VirginiaHB3972026 Regular SessionHouseWALLET

Clean energy and community flood preparedness; market-based trading program.

Sponsored By: Charniele L. Herring (Democratic)

Became Law

Summary

Clean energy and community flood preparedness; market-based trading program. Directs the Department of Environmental Quality and the State Air Pollution Control Board to establish and maintain a market-based trading program consistent with the Regional Greenhouse Gas Initiative program, as defined in existing law, to reduce carbon dioxide emissions from electricity generating units in the Commonwealth. This bill is identical to SB 802.

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 1 benefits, 1 costs, 1 mixed.

How carbon auction money is used

Money from carbon allowance auctions goes into a special, interest‑bearing state account. The state can spend it for these uses without another budget vote. 45% helps localities and residents with flooding and sea level rise. 50% goes to Housing and Community Development for low‑income energy efficiency, including eligible housing; the Department of Energy provides technical help. 3% funds DEQ program costs and statewide climate planning. 2% helps Housing and Energy run those low‑income programs; money left in the Housing account does not revert.

Long power deals must buy carbon allowances

If Virginia fully participates in RGGI or DEQ implements the carbon trading rule, some long power contracts face a new duty. A covered deal is an energy conversion or tolling agreement with a primary term of 20 years or more. The purchaser must deliver the fuel and receive all the unit’s output. Under those deals, the purchaser must buy the CO2 allowances for that unit.

Carbon trading rules for power plants

The law creates a market-based carbon program for Virginia power plants. The Department of Environmental Quality runs it and follows the Regional Greenhouse Gas Initiative model. The rule uses the Board’s regulation adopted April 19, 2019 (published May 27, 2019) without another rulemaking step. DEQ runs allowance auctions and aims to sell 100% each year. It can sell fewer if needed to protect allowance value, avoid a net loss for consumers, or stay consistent with RGGI.

Sponsors & Cosponsors

Sponsor

  • Charniele L. Herring

    Democratic • House

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 154 • No: 70

Senate vote 3/2/2026

Passed Senate

Yes: 21 • No: 19

Senate vote 2/26/2026

Constitutional reading dispensed Block Vote (on 2nd reading)

Yes: 40 • No: 0

Senate vote 2/26/2026

Passed by for the day Block Vote (Voice Vote)

Yes: 0 • No: 0

Senate vote 2/24/2026

Reported from Agriculture, Conservation and Natural Resources

Yes: 8 • No: 6

House vote 2/3/2026

Read third time and passed House

Yes: 63 • No: 35

House vote 1/28/2026

Reported from Agriculture, Chesapeake and Natural Resources with substitute

Yes: 15 • No: 7

House vote 1/21/2026

Subcommittee recommends reporting with substitute

Yes: 7 • No: 3

Actions Timeline

  1. Acts of Assembly Chapter text (CHAP0920)

    4/13/2026Governor
  2. Approved by Governor-Chapter 920 (effective 7/1/2026)

    4/13/2026Governor
  3. Governor's Action Deadline 11:59 p.m., April 13, 2026

    3/10/2026Governor
  4. Enrolled Bill communicated to Governor on March 10, 2026

    3/10/2026House
  5. Fiscal Impact Statement from Department of Planning and Budget (HB397)

    3/5/2026House
  6. Bill text as passed House and Senate (HB397ER)

    3/5/2026House
  7. Enrolled

    3/5/2026House
  8. Signed by President

    3/5/2026Senate
  9. Signed by Speaker

    3/5/2026House
  10. Passed Senate (21-Y 19-N 0-A)

    3/2/2026Senate
  11. Passed by for the day

    2/27/2026Senate
  12. Read third time

    2/27/2026Senate
  13. Passed by for the day Block Vote (Voice Vote)

    2/26/2026Senate
  14. Constitutional reading dispensed Block Vote (on 2nd reading) (40-Y 0-N 0-A)

    2/26/2026Senate
  15. Rules suspended

    2/26/2026Senate
  16. Reported from Agriculture, Conservation and Natural Resources (8-Y 6-N)

    2/24/2026Senate
  17. Referred to Committee on Agriculture, Conservation and Natural Resources

    2/4/2026Senate
  18. Constitutional reading dispensed (on 1st reading)

    2/4/2026Senate
  19. Read third time and passed House (63-Y 35-N 0-A)

    2/3/2026House
  20. Engrossed by House - committee substitute

    2/2/2026House
  21. committee substitute agreed to

    2/2/2026House
  22. Read second time

    2/2/2026House
  23. Read first time

    1/30/2026House
  24. Fiscal Impact Statement from Department of Planning and Budget (HB397)

    1/29/2026House
  25. Committee substitute printed 26105867D-H1

    1/28/2026House

Bill Text

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