stats. 1982, Ch. 1462, Sec. 3.)

chapter: 5. Direct Service Contract Audit Requirements


text:
The Legislature hereby finds that in a contractual relationship between the Health and Welfare Agency, its component departments, and private, nonprofit human service organizations:

(a) Problems arise under cooperative agreements that end in disputes.

(b) The intent between the disputing parties is to resolve their controversy through an informal dispute process. The parties should set a goal of no more than 60 days from receipt of a complaint to resolution.

(c) If the parties reach an impasse, then there should be a logical intermediate appeal authority as the next level in the appeal process.

(d) In California, there exists no process between informal dispute resolution and judicial review that is available to and can properly address controversies between the Health and Welfare Agency and human service organizations.

history: (History: Added by Stats. 1982, Ch. 1373, Sec. 1.)

chapter: 1. Legislative Intent and Policy

path: 25.1. HEALTH AND WELFARE AGENCY—ADMINISTRATIVE APPEALS PROCESS FOR NONPROFIT HUMAN SERVICES AGENCIES > 1. Legislative Intent and Policy


text:
A formal administrative appeal process shall be established and made available to all private, nonprofit human service organizations seeking resolution of any dispute arising out of a direct service contract with the Health and Welfare Agency or a component department of the agency, except as provided in Section 38030 of the Health and Safety Code.

This division shall not apply to contracts entered into pursuant to Chapter 7 (commencing with Section 14000) or Chapter 8 (commencing with Section 14200) of Part 3 of Division 9 of the Welfare and Institutions Code.

chapter: 2. Appeal Authority

path: 25.1. HEALTH AND WELFARE AGENCY—ADMINISTRATIVE APPEALS PROCESS FOR NONPROFIT HUMAN SERVICES AGENCIES > 2. Appeal Authority


text: Notwithstanding any other statutes to the contrary, this division shall prevail.

division: 25.1. HEALTH AND WELFARE AGENCY—ADMINISTRATIVE APPEALS PROCESS FOR NONPROFIT HUMAN SERVICES AGENCIES


text:
The appeal authority shall be the Office of Administrative Hearings in the Department of General Services. The office is hereby charged with the responsibility to administer and conduct hearings, and to render proposed decisions about the matter in dispute.

The appeal authority may delay or set aside a state agency or departmental action related to the appeal.

The appeal authority shall provide flexibility in the appeal process, providing a range of review from the most formal to a level acceptable to both parties.

An appeal pursuant to this division shall not be considered by the appeal authority until the direct service contractor has attempted to resolve the dispute through the grievance procedure established in accordance with Section 38036 of the Health and Safety Code. If the department or agency has failed to establish such a procedure, the appeal authority shall assume immediate jurisdiction over the dispute.


text:
An administrative appeal process means a process established by a state agency or department which allows a nonprofit human service agency to seek review and resolution of some complaint about a specific action or inaction of a state agency.

The hearings held pursuant to this division shall be conducted using current procedures presently established by the office.

If the dispute is brought pursuant to subdivisions (d) through (g) of Section 38061 and it involves a sum of money more than ten thousand dollars ($10,000), the appeal authority, taking into account the cash flow problems of the parties, may require the party holding the disputed funds to place the amount under dispute in a special deposit fund to earn and be paid interest with such earnings to be distributed to the party who succeeds upon appeal. If the amount is less than ten thousand dollars ($10,000), it may be placed in such a special deposit fund with the approval of both parties.

The appeal process shall include flexibility to modify procedures to accommodate the particular needs of a given case.

The state’s portion of the cost of the appeal process shall be borne by the state agency or department which shall not include internal operating expenses of the Office of Administrative Hearings.

chapter: 3. Administrative Appeal Process

path: 25.1. HEALTH AND WELFARE AGENCY—ADMINISTRATIVE APPEALS PROCESS FOR NONPROFIT HUMAN SERVICES AGENCIES > 3. Administrative Appeal Process


text:
An appeal may be taken under the following circumstances.

(a) Denial of a local contracting agency’s application for funding.

(b) Denial of a local contracting agency’s application for expansion or startup funding.

(c) Termination of a direct service contract.

(d) Suspension of a direct service contract.

(e) Denial of all or part of a direct service payment for services schedule.

(f) Demand for remittance of an overpayment.

(g) When allegations are asserted which, if true, would constitute a violation of a contract provision, or of federal or state law, regulations, or guidelines.

Decisions made pursuant to subdivisions (a) and (b) shall be limited to a determination as to the procedural propriety of the decisionmaking process, including the reason stated in the decision.


text:
The Office of Administrative Hearings shall, by December 31, 1983, adopt regulations governing the hearings, which shall include all the following:

(a) Deadlines for filing petitions, commencing hearings and rendering decisions.

(b) Notice to affected parties.

(c) Hearings shall be conducted at the offices of the Office of Administrative Hearings in Los Angeles, Sacramento or San Francisco.

(d) Any other issues deemed appropriate by the Office of Administrative Hearings.

path: 25.1. HEALTH AND WELFARE AGENCY—ADMINISTRATIVE APPEALS PROCESS FOR NONPROFIT HUMAN SERVICES AGENCIES > 4. Implementation of Administrative Appeal Process


text: This act shall be known and may be cited as the State Department of Health Services Cooperative Agreement Act.

history: (History: Added by Stats. 1993, Ch. 1033, Sec. 1. Effective January 1, 1994.)

chapter: 1. General Provisions

path: 25.2. STATE DEPARTMENT OF HEALTH SERVICES COOPERATIVE AGREEMENT ACT > 1. General Provisions


text:
The purposes of this division are:

(a) To simplify the administration of public health programs by the State Department of Health Services.

(b) To reduce the administrative cost of public health programs to the department.

(c) To encourage units of state and local government and nonprofit organizations to attempt bold new solutions to local public health problems.

division: 25.2. STATE DEPARTMENT OF HEALTH SERVICES COOPERATIVE AGREEMENT ACT


text:
For purposes of this division, the following definitions shall apply:

(a) “Cooperative agreement” means an agreement between the department and a unit of local government, any other unit of state government, or a nonprofit organization that provides for a contract under any of the following programs:

(1) California AIDS Program (Chapter 2 (commencing with Section 120800) of Part 4 of Division 105).

