BILL ANALYSIS Ó
Senate Committee on Labor and Industrial Relations
William W. Monning, Chair
Date of Hearing: June 26, 2013 2013-2014 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: AB 26
Author: Bonilla
As Introduced/Amended: May 28, 2013
SUBJECT
California Global Warming Solutions Act of 2006: Greenhouse Gas
Reduction Fund
KEY ISSUES
Should moneys from the Greenhouse Gas Reduction Fund be
classified as public funds for purposes of public works
provisions under the labor code, thereby, requiring the payment
of prevailing wages for workers on those projects?
Should the Legislature define what classifies a worker as
qualified to perform work to reduce greenhouse gas emissions?
Should the Legislature require the Chief of the Division of
Apprenticeship Standards to develop a curriculum for advanced
safety training in performing work processes to reduce
greenhouse gas emissions to be taught by apprenticeship programs
and the community colleges?
ANALYSIS
Existing law defines the term "public works" 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. (Labor Code §1720)
Under existing law , "paid for in whole or in part out of public
funds" means, among other things, the following:
1. Payment of money or the equivalent of money by the state
or political subdivision directly to or on behalf of the
public works contractor, subcontractor, or developer.
2. Performance of construction work in execution of a
project.
3. Fees, costs, rents, insurance or bond premiums, loans,
interest rates, or other obligations normally required in
the execution of the contract, that are paid, reduced,
charged at less than fair market value, waived, or forgiven
by the state/political subdivision.
4. Money loaned by the state/political subdivision that is
to be repaid on a contingent basis.
Existing law requires all employees who work on public works
projects costing $1,000 or more to be paid the general
prevailing rate of per diem wages (the hourly wage rate being
paid to a majority of the workers in a particular craft within a
given locality) and the general prevailing rate for holiday and
overtime work for the specific location where the public work is
to be performed. (L.C. §1771) The Director of the Department of
Industrial Relations (DIR) is tasked with the responsibility of
determining the general prevailing rate of per diem wages in
accordance with specified standards. (L.C. §1773)
Existing law, under the CA Global Warming Solutions Act of 2006 ,
requires the California Air Resources Board (ARB) to determine
the 1990 statewide greenhouse gas (GHG) emissions level and
approve a statewide GHG emissions limit that is equivalent to
that level, to be achieved by 2020, and to adopt GHG emissions
reductions measures by regulation. (Health and Safety Code
§38500 et seq.). Among other things, the Act does the following:
1. Establishes the Greenhouse Gas Reduction Fund (Fund) to
receive cap-and-trade auction proceeds and price
containment reserve sales, and to provide the framework for
administration of auction proceeds. The State portion of
the proceeds from the auction is deposited into the Fund to
support programs that further the purposes of the
California Global Warming Solutions Act of 2006 (Government
Code §§16428.8 and 16428.9).
2. Requires the Department of Finance, in consultation with
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the ARB, to submit to the Legislature on or before January
10, 2013 a proposal that provides a detailed spending plan
for the expenditure of moneys in the Fund (GOV §16428.85).
3. Requires the Department of Finance, in consultation with
the ARB and any other relevant state entity, to develop and
submit to the legislature a three-year investment plan that
does all of the following (Healthy and Safety Code §39716):
a. Identify the state's near-term and long-term
greenhouse gas emissions reduction goals and targets
by sector.
b. Analyze gaps, where applicable, in current
state strategies to meeting the state's greenhouse gas
emissions reduction goals by sector.
c. Identify priority programmatic investments of
moneys that will facilitate the achievement of
feasible and cost-effective greenhouse gas emissions
reductions toward achievement of greenhouse gas
reduction goals and targets.
Existing law , under the Shelly-Maloney Apprentice Labor
Standards Act of 1939, gives authority to the Chief of the
Division of Apprenticeship Standards (DAS), within DIR, to
oversee the Division with the goal of promoting the welfare of
apprentices and industry (Labor Code §3073). Also within DIR,
the Division of Occupational Safety and Health is tasked with
the responsibility of protecting workers from health and safety
hazards on the job (L.C. §140).
Existing law , under the California Emergency Services Act,
creates the California Emergency Management Agency (Cal/EMA) to
coordinate the overall state agency response to major disasters
in support of local government (GOV §8550).
This Bill would enact various provisions related to the payment
of wages for projects funded from the Greenhouse Gas Reductions
Fund.
Specifically, this bill would:
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1) Provide that moneys from the fund shall be public funds
as the term is utilized in Labor Code for public works
projects, thereby, requiring the payment of prevailing
wages for workers on those projects.
