BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 535 (De Leon)
Hearing Date: 05/16/2011 Amended: 03/24/2011
Consultant: Brendan McCarthy Policy Vote: EQ 5-1
_________________________________________________________________
____
BILL SUMMARY: SB 535 requires at least ten percent of any
revenues generated under AB 32 be used in disadvantaged
communities for greenhouse gas emission reduction projects,
mitigation of health impacts of climate change, and support for
green collar jobs.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Program implementation Likely in the tens of millions per
yearSpecial *
Program administration Likely in the millions per year
Special *
* California Communities Healthy Air Revitalizations Trust.
_________________________________________________________________
____
STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Under current law (AB 32, Nunez, 2006), the Air Resources Board
is required to reduce greenhouse gas emissions to 1990 levels by
2020. AB 32 authorizes the Air Resources Board to impose
administrative fees on greenhouse gas emitters to carry out the
provisions of AB 32. The Air Resources Board is also authorized
to adopt market-based compliance measures, such as a cap and
trade program, to achieve the state's goals. Under a cap and
trade program, the total amount of allowed emissions would be
capped by the Air Resources Board. Emitters of greenhouse gasses
would either be given permits to emit, permits would be
auctioned off, or some combination of the two. Emitters could
then trade emission permits between themselves in order to meet
the overall emission reduction target at least cost. The Air
Resources Board is developing a cap and trade program, which
SB 535 (De Leon)
Page 1
will be implemented by 2012. (The environmental documentation of
the cap and trade regulation is currently under judicial
review.) At first, most of the emission credits will be given to
regulated entities. The limited initial auction of emission
credits is expected to generate about $100 million in 2012. In
future years, the portion of emission credits that is to be
auctioned will grow, as will auction revenues.
SB 535 creates the California Communities Healthy Air
Revitalization Trust (Trust). Under the bill, not less than ten
percent of any revenues generated under AB 32 (excluding fees
charged by the Air Resources Board to cover administrative
costs), are to be deposited in the Trust. Using funds in the
Trust, the Secretary for Environmental Protection is required to
fund programs that reduce greenhouse gas emissions or mitigate
public health impacts of climate change or support green collar
jobs. All expenditures are to be made in communities that are
the most impacted and disadvantaged, as determined by the
Secretary. The bill caps administrative costs at five percent of
total expenditures.
Total expenditures under the bill are unknown and will depend on
future revenues generated from the cap and trade program.
Nevertheless, based on initial projections of cap and trade
auction revenues, total program expenditures are likely to be in
the tens of millions per year.
This bill is similar to AB 1405 (De Leon) of 2009. That bill was
vetoed by Governor Schwarzenegger.
SB 237 (Wolk) creates a program to use revenues generated under
the AB 32 cap and trade program for the support of agricultural
activities relating to climate change. That bill is on this
committee's suspense file.
SB 246 (De Leon) requires the Air Resources Board to follow
specified criteria if the Board allows greenhouse gas compliance
offsets to be used in a cap and trade program under AB 32. That
bill will be heard in this committee.
SB 533 (Wright) makes changes to the process for adopting
regulations under AB 32. That bill has been moved to the Senate
Floor pursuant to Senate Rule 28.8.
SB 535 (De Leon)
Page 2