BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 26
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          Date of Hearing:   May 1, 2013

                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
                               Roger Hernández, Chair
                    AB 26 (Bonilla) - As Amended:  April 22, 2013
           
          SUBJECT  :   California Global Warming Solutions Act of 2006:  
          Greenhouse Gas Reductions Fund.

           SUMMARY  :   Enacts various provisions related to projects funded  
          from the Greenhouse Gas Reductions Fund and related curriculum.   
          Specifically,  this bill  :

          1)Requires the three-year investment plan to allocate moneys  
            from the Greenhouse Gas Reductions Fund (Fund) consistent with  
            the following additional statewide goals:

             a)   Transition the state's workforce away from carbon  
               intensive project job skills to greenhouse gas emissions  
               reducing project job skills.

             b)   Reinvest on a regional basis to meet economic needs  
               resulting from climate change policy.

          2)Specifies that moneys appropriated from the Fund may be  
            allocated through investments that may include funding for  
            apprenticeship and job training programs associated with  
            greenhouse gas emissions reduction technologies.

          3)Provides that construction, alteration, demolition,  
            installation, repair, line and maintenance work paid for in  
            whole or in part from the Fund shall be considered "public  
            works."

          4)Provides that moneys from the Fund may be made available to  
            the owner or operator of a refinery to perform maintenance  
            work to reduce greenhouse gas emissions if all maintenance  
            work at the refinery related to reducing greenhouse gas  
            emissions that falls within an "apprenticeable occupation"  
            will be performed by "skilled journeypersons" and "registered  
            apprentices," as those terms are defined.

          5)Provides that "approved advanced safety training in performing  
            work processes to reduce greenhouse gas emissions" (as  








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            defined) may be provided by an apprenticeship program approved  
            by the Chief of the Division of Apprenticeship Standards (DAS)  
            or by the California Community Colleges.

          6)Requires, no later than January 1, 2016, the Chief of DAS to  
            approve a curriculum, and, in consultation with the California  
            Emergency Management Agency and the Division of Occupational  
            Safety and Health, to periodically revise the curriculum to  
            reflect current best practices.

          7)Provides that an apprenticeship program or community college  
            shall issue a certificate to a worker who completes the  
            approved curriculum.

          8)Specifies that employers shall not be required to pay for the  
            costs of the training or to pay wages to workers for the time  
            spent in the training unless the employer has agreed to do so.

          9)Makes other related and conforming changes.

           EXISTING LAW  :

          1)Enacts the California Global Warming Solutions Act of 2006 to  
            facilitate the achievement of reductions of greenhouse gas  
            emissions in the state, as specified.

          2)Designates the State Air Resources Board (CARB) as the state  
            agency charged with monitoring and regulating sources of  
            emissions of greenhouse gases. 

          3)Authorizes CARB to include the use of market-based compliance  
            mechanisms, as specified.

          4)Requires all moneys, except for fines and penalties, collected  
            by CARB from the auction or sale of allowances as part of a  
            market-based compliance mechanism to be deposited in the  
            Greenhouse Gas Reduction Fund and to be available upon  
            appropriation by the Legislature.

          5)Requires the Department of Finance, in consultation with CARB  
            and any other relevant state agency, to develop, as specified,  
            a 3-year investment plan for the moneys deposited in the  
            Greenhouse Gas Reduction Fund.









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          6)Requires the prevailing wage rate to be paid to all workers on  
            "public works" projects over $1,000.

          7)Defines "public work" to include, among other things,  
            construction, alteration, demolition, installation or repair  
            work done under contract and paid for in whole or in part out  
            of public funds.

          8)Establishes a definition for "paid for in whole or in part out  
            of public funds," as specified. 

           FISCAL EFFECT  :   Unknown

           COMMENTS  :  In 2006, the Legislature passed the California Global  
          Warming Solutions Act (AB 32) which called for California to  
          reduce its greenhouse gas emissions to 1990 levels by the year  
          2020.  The Cap and Trade Program is a key element in  
          California's climate plan.  It sets a statewide limit on sources  
          responsible for 85 percent of California's greenhouse gas  
          emissions, and establishes a price signal needed to drive  
          long-term investment in cleaner fuels and more efficient use of  
          energy.  