(2) Health of Seasonal Agricultural and Migratory Workers (Chapter 3 (commencing with Section 124550) of Part 4 of Division 106).

(3) American Indian Health Services (Chapter 4 (commencing with Section 124575) of Part 4 of Division 106).

(4) Rural Health Services Development (Chapter 5 (commencing with Section 124600) of Part 4 of Division 106).

(5) Grants-In-Aid for Clinics (Article 1 (commencing with Section 124875) of Chapter 7 of Part 4 of Division 106).

(6) Expanded Access to Primary Care (Article 2 (commencing with Section 124900) of Chapter 7 of Part 4 of Division 106).

(7) Birth Defects Monitoring Program (Chapter 1 (commencing with Section 103825) of Part 2 of Division 102).

(8) Maternal and child health programs, including, but not limited to, Article 5 (commencing with Section 123800) of Chapter 3 of Part 2 of Division 106 and as set forth in subdivision (c) of Section 27.

(9) Special Supplemental Food Program for Women, Infants, and Children (Article 2 (commencing with Section 123275) of Chapter 1 of Part 2 of Division 106).

(10) Perinatal Health Care (Article 4 (commencing with Section 123550) of Chapter 2 of Part 2 of Division 106).

(11) Family planning services (Section 14503 of the Welfare and Institutions Code).

(12) Hereditary Disorders Programs (subdivision (b) of Section 27).

(13) Other public health programs for the protection, preservation, and advancement of public health authorized pursuant to Section 100185 or pursuant to an annual Budget Act provision.

(b) “Department” means the State Department of Health Services.

history: (History: Amended by Stats. 1996, Ch. 1023, Sec. 299. Effective September 29, 1996.)


text: The department shall comply with Sections 38030, 38031, 38032, 38035, and 38036, Chapter 3 (commencing with Section 38020) and Chapter 5 (commencing with Section 38040) of Division 25, and the grievance and appeal provisions set forth in Section 38036, Division 25.1 (commencing with Section 38050), and Article 4 (commencing with Section 19130) of Chapter 5 of Part 2 of Division 5 of Title 2 of the Government Code.


text:
(a) Cooperative agreements shall be procured by means of a request for application or a request for proposal, whichever is applicable, as determined by the department.

(b) A procurement by a request for application is one where the department has funds, regardless of the source, that it seeks to distribute to those entities or organizations specified in Section 38072, that meet the criteria and standards stated in the request for application. A distinguishing feature of a request for application is that, unlike a request for proposal, a request for application is a request where multiple awards are to be made based on the information provided in the application and evaluated against the methodology and criteria specified in the request for application.

(c) All request for proposal cooperative agreement awards shall comply with the requirements of Section 10344 of the Public Contract Code.

(d) A cooperative agreement shall be for a period of up to three years.

(e) A cooperative agreement for a one-year period may provide for up to two annual extensions.

(f) A cooperative agreement may be procured without a request for application or a request for proposal under any of the following circumstances:

(1) If the amount of the cooperative agreement is less than fifty thousand dollars ($50,000) annually. A nonprofit organization shall receive only one of these awards during each fiscal year.

(2) If the amount of the cooperative agreement is less than two hundred thousand dollars ($200,000) a year and from a program that awards five or fewer grants per year.

(3) If the department is awarding a cooperative agreement under the California Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) to an entity or organization that currently has an executed agreement with the specific WIC local agency. A cooperative agreement described in this paragraph may be awarded by means of subvention. Cooperative agreements for new or additional WIC local agencies shall be procured by means of a process that complies with applicable federal and state laws and the department’s state plan for operation of WIC.

history: (History: Amended by Stats. 2021, Ch. 143, Sec. 16. (AB 133) Effective July 27, 2021.)


text: The department, at its discretion, may enter into a single cooperative agreement with a single contractor based upon the contractor’s applications submitted in response to requests for application from several programs.


text: In administering cooperative agreements, the program staff shall prepare all requests for proposals and requests for applications, evaluate the proposals and applications received, make the awards, and monitor progress of recipients of awards.


text:
(a) The department shall use only one or more of the following payments systems for cooperative agreements:

(1) Allowable costs up to a maximum amount.

(2) Fixed payment per unit of service.

(3) Fixed monthly payment.

(4) Fixed price agreement.

(b) If the allowable cost payment system is used, the cooperative agreement shall contain a line item budget for the cooperative agreement project, and both of the following shall apply:

(1) Except as required by other funding sources, including, but not limited to, the federal government or private foundations, the line item budget shall specify aggregate costs for the following and no other categories:

(A) Personnel, including, but not limited to, salary, wages, and fringe benefits.

(B) Operating expenses, other than personnel, including, but not limited to, rent, depreciation, use allowance, supplies, utilities, and other operating costs.

(C) Capital expenditures to be paid for by the cooperative agreement.

(D) Other costs as specified in the agreement.

(E) A fixed indirect cost amount or rate.

(2) A nonprofit organization or unit of state or local government that is a party with the department in a cooperative agreement may propose, in writing, scope of work revisions or changes. The contractor shall be notified in writing within 30 calendar days when proposed revisions are approved or disapproved by the department. If written notification does not occur within this time period, the proposed revisions or changes shall be deemed approved.


text:
(a) The department shall develop uniform cooperative agreement formats containing standardized agreement language. Each uniform format shall be developed with the participation of the affected parties. The purpose of the uniform formats shall be to consolidate and simplify administrative and programmatic requirements, maintain systemwide consistency, develop procedures that promote ease of use by clients, streamline processes, eliminate unnecessary paperwork, and ensure fiscal accountability. Uniform formats shall be outcome oriented and conducive to the business and operational needs of all parties to the extent practical.

(b) For purposes of this section “standardized agreement language” means language that constitutes terms and conditions of performance necessitated by sound contract management and compliance practices, including, but not limited to, payment and invoicing systems and procedures, record management requirements, and programmatic reporting requirements. Excluded from this definition are scopes of work, line item budgets, funding related provisions, preprinted generic exhibits, and cancellation or amendment clauses.

(c) The department may form working groups including representatives of all affected parties to implement this section.

(d) After finalization of uniform cooperative agreement formats, no unilateral change to standardized agreement language may be implemented without making the changes available for public comment. These changes include changes caused by programmatic decisions, control agency requirements, and administrative needs.

