Democrats choose union over Tesla in California cap-and-trade deal

In this June 22, 2012 file photo, Tesla workers cheer on the first Tesla Model S cars sold during a rally at the Tesla factory in Fremont, Calif.
In this June 22, 2012 file photo, Tesla workers cheer on the first Tesla Model S cars sold during a rally at the Tesla factory in Fremont, Calif. AP

Democratic lawmakers and Gov. Jerry Brown are siding with organized labor in its battle with automaker Tesla, inserting a provision in last-minute legislation to spend $1.5 billion in cap-and-trade money.

The negotiated package largely spends funds on a variety of anti-pollution programs, such as those to retrofit and replace smog-belching big rigs and buses.

But the legislation, amended late Monday to be ready for votes before lawmakers adjourn for the year on Friday, also would inject the state into an increasingly acrimonious union organizing campaign at automaker Tesla’s Fremont plant. Beginning in July 2018, manufacturers that want to be eligible for state zero-emission vehicle rebates – a major driver of Tesla sales – would need to be certified by the state labor secretary “as fair and responsible in the treatment of their workers.”

Clean vehicle rebates have helped put more than 100,000 vehicles on the road. Tesla buyers are eligible for rebates of up to $2,500, but that perk could be imperiled by the legislation’s worker-treatment language.

The United Auto Workers union has set out to organize thousands of Tesla workers, some of whom allege that the company had illegally intimidated them. The National Labor Relations Board’s Oakland regional office filed a complaint against the company late last month.

About 350 people wanting to purchase the newest Tesla, the Model 30, waited in line Thursday morning, March 31, 2016, in Rocklin. They came from all around the region. Some arrived the day before.

In a letter Tuesday to Brown, the Association of Global Automakers said the proposal creates “an unpredictable standard that would be impossible to adhere to in an already challenging market.

“We believe this language presents several constitutional, legal and enforceability concerns but, more importantly, is counterproductive to building a sustainable market for zero emission vehicles in California,” wrote Damon Shelby Porter, the association’s director of state government affairs.

Steve Smith, a spokesman for the California Labor Federation, disagreed. “We think it’s important for the Legislature to send a message that we can create jobs, reduce emissions and protect workers at the same time,” he said.

Another union-friendly provision in the package sets aside $140 million for zero-emission equipment at California ports but the money cannot be spent on automated cargo-handling equipment. Increasing port automation has been a major concern of port workers unions.

The package reflects a deal between legislative Democrats and the Brown administration. It comes almost two months after lawmakers approved Assembly Bill 398. That measure extended the state’s nationally watched cap-and-trade program to reduce heat-trapping emissions blamed for climate change, removing legal uncertainty that had been blamed for sub-par pollution credit auction results.

With cap-and-trade’s future assured, the Brown administration, legislative leaders and dozens of interest groups have spent recent weeks negotiating how to spend hundreds of millions of dollars generated by the program.

Sixty percent of the money is already committed to high-speed rail, housing near transit and other programs, with 40 percent to be allocated each year by the Legislature. Officials estimate that portion totals more than $1.4 billion, including a beginning balance of $843 million.

The Brown administration released its spending priorities two weeks ago. Senate and Assembly leaders never formally presented plans for spending the money but leading Democrats made clear that a priority should be to reduce diesel pollution, a major problem around the state’s ports.

The newly amended legislation would spend almost $600 million in California cap-and-trade auction revenue to retrofit and replace big rigs and school buses blamed for contributing to poor air quality linked to asthma and other illnesses. It also includes incentives for clean-vehicle purchases and zero-emission port equipment.

Farms and other agricultural businesses and vehicles would be eligible for at least $250 million in grants, rebates and other help, with another $200 million set aside for biomass and various “healthy forest” efforts. Such programs have been popular in the more rural districts of Republican lawmakers, some of whom provided key votes for the July legislation to extend cap-and-trade.

Among the other line items in this week’s legislation are $25 million to pay for standby firefighters during times of high fire danger and $40 million to reduce organic waste. Low-income weatherization programs would receive $18 million.

The package is among several bills scheduled to be considered by the Senate budget panel Tuesday, with the Assembly Budget Committee doing the same Wednesday. Tuesday is the last day bills can be amended and still be eligible for votes before Friday’s legislative deadline.

Editor’s note: This post has been updated to further describe the agreement between the Legislature and Brown administration, and include comment from the Association of Global Automakers.

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