          The Cap and Trade Program covers about 350 businesses throughout  
          California which represents 600 facilities. The Cap and Trade  
          auction started in the fall of 2012 for electric utilities and  
          large industrial facilities.  The Cap and Trade program will  
          incorporate the distributors of transportation, natural gas and  
          other fuels starting in 2015.  Assembly Bill 1532 (John A.  
          Pérez) signed by the Governor in 2012, requires the Department  
          of Finance, in consultation with CARB to develop a 3-year  
          investment plan and to submit the plan to the Legislature.  The  
          first plan is scheduled be released this May.
           Brief Background on Prevailing Wage Law  

          State prevailing wage laws vary from state to state, but do  
          share a common history that actually predates federal prevailing  
          wage law.  Many of these state laws were enacted as part of  
          general reform efforts to improve working conditions at the end  
          of the 19th and the beginning of the 20th centuries.  Between  
          1891 and 1923, seven states adopted prevailing wage laws that  
          required payment of specified hourly wages on government  
          construction projects.  The State of Kansas enacted the first  
          prevailing wage law in 1891.








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          Eighteen additional states and the federal government adopted  
          prevailing wage laws during the Great Depression of the 1930s  
          amidst concern that acceptance of the low bid, a common  
          requirement of government contracting for public projects when  
          government had become the major purchaser of construction, would  
          operate to reduce the wages paid to workers on those projects to  
          a level that would disrupt the local economy.

          California's prevailing was law was enacted in 1931.

          In general, the proponents of prevailing wage legislation wanted  
          to prevent the government from using its purchasing power to  
          undermine the wages of its citizens.  It was believed that the  
          government should set an example, by paying the wages prevailing  
          in a locality for each occupation hired by government  
          contractors to build public projects.  Thus, prevailing wage  
          laws are generally meant to ensure that wages commonly paid to  
          construction workers in a particular region will determine the  
          minimum wage paid to the same type of workers employed on  
          publicly funded construction projects. 

          In general, "public works" is defined to include construction,  
          alteration, demolition, installation or repair work done under  
          contract and "paid for in whole or in part out of public funds."  
           

          Over a decade ago, there was much administrative and legislative  
          action over what constituted the term "paid for in whole or in  
          part out of public funds."  This action culminated in the  
          enactment of SB 975 (Alarcón), Chapter # 938, Statutes of 2001,  
          which codified a definition of "paid for in whole or in part out  
          of public funds" that included certain payments, transfers,  
          credits, reductions, waivers and performances of work.  At the  
          time, supporters of SB 975 stated that it established a  
          definition that conformed to several precedential coverage  
          decisions made by the Department of Industrial Relations (DIR).   


          The determination of whether a project is deemed to constitute a  
          "public work" is important because the Labor Code requires  
          (except for projects of $1,000 or less) that the "prevailing  
          wage" to be paid to all workers employed on public works  
          projects.








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           Specific Provisions of the Bill Relevant to this Committee   
            
          Among other things, this bill provides that construction,  
          alteration, demolition, installation, repair, line and  
          maintenance work paid for in whole or in part from the Fund  
          shall be considered "public works" for purposes of state  
          prevailing wage law.

          This bill also provides that moneys from the Fund may be made  
          available to the owner or operator of a refinery to perform  
          maintenance work to reduce greenhouse gas emissions if all  
          maintenance work at the refinery related to reducing greenhouse  
          gas emissions that falls within an "apprenticeable occupation"  
          will be performed by "skilled journeypersons" and "registered  
          apprentices."

          The bill defines an "apprenticeable occupation" to mean an  
          occupation for which the Chief DAS has approved an  
          apprenticeship program pursuant to existing law.

