Turmoil, anger at 11th hour as LA smog-credits bill neared victory

Nobody thought the fight over Rod Wright’s SB 827 would be easy. They were right.

“There was carnage,” said Sen. Wright, D- Los Angeles, of the fight over the highest-stakes environmental-regulatory bill of the year, with a potential, $4 billion economic hit and 65,000 jobs at stake in the L.A. basin. The bill allows air regulators to distribute valuable emissions credits in the way they did before the courts blocked them. The bill now is before Republican Gov. Arnold Schwarzenegger.

 But the story of the bill’s path through the Legislature illustrates the backroom deals and last-minute maneuvering that have become emblematic of the end of a legislative year. Charges of deceit, manipulation and out-right lying were all flying around committee rooms and the Assembly and Senate floors as the sun began to rise Saturday morning and the Legislature was still in session.

The bill began life under another name, and was born in a hijacking. It was rewritten, then rewritten again, then rewritten again. It was bounced from committee to committee and back again as tempers flared and suspicions deepened in the middle of the night. “There were two or three occasions when things got pretty testy,” Wright said. Wright, a seasoned veteran of the Capitol’s political wars, knows when things get testy.

The measure was left for dead in the inactive file, then reemerged as if by magic, then went back down, then went back up. Another bill, initially identical in contents and intended to accompany SB 827 as part of a package, was more narrowly drafted to reflect environmentalists’ concerns. It then disappeared down a rabbit hole and never returned, and the angry author of that bill, Sen. Alan Lowenthal, D-Long Beach, demanded that his colleagues vote against SB 827.

"It was a direct assault on CEQA (the California Environmental Quality Act)," Lowenthal said later.

"All of the bills — his bill, my bill, the other (Sentinel powerplant) bill — were going to affect CEQA in some way, because each of our bills was attempting to do something. There was no way of doing anything and not modifying CEQA," Wright said.

Each step of the way, SB 827 was accompanied by Wright and a phalanx of lobbyists who pushed the legislation from one house to the other and back. A crucial change in the bill sought by the South Coast Air Quality Management District was made in the middle of the night by Senate leaders and wound up facing a committee vote reflecting the change — despite the author’s promise that it would not be changed.

Indeed, despite that change, the chair of a committee that heard the bill, Assemblyman Felipe Fuentes, D-Sylmar, told colleagues on the Assembly floor that there was nothing improper about the bill’s journey to the Assembly floor.

“It’s been alluded to a couple of times that this was a 'gut and amend.'  It was not,” Fuentes said. “This bill was heard in Senate E.Q. (Environmental Quality) and in Assembly Natural Resources, and it was just heard in Utilities and Commerce. There has been a process to this bill.”

But Fuentes didn’t have all of his facts quite right. And he wasn’t alone: Others made statements on the bill that were similarly misleading.

According to the Legislative Counsel’s bill tracking system, SB 827 was never heard in the Senate Environmental Quality Committee. While the bill was in fact heard in the Assembly Natural Resources Committee on Sept. 9, the controversial amendments had not yet been added to the bill. Those amendments did not materialize until a hearing of the Assembly Utilities and Commerce Committee, held just before midnight on Friday, Sept. 11.

Assemblyman Jared Huffman, D-San Rafael, said the late amendments betrayed an earlier promise from Wright not to amend the bill. Wright made those assurances to Huffman during a Sept. 9 hearing of Assembly Natural Resources.

When Huffman confronted Wright about the late amendments during the late-night hearing of the Assembly Utilities committee, Wright said he had essentially lost control over his bill, and that the amendments to the bill were being added at the behest of Senate Leader Darrell Steinberg, D-Sacramento.

Wright flatly denied that he had promised not to amend the bill.

"That's not true, that's factually inaccurate. I was asked, 'Do you intend to modify this bill when it leaves this committee?' and I said I didn't have any intention of doing that, but that I was going to another committee and we are still looking at this," Wright said.

He also said that every version of the bill  — "literally every comma, every word" — had been vetted by the Senate leadership and the appropriate policy committees.

By then, the bill had clearly been marked for quick passage by Steinberg – “pro-tem-ized”, in Capitol parlance. After the bill left the Assembly floor, it was supposed to go back to the committee, based on an earlier agreement between the committee chairman, Joe Simitian, D-Palo Alto, and Wright.  But the bill moved directly to the Senate floor without a committee vote after passing the Assembly shortly after 2 a.m. Saturday morning.

The bill passed the Senate on a 27-9 vote. Only 12 Democrats voted for the bill.

Those who knew the bill had been diddled were not happy.

“The process was awful, and all of this political intrigue and lobbying was swirling around these bills to the point that it was one of the more distressing things we did,” said Huffman. “I am very discouraged that the Legislative process turned into an open market for CEQA exemptions in the final days of the session.” CEQA is the state’s principal environmental law.

Assemblyman Ira Ruskin, D-Redwood City, expressed dismay that the Assembly was overriding environmental laws at the 11th hour. “The Pandora’s Box is fully opened and the process has begun to run amok,” he said. “Just on the merits of the process, I would urge a ‘no’ vote” on SB 827.

Proponents of the measure were not impressed with the protests of environmentalists. “No more sanctimonious comments about the high moral ground,” snapped an increasingly angry Assemblyman Charles Calderon, D-Montebello, who successfully jockeyed the bill in the lower house.

Wright’s  SB 827 – originally known as SB 696 before parliamentary surgery – blocks a November 2008 court ruling and allows the AQMD to resume its method of banking and distributing air-emission credits.

“The bottom line in all this is that we wanted to make sure that the emission credits being exchanged are actually resulting in a reduction of pollution,” said Jane Williams, executive director of the Communities Against Toxics, which fought the district in court.  

The ruling, stemming from a lawsuit brought by Williams' group, the Natural Resources Defense Council and its allies, effectively froze AQMD’s banking, sale and distribution of credits not only to businesses and commercial interests, but to the purveyors of essential services as well, including schools, emergency services, hospitals, and the like.

Last week, the court lifted the moratorium on those services, in what partisans called the “free-the-hostages decision,” after environmentalists led by the NRDC sought the exemption from the court.

The court fights aren’t over. If Schwarzenegger signs SB 827, it will go into effect in January. As soon as the AQMD begins redistributing the credits, the environmentalis
ts intend to go back to court, Williams said.

The environmentalists contend that the AQMD distributes the valuable emissions credits in such a way that high-polluting entities operate at the expense of cleaner emitters, and that the process violates the state’s environmental laws. The fight in the Capitol over SB 827 pitted the environmentalists on one side, in opposition, and the AQMD and an array of business and local groups in support, who said Wright’s bill was crucial to boosting Los Angeles’ recession-crippled economy.

“Whenever you talk about CEQA, there are people for whom that’s a Holy Grail. But you had every segment of Southern California on hold. You had commerce tied up, you had $2 billion in stimulus money on hold. It was wreaking havoc in the region.”  Wright said the court’s ruling blocked businesses and essential services from operating, threatened 65,000 jobs and forced a $4 billion hit on the L.A. area-economy.

“I don’t question the validity of the advocacy of the people who brought this (suit), but you can’t stop commerce in the whole region because four or five people don’t like each other,” Wright added.