SB1612

SECTION 1. The legislature finds that global warming poses a serious threat to the economic well-being, public health, natural resources, and the environment of Hawaii. The potential adverse impacts of global warming include the exacerbation of air quality problems, a rise in sea levels resulting in the displacement businesses and residences, damage to marine ecosystems and the natural environment, and an increase in the incidence of infectious diseases, asthma, and other human health-related problems.

Global warming will have detrimental effects on some of Hawaii's largest industries, including tourism, agriculture, recreational and commercial fishing, and forestry. It will also increase the strain on electricity supplies necessary to meet the demand for air conditioning during the hottest times of the year.

The State has long been a leader in environmental stewardship and is endeavoring to lead the way in alternative renewable energy development and use. It is the intent of the legislature that this air pollution reduction program will continue the State's tradition of environmental leadership by placing Hawaii among the nation's leaders in efforts to reduce emissions of greenhouse gases. By reducing emissions here in Hawaii, this program will serve as an example to other states, the federal government, and other countries to protect our fragile environment. Hawaii will also position 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 assist the State in achieving the 2020 statewide limit on emissions of greenhouse gases established by this Act. This Act will provide an opportunity for the State to take a global economic and technological leadership role in reducing emissions of greenhouse gases.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

GREENHOUSE GAS EMISSIONS REDUCTION

§ -1 Definitions. As used in this chapter unless the context otherwise requires:

"Allowance" means an authorization to emit, during a specified year, up to one ton of carbon dioxide equivalent.

"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 department. "Alternative compliance mechanism" includes but is not limited to a flexible compliance schedule, alternative control technology, a process change, or a product substitution.

"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.

"Cost-effective" or "cost-effectiveness" means the cost per unit of reduced emissions of greenhouse gases adjusted for its global warming potential.

"Department" means the department of health.

"Direct emission reduction" means a greenhouse gas emission reduction action made by a greenhouse gas emission source at that source.

"Director" means the director of health.

"Emissions reduction measure" means programs, measures, standards, and alternative compliance mechanisms authorized pursuant to this chapter, applicable to sources or categories of sources, that are designed to reduce emissions of greenhouse gases.

"Greenhouse gas" or "greenhouse gases" includes all of the following gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexaflouride.

"Greenhouse gas emissions limit" means an authorization, during a specified year, to emit up to a level of greenhouse gases specified by the department expressed in tons of carbon dioxide equivalents.

"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 department, that its participation in the program established under this chapter will enable the department to effectively reduce greenhouse gas emissions and monitor compliance with the statewide greenhouse gas emissions limit.

"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.

"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; or

(2) Greenhouse gas emissions exchanges, banking, credits, and other transactions, governed by rules and protocols established by the director, 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 director pursuant to this chapter.

"Statewide greenhouse gas emissions" means the total annual emissions of greenhouse gases in the State, including all emissions of greenhouse gases from the generation and consumption of electricity in Hawaii. Statewide emissions shall be expressed in tons of carbon dioxide equivalents.

"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 director.

§ -2 Administration. The department shall administer this chapter through the director. The director may delegate to any person the power and authority vested in the director by this chapter as the director deems reasonable and proper for the effective administration of this chapter, except the power to make rules.

§ -3 Statewide greenhouse gas emissions limit; adoption. No later than January 1, 2008, after one or more public workshops, with public notice and an opportunity for all interested parties to comment, the director shall determine what the statewide greenhouse gas emissions level was in 1990 and approve a statewide greenhouse gas emissions limit that is equivalent to that level to be achieved by 2020. To ensure the most accurate determination feasible of the 1990 level of greenhouse gas emissions, the department shall evaluate the best available scientific, technological, and economic information on greenhouse gas emissions.

The director shall make annual reports to the governor and the legislature on ways to continue reductions of greenhouse gas emissions beyond 2020.

§ -4 Greenhouse gas emissions; limits. (a) Before January 2, 2011, the director shall adopt rules establishing greenhouse gas emission limits and emission reduction measures to achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions in furtherance of achieving the statewide greenhouse gas emissions limit, to become operative beginning on January 1, 2012.

(b) The director, to the extent feasible and in furtherance of achieving the statewide greenhouse gas emissions limit, shall adopt rules pursuant to this section and section -11 that:

(1) Minimize costs and maximize the total benefits to the State and encourage early action to reduce greenhouse gas emissions;

(2) Ensure that activities undertaken to comply with the rules do not disproportionately impact low-income communities;

(3) Ensure that entities that have voluntarily reduced their greenhouse gas emissions prior to the implementation of this section receive appropriate credit for early voluntary reductions;

(4) Ensure that activities undertaken pursuant to the rules complement, and do not interfere with, efforts to achieve and maintain federal and state ambient air quality standards and to reduce toxic air contaminant emissions;

(5) Consider cost-effectiveness of these rules;

(6) Consider overall societal benefits, including reductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health;

(7) Minimize the administration burden of implementing and complying with these rules;

(8) Minimize leakage; and

(9) Consider the significance of the contribution of each source or category of sources to statewide emissions of greenhouse gases.