2) Insofar as money from the fund may be made available to
the owner or operator of a refinery (per existing law) to
perform work to reduce greenhouse gas emissions, require
that all work that falls within an apprenticeable
occupation be performed by skilled journeypersons and
registered apprentices. (Except work by the refinery's own
workers)
3) Specify that funds shall be made available for work at a
refinery only if it is related to complying with a
market-based compliance mechanism established per the CA
Global Warming Solutions Act, and is not required by any
other law, regulation, or court order.
4) Provide definitions for the following terms:
a. "Registered apprentice" means an apprentice
registered in an apprenticeship program approved by
the Chief of the DAS.
b. "Approved advanced safety training in
performing work processes to reduce greenhouse gas
emissions" means curriculum of in-person class and
laboratory instruction that is approved by the DAS.
c. "Skilled journeyperson" means a worker who
meets all of the following:
i. The worker has either 1) graduated
from an DAS approved apprenticeship program, or
2) has at least as many hours of on-the-job
training as would be required to graduate from an
apprenticeship.
ii. The worker is being paid at least
the prevailing hourly wage rate for a
journeyperson in the applicable occupation and
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geographic area.
iii. The worker has completed within the
prior 2 years, at least 20 hours of approved
advanced safety training in performing work
processes to reduce greenhouse gas emissions.
However, this requirement shall apply to work
performed on or after January 1, 2018.
5) Require the Chief of the Division of Apprenticeship
Standards to approve, no later than January 1, 2016 and in
consultation with the CA Emergency Management Agency and
the Division of Occupational Safety and Health, a
curriculum for advanced safety training in performing work
processes to reduce greenhouse gas emissions.
6) Authorize the approved advanced safety training to be
provided by a DAS approved apprenticeship program or by the
California Community Colleges.
COMMENTS
1. California Global Warming Solutions Act of 2006:
In 2006, the Legislature passed the CA Global Warming
Solutions Act (AB 32 Nunez) which called for California to
reduce its greenhouse gas emissions to 1990 levels by the year
2020. The Act designates the State Air Resources Board as the
state agency charged with monitoring and regulating sources of
emissions of greenhouse gases. The act authorizes the state
board to include the use of market-based compliance
mechanisms. 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 auction started in the fall of 2012 for
electric utilities and large industrial facilities. The
program will incorporate the distributors of transportation,
natural gas and other fuels starting in 2015. AB 1532 (John A.
Pérez) signed by the Governor in 2012, requires the Department
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of Finance, in consultation with CARB to develop a 3-year
investment plan identifying greenhouse gas reduction goals and
targets, analyzing gaps in state strategies to meet those
goals, and identifying investment priorities.
Existing law requires all moneys, except for fines and
penalties, collected by CARB from the auction or sale of
allowances to be deposited into the Greenhouse Gas Reduction
Fund to be available upon appropriation by the Legislature.
2. A Brief History on State and Federal Prevailing Wage Law:
State prevailing wage laws vary from state to state, many of
which were enacted as part of Progressive Era reform efforts
to improve working conditions at the end of the 19th and
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 being the first in 1891. Eighteen
additional states (including California in 1931) 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, would reduce local wages and disrupt the
local economies. This was particularly in the depths of the
Great Depression, where, for some local economies, the
government had become the primary purchaser of construction
products and a significant employer.
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. Even today,
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.
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3. Need for this bill?
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." 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" be paid to all workers employed on public
works projects. Classifying funds from the California Global
Warming Solutions Act as "public funds" would extend existing
public works requirements to those projects, primarily the
payment of prevailing wage for workers.
According to the author, many of the projects that may be
funded with revenues from the Global Warming Solutions Act
(cap-and-trade auction) are likely to be construction related.
Current law does not specify that projects funded with Fund
monies must pay the prevailing wage. The author states that AB
26 upholds California's commitment to living wages by
clarifying that work paid for with Greenhouse Gas Reduction
Fund revenues is considered a public work, and therefore,
subject to the payment of prevailing wage.
4. Staff Comment:
This bill does two main things, 1) defines monies derived from
the Global Warming Solutions Act as public funds for which
projects would be required to comply with existing prevailing
wage requirements, and 2) provides training qualification
requirements for the employees working on those projects. The
bill's proponents argue that this bill seeks to ensure that
workers on these projects are getting paid a good living wage
and are getting the training they need to ensure their safety
and that of their surrounding communities. These requirements,
however, have raised opposition from some of the workers
performing these jobs. The bill appears to place two worker
advocate groups on opposite sides of the bill, the State
Building and Construction Trades Council and the United
Steelworkers, both groups trying to protect access to this
work as well as employee safety. The Committee encourages the
proponents and opponents to continue the dialogue on this bill
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and attempt to resolve their differences with regards to the
concerns raised.
