BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1447
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          Date of Hearing:   April 28, 2014

                        ASSEMBLY COMMITTEE ON TRANSPORTATION
                               Bonnie Lowenthal, Chair
                   AB 1447 (Waldron) - As Amended:  April 22, 2014
           
          SUBJECT  :  California Global Warming Solutions Act of 2006:   
          Greenhouse Gas Reduction Fund:  traffic signal synchronization 

           SUMMARY  :  Adds traffic signal synchronization to the list of  
          sustainable infrastructure projects eligible to receive money  
          from cap-and-trade auction proceeds if the project is designed  
          and implemented to achieve cost-effective reductions in  
          greenhouse gas emissions and includes specific reduction targets  
          and metrics to evaluate the project's effect.  

           EXISTING LAW  :  

          1)Enacts the Global Warming Solutions Act of 2006 (AB 32  
            (Nunez), Chapter 488, Statutes of 2006) that requires the Air  
            Resources Board (ARB) to adopt a statewide greenhouse gas  
            emissions limit equivalent to the statewide greenhouse gas  
            emissions levels in 1990 to be achieved by 2020.   

           2)Requires ARB to provide each region of the state with  
            greenhouse gas emission reduction targets for the automobile  
            and light truck sector.   

           3)Requires a regional transportation plan to include a  
            sustainable communities strategy designed to achieve the  
            regional targets for greenhouse gas emission reduction.   

           4)Requires ARB to adopt regulations to achieve maximum  
            technologically feasible and cost-effective greenhouse gas  
            emission reductions; to this end, authorizes ARB to permit the  
            use of market-based compliance mechanisms (cap-and-trade  
            program) to comply with greenhouse reduction regulations.  

          5)Requires cap-and-trade auction proceeds be used to reduce  
            greenhouse gas emissions in the state through investments  
            related to, but not limited to:

             a)   Energy efficiency and renewable energies;

             b)   State-of-the-art systems to move goods and freight,  








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               advanced technology vehicles and vehicle infrastructure,  
               advanced biofuels, and low-carbon and efficient public  
               transportation;

             c)   Water use and supply, land and natural resource  
               conservation and management, forestry, and sustainable  
               agriculture;

             d)   Strategic planning and development of sustainable  
               infrastructure projects, such as transportation and  
               housing;

             e)   In-state diversion of municipal solid waste and disposal  
               through waste reduction, division, and reuse;

             f)   Programs implemented by local and regional agencies,  
               local and regional collaboratives, and nonprofit  
               organizations coordinating with local governments; and,

             g)   Research, development, and deployment of innovative  
               technologies, measures, and practices.  

          6)Requires the Department of Finance (DOF), in consultation with  
            ARB, to develop and submit a three-year investment plan to the  
            Legislature to guide the use of auction proceeds.  

          7)Requires the investment plan to allocate:  (1) a minimum of  
            25% of the available moneys in the fund to projects that  
            provide benefits to identified disadvantaged communities; and,  
            (2) a minimum of 10% of the available moneys in the fund to  
            projects located within identified disadvantaged communities.   


           FISCAL EFFECT  :  Unknown

           COMMENTS  :  ARB's cap-and-trade program was established to help  
          the state meet its AB 32 goals.  Under the cap-and-trade  
          program, ARB places a cap on greenhouse gas emissions by issuing  
          a limited number of tradable permits (called allowances) equal  
          to the cap.  Each year, the number of allowances declines in  
          proportion to the cap to achieve the intended emission  
          reductions. Businesses that aggressively reduce their emissions  
          can trade their surplus allowances to firms that find it more  
          expensive to reduce their emissions.  In distributing the  
          emissions allowances, ARB allocates a portion of the allowances  








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          for free to covered entities, places some in a cost containment  
          reserve, and auctions the remainder. The price of auctioned  
          allowances is set by the marketplace.  Over time, program  
          regulations require a greater reliance on auctioning, which  
          will, among other things, help maximize incentives for sources  
          to reduce their emissions and provide proceeds (auction  
          revenues) that can be reinvested for public benefit to further  
          the purposes of AB 32.  

          To guide investment of auction proceeds, the Legislature passed  
          and the Governor signed 
          AB 1532 (John A. Pérez), Chapter 807, Statutes of 2012, which  
          created the Greenhouse Gas Reduction Fund Investment Plan and  
          Communities Revitalization Act.  Among other provisions, AB 1532  
          requires DOF and ARB to develop and submit a three-year  
          investment plan to identify priority investments that will help  
          achieve greenhouse gas reduction goals. Auction proceeds are to  
          be appropriated to state agencies by the Legislature consistent  
          with the investment plan.  

          The first investment plan, for fiscal years 2013-14 through  
          2015-16 was released in May last year.  The 2013-14 Budget Act,  
          however, did not appropriate any funds pursuant to the  
          investment plan.  Instead it loaned $500 in auction proceeds to  
          the General Fund.  For the 2014-15 Budget, the Governor proposed  
          spending $850 million on a variety of programs, including $250  
          million for high-speed rail and approximately $350 million for  
          other transportation-related investments.  No funds have been  
          proposed specifically for traffic signal synchronization.  

          In addition to the Governor's proposal, Senator Steinberg  
          recently announced his proposed strategy for investing auction  
          proceeds.  The specifics of his plan have not yet been released,  
          but the plan reportedly calls for 10% of an estimated $5 billion  
          annually in auction proceeds to be used as a permanent source of  
          funding for state highway road rehabilitation and for complete  
          streets for traffic management, repair, deferred maintenance,  
          bikeways, and road and highway retrofit.  It is unclear if  
          traffic signal synchronization would be allowed under the  
          Senator's proposal.  


          The City of Los Angeles was the first major city in the world to  
          synchronize all of its 4,500 traffic lights. This effort to  
          reduce congestion, pollution, and wasted time took 30 years and  








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          cost roughly $400 million, $150 million of which came from  
          transportation bonds authorized by the Highway Safety, Traffic  
          Reduction, Air Quality, and Port Security Bond Act of 2006, a  
          nearly $20 billion bond measure approved by the voters as  
          Proposition 1B in November 2006.  That measure provided $250  
          million to fund traffic signal synchronization or other  
          technology-based improvements to improve safety, operations, and  
          the effective capacity of local streets and roads.  Of the $250  
          million available for this effort, $150 million was allocated to  
          the City of Los Angeles.  The effort reportedly has had great  
          success reducing traffic congestion and associated air  
          pollution.  


          The author introduced this bill to provide a means of funding  
          future traffic signal synchronization projects, funding for  
          which has diminished along with transportation bond dollars.   
          These projects would be eligible to use auction proceeds  
          assuming data support projected reductions in greenhouse gas  
          emissions as a result.  Arguably, traffic signal synchronization  
          projects are already eligible for funding as part of sustainable  
          transportation infrastructure projects called for in the  
          investment plan.  However, they are not specifically identified.  
           AB 1447 would specifically clarify that these projects are,  
          indeed, eligible.  


          Writing in opposition to this bill, the California Municipal  
          Utilities Association discourages calling out the traffic signal  
          synchronization program instead preferring broad funding  
          categories consistent with current law.  Others argue that the  
          ARB lacks the authority to raise revenue through auction  
          proceeds and, therefore, authority to spend the proceeds is  
          premature.  

           Double-referral  :  This bill passed out of the Natural Resources  
          Committee on April 21, 2014, with a vote of 9-0.

           Previous legislation:   

          AB 32 (Nunez), Chapter 488, Statutes of 2006, enacted the Global  
          Warming Act of 2006 that requires ARB to adopt a statewide  
          greenhouse gas emissions limit equivalent to the statewide  
          greenhouse gas emissions levels in 1990 to be achieved by 2020.   
           








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          AB 1532 (John A. Pérez), Chapter 807, Statutes of 2012, creates  
          the Greenhouse Gas Reduction Fund Investment Plan and  
          Communities Revitalization Act to set procedures for the  
          investment of auction revenues.  

          SB 535 (De Leon), Chapter 830, Statutes of 2012, provides that  
          the required investment plan for cap-and-trade revenue is to  
          allocated funds as follows:  1) a minimum of 25% of the  
          available moneys in the fund to projects that provide benefits  
          to identified disadvantaged communities; and, 2) a minimum of  
          10% of the available moneys in the fund to projects located  
          within identified disadvantaged communities.  

           REGISTERED SUPPORT / OPPOSITION  :  

           Support 
           
          None on file

           Opposition 
           
          California Chamber of Commerce
          California Municipal Utilities Association
           

          Analysis Prepared by  :   Janet Dawson / TRANS. / (916) 319-2093