(c) In furtherance of achieving the statewide greenhouse gas emissions limit, by January 1, 2011, the director may adopt rules that establish a system of market-based declining annual aggregate emission limits for sources or categories of sources that emit greenhouse gas emissions, applicable from January 1, 2012, to December 31, 2020, that the director determines will achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions, in the aggregate, from those sources or categories of sources.

(d) Any rule adopted by the director pursuant to this section or section -11 shall ensure all of the following:

(1) The greenhouse gas emission reductions achieved are real, permanent, quantifiable, verifiable, and enforceable by the director;

(2) For rules adopted pursuant to section -11, the reduction is in addition to any greenhouse gas emission reduction otherwise required by law or rule and any other greenhouse gas emission reduction that otherwise would occur; and

(3) If applicable, the greenhouse gas emission reduction occurs over the same time period and is equivalent in amount to any direct emission reduction required pursuant to this chapter.

(e) The director shall rely upon the best available economic and scientific information and its assessment of existing and projected technological capabilities when adopting rules required by this section.

(f) The director shall consult with the public utilities commission in the development of the rules as they affect electricity and natural gas providers in order to minimize duplicative or inconsistent requirements.

(g) After January 1, 2011, the director may revise rules adopted pursuant to this section and adopt additional rules to further this chapter.

§ -5 Mandatory greenhouse gas emissions; reporting. (a) The director, pursuant to chapter 91, shall adopt rules to require the reporting and verification of statewide greenhouse gas emissions and to monitor and enforce compliance with this chapter.

(b) The rules shall:

(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 and including greenhouse gas emissions from electricity produced and consumed in the State;

(2) Provide reporting tools and formats to ensure collection of necessary data; and

(3) Require greenhouse gas emission sources to maintain comprehensive records of all reported greenhouse gas emissions.

(c) The director shall periodically review and update state emission reporting requirements and endeavor to make the requirements consistent with the requirements of international, federal, and other states' greenhouse gas emission reporting programs, as necessary.

§ -6 Greenhouse gas emissions; reductions. (a) The director shall adopt rules 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 chapter.

(b) Before July 30, 2007, the director 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 this section. Before January 2, 2010, the director shall adopt rules to implement the measures identified on the list published pursuant to this subsection.

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

§ -7 Scoping plan. (a) Before January 2, 2009, the director shall prepare and approve a scoping plan, as that term is understood by the director, 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 chapter. The director shall consult with all state agencies with jurisdiction over sources of greenhouse gases, including the public utilities 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 director are complementary, non-duplicative, and can be implemented in an efficient and cost-effective manner.

(b) The scoping plan developed by the director shall identify and make recommendations on direct emission reduction measures, alternative compliance mechanisms, market-based compliance mechanisms, and potential monetary and non-monetary incentives for sources and categories of sources that the director 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 under subsection (b), the director shall consider all relevant information pertaining to greenhouse gas emissions reduction programs in other states, localities, and nations, including California, the northeastern states of the United States, Canada, and the European Union.

(d) The director shall evaluate the total potential costs and total potential economic and non-economic benefits of the plan for reducing greenhouse gases to the State's economy, environment, and public health, using the best available economic models, emission estimation techniques, and other scientific methods.

(e) In developing the plan, the director shall consider 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 minimum threshold of greenhouse gas emissions below which emission reductions requirements shall not apply.

(f) In developing a scoping plan, the director shall identify opportunities for emission reductions measures from all verifiable ad enforceable voluntary actions, including but not limited to carbon sequestration projects and best management practices.

(g) The director shall conduct a series of public workshops to give interested parties an opportunity to comment on the scoping plan. The director shall conduct at least one of these workshops in each county.

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

§ -8 Greenhouse gas emissions; early enaction. Nothing in this chapter shall restrict the director from adopting greenhouse gas emission limits or emission reduction measures prior to January 1, 2011, imposing those limits or measures prior to January 1, 2012, or providing early reduction credit where appropriate.

§ -9 Greenhouse gas emissions; consultation. The director shall consult with other states, the federal government, non-governmental organizations, and, if applicable, other nations to identify effective strategies and methods to reduce greenhouse gases, manage greenhouse gas control programs, and to facilitate the development of integrated and cost-effective regional, national, and international greenhouse gas reduction programs.

§ -10 Emissions programs; community opportunities. The director shall ensure that the greenhouse gas emission reduction rules, programs, mechanisms, and incentives under its jurisdiction, where applicable and to the extent feasible, direct public and private investment toward the most disadvantaged communities in the State and provide an opportunity for small businesses, schools, affordable housing associations, and other community institutions to participate in the benefit from statewide efforts to reduce greenhouse gas emissions.

§ -11 Market-based compliance mechanisms. (a) The director may include in the rules adopted pursuant to section -4 the use of market-based compliance mechanisms to comply with the rules.

(b) Prior to the inclusion of any market-based compliance mechanism in the rules, to the extent feasible and in furtherance of achieving the statewide greenhouse gas emissions limit, the director shall do all of the following:

(1) Consider the potential for direct, indirect, and cumulative emission impacts from these mechanisms, including localized impacts in communities that are already adversely impacted by air pollution;

(2) Design any market-based compliance mechanism to prevent any increase in the emissions of toxic air contaminants or criteria air pollutants identified by the Environmental Protection Agency; and

(3) Maximize additional environmental and economic benefits for Hawaii, as appropriate.