(e) Nothing in this section shall be construed to prevent or delay changes necessitated by state or federal statute or regulations.


text:
All of the following shall apply to cooperative agreements:

(a) The department or contractor may terminate, upon a minimum of 30 days written notice, any cooperative agreement.

(b) The department may reject a request for proposal or a request for application response based on an entity’s or organization’s failure to comply with contracted requirements in prior contracts or cooperative agreements with the department.

(c) The organization or unit of state and local government shall be liable to return any funds for failure to comply with the requirements of the cooperative agreement.


text:
(a) A cooperative agreement involving the purchase of electronic data processing hardware, software, or services, or telecommunication goods and services, up to a purchase amount of fifty thousand dollars ($50,000), shall be exempt from Chapter 3 (commencing with Section 12100) and Chapter 3.5 (commencing with Section 12120) of Part 2 of Division 2 of the Public Contract Code, and from Part 1 (commencing with Section 11000) of Division 3 of Title 2 of the Government Code.

(b) A cooperative agreement with a unit of local or state government that requires the purchase of capital equipment shall utilize the contractor’s existing procurement systems for the purchase of equipment.

(c) A cooperative agreement with a nonprofit organization that provides for capital expenditures as part of a line item budget shall utilize a procurement system for the purchase of equipment under a cooperative agreement that meets the following standards:

(1) The nonprofit organization shall maintain a code or standard of conduct that shall govern the performance of its officers, employees, or agents engaged in awarding procurement contracts. No employee, officer, or agent shall participate in the selection, award, or administration of a procurement contract in which, to his or her knowledge, he or she has a financial interest.

(2) Procurements shall be conducted in a manner that provides, to the maximum extent practical, open and free competition.

(3) Procurements shall be conducted in a manner that provides for all of the following:

(A) Avoidance of the purchasing of unnecessary or duplicate items.

(B) Solicitation for capital expenditures based upon a clear and accurate description of the technical requirements of the capital goods to be procured.

(C) The taking of positive steps to utilize small, minority, women, or veteran owned businesses.

(d) Notwithstanding subdivisions (a), (b), and (c), the Director of General Services may exempt from those requirements any purchases in excess of fifty thousand dollars ($50,000) annually of capital equipment, and electronic data processing and telecommunications goods and services made under a cooperative agreement for which, in his or her judgment, the exemption is appropriate and in the best interests of the state. Written notice of an exemption shall be given to the Controller.

(e) Subdivision (a) shall become inoperative on June 30, 1997.


text:
(a) All cooperative agreements, regardless of the size of the contracting nonprofit organization, are subject to the late payment provisions in Section 927.6 of the Government Code.

(b) In implementing this division, the department shall have the authority of, and be subject to, the provisions set forth in Chapter 2 (commencing with Section 124475) of Part 4 of Division 106, except that those provisions apply to all cooperative agreements, not only those agreements with clinics. However, notwithstanding Section 124500, moneys in the Clinic Revolving Fund of the State Department of Health Services shall be used for purposes of this division only upon appropriation of funds by the Legislature for that purpose.

history: (History: Amended by Stats. 2000, Ch. 776, Sec. 3. Effective September 27, 2000.)


text:
When the department awards a cooperative agreement pursuant to Section 38074, prior to execution of the agreement, the department may do the following:

(a) Certify to the Controller that a cooperative agreement has been awarded, the name of the organization or agency to which the award has been made, the amount approved by the department for funding the cooperative agreement, and any other information as may be required by the Controller.

(b) Present a claim to the Controller for payment to the organization or agency, from an appropriation available for such purpose, of an amount not exceeding 25 percent of the funding approved for the cooperative agreement.


text:
(a) Provisions shall be included in any invitation for bid or request for proposal issued and in any contract executed on or after January 1, 1996, in an amount that exceeds two hundred fifty thousand dollars ($250,000) by the State Department of Health Services, to permit the substitution of securities for any moneys withheld to ensure performance under a service or consulting service contract, provided that substitution of securities provisions shall not be required where federal regulations or policies, or both, do not allow the substitution of securities. At the request and expense of the contractor, securities equivalent to the amount withheld shall be deposited with the state department, or with a state or federally chartered bank in California as the escrow agent, who shall then pay the moneys to the contractor. Upon satisfactory completion of the contract, the securities shall be returned to the contractor.

(b) Alternatively, the contractor may request and the state department shall make payment of retentions earned directly to the escrow agent at the expense of the contractor. At the expense of the contractor, the contractor may direct the investment of the payments into securities and the contractor shall receive the interest earned on the investments upon the same terms provided for in this section for securities deposited by the contractor. Upon satisfactory completion of the contract, the contractor shall receive from the escrow agent all securities, interest, and payments received by the escrow agent from the state department, pursuant to the terms of this section. The contractor shall pay to each subcontractor, not later than 20 days of receipt of the payment, the respective amount of interest earned, net of costs attributed to retention withheld from each subcontractor, on the amount of retention withheld to insure the performance of the contractor.

(c) Securities eligible for investment under this section shall include those listed in Section 16430 of the Government Code, bank or savings and loan certificates of deposit, interest bearing demand deposit accounts, standby letters of credit, or any other security mutually agreed to by the contractor and the state department.

The contractor shall be the beneficial owner of any securities substituted for moneys withheld and shall receive any interest thereon.

Failure to include these provisions in bid and contract documents shall void any provisions for performance retentions in an affected contract.

history: (History: Added by Stats. 1994, Ch. 635, Sec. 2. Effective January 1, 1995.)


text:
(a) Cooperative agreements shall be subject to review and approval by the Department of General Services pursuant to Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of the Public Contract Code, except as follows:

(1) Changes in the scope of work approved under paragraph (2) of subdivision (b) of Section 38077.

(2) For allowable cost agreements, changes in line item budgets of up to 15 percent of the annual total, not to exceed one hundred thousand dollars ($100,000), so long as the contract total does not increase or decrease. This maximum amount shall be assessed annually and automatically adjusted in accordance with cost-of-living indexes.

(3) Agreements, and amendments to those agreements, under programs expressly exempted from the review and approval of the Department of General Services pursuant to statute, including, but not limited to, those exemptions granted prior to January 1, 1994.

