BILL ANALYSIS Ó
SB 535
Page 1
Date of Hearing: August 29, 2012
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
SB 535 (De León) - As Amended: August 24, 2012
SENATE VOTE : 49-20
SUBJECT : California Communities Healthy Air and Revitalization
Act
SUMMARY : Requires the Governor's annual budget to include
funding, as specified, from the Greenhouse Gas (GHG) Reduction
Fund (GHGR Fund) for projects located within priority community
investment areas. Requires a minimum of 10 percent of revenues
deposited in the GHGR Fund to be allocated, upon appropriation
by the Legislature, to benefit socioeconomically disadvantaged
communities impacted by air pollution and climate change.
EXISTING LAW , under the California Global Warming Solutions Act
of 2006 (AB 32 (Nuñez), Chapter 488, Statutes of 2006):
1)Requires the Air Resources Board (ARB), pursuant to AB 32, to
adopt a statewide GHG emissions limit equivalent to 1990
levels by 2020 and adopt regulations to achieve maximum
technologically feasible and cost-effective GHG emission
reductions.
2)Authorizes ARB to adopt fees to be paid by the sources of GHG
emissions regulated pursuant to AB 32. Fee revenues must be
deposited in the Air Pollution Control Fund and may be spent
for purposes of carrying out AB 32.
3)Authorizes ARB to permit the use of market-based compliance
mechanisms to comply with GHG reduction regulations, to be
adopted by 2011 and operative by 2012, once specified
conditions are met. Prior to adopting a market-based
compliance mechanism, to the extent feasible and in
furtherance of achieving the statewide GHG emissions limit,
ARB must:
a) Consider the potential for direct, indirect, and
cumulative emission impacts from these mechanisms,
including localized impacts in communities that are already
adversely impacted by air pollution.
SB 535
Page 2
b) Design any market-based compliance mechanism to prevent
any increase in the emissions of toxic air contaminants or
criteria air pollutants.
c) Maximize additional environmental and economic benefits
for California, as appropriate.
4)Requires ARB, to the extent feasible and in furtherance of
achieving the statewide GHG emissions limit, to:
a) Design market-based and certain other regulations,
including distribution of emissions allowances where
appropriate, in a manner that is equitable, seeks to
minimize costs and maximize the total benefits to
California, and encourages early action to reduce GHG
emissions.
b) Ensure that activities undertaken to comply with the
regulations do not disproportionately impact low-income
communities, and complement efforts to achieve and maintain
federal and state ambient air quality standards and to
reduce toxic air contaminant emissions.
5)Requires ARB to ensure that the GHG emission reduction rules,
regulations, programs, mechanisms, and incentives under its
jurisdiction direct public and private investment toward the
most disadvantaged communities in California and provide an
opportunity for small businesses, schools, affordable housing
associations, and other community institutions to participate
in and benefit from statewide efforts to reduce GHG emissions.
6)Creates the GHGR Fund and requires all moneys, except for
fines and penalties, collected by ARB from the auction or sale
of allowances pursuant to a market-based compliance mechanism
to be deposited in the GHGR Fund and available for
appropriation by the Legislature.
7)Requires the Department of Finance (DOF) to submit proposed
legislation, on or before January 10, 2013, that provides a
detailed spending plan for moneys in the GHGR Fund, unless the
Legislature passes a bill on or before August 31, 2012, that
establishes a long-term spending strategy for moneys in the
GHGR Fund. Requires any state agency, prior to expending any
moneys appropriated from the GHGR Fund, to prepare a specified
SB 535
Page 3
record.
8)Authorizes the DOF to allocate or otherwise use an amount of
at least $500 million from moneys deposited in the GHGR Fund,
and make commensurate reductions to General Fund expenditure
authority, to support the regulatory purposes of AB 32.
