The California Voluntary Carbon Market Disclosures Act – first disclosures not required until 2025?

California’s Voluntary Carbon Market Disclosures Act (Assembly Bill 1305) was signed into law in October. Among other things, the VCMDA places disclosure obligations on companies making net zero claims at the enterprise or product level. The requirements of the VCMDA are discussed in detail in our earlier posts here and here.

This broadly written legislation raises numerous interpretive questions, including the date by which responsive disclosures must be posted. Although the VCMDA takes effect on January 1, 2024, it is silent on when disclosures are first required. In the absence of specificity in the VCMDA or the legislative record or any published guidance, most subject companies have been scrambling to have their first disclosures up at the beginning of the year.   

The bill sponsor – Assemblymember Jesse Gabriel – has now weighed in on his intent in a letter to the Chief Clerk of the Assembly. He acknowledges in the letter that the bill does not specify the date on which the first set of disclosures must be posted to a company’s internet website. However, he indicates in the letter that it was his intent that the first annual disclosure be posted by January 1, 2025, to provide reporting entities with sufficient time to align their business practices with the stated objectives of AB 1305 prior to being subject to potential civil fines.

According to the letter to the Chief Clerk, Assemblymember Gabriel intends to submit a formal letter to the Assembly Daily Journal when the State Assembly reconvenes on January 3, 2024. Letters to the Daily Journal are often used to express legislative intent.

This January 2023 California Globe article by Chris Micheli – described in the byline as a lobbyist with Aprea & Micheli and an Adjunct Professor of Law at the University of the Pacific McGeorge School of Law – provides further color:

“One method to help ascertain the legislative intent behind a specified measure is a letter that is published in the Assembly Daily Journal or the Senate Daily Journal by the bill’s author. These letters, for which there are many each year, may be used by the bill’s author to explain an ambiguity in the bill or explain the purpose of particular changes in the law as done by the bill.

“The courts in this state can utilize these letters as extrinsic aids in determining the intent of the Legislature. Different versions of the bill, committee and floor analyses, and other items are generally given greater weight than these letters. Nonetheless, a Journal letter may be the best indicator available regarding the intent of the bill’s author and so they should be consulted.”

For readers of this post that want to dig further into the topic of Daily Journal letters, Mr. Micheli has written numerous other articles on this subject. Among others, in a November 2023 California Globe article, he addressed FAQs about using letters to the Daily Journal. 

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