(b) (1) A nonprofit organization or governmental agency that is awarded a cooperative agreement shall not be subject to the minority and women business and disabled veterans participation goals set forth in Article 1.5 (commencing with Section 10115 of Chapter 1 of Part 2 of Division 2 of the Public Contract Code with respect to that portion of the cooperative agreement budget that is for personnel related costs of the cooperative agreement, as determined by the department.

(2) A nonprofit organization or governmental agency that is awarded a cooperative agreement shall also be exempt from the participation goals described in paragraph (1) when the cooperative agreement meets any of the following criteria:

(A) The amount of the cooperative agreement is one hundred thousand dollars ($100,000) or less annually.

(B) In the case of a nonprofit organization, the nonprofit organization to be awarded the cooperative agreement has a board of directors of which at least 51 percent of the members are any combination of women, minorities, and disabled veterans.

(C) Cooperative agreements that result from requests for application.

(c) The Director of General Services may exempt from his or her approval or from approval of the department any cooperative agreements for which, in his or her judgment, the exemption is appropriate and in the best interests of the state. Written notice of an exemption shall be given to the Controller.

(d) Subdivision (b) shall become inoperative on June 30, 1997.

history: (History: Amended by Stats. 2002, Ch. 386, Sec. 6. Effective January 1, 2003.)


text: This division shall be known, and may be cited, as the California Global Warming Solutions Act of 2006.

history: (History: Added by Stats. 2006, Ch. 488, Sec. 1. Effective January 1, 2007.)

part: 1. GENERAL PROVISIONS

chapter: 1. Title of Division

path: 25.5. CALIFORNIA GLOBAL WARMING SOLUTIONS ACT OF 2006 > 1. GENERAL PROVISIONS > 1. Title of Division


text:
(a) The Legislature finds and declares all of the following:

(1) Global warming poses a serious threat to the economic well-being, public health, natural resources, and the environment of California. The potential adverse impacts of global warming include the exacerbation of air quality problems, a reduction in the quality and supply of water to the state from the Sierra snowpack, a rise in sea levels resulting in the displacement of thousands of coastal businesses and residences, damage to marine ecosystems and the natural environment, and an increase in the incidences of infectious diseases, asthma, and other human health-related problems.

(2) Global warming will have detrimental effects on some of California’s largest industries, including agriculture, wine, tourism, skiing, recreational and commercial fishing, and forestry. It will also increase the strain on electricity supplies necessary to meet the demand for summer air-conditioning in the hottest parts of the state.

(3) California has long been a national and international leader on energy conservation and environmental stewardship efforts, including the areas of air quality protections, energy efficiency requirements, renewable and clean energy standards, natural resource conservation, and greenhouse gas emission standards for vehicles. The program established by this division will continue this tradition of environmental leadership by placing California at the forefront of national and international efforts to reduce emissions of greenhouse gases.

(4) National and international actions are necessary to fully address the issue of global warming. However, action taken by California to reduce emissions of greenhouse gases will have far-reaching effects by encouraging other states, the federal government, and other countries to act.

(5) California has positioned its economy, technology centers, financial institutions, and businesses to benefit from national and international efforts to reduce emissions of greenhouse gases. More importantly, investing in the development of innovative and pioneering technologies will continue to assist California in achieving statewide greenhouse gas emissions targets established by this division and will continue to provide an opportunity for the state to take a global economic and technological leadership role in reducing emissions of greenhouse gases.

(b) (1) It is the intent of the Legislature that the State Air Resources Board coordinate with state agencies, as well as consult with the environmental justice community, industry sectors, business groups, academic institutions, environmental organizations, and other stakeholders in implementing this division.

(2) It is the intent of the Legislature that the State Air Resources Board consult with the Public Utilities Commission in the development of emissions reduction measures, including limits on emissions of greenhouse gases applied to electricity and natural gas providers regulated by the Public Utilities Commission, in order to ensure that electricity and natural gas providers are not required to meet duplicative or inconsistent regulatory requirements.

(3) It is the intent of the Legislature that the State Air Resources Board design emissions reduction measures to meet the statewide emissions limits for greenhouse gases established pursuant to this division in a manner that minimizes costs and maximizes benefits for California’s economy, improves and modernizes California’s energy infrastructure and maintains a safe, clean, affordable, resilient, and reliable electric system, maximizes additional environmental and economic cobenefits for California, and complements the state’s efforts to improve air quality.

(4) It is the intent of the Legislature that the State Air Resources Board extend the market-based compliance mechanism adopted pursuant to subdivision (c) of Section 38562 from January 1, 2021, to December 31, 2045, inclusive, in a manner that effectively reduces greenhouse gas emissions; minimizes any adverse impacts on state consumers, businesses, and the economy; and continues elements of the current program that protect state utility ratepayers, encourages decarbonization of the state’s economic sectors, and further enables Californians to affordably decarbonize and power their end uses.

(5) It is the intent of the Legislature that the Climate Action Team established by the Governor to coordinate the efforts set forth under Executive Order No. S-3-05 continue its role in coordinating overall climate policy.

(6) It is the intent of the Legislature that the market-based compliance mechanism be known as the California Cap-and-Invest Program in recognition of its cost-effective, market-based approach to reduce emissions of greenhouse gases and the direct and indirect investments the mechanism has demonstrated, and should continue to demonstrate, in cost-effective emission reduction measures.

(c) This section shall remain in effect only until January 1, 2046, and as of that date is repealed.

history: (History: Amended (as amended by Stats. 2017, Ch. 135, Sec. 1) by Stats. 2025, Ch. 117, Sec. 1. (AB 1207) Effective September 19, 2025. Repealed as of January 1, 2046, by its own provisions. See later operative version amended by Sec. 2 of Stats. 2025, Ch. 117.)

chapter: 2. Findings and Declarations

path: 25.5. CALIFORNIA GLOBAL WARMING SOLUTIONS ACT OF 2006 > 1. GENERAL PROVISIONS > 2. Findings and Declarations


text:
(a) The Legislature finds and declares all of the following:

(1) Global warming poses a serious threat to the economic well-being, public health, natural resources, and the environment of California. The potential adverse impacts of global warming include the exacerbation of air quality problems, a reduction in the quality and supply of water to the state from the Sierra snowpack, a rise in sea levels resulting in the displacement of thousands of coastal businesses and residences, damage to marine ecosystems and the natural environment, and an increase in the incidences of infectious diseases, asthma, and other human health-related problems.

