HOUSE BILL 653

49th legislature - STATE OF NEW MEXICO - first session, 2009

INTRODUCED BY

Benjamin H. Rodefer

AN ACT

RELATING TO THE ENVIRONMENT; ENACTING A NEW SECTION OF THE AIR QUALITY CONTROL ACT TO PROVIDE AUTHORITY TO THE ENVIRONMENTAL IMPROVEMENT BOARD TO ADOPT RULES TO REDUCE GREENHOUSE GAS EMISSIONS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. A new section of the Air Quality Control Act is enacted to read:

     "[NEW MATERIAL] GREENHOUSE GAS EMISSIONS--ENVIRONMENTAL IMPROVEMENT BOARD--CAP AND TRADE RULES.--

          A. The board shall adopt rules to reduce greenhouse gas emissions in New Mexico. The rules shall require affected greenhouse gas emission sources to reduce greenhouse gas emissions and establish a program for trading emission reduction allowances in a greenhouse gas cap and trade program that provides for:

                (1) affected sources to reduce greenhouse gas emissions;

                (2) a greenhouse gas emissions trading and banking program;

                (3) a method for establishing and allocating emission allowances and other emission reduction units, including the free distribution of allowances to electricity providers covered by the program after the annual reduction is made to the cap;

                (4) three-year compliance periods beginning January 1, 2012;

                (5) emissions and allowance monitoring, tracking, recordkeeping and terms and conditions for allowances or other actions that may be necessary to verify compliance with this section;

                (6) mandatory emissions reporting requirements for:

                     (a) sources subject to the board's authority pursuant to Section 74-2-5 NMSA 1978 that emit annual emissions equal to or greater than ten thousand metric tons of carbon dioxide equivalent; or

                     (b) entities for whom ten thousand metric tons or more of carbon dioxide equivalent is attributable due to imported electricity or residential, commercial, industrial or transportation fuels;                            (7) public disclosure of facility-level aggregated carbon dioxide equivalent emissions; provided that such disclosure may be delayed for market-related reasons;

                (8) public disclosure of other data and information, except upon a showing pursuant to Section 74-2-11 NMSA 1978;

                (9) methods and requirements for auctioning allowances, including coordinated regional auction processes and minimum annual auctions of ten percent of the state's total allowance cap;

                (10) early reduction allowances, including criteria to quantify and grant such allowances; and

                (11) offset allowances, including criteria to quantify and grant such allowances, such as accreditation of third-party verifiers.

          B. In adopting rules pursuant to this section, the board shall:

                (1) design rules, including the distribution of allowances, that are equitable, minimize costs, including costs to end-user energy consumers, maximize total benefits to the state and recognize early action to reduce greenhouse gas emissions;

                (2) ensure that activities undertaken to comply with the rules do not substantially adversely affect low-income communities;

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

                (4) consider cost-effectiveness of the rules;

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

                (6) minimize the administrative burden of implementing and complying with the rules;

                (7) minimize leakage and competitive disadvantages to New Mexico industries consistent with federal constitutional requirements; and

                (8) consider whether the allowance market is of sufficient size to promote liquidity and reduce costs.

          C. By January 1, 2010, the department shall establish and adjust as appropriate the statewide greenhouse gas emissions level in 2000 and the statewide greenhouse gas emissions limit that is equivalent to ten percent below that level by 2020. The department shall establish and adjust as appropriate the post-2020 greenhouse gas emissions limit not less than three years in advance of the effective date of the limit.

          D. The department shall coordinate and participate with other states, regional organizations and the federal government for implementation of this section. 

          E. Any violation of a rule, regulation, order, emission limitation, emission reduction measure or other measure adopted by the board pursuant to this section shall be deemed a violation of a permit or regulation, as applicable, and shall be subject to enforcement pursuant to the Air Quality Control Act.

           F. Any affected source that does not hold sufficient allowances at the end of each compliance period may be assessed a civil penalty equal to the market value of three allowances assessed at the end of the compliance period for every metric ton of carbon dioxide equivalent not covered by an allowance.  

          G. 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 the deadline. The adjustment period shall not exceed one year unless approved by the legislature. The governor shall, within ten days of invoking this subsection, provide written notification to the legislature of the action undertaken.

          H. The department shall report annually to the appropriate interim legislative committee on the status of implementation of this section.  

          I. As used in this section:

                (1) "affected source" means:

                     (a) any source subject to the board's authority pursuant to Section 74-2-5 NMSA 1978 that annually emits twenty-five thousand metric tons or more of carbon dioxide equivalent; or

                     (b) any entity for whom twenty-five thousand metric tons or more of carbon dioxide equivalent is attributable due to imported electricity or residential, commercial, industrial or transportation fuels;

                (2) "allowance" means an authorization to emit during a specified year up to one ton of carbon dioxide equivalent; 

                (3) "banking" means the carryover of unused allowances or offsets from one compliance period to another;

                (4) "board" means the environmental improvement board;

                (5) "carbon dioxide equivalent" means a metric measure used to compare emissions from various greenhouse gases based upon their global warming potential;

                (6) "entity" means any individual, estate,

trust, receiver, cooperative association, club, corporation,

company, firm, partnership, limited liability company, limited

liability partnership, joint venture, syndicate, other

association or gas, water or electric utility owned or operated

by a county or municipality;

                (7) "greenhouse gas" means any of the following gases:

                     (a) carbon dioxide;

                     (b) methane;

                     (c) nitrous oxide;

                     (d) hydrofluorocarbons;

                     (e) perfluorocarbons; and

                     (f) sulfur hexafluoride;

                (8) "greenhouse gas emissions limit" means an authorization to emit up to a level of carbon dioxide equivalent specified by the department;

                (9) "leakage" means a reduction in emissions of greenhouse gases within the state that is offset by emissions of greenhouse gases outside the state;

                (10) "offset allowance" means an allowance issued to a project determined by the department to reduce a carbon dioxide equivalent emissions that occurs outside an affected source sector and that is real, verifiable, surplus, permanent and enforceable; and

                (11) "sector" means any entity with the same North American industry classification system code as an affected source."

     Section 2. DELAYED REPEAL.--Section 1 of this act is repealed on the first day of the month following certification by the secretary of environment, after a public hearing, to the secretary of finance and administration, the legislative council service and the New Mexico compilation commission that a federal program that will result in emission reductions at least as great as required by Section 1 of this 2009 act has been implemented in New Mexico and that the federal program recognizes allowances distributed in New Mexico, early action credits and offset projects developed pursuant to the provisions of Section 1 of this act.

     Section 3. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2009.

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