5. Proponent Arguments :
According to the author, as California's economy transitions
to meet AB 32 goals, we need to ensure that we also transition
our workforce and support jobs that pay a living wage and
contribute to improving our local economies. Proponents argue
that by requiring projects arising from implementation of 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 will also
contribute to continuous training and education.
Additionally, the author argues, it is also crucial that we
employ the most highly trained workers in our refineries to
ensure the safety of all employees and promote continuous
safety training as technology develops. AB 26 seeks to work
within the confines of the investment plan and provide
additional requirements on potential recipients. Proponents
state that the sole purpose of this bill is to ensure that
communities and workers in the counties where these facilities
are located are protected, that the work is done by the best
trained, highly skilled streamlined workforce available, and
that those workers be fairly compensated.
6. Opponent Arguments :
This bill is opposed by several organizations, including the
CA Chamber of Commerce and the CA Manufacturers and Technology
Association (CMTA). CMTA states that pending litigation filed
by the CA Chamber of Commerce and Pacific Legal Foundation 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 and argue that this bill jumps out
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ahead of the information needed to make wise policy choices.
Communities for a Better Environment (CBE) supports ending the
hiring of less qualified out of state contract employees to do
refinery work, however, they argue that the systems of
training workers in industrial unions versus construction are
different reflecting differences between the industries in
which they work. CBE believes that this bill and the
proponents are trying to "blame the workers" for events such
as the Chevron Richmond Refinery explosion and fire last year,
despite scientific evidence to the contrary. The United
Steelworkers (USW) argues that the US Chemical Safety Board's
Interim Investigative Report clearly states that management's
decisions were at full fault for the explosion and fire and,
in fact, it is because of the skills of the highly trained
steelworkers that there was no loss of life.
The United Steelworkers write the following in opposition:
AB 26 fails to protect climate change by giving
subsidies to big oil rather than addressing and promoting
clean energy alternatives;
AB 26 redefines refinery maintenance as public works
and gives public money to large oil companies to use for
routine repairs;
AB 26 replaces permanent, long-term, certified and
trained refinery workers with temporary, contract
employees; and
AB 26 jeopardizes refinery safety, refinery workers,
and our surrounding communities by minimizing inclusion
of safety records as a mandatory qualifying factor for
project contracts.
USW would like to see the training requirement in the bill
eliminated because 20 hours of training is not sufficient to
adequately train someone. Additionally, they argue that the
substitution of proprietary, fully trained United Steelworkers
with transient, migratory workers would do nothing to enhance
public safety.
7. Double Referral :
This bill has been double referred and prior to coming to this
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Committee for a hearing, it was heard and passed by the Senate
Environmental Quality Committee. Amendments coming out of
that Committee emphasize that moneys from the fund shall be
made available for work at a refinery only if the work is
related to complying with a market-based compliance mechanism
established pursuant to the California Global Warming
Solutions Act. This amendment clarifies that routine
maintenance type work will not be funded.
8. Committee Amendment Suggestion:
Amendments taken out of Senate Environmental Quality used the
term "public funds" to specify that projects funded by the
Greenhouse Gas Reductions Fund would be considered "public
works," as defined in Labor Code. However, under current law,
the actual reference to these publicly funded projects is
"public works." Therefore, the author may wish to amend the
bill to correctly reference that projects funded from the
Greenhouse Gas Reduction Fund will be public works for
purposes of Labor Code.
9. Prior Legislation :
AB 32 (Nunez) of 2006: Chaptered
AB 32 enacted the Global Warming Act of 2006 (Act).
AB 1532 (John A. Pérez) of 2012: Chaptered
AB 1532 requires the Department of Finance, in consultation
with CARB to develop a 3-year investment plan identifying
greenhouse gas reduction goals and targets, analyzing gaps in
state strategies to meet those goals, and identifying
priorities.
SB 535 (De Leon) of 2012: Chaptered
SB 535 requires the CA Environmental Protection Agency to
identify disadvantaged communities for investment
opportunities, as specified.
SUPPORT
State Building and Construction Trades Council of California
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Senate Committee on Labor and Industrial Relations
(Sponsor)
California Teamsters Public Affairs Council
International Association of Heat and Frost Insulators, Local 5
OPPOSITION
Asian Pacific Environmental Network (unless amended)
California Chamber of Commerce
California Manufacturers & Technology Association
Communities for a Better Environment
United Steel Workers
NEUTRAL
Communications Workers of America, AFL-CIO - District 9
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Senate Committee on Labor and Industrial Relations