(2) Global warming will have detrimental effects on some of California’s largest industries, including agriculture, wine, tourism, skiing, recreational and commercial fishing, and forestry. It will also increase the strain on electricity supplies necessary to meet the demand for summer air-conditioning in the hottest parts of the state.

(3) California has long been a national and international leader on energy conservation and environmental stewardship efforts, including the areas of air quality protections, energy efficiency requirements, renewable energy standards, natural resource conservation, and greenhouse gas emission standards for passenger vehicles. The program established by this division will continue this tradition of environmental leadership by placing California at the forefront of national and international efforts to reduce emissions of greenhouse gases.

(4) National and international actions are necessary to fully address the issue of global warming. However, action taken by California to reduce emissions of greenhouse gases will have far-reaching effects by encouraging other states, the federal government, and other countries to act.

(5) California has positioned its economy, technology centers, financial institutions, and businesses to benefit from national and international efforts to reduce emissions of greenhouse gases. More importantly, investing in the development of innovative and pioneering technologies will continue to assist California in achieving the 2020 statewide limit on emissions of greenhouse gases established by this division and will continue to provide an opportunity for the state to take a global economic and technological leadership role in reducing emissions of greenhouse gases.

(b) (1) It is the intent of the Legislature that the State Air Resources Board coordinate with state agencies, as well as consult with the environmental justice community, industry sectors, business groups, academic institutions, environmental organizations, and other stakeholders in implementing this division.

(2) It is the intent of the Legislature that the State Air Resources Board consult with the Public Utilities Commission in the development of emissions reduction measures, including limits on emissions of greenhouse gases applied to electricity and natural gas providers regulated by the Public Utilities Commission, in order to ensure that electricity and natural gas providers are not required to meet duplicative or inconsistent regulatory requirements.

(3) It is the intent of the Legislature that the State Air Resources Board design emissions reduction measures to meet the statewide emissions limits for greenhouse gases established pursuant to this division in a manner that minimizes costs and maximizes benefits for California’s economy, improves and modernizes California’s energy infrastructure and maintains a clean, safe, affordable, resilient, and reliable electric system, maximizes additional environmental and economic cobenefits for California, and complements the state’s efforts to improve air quality.

(4) It is the intent of the Legislature that the Climate Action Team established by the Governor to coordinate the efforts set forth under Executive Order No. S-3-05 continue its role in coordinating overall climate policy.

(5) It is the intent of the Legislature that the market-based compliance mechanism be known as the California Cap-and-Invest Program in recognition of its cost-effective, market-based approach to reduce emissions of greenhouse gases and the direct and indirect investments the mechanism has demonstrated, and should continue to demonstrate, in cost-effective emission reduction measures.

(c) This section shall become operative on January 1, 2046.

history: (History: Amended (as added by Stats. 2017, Ch. 135, Sec. 2) by Stats. 2025, Ch. 117, Sec. 2. (AB 1207) Effective September 19, 2025. Section operative January 1, 2046, by its own provisions.)

division: 25.5. CALIFORNIA GLOBAL WARMING SOLUTIONS ACT OF 2006


text:
For the purposes of this division, the following terms have the following meanings:

(a) “Allowance” means an authorization to emit, during a specified year, up to one ton of carbon dioxide equivalent.

(b) “Alternative compliance mechanism” means an action undertaken by a greenhouse gas emission source that achieves the equivalent reduction of greenhouse gas emissions over the same time period as a direct emission reduction, and that is approved by the state board. “Alternative compliance mechanism” includes, but is not limited to, a flexible compliance schedule, alternative control technology, a process change, or a product substitution.

(c) “Carbon dioxide equivalent” means the amount of carbon dioxide by weight that would produce the same global warming impact as a given weight of another greenhouse gas, based on the best available science, including from the Intergovernmental Panel on Climate Change.

(d) “Cost-effective” or “cost-effectiveness” means the cost per unit of reduced emissions of greenhouse gases adjusted for its global warming potential.

(e) “Direct emission reduction” means a greenhouse gas emission reduction action made by a greenhouse gas emission source at that source.

(f) “Emissions reduction measure” means programs, measures, standards, and alternative compliance mechanisms authorized pursuant to this division, applicable to sources or categories of sources, that are designed to reduce emissions of greenhouse gases.

(g) “Greenhouse gas” or “greenhouse gases” includes all of the following gases:(1) Carbon dioxide.

(2) Methane.

(3) Nitrous oxide.

(4) Hydrofluorocarbons.

(5) Perfluorocarbons.

(6) Sulfur hexafluoride.

(7) Nitrogen trifluoride.

(h) “Greenhouse gas emissions limit” means an authorization, during a specified year, to emit up to a level of greenhouse gases specified by the state board, expressed in tons of carbon dioxide equivalents.

(i) “Greenhouse gas emission source” or “source” means any source, or category of sources, of greenhouse gas emissions whose emissions are at a level of significance, as determined by the state board, that its participation in the program established under this division will enable the state board to effectively reduce greenhouse gas emissions and monitor compliance with the statewide greenhouse gas emissions limit.

(j) “Leakage” means a reduction in emissions of greenhouse gases within the state that is offset by an increase in emissions of greenhouse gases outside the state.

(k) “Market-based compliance mechanism” means either of the following:

(1) A system of market-based declining annual aggregate emissions limitations for sources or categories of sources that emit greenhouse gases.

(2) Greenhouse gas emissions exchanges, banking, credits, and other transactions, governed by rules and protocols established by the state board, that result in the same greenhouse gas emission reduction, over the same time period, as direct compliance with a greenhouse gas emission limit or emission reduction measure adopted by the state board pursuant to this division.

(l) “State board” means the State Air Resources Board.

(m) “Statewide greenhouse gas emissions” means the total annual emissions of greenhouse gases in the state, including all emissions of greenhouse gases from the generation of electricity delivered to and consumed in California, accounting for transmission and distribution line losses, whether the electricity is generated in state or imported. Statewide emissions shall be expressed in tons of carbon dioxide equivalents.

