BILL ANALYSIS Ó
AB 416
Page 1
Date of Hearing: April 1, 2013
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 416 (Gordon) - As Amended: March 21, 2013
SUBJECT : State Air Resources Board: Local Emission Reduction
Program
SUMMARY : Requires the Air Resources Board (ARB) to establish
the Local Emission
Reduction Program (LERP) to provide grants and other financial
assistance to eligible local government recipients for the
purposes of developing and implementing greenhouse gas (GHG)
emissions reduction projects.
EXISTING LAW :
1)Requires ARB, pursuant to California Global Warming Solutions
Act of 2006 (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 permit the use of market-based compliance
mechanisms to comply with GHG reduction regulations, under
limited circumstances once specified conditions are met.
3)Establishes the GHG Reduction 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 (i.e., the cap-and-trade program adopted
by ARB under AB 32) to be deposited in the Fund and available
for appropriation by the Legislature.
4)Establishes the GHG Reduction Fund Investment Plan and
Communities Revitalization Act (AB 1532) to set procedures for
the investment of GHG allowance auction revenues. AB 1532
authorizes a range of GHG reduction investments, including
funding to reduce GHG emissions through investments in
programs implemented by local and regional agencies, local and
regional collaboratives, and nonprofit organizations
coordinating with local governments.
THIS BILL :
AB 416
Page 2
1)Requires ARB to:
a) Establish LERP and provides that moneys shall be
available from the General Fund, upon appropriation by the
Legislature, for its purposes.
b) Administer LERP in coordination with the Strategic
Growth Council (SGC).
c) Develop standards for distribution of funds to reduce
GHG emissions and achieve a variety of other related
objectives.
d) Provide opportunities for both small and large
population participants.
e) Ensure, in coordination with SGC, that funding is
available for innovative projects that create new systems
or technologies and existing, proven GHG emissions reducing
or sequestering projects.
f) Ensure projects maximize funds appropriated, provide
environmental and economic benefits, and do not conflict
with other areas of law.
2)Defines eligible recipients as a city, county, metropolitan
planning organization, regional climate authority, special
district, joint powers authority, air district, regional
collaborative, or nonprofit organization working in
coordination with a local government.
3)Requires ARB and SGC to give priority to projects that
demonstrate one or more of the following characteristics:
a) Regional implementation.
b) The ability to leverage additional public and private
funding.
c) The potential for "cobenefits" or "multibenefit"
attributes.
d) The potential for the project or program to be
replicated.
AB 416
Page 3
e) Consideration of geographic and socioeconomic issues.
FISCAL EFFECT : Unknown
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 two quarterly
auctions of allowances in the cap-and-trade program were held
in November 2012 and February 2013. The next auction (the
last of the current fiscal year) is scheduled for May 16,
2013.
The 2012-13 Budget Act (AB 1464) authorized Department of
Finance (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. AB 1532 (John A. Pérez) establishes a
long-term spending strategy for moneys in the Fund, including
procedures for deposit and expenditure of cap-and-trade
auction revenues pursuant to an investment plan. AB 1532
specifically authorizes funding for the same local recipients
described in this bill (local and regional agencies, local and
regional collaboratives, and nonprofit organizations
coordinating with local governments).
Pursuant to AB 1532, DOF and ARB are developing a three-year
investment plan for the auction proceeds. The investment plan
will identify the state's GHG emission reduction goals and
priority programs for investment of proceeds to support
achievement of those goals. The Governor's proposed 2013-14
Budget includes a brief discussion of Administration
priorities for investment, emphasizing investments in the
transportation and energy sectors from which large reductions
in GHG emissions are possible. In addition, areas to be
examined during the planning process include sustainable
agriculture practices (including the development of
bioenergy), forest management and urban forestry, and the
AB 416
Page 4
diversion of organic waste to bioenergy and composting.
In February 2013, ARB released an investment plan "concept
paper" and held public workshops to solicit public input. The
release of a draft investment plan is pending, and will be
followed by an ARB public hearing (tentatively scheduled for
April 25-26, 2013). DOF will submit the final plan to the
Legislature in May 2013. Funding will be appropriated to
state agencies by the Legislature and Governor through the
annual Budget Act, consistent with the plan.
2)Author's statement:
AB 416 will address the absence of a statutory program
providing local governments with access to state moneys for
GHG reducing projects, which will allow local governments to
serve as a delivery tool for projects that will help the state
reach its GHG reduction goals set forth in AB 32.
Projects at the local and regional level that could achieve a
portion of the state's GHG emission reduction targets are
lacking investment. Absent AB 416, local-scale and
regional-scale emission reduction initiatives are not likely
to be undertaken for a variety of reasons, including the small
scale of some local projects, a lack of knowledge or
understanding about the local emission reduction opportunities
that exist, the lack of community partner relationships, the
lack of incentives to coordinate and aggregate local-scale
small or micro projects, and the lack of credits, funds, and
incentives to engage in community, local, and regional-scale
projects.
AB 416 ensures that direct investments reach California
communities for GHG reducing projects, enhancing the
environments and economies of local and regional areas through
multi-benefit projects. This bill addresses the need for
investments within our local communities by allowing local
governments to deliver these investments for the state. These
types of investments will have two main goals: (1) the
reduction of GHG emissions, and (2) the creation of local jobs
and other benefits that meet the unique needs of each local
area.
3)Once more, with feeling? Projects and recipients described in
this bill are already eligible for funding from cap and trade
AB 416
Page 5
auction revenue under AB 1532. Though this bill provides no
funding (apart from the implausible source of the General
Fund), the GHG reduction projects contemplated in the bill are
candidates for funding from auction revenues. By requiring
ARB and SGC to establish the LERP in advance of receiving any
funds, this bill seems to emphasize projects initiated by
local governments, and perhaps prioritize eventual funding in
the eyes of the local recipient proponents. However, it could
be argued that the bill puts the cart before the horse. To
avoid requiring ARB and SGC to prematurely or unnecessarily
establishing LERP, including the cost of adopting standards
and guidelines required by the bill, the author and the
committee may wish to consider clarifying that the agencies'
obligations under this bill are contingent on the
appropriation of funds. In addition, to avoid potential
conflicts in planning and administration of funds, the bill
should clarify that LERP is subordinate to the AB 1532
investment plan process.
4)Prior legislation. This bill is similar to AB 2404 (Fuentes),
which was approved by this committee in April 2012 and later
held in the Assembly Appropriations Committee.
5)Double referral. This bill is double-referred to the Assembly
Local Government Committee
REGISTERED SUPPORT / OPPOSITION :
Support
Association of California Healthcare Districts
Audubon California
Bay Area Urban Forest Ecosystem Council
Bolsa Chica Land Trust
California Association of Sanitation Agencies
California Climate & Agricultural Network
California ReLeaf
California State Association of Counties
California Urban Forests Council
California Special Districts Association
Central Coast Urban Forests Council
City of Hayward
County of Santa Clara
Crestline Sanitation District
Environmental Defense Fund
AB 416
Page 6
Fulton-El Camino Recreation & Park District
Goleta Sanitary District
Green Cities California
Grizzly Flats Community Services District
Inland Urban Forest Council
Land Trust of Santa Cruz County
League of California Cities
Local Government Commission
Los Medanos Community Healthcare District
Marin Agricultural Land Trust
McCloud Community Services District
Menlo Park Fire Protection District
Monterey County Board of Supervisors
Peninsula Open Space Trust
Planning and Conservation League
Pleasant Hill Recreation & Park District
Rancho Simi Valley Recreation & Park District
Sacramento Urban Forests Council
San Diego Regional Urban Forest Council
San Joaquin Valley Urban Forest Council
Sonoma County Agricultural Preservation & Open Space District
Sonoma County Board of Supervisors
Sonoma County Regional Climate Protection Authority
Sonoma County Water Agency
South Tahoe Public Utility District
Street Tree Seminar/Los Angeles-Orange County Urban Forests
Council
The Nature Conservancy
Three Valleys Municipal Water District
Urban Counties Caucus
Ventura County Resources Conservation District
Vista Irrigation District
Western Municipal Water District
Opposition
Central Coast Forest Association
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092
AB 416
Page 7