          The bill defines a "skilled journeyperson" to mean a worker who  
          meets all of the following:

          1)The worker accomplished either of the following:

             a)   Graduated from an apprenticeship program for the  
               applicable occupation that was approved by the Chief of DAS  
               or by the federal Office of Apprenticeship, or by its  
               predecessor agency.

             b)   Has at least as many hours of on-the-job experience in  
               the applicable occupation that would be required to  
               graduate from an apprenticeship program for the applicable  
               occupation that is approved by the Chief of DAS.

          2)The worker is being paid at least the prevailing hourly wage  
            rate for a journeyperson in the applicable occupation and  
            geographic area.

          3)The worker has completed within the prior two calendar years  
            at least 20 hours of approved advanced safety training in  
            performing work processes to reduce greenhouse gas emissions.  
            The bill specifies that this requirement shall apply only to  








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            work performed on or after January 1, 2018.

          The bill defines a "registered apprentice" to mean an apprentice  
          registered in an apprenticeship program approved by the Chief of  
          DAS who is performing work covered by the standards of that  
          apprenticeship program and receiving the supervision required by  
          the standards of that apprenticeship program.

          With respect to curriculum, this bill also provides that  
          "approved advanced safety training in performing work processes  
          to reduce greenhouse gas emissions" (as defined) may be provided  
          by an apprenticeship program approved by the Chief of DAS or by  
          the California Community Colleges.  The bill requires, no later  
          than January 1, 2016, the Chief of DAS to approve a curriculum,  
          and, in consultation with the California Emergency Management  
          Agency and the Division of Occupational Safety and Health, to  
          periodically revise the curriculum to reflect current best  
          practices.

          The bill also provides that an apprenticeship program or  
          community college shall issue a certificate to a worker who  
          completes the approved curriculum and specifies that employers  
          shall not be required to pay for the costs of the training or to  
          pay wages to workers for the time spent in the training unless  
          the employer has agreed to do so.




           ARGUMENTS IN SUPPORT  :

          The author states the following in support of this bill:

               "[P]ayments for auction allowances may result in workforce  
               impacts.  We want to ensure that Cap and Trade monies can  
               be used for job retraining and apprenticeship programs so  
               that employees affected by these changes can learn new  
               skills to transition to the green economy.  As we slowly  
               evolve our economy from carbon intensive strategies, we  
               need to provide an avenue for workers to be transitioned  
               along with those strategies.  By including this  
               (transitioning the state's workforce to GHG emission  
               reduction job skills) on the list of goals to be funded by  
               the GGRF, we are allowing for this to occur.  AB 26 also  








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               ensures that apprenticeship and job training programs are  
               included on the list of potential investments that may be  
               included in the investment plan.  

               Furthermore, we want to ensure that monies are allocated in  
               harmony with other state goals, such as reducing carbon  
               emissions through land use decisions.

               Lastly, many of the projects to be funded are likely to be  
               construction related.  As a state, we want to be sure that  
               we uphold our commitment to living wages.  AB 26 clarifies  
               that construction, alteration, demolition, installation,  
               repair, and maintenance work paid for with GGRF monies is  
               considered a public work.

               The bill also ensures that all refinery maintenance work  
               which is funded with GGRF monies uses the tradespeople who  
               are best trained in safety.  It is very important that we  
               utilize the best trained persons to ensure the safety of  
               all employees at refineries."  

          In addition, the author has submitted data and studies to show  
          that prevailing wage laws encourage better training and the use  
          of more experienced workers - both of which contribute to a  
          safer work environment.

          In addition, this bill is supported by the State Building and  
          Construction Trades Council of California who states the  
          following:

               "When the California Global Warming Solutions Act of 2006  
               was passed, no one could have expected the amount of work  
               that would need to be completed in order to meet the  
               requirements of the Act. As the State Air Resources Board  
               has worked through the process of crafting regulations that  
               will ultimately shape how the Act will be carried out, it  
               has become clear that there will be many opportunities for  
               California construction workers to do work related to  
               meeting the goals of the Act. Furthermore, it is clear that  
               there will be a tremendous amount of projects on which  
               apprentices can learn new clean energy skills. These skills  
               will allow them to make a career out of doing  
               environmentally friendly work on new projects and  
               maintenance on existing infrastructure that needs to  








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               retrofitted in order to be cleaner. 

               Because of these facts, it has become clear that there  
               needs to be a process where funds spent out of the  
               Greenhouse Gas Reduction Fund will not only provide work  
               for California construction workers, but provide a training  
               component as well. This training component is critical in  
               order to prepare the next generation of workers on  
               technologies being created to keep the environment clean  
               and meet the requirements of the Act. Fortunately, there  
               already exists a model to ensure that workers doing this  
               work get paid a decent wage and that the next generation of  
               workers is also trained. By requiring work arising out of  
               the regulations implementing the Act to be considered  
               public works, the prevailing wage will be triggered, which  
               not only provides a middle class livelihood for the  
               construction workers earning it, but includes a per hour  
               dollar amount that goes back to apprenticeship programs so  
               apprentices can be trained and hired to learn new skills.

               In addition to the per hour dollar amount that goes back to  
               a workers' apprenticeship program, the prevailing wage  
               allows contractors to spend a part of a worker's prevailing  
               wage on fringe benefits such as healthcare coverage,  
               pension, sick and vacation time, to name a few. These  
               fringe benefits are one that many non-construction workers  
               take for granted, but that construction workers receive as  
               a per hour dollar amount on their paychecks that then goes  
               to providing those fringe benefits. Given that construction  
               is one of the most dangerous occupations in the world, it  
               is important that these workers receive healthcare coverage  
               and other benefits in case they are injured and need time  
               away from work. These benefits also ensure that if these  
               workers get injured they will have the healthcare coverage  
               they need instead of relying upon receiving their care at  
               an emergency room where the burden to pay is shifted to  
               taxpayers.

               The wage and benefits provided by the Prevailing Wage lead  
               directly to a middle class livelihood and any of the funds  
               that come out of the Greenhouse Gas Reduction Fund should  
               not only go towards making the environment cleaner, but  
               also to the workers performing the work so that they can  
               earn a livable wage with benefits." 








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           ARGUMENTS IN OPPOSITION  :

          The California Manufacturers & Technology Association (CMTA)  
          opposes this bill and, among other things, states that pending  
          litigation to determine whether the sale of allowances is  
          authorized under AB 32 makes it unwise to appropriate money  
          until the legal questions have been fully resolved and we have a  
          clear understanding of how any legally raised revenues may be  
          spent.  CMTA also states that the forthcoming investment plan  
          will include a full assessment of the program, recommend new  
          strategies and perhaps recommend adjustments for existing  
          policies.  They contend that when this work is complete, the  
          priorities can be revisited to determine if revenues are needed  
          to achieve the environmental goals or if the program focus  
          should be protecting against emissions and economic leakage.   
          CMTA concludes that this bill jump out ahead of the information  
          needed to make wise policy choices.











           COMMITTEE STAFF COMMENTS  :

          1)This bill was previously heard by the Assembly Committee on  
            Natural Resources.  However, in light of the recent  
            amendments, the bill was referred to this Committee as well.   
            Please see the bill analysis prepared by the Assembly  
            Committee on Natural Resources for a more thorough discussion  
            of some of the other issues addressed in the bill.

          2)This bill provides that moneys from the Fund may be made  
            available to the owner or operator of a refinery to perform  
            maintenance work to reduce greenhouse gas emissions if all  
            maintenance work at the refinery related to reducing  
            greenhouse gas emissions that falls within an "apprenticeable  
            occupation" will be performed by "skilled journeypersons" and  








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            "registered apprentices," as those terms are defined.  In  
            light of recent incidents (such as the August 2012 fire at the  
            Chevron refinery in Richmond) and if these requirements on who  
            may perform the work are based upon safety arguments, the  
            author may wish to consider whether the requirement should be  
            applied to all refinery maintenance work performed, not just  
            such maintenance work paid for from the Fund.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          State Building and Construction Trades Council of California

          Opposition 
           
          California Manufacturers & Technology Association
           

          Analysis Prepared by  :    Ben Ebbink / L. & E. / (916) 319-2091