(n) “Statewide greenhouse gas emissions limit” or “statewide emissions limit” means the maximum allowable level of statewide greenhouse gas emissions in 2020, as determined by the state board pursuant to Part 3 (commencing with Section 38550).

history: (History: Amended by Stats. 2009, Ch. 331, Sec. 1. (SB 104) Effective January 1, 2010.)

chapter: 3. Definitions

path: 25.5. CALIFORNIA GLOBAL WARMING SOLUTIONS ACT OF 2006 > 1. GENERAL PROVISIONS > 3. Definitions


text:
(a) “District” has the same meaning as in Section 39025.

(b) This section shall remain in effect only until January 1, 2031, and as of that date is repealed.

history: (History: Added by Stats. 2017, Ch. 135, Sec. 3. (AB 398) Effective July 25, 2017. Repealed as of January 1, 2031, by its own provisions.)


text: For purposes of this division, “social costs” means an estimate of the economic damages, including, but not limited to, changes in net agricultural productivity; impacts to public health; climate adaptation impacts, such as property damages from increased flood risk; and changes in energy system costs, per metric ton of greenhouse gas emission per year.

history: (History: Added by Stats. 2016, Ch. 250, Sec. 3. (AB 197) Effective January 1, 2017.)


text: The State Air Resources Board is the state agency charged with monitoring and regulating sources of emissions of greenhouse gases that cause global warming in order to reduce emissions of greenhouse gases.

chapter: 4. Role of State Board

path: 25.5. CALIFORNIA GLOBAL WARMING SOLUTIONS ACT OF 2006 > 1. GENERAL PROVISIONS > 4. Role of State Board


text:
(a) On or before January 1, 2008, the state board shall adopt regulations to require the reporting and verification of statewide greenhouse gas emissions and to monitor and enforce compliance with this program.

(b) The regulations shall do all of the following:

(1) Require the monitoring and annual reporting of greenhouse gas emissions from greenhouse gas emission sources beginning with the sources or categories of sources that contribute the most to statewide emissions.

(2) Account for greenhouse gas emissions from all electricity consumed in the state, including transmission and distribution line losses from electricity generated within the state or imported from outside the state. This requirement applies to all retail sellers of electricity, including load-serving entities as defined in subdivision (k) of Section 380 of the Public Utilities Code and local publicly owned electric utilities as defined in Section 224.3 of the Public Utilities Code.

(3) Where appropriate and to the maximum extent feasible, incorporate the standards and protocols developed by the California Climate Action Registry, established pursuant to former Chapter 6 (commencing with Section 42800) of Part 4 of Division 26, as added by Section 1 of Chapter 1018 of the Statutes of 2000. Entities that voluntarily participated in the California Climate Action Registry prior to December 31, 2006, and have developed a greenhouse gas emission reporting program, shall not be required to significantly alter their reporting or verification program except as necessary to ensure that reporting is complete and verifiable for the purposes of compliance with this division as determined by the state board.

(4) Ensure rigorous and consistent accounting of emissions, and provide reporting tools and formats to ensure collection of necessary data.

(5) Ensure that greenhouse gas emission sources maintain comprehensive records of all reported greenhouse gas emissions.

(c) The state board shall do both of the following:

(1) Periodically review and update its emission reporting requirements, as necessary.

(2) Review existing and proposed international, federal, and state greenhouse gas emission reporting programs and make reasonable efforts to promote consistency among the programs established pursuant to this part and other programs, and to streamline reporting requirements on greenhouse gas emission sources.

history: (History: Amended by Stats. 2017, Ch. 561, Sec. 116. (AB 1516) Effective January 1, 2018.)

path: 25.5. CALIFORNIA GLOBAL WARMING SOLUTIONS ACT OF 2006 > 2. MANDATORY GREENHOUSE GAS EMISSIONS REPORTING


text:
(a) (1) The state board shall make available, and update at least annually, on its internet website the emissions of greenhouse gases and criteria pollutants for each facility that reports to the state board pursuant to Section 38530. The data shall be displayed in a manner that illustrates the changes in emissions levels over time.

(2) No later than January 1, 2018, the state board shall add toxic air contaminant emissions to the information made available pursuant to paragraph (1).

(3) The criteria pollutant and toxic air contaminant emissions data for stationary sources shall be based on data provided to the state board by air pollution control and air quality management districts collected pursuant to Section 39607 and Chapter 3 (commencing with Section 44340) of Part 6 of Division 26.

(b) At least once a year at a hearing of the Joint Legislative Committee on Climate Change Policies, the state board shall present an informational report on topics related to the scoping plan pursuant to Sections 38561 and 38562.7, as directed by the joint committee. The report shall include a discussion of the regulatory requirements, initiatives, and other programs that influence the implementation of the scoping plan. The report also may include recommendations from the state board for legislative action and consideration.

history: (History: Amended by Stats. 2024, Ch. 184, Sec. 2. (SB 1136) Effective January 1, 2025.)

part: 2. MANDATORY GREENHOUSE GAS EMISSIONS REPORTING


text:
(a) This section shall be known, and may be cited, as the Climate Corporate Data Accountability Act.

(b) For purposes of this section, the following terms have the following definitions:

(1) “Emissions reporting organization” means a nonprofit emissions reporting organization contracted by the state board pursuant to paragraph (3) of subdivision (c) that both:

(A) Currently operates a greenhouse gas emissions reporting organization for organizations operating in the United States.

(B) Has experience with greenhouse gas emissions disclosure by entities operating in California.

(2) “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.

(3) “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.

(4) “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.

(5) “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.

(c) (1) 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:

(A) The emissions reporting organization, if contracted for services.

(B) The state board.

(2) The state board shall ensure that the regulations adopted pursuant to this subdivision require all of the following:

(A) (i) (I) 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.

(II) 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.

(ii) 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.

(iii) 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.

(iv) (I) 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).

(II) 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.

(v) 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.

(vi) 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.

(B) 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.

(C) 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.

(D) (i) 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.

(ii) 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.

(E) 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.

(F) (i) 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.

(ii) 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.

(iii) 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.

(iv) 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.

(v) 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).

(G) (i) That a reporting entity shall pay an annual fee to the state board for the administration and implementation of this section.

(ii) 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.

(iii) 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.

(iv) The state board may adjust the fee in any year to reflect changes in the California Consumer Price Index during the prior year.

(3) 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).

(4) The state board may adopt or update any other regulations that it deems necessary and appropriate to implement this section.

(5) In developing the regulations required pursuant to this subdivision, the state board shall consult with all of the following:

(A) The Attorney General.

(B) Other government stakeholders, including, but not limited to, experts in climate science and corporate carbon emissions accounting and reporting.

(C) Investors.

(D) Stakeholders representing consumer and environmental justice interests.

(E) Reporting entities that have demonstrated leadership in full-scope greenhouse gas emissions accounting and public disclosure and greenhouse gas emissions reductions.

(6) 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.

(d) (1) 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.

(2) The state board shall ensure the report required by this subdivision is posted publicly by either of the following:

(A) 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).

(B) The state board on its public internet website.

(e) (1) (A) 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.

(B) 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.

(C) Any contract for services with a reporting organization shall be considered a noninformation technology services contract for procurement purposes.

(2) 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.

(f) (1) Section 38580 does not apply to a violation of this section.

(2) (A) 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:

(i) The violator’s past and present compliance with this section.

(ii) Whether the violator took good faith measures to comply with this section and when those measures were taken.

(B) 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.

(C) Penalties assessed on scope 3 reporting, between 2027 and 2030, shall only occur for nonfiling.

(g) 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).

(h) 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.

(i) 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.

history: (History: Amended by Stats. 2025, Ch. 609, Sec. 1. (AB 154) Effective October 11, 2025.)


text:
(a) For purposes of this section, the following definitions apply:

(1) “Climate reporting organization” means a nonprofit climate reporting organization contracted by the state board pursuant to subdivision (d) that both:

(A) Currently operates a climate reporting organization for organizations operating in the United States.

(B) Has experience with climate-related financial risk disclosure by entities operating in California.

(2) “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.

(3) “Climate-related financial risk report” means a report required by subdivision (b).

(4) “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.

(b) (1) (A) 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:

(i) 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).

(ii) Its measures adopted to reduce and adapt to climate-related financial risk disclosed pursuant to clause (i).

(B) 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.

(2) 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.

(3) 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:

(A) 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.

(B) 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.

(4) 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.

(c) (1) 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.

(2) (A) 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.

(B) (i) 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.

(ii) The state board may adjust the fee in any year to reflect changes in the California Consumer Price Index during the prior year.

(C) 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.

(d) The state board may contract with a climate reporting organization to do any of the following it deems appropriate:

(1) Biennially prepare a public report that contains all of the following elements:

(A) A review of the disclosure of climate-related financial risk contained in a subset of publicly available climate-related financial risk reports by industry.

(B) 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.

(C) Identification of inadequate or insufficient reports.

(2) 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).

(3) Monitor federal regulatory actions among agency members of the federal Financial Stability Oversight Council, as well as nonindependent regulators overseen by the White House.

(e) Any contract for services with a reporting organization shall be considered a noninformation technology services contract for procurement purposes.

(f) (1) Section 38580 does not apply to a violation of this section.

(2) 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:

(A) The violator’s past and present compliance with this section.

(B) Whether the violator took good faith measures to comply with this section and when those measures were taken.

(g) 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).

history: (History: Amended by Stats. 2025, Ch. 609, Sec. 2. (AB 154) Effective October 11, 2025.)


text:
The state board, in consultation with the California Department of Forestry and Fire Protection, shall develop all of the following:

(a) A standardized system for quantifying the direct carbon emissions and decay from fuel reduction activities for purposes of meeting the accounting requirements for Greenhouse Gas Reduction Fund expenditures. This system may include standardized lookup tables by forest stand type, including for oak woodland forests, and harvest or other management prescriptions. The system shall acknowledge that certain expenditures, such as for planning, analysis, modeling, or outreach, will not have a direct greenhouse gas reduction benefit, but will facilitate necessary climate preparedness activities that will have direct greenhouse gas benefits.

(b) In consultation with academic experts, a historic baseline of greenhouse gas emissions from California’s natural fire regime reflecting conditions before modern fire suppression. This shall be completed on or before December 31, 2020. The baseline may be included within the state board’s natural working lands inventory.

(c) On or before December 31, 2020, and every five years thereafter, a report that assesses greenhouse gas emissions associated with wildfire and forest management activities.

history: (History: Added by Stats. 2018, Ch. 626, Sec. 4. (SB 901) Effective January 1, 2019.)


text: By January 1, 2008, the state board shall, after one or more public workshops, with public notice, and an opportunity for all interested parties to comment, determine what the statewide greenhouse gas emissions level was in 1990, and approve in a public hearing, a statewide greenhouse gas emissions limit that is equivalent to that level, to be achieved by 2020. In order to ensure the most accurate determination feasible, the state board shall evaluate the best available scientific, technological, and economic information on greenhouse gas emissions to determine the 1990 level of greenhouse gas emissions.

path: 25.5. CALIFORNIA GLOBAL WARMING SOLUTIONS ACT OF 2006 > 3. STATEWIDE GREENHOUSE GAS EMISSIONS LIMIT


text:
(a) The statewide greenhouse gas emissions limit shall remain in effect unless otherwise amended or repealed.

(b) It is the intent of the Legislature that the statewide greenhouse gas emissions limit continue in existence and be used to maintain and continue reductions in emissions of greenhouse gases beyond 2020.

(c) The state board shall make recommendations to the Governor and the Legislature on how to continue reductions of greenhouse gas emissions beyond 2020.

part: 3. STATEWIDE GREENHOUSE GAS EMISSIONS LIMIT


text: The state board shall adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions from sources or categories of sources, subject to the criteria and schedules set forth in this part.

part: 4. GREENHOUSE GAS EMISSIONS REDUCTIONS

path: 25.5. CALIFORNIA GLOBAL WARMING SOLUTIONS ACT OF 2006 > 4. GREENHOUSE GAS EMISSIONS REDUCTIONS


text:
(a) On or before June 30, 2007, the state board shall publish and make available to the public a list of discrete early action greenhouse gas emission reduction measures that can be implemented prior to the measures and limits adopted pursuant to Section 38562.

(b) On or before January 1, 2010, the state board shall adopt regulations to implement the measures identified on the list published pursuant to subdivision (a).

(c) The regulations adopted by the state board pursuant to this section shall achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from those sources or categories of sources, in furtherance of achieving the statewide greenhouse gas emissions limit.