(c) The director shall adopt rules governing how market-based compliance mechanisms may be used by regulated entities subject to greenhouse gas emission limits and mandatory emission reporting requirements to achieve compliance with their greenhouse gas emissions limits.

§ -12 Adoption of methodologies. The director shall adopt methodologies for the quantification of voluntary greenhouse gas emission reductions. The director shall adopt rules to verify and enforce any voluntary greenhouse gas emission reductions that are authorized by the director for use to comply with greenhouse gas emission limits established by the director. The adoption of methodologies shall be exempt from the rulemaking provisions of chapter 91.

§ -13 Limitations on director's authority. Nothing in this chapter confers any authority on the director to alter any programs administered by other state agencies for the reduction of greenhouse gas emissions.

§ -14 Enforcement. (a) The director shall monitor compliance with and enforce any rule, order, emission limitation, emissions reduction measure, or market-based compliance mechanism adopted by the director pursuant to this chapter.

(b) Any violation of any rule, order, emission limitation, emissions reduction measure, or other measure adopted by the director pursuant to this chapter may be subject to penalties under part IV of chapter 342B.

(c) Any violation of any rule, order, emission limitation, emissions reduction measure, or other measure adopted by the director pursuant to this chapter shall be deemed to result in an emission of an air pollutant or regulated air pollutant as defined in section 342B-1, for the purposes of the penalty provisions of part IV of chapter 342B.

(d) The director may develop a method to convert a violation of any rule, order, emission limitation, or other emissions reduction measure adopted by the director pursuant to this chapter into the number of days in violation, where appropriate, for the purposes of the penalty provisions of part IV of chapter 342B.

§ -15 Mobile sources of emissions. The director may adopt rules to control mobile sources of greenhouse gas emissions to achieve reductions in statewide greenhouse gas emissions.

§ -16 Environmental justice advisory committee. (a) The director, by July 1, 2007, shall convene an environmental justice advisory committee, of at least three members, to advise the department in developing the scoping plan pursuant to section -7 and any other pertinent matter in implementing this chapter. The advisory committee shall be composed of representatives from communities in the State with the most significant exposure to air pollution, including but not limited to communities with low-income populations.

(b) The director shall appoint the environmental justice advisory committee members from nominations received from environmental justice organizations and community groups.

(c) The members of the committee shall serve without compensation but shall be reimbursed for reasonable expenses, including travel expenses, for attendance at environmental justice advisory committee meetings.

§ -17 Economic and technology advancement advisory committee; established. (a) The director shall appoint an economic and technology advancement advisory committee to advise the department on activities that will facilitate investment in and implementation of technological research and development opportunities, including but not limited to: identifying new technologies, research, demonstration projects; funding opportunities; developing state, national, and international partnerships and technology transfer opportunities; and identifying and assessing research and advanced technology investment and incentive opportunities that will assist in the reduction of greenhouse gas emissions. The economic and technology advancement advisory committee may also advise the director on state, regional, national, and international economic and technological developments related to greenhouse gas emission reductions.

(b) The economic and technology advancement advisory committee members shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

§ -18 State agencies; efforts to reduce emissions. (a) All state agencies shall consider and implement strategies to reduce their greenhouse gas emissions.

(b) Nothing in this chapter shall relieve any person, entity, or public agency of compliance with other applicable federal, state, or local laws, including state air and water quality requirements, and other requirements for protecting public health or the environment.

§ -19 Limitations on authority. (a) Nothing in this chapter shall affect the authority of the public utilities commission.

(b) Nothing in this chapter shall affect the obligation of an electrical corporation to provide customers with safe and reliable electric service.

(d) Nothing in this chapter shall limit the existing authority of a state entity to adopt and implement greenhouse gas emissions reduction measures, nor shall it relieve any state entity of its legal obligations to comply with existing law or regulation.

(e) Nothing in this chapter shall preclude, prohibit, or restrict the construction of any new facility or the expansion of an existing facility subject to rule under this chapter if all applicable requirements are met and the facility is in compliance with the rules adopted pursuant to this chapter.

§ -20 Schedule of fees; establishment. The director may adopt rules that specify a schedule of fees to be paid by the sources of greenhouse gas emissions regulated pursuant to this chapter. The revenues collected pursuant to this section shall be deposited into the clean air special fund established under section 342B-32 to be used for the purposes thereof.

§ -21 Governor's authority to adjust deadlines. (a) In the event of extraordinary circumstances, catastrophic events, or threat of significant economic harm, the governor may adjust the applicable deadlines for individual regulations, or for the State in the aggregate, to the earliest feasible date after that deadline.

(b) The adjustment period may not exceed one year, unless the governor makes an additional adjustment pursuant to subsection (a).

(c) The governor, within ten days of invoking subsection (a), shall provide written notification to the legislature of the action undertaken."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 4. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1612
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII