BILL ANALYSIS Ó
AB 1639
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Date of Hearing: April 28, 2014
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 1639 (Grove) - As Amended: April 22, 2014
SUBJECT : Greenhouse Gas Reduction Fund: high-speed rail
SUMMARY : Prohibits appropriation of moneys from the Greenhouse
Gas Reduction Fund (GHGRF) for purposes of the high-speed rail
(HSR) system.
EXISTING LAW :
1)Requires the Air Resources Board (ARB), pursuant to California
Global Warming Solutions Act of 2006 (AB 32), to adopt a
statewide greenhouse gas (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, once
specified conditions are met.
3)Establishes the GHGRF 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 GHGRF and available for appropriation
by the Legislature.
4)Establishes the GHGRF Investment Plan and Communities
Revitalization Act [AB 1532 (John A. Pérez), Chapter 807,
Statutes of 2012] to set procedures for the investment of GHG
allowance auction revenues. AB 1532 authorizes a range of GHG
reduction investments and establishes several additional
policy objectives.
5)Requires the investment plan to allocate: (1) a minimum of 25
percent of the available moneys in the fund to projects that
provide benefits to identified disadvantaged communities; and;
(2) a minimum of 10 percent of the available moneys in the
fund to projects located within identified disadvantaged
communities [SB 535 (De Leon), Chapter 830, Statutes of 2012].
AB 1639
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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 achieve AB 32's 2020 limit.
Approximately 78 percent of the reductions will be achieved
through identified direct regulations. ARB proposes to
achieve the balance of reductions necessary to meet the 2020
limit (approximately 18 MMT) through a cap-and-trade program
that covers an estimated 600 entities.
The 2012-13 Budget Act 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 established a long-term spending strategy for moneys in
the GHGRF, including procedures for deposit and expenditure of
cap-and-trade auction revenues pursuant to an investment plan.
AB 1532 specifically authorizes funding for transportation
projects that reduce GHG emissions.
While DOF and ARB developed a three-year investment plan for
the auction proceeds pursuant to AB 1532, the 2013-14 Budget
Act provided that the first $500 million in auction revenue be
loaned to the GF and did not appropriate any funds pursuant to
the investment plan. For the 2014-15 Budget, the Governor has
proposed spending $850 million on a variety of programs,
including $250 million for HSR and approximately $350 million
for other transportation-related investments.
The proposed HSR funding will support construction of the
system's initial operating section, which is estimated to cost
$31 billion and be completed by 2022. This includes $58.6
million to continue environmental planning of the Phase 1
project extending from San Francisco to Anaheim, and $191.4
million for right-of-way acquisition and construction of the
initial construction segment extending from Madera to near
Bakersfield. The proposal anticipates a reduction of 4.3
million metric tons of carbon dioxide (CO2) equivalents by
2030, with an additional one million tons of CO2 annually
thereafter, attributable to reduced car and airplane travel.
AB 1639
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Trailer bill language proposes that beginning in 2015-16, 33
percent of all GHGRF revenues be continuously appropriated for
the HSR project. Further, it specifies that the remaining
$400 million General Fund loan be directed to HSR. At this
time, the administration has not provided an estimate of
projected cap-and-trade auction revenues; thus, it is unclear
how much funding would go to HSR in 2015-16 and beyond.
2)LAO concerns . In a March 27, 2014 presentation to the Senate
Transportation and Housing Committee, the Legislative
Analyst's Office expressed the following concerns:
Using Cap-and-Trade Auction Revenues for High-Speed Rail
May Not Maximize Greenhouse Gas (GHG) Reductions.
o The high-speed rail project would not
contribute significant GHG reductions before 2020,
which is the statutory target for reaching 1990
emissions. This is because the high-seed rail system
will not be operational until 2022.
o The construction of high-speed rail would
actually generate GHG emissions of 30,000 metric tons
over the next several years. (The HSR Authority plans
to offset these emissions by planting thousands of
trees in the Central Valley.)
1)HSR funding will be decided in the Budget Act . The question
of whether the Legislature agrees with the Governor's proposal
to use the GHGRF to support the HSR project will be decided in
June when the Budget Act is enacted. In the event this bill
passed the Legislature and was signed by the Governor, it
would be enacted next January. In future years, the bill
could be overridden any time the Legislature decided to
appropriate GHGRF moneys for HSR.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
AB 1639
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Sierra Club California (prior version)
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092