(d) The regulations adopted pursuant to this section shall be enforceable no later than January 1, 2010.


text: The state board shall create, and maintain on its internet website, a greenhouse gas emissions dashboard that provides updated publicly available information regarding how the state is progressing toward meeting its statewide climate change goals.

history: (History: Added by Stats. 2022, Ch. 366, Sec. 1. (SB 1145) Effective January 1, 2023.)


text:
(a) On or before January 1, 2009, the state board shall prepare and approve a scoping plan, as that term is understood by the state board, for achieving the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from sources or categories of sources of greenhouse gases by 2020 under this division. The state board shall consult with all state agencies with jurisdiction over sources of greenhouse gases, including the Public Utilities Commission and the State Energy Resources Conservation and Development Commission, on all elements of its plan that pertain to energy-related matters including, but not limited to, electrical generation, load based-standards or requirements, the provision of reliable and affordable electrical service, petroleum refining, and statewide fuel supplies to ensure the greenhouse gas emissions reduction activities to be adopted and implemented by the state board are complementary, nonduplicative, and can be implemented in an efficient and cost-effective manner.

(b) The plan shall identify and make recommendations on direct emissions reduction measures, alternative compliance mechanisms, market-based compliance mechanisms, and potential monetary and nonmonetary incentives for sources and categories of sources that the state board finds are necessary or desirable to facilitate the achievement of the maximum feasible and cost-effective reductions of greenhouse gas emissions by 2020.

(c) In making the determinations required by subdivision (b), the state board shall consider all relevant information pertaining to greenhouse gas emissions reduction programs in other states, localities, and nations, including the northeastern states of the United States, Canada, and the European Union.

(d) The state board shall evaluate the total potential costs and total potential economic and noneconomic benefits of the plan for reducing greenhouse gases to California’s economy, environment, and public health, using the best available economic models, emission estimation techniques, and other scientific methods.

(e) In developing its plan, the state board shall take into account the relative contribution of each source or source category to statewide greenhouse gas emissions, and the potential for adverse effects on small businesses, and shall recommend a de minimis threshold of greenhouse gas emissions below which emissions reduction requirements will not apply.

(f) In developing its plan, the state board shall identify opportunities for emissions reduction measures from all verifiable and enforceable voluntary actions, including, but not limited to, carbon sequestration projects and best management practices.

(g) The state board shall conduct a series of public workshops to give interested parties an opportunity to comment on the plan. The state board shall conduct a portion of these workshops in regions of the state that have the most significant exposure to air pollutants, including, but not limited to, areas designated as federal extreme nonattainment that have communities with minority populations, communities with low-income populations, or both.

(h) The state board shall update its plan for achieving the maximum technologically feasible and cost-effective reductions of greenhouse gas emissions at least once every five years.

history: (History: Amended by Stats. 2022, Ch. 361, Sec. 3. (SB 1020) Effective January 1, 2023.)


text:
(a) (1) By July 1, 2023, the state board shall develop a comprehensive strategy for the state’s cement sector to achieve net-zero emissions of greenhouse gases associated with cement used within the state as soon as possible, but no later than December 31, 2045.

(2) To ensure adequate progress is made toward achieving the goal established in paragraph (1), the state board shall establish interim targets for reductions in the greenhouse gas intensity of cement used within the state relative to the average greenhouse gas intensity of cement used within the state during the 2019 calendar year, with the goal of reducing the greenhouse gas intensity of cement used within the state to 40 percent below the 2019 average levels by December 31, 2035.

(3) When determining the greenhouse gas intensity of cement, the state board shall not include greenhouse gas emissions reductions attributable to activities or offsets that are unrelated to the raw materials, fuels or other energy sources, processes, or transportation involved in making or using cement or its inputs.

(4) (A) By July 1, 2028, the state board shall evaluate the feasibility of achieving the interim targets established under paragraph (2) and may adjust the interim targets upward or downward to reflect technological advancements and progress in addressing barriers to the deployment of greenhouse gas emissions reduction technologies and processes, including those barriers for which measures have been identified pursuant to paragraph (7) of subdivision (b).

(B) If the state board makes a downward adjustment to any interim target established under paragraph (2), the state board shall document the feasibility constraints the state board has identified and recommend measures and actions, including proposed statutory changes, necessary to overcome those constraints to enable the cement sector to achieve net-zero emissions of greenhouse gases as soon as possible, but no later than December 31, 2045.

(b) In developing the comprehensive strategy pursuant to subdivision (a), the state board shall do all of the following:

(1) Define a metric for greenhouse gas intensity and evaluate the data submitted by cement manufacturing plants to the state board for the 2019 calendar year and other relevant data about emissions of greenhouse gases for cement that was imported into the state to establish a baseline from which to measure greenhouse gas intensity reductions.

(2) Assess the effectiveness of existing measures, identify any modifications to existing measures, and evaluate new measures to overcome the market, statutory, and regulatory barriers inhibiting achievement of the objectives described in this section.

(3) Identify actions that reduce adverse air quality impacts and support economic and workforce development in communities neighboring cement plants.

(4) Include provisions to minimize and mitigate potential leakage and account for embedded emissions of greenhouse gases in imported cement in a similar manner to emissions of greenhouse gases for cement produced in the state, such as through a border carbon adjustment mechanism.

(5) Coordinate and consult with other state agencies, districts, and experts in academia, industry, and public health, and with local communities.

(6) Prioritize actions that leverage state and federal incentives, where applicable, to reduce costs of implementing greenhouse gas emissions reduction technologies and processes and to increase economic value for the state.

(7) Evaluate measures to support market demand and financial incentives to encourage the production and use of cement with low greenhouse gas intensity, including, but not limited to, consideration of all of the following measures:

(A) Measures to expedite the adoption for use in projects undertaken by state agencies, including the Department of Transportation, of Portland limestone cement and other blended cements.

(B) Measures to provide financial support and incentives for research, development, and demonstration of technologies to mitigate emissions of greenhouse gases from the production of cement with the objective of accelerating industry deployment of those technologies.

(C) Measures to facilitate fuel switching.

(D) Measures to create incentives and remove obstacles for energy efficiency improvements and waste heat recovery at cement manufacturing facilities.

(c) The state board shall implement the strategy developed pursuant to this section, upon appropriation by the Legislature.

history: (History: Added by Stats. 2021, Ch. 246, Sec. 2. (SB 596) Effective January 1, 2022.)