Requires ARB and DOF, at least 60 days prior to allocating any
funds, to submit a plan for the expenditure or use of the
funds to the chairpersons of the Senate and Assembly
Appropriations Committees and the Chairperson of the Joint
Legislative Budget Committee. Prohibits the use of funds for
the purpose of developing a high-speed rail system for at
least two years.
THIS BILL :
1)Requires the California Environmental Protection Agency
(CalEPA) to develop a methodology that identifies priority
community areas for investment opportunities related to the
bill. Requires that these "priority community investment
areas" be identified and updated at least every two years
based on specified geographic, socioeconomic, and
environmental hazard criteria.
2)Requires ARB to develop and adopt, beginning April 1, 2013,
three investment plans for 2013 to 2014; 2015 to 2017; and,
2018 to 2020. Requires that each investment plan maximize
benefits to priority community investment areas, as specified,
through specified activities.
3)Requires ARB to annually provide the Governor with a plan
consistent with the relevant investment plan detailing
proposed appropriations from the fund.
4)Requires the Governor, as part of the annual proposed Budget,
to include proposed appropriations consistent with the plan.
5)If ARB, in consultation with CalEPA, finds that the
investments made in the prior fiscal year did not result in at
least 25 percent of the available moneys being allocated to
projects that provide benefits to priority community
investment areas, and that at least 10 percent of all the
available moneys from that fiscal year were not invested in
projects located within priority community investment areas,
requires the Governor to include in the annual proposed Budget
SB 535
Page 4
allocations to administering agencies to make investments in
eligible projects within priority community investment areas,
as specified. States that this allocation shall not be
considered part of the next fiscal year's priority community
investment area and shall be separately identified in the
Governor's annual proposed Budget.
6)Requires ARB to submit a report, on or before December 1 of
each year, to the appropriate committees of the Legislature on
the status of projects and their outcomes; any changes the ARB
recommends to the investment plan; and a description of how
agencies have maximized the benefits of the investments to
priority community investment areas, as specified.
7)Allocates at least 10 percent of the revenues derived from the
auction of GHG allowances pursuant to the cap and trade
program adopted by ARB pursuant to AB 32 to provide funding to
the "most impacted and disadvantaged communities," as defined,
for programs or projects that reduce GHG emissions or mitigate
direct health impacts of climate change, through competitive
grants, loans, or other funding mechanisms.
8)Defines "most impacted and disadvantaged communities" as
census blocks having the highest 10 percent of cumulative
impacts in California as identified by the Office of
Environmental Health Hazard Assessment (OEHHA), reported by
March 1, 2013, and updated every three years thereafter.
Specifies minimum evaluation criteria for cumulative impacts,
air pollution exposure, environmental exposure, and
socioeconomic vulnerability.
9)Requires ARB to conduct a public process and prepare a report
regarding implementation, the types of programs and projects
to be funded, the selection and oversight process, and
eligibility criteria.
10)Provides that ARB may only approve a program or project for
funding after determining that the use of moneys for that
program or project is consistent with the requirements for the
use of moneys derived from valid regulatory fees, as
established by the California Supreme Court in Sinclair Paint
Co. v. State Bd. of Equalization (1997) 15 Cal.4th 866 and
reaffirmed in California Farm Bureau Federation v. State Water
Resources Control Bd. (2011) 51 Cal.4th 421 (except for
penalty moneys, if those moneys are segregated from fee
SB 535
Page 5
moneys).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, revenue redirection of an unknown amount, but
possibly in the tens of millions of dollars, and potential
ongoing administrative costs to ARB of an unknown amount, but
possibly in the millions of dollars and no more than 5 percent
of funds allocated for purposes of the bill.
COMMENTS :
1)Background. According to ARB, a total reduction of 80 million
metric tons (MMT), or 16 percent compared to business as
usual, is necessary to reduce statewide GHG emissions to 1990
levels by 2020. ARB intends to achieve approximately 78
percent of the reductions through identified "regulatory"
measures. ARB proposes to achieve the balance of reductions
necessary to meet the 2020 limit (approximately 18 MMT)
through a cap-and-trade program. The first auction of
allowances in the cap-and-trade program will take place on
November 14, 2012, and the auctions will be held quarterly
thereafter.
The 2012-13 Budget Act (AB 1464 (Budget Committee), Chapter
21, Statutes of 2012) authorizes DOF to allocate at least $500
million from cap-and-trade revenue, and make commensurate
reductions to General Fund expenditure authority, to support
the regulatory purposes of AB 32. The Resources Budget
Trailer Bill (SB 1018 (Budget and Fiscal Review Committee)
Chapter 39, Statutes of 2012) creates the GHGR Fund for
cap-and-trade auction revenues and requires DOF to submit
proposed legislation, on or before January 10, 2013, that
provides a detailed spending plan for moneys in the GHGR Fund,
unless the Legislature passes a bill on or before August 31,
2012, that establishes a long-term spending strategy for
moneys in the GHGR Fund.
AB 32 requires ARB to ensure that the GHG emission reduction
rules, regulations, programs, mechanisms, and incentives under
its jurisdiction direct public and private investment toward
the "most disadvantaged communities" in California and provide
an opportunity for small businesses, schools, affordable
housing associations, and other community institutions to
participate in and benefit from statewide efforts to reduce
GHG emissions.
SB 535
Page 6
With regard to any market-based compliance mechanisms,
including cap-and-trade, ARB is required to "consider the
potential for direct, indirect, and cumulative emissions
impacts from these mechanisms, including localized impacts in
communities that are already adversely impacted by air
pollution." In addition, in adopting and implementing AB 32,
ARB is required to "ensure that activities undertaken to
comply with the regulations do not disproportionately impact
low-income communities." With regard to "co-pollutants," AB
32's GHG-reduction regulations must be designed and
implemented to "prevent any increase in the emissions of toxic
air contaminants or criteria air pollutants" and "complement
efforts to achieve and maintain federal and state ambient air
quality standards and to reduce toxic air contaminant
emissions."
According to the author and many of the supporters, "SB 535
ensures that as California takes steps to address global
warming, we invest in the neighborhoods that continue to
suffer from higher levels of pollution and who are least able
to confront the expected impacts of the climate crisis."
2)AB 1532 (Pérez) . As discussed above, SB 1018 creates the GHGR
Fund in which cap-and-trade auction revenues will be
deposited. AB 1532, which is currently pending in the
Legislature, authorizes the use of the GHGR Fund for the
purpose of reducing GHG emissions through various types of
investments, such as investments in clean and efficient energy
and low-carbon transportation.
AB 1532 also directs CalEPA to develop a methodology that
identifies "priority community areas for investment
opportunities." These priority community areas are identified
based on geographic, socioeconomic, and environmental hazard
criteria, which may include any of the following:
(a) Areas disproportionately adversely affected by and
within close proximity to sources that produce high
criteria and toxic air pollution levels, environmental
pollution, and other hazards that can lead to negative
public health effects, exposure, and environmental
degradation;
(b) Areas that contain or produce material that, because of
SB 535
Page 7
its quantity, concentration, or physical or chemical
characteristics, pose a significant hazard to human health
and safety; and
(c) Areas with concentrations of people that are of low
income, high unemployment, low levels of homeownership,
high rent burden, sensitive populations, and low levels of
educational attainment.
AB 1532 requires ARB to develop guidelines for administering
agencies (i.e. ARB and any other state agency identified by
the Legislature) for purposes of allocating moneys to projects
that maximize benefits for priority community areas. These
administering agencies may set aside a percentage of their
appropriated GHGR Fund moneys for projects that maximize
benefits for priority community areas.
3)Investing in Priority Community Investments Areas and Most
Impacted and Disadvantaged Communities. This bill and AB 1532
share similar provisions regarding priority community areas
for investment opportunities. This bill, however, requires
the Governor's Budget to include allocations for investments
in projects within priority community investment areas if
certain investment levels related to those communities are not
met. Additionally, the bill requires a minimum of 10 percent
of revenues deposited into the GHGR Fund to be allocated to
fund programs or projects that reduce GHG emissions or
mitigate direct health impacts of climate change in the "most
impacted and disadvantaged communities" in California.
4)Prior legislation. In 2010, Governor Schwarzenegger vetoed AB
1405 (De Léon), which directed a minimum of 10 percent of
revenues generated pursuant to AB 32 to a Community Benefits
Fund to be awarded by the Secretary for Environmental
Protection to benefit disadvantaged communities. In his veto
message, the Governor stated:
This bill creates the California Climate Change Community
Benefits fund by requiring a minimum of 10% of revenues
from the sale of compliance instruments for market-based
compliance mechanisms under AB 32 to be deposited into the
fund.
When the Legislature passed and I signed AB 32, we made a
commitment to California's disadvantaged communities that
SB 535
Page 8
we would ensure that the impacts of climate change and the
impacts of reducing climate change would not fall
disproportionately on their communities. Throughout the
(ARB) process, they have kept this commitment in mind and
have fashioned every aspect of this program in a manner
that attempts to lessen any disproportionate impact on
these communities.
I am confident ARB with keep on this path as they continue
the important work of fashioning market-based mechanisms
that will reduce the burden on California's business
community while still achieving our climate change
reduction goals.
To that end, this bill is premature. Unfortunately, the
bill proposes to spend money that does not currently exist
and might not ever exist in a fund controlled by the state
of California.
Important work continues at ARB to determine the most
effective and least costly manner to implement AB 32. I
encourage the supporters of this bill to work in earnest
with ARB as they build this program. There will be a time
to have this discussion. Unfortunately, now is not that
time.
REGISTERED SUPPORT / OPPOSITION :
Support
American Lung Association of California
Apollo Alliance
Asian Immigrant Women Advocates
Asian Neighborhood Design
Asian Pacific Environmental Network
Asian Pacific Islander California Action Network
Asian Pacific Islander Youth Promoting Advocacy & Leadership
Asian Pacific Policy & Planning Council
Blue Green Alliance
Breathe California
Californians Against Waste
California Black Chamber of Commerce
California Black Health Network
California Building and Construction Trades Council
California Climate and Agriculture Netowork
SB 535
Page 9
California Interfaith Power and Light
California League of Conservation Voters
California NAACP
California Pan Ethnic Health Network
California ReLeaf
Catholic Charities, Diocese of Stockton
Central Valley Air Quality Coalition
City of Pomona
City of Santa Ana
Coalition for Clean Air
Coalition for Human Immigrant Rights of Los Angeles
Community Coalition
Community Health for Asian Americans
East Yard Communities for Environmental Justice
Ecology Center
Ella Baker Center
Environment California
Environmental Defense Fund
Environmental Health Coalition
Filipino/American Coalition for Environmental Solidarity
Forward Together
Fresno Metro Ministry
Global Alliance for Incinerator Alternatives
Global Green
Greenlining Institute
Green Technical Education and Employment
Homeboy Industries
Housing California
Korean Resource Center
Latino Coalition for a Healthy California
Los Angeles County Bicycle Coalition
National Parks Conservation Association
Natural Resources Defense Council
Pacifika Voice
Pacoima Beautiful
PELE, the Sorority of Oceania
People Organized to Demand Environmental and Economic Rights
Planning and Conservation League
Regional Asthma Management & Prevention & Community Action to
Fight Asthma
Rising Sun Energy
Sierra Club California
Southeast Asian Community Alliance
The Nature Conservancy
The William C. Velazquez Institute
SB 535
Page 10
TransForm
Trust for Public Land
Union of Concerned Scientists
Opposition
None on file
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092