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