BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 511 (Lieu) - Coastal resources: climate change: grants.
Amended: April 30, 2013 Policy Vote: NR&W 8-1
Urgency: No Mandate: No
Hearing Date: May 23, 2013 Consultant: Marie Liu
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: SB 511 would require the Natural Resources Agency
(agency), in coordination with the State Air Resources Board
(ARB) to develop guidelines for the awarding grants for projects
that enhance greenhouse gas emissions avoidance and
sequestration associated with natural resources.
Fiscal Impact: Ongoing costs, likely in the hundreds of
thousands of dollars, from the GHG Reduction Fund (special) to
the Natural Resources Agency for administration of a grant
program.
Background: The California Global Warming Solutions Act of 2006
(AB 32 (Nunez/Pavley) Chapter 488/2006) requires the state's
greenhouse gas (GHG) emissions to be reduced to 1990 levels by
2020. One of the actions to achieve the required GHG reductions
is through a "cap and trade" market-based compliance mechanism
where permits to emit GHG emissions can be purchased and sold on
the open market with the goal that the overall emission
reduction is reached at the least cost. The first auction for
credits held by ARB was on November 2013 and will continue
quarterly. Revenues are deposited in the GHG Reduction Fund
(fund).
AB 1532 (Perez) Chapter 807/2012 required that the fund be used
for specified purposes. To that end, AB 1532 required the
Department of Finance, in consultation with ARB and other state
agencies to develop a three-year investment plan identifying
priority programmatic investments of auction proceeds.
SB 535 (de Leon) Chapter 535/2012 further required that at least
10% of the fund be spent for projects in disadvantaged
communities and at least 25% for projects that benefit
disadvantaged communities.
SB 511 (Lieu)
Page 1
Proposed Law: This bill would require the agency, in
coordination with the ARB, to develop guidelines for the
awarding of grants for projects that enhance GHG emission
avoidance and sequestration associated with natural resources.
Specifically, eligible projects would be required to reduce GHG
emissions, provide incentives for pilot projects that act as
models for enhancing natural resources emission reductions and
sequestration, leverage other funds, promote investments in
projects with co-benefits including adaptation, and ensure
funding of projects in disadvantaged communities. The agency is
directed to use existing programs.
This bill would also exempt the development of the guidelines
from the Administrative Procedure Act.
Related Legislation: In this session, SB 798 (de Leon/Pavley),
AB 416 (Gordon), AB 574 (Lowenthal), AB 1023 (Eggman), and AB
1375 (Chau) all propose various expenditures from the GHG
Reduction Fund.
Staff Comments: The author's intention in this bill is to guide
the spending of monies from the GHG Reduction Fund, although
there is no language in the bill that actually indicates that
the grant guidelines are for the spending of GHG Reduction Fund
monies. Additionally, the bill language is unclear whether the
agency would be directed to establish guidelines for a new grant
program or whether the agency would only be allowed to use
existing programs. Assuming that the agency would be in charge
of implementing a new grant program, administrative costs are
usually approximately 5% of the monies to be allocated. Assuming
that the grant program would be allocating millions of dollars,
administrative costs are likely in the hundreds of thousands to
millions of dollars.
The ARB released its draft Investment plan in April with the
final anticipated being released with the Governor's revised
budget in May. The draft established three investment
priorities: sustainable communities and clean transportation,
energy efficiency and clean energy, natural resources and waste
diversion. While there appears to be shared goals between this
bill and the investment plan, it is unclear how this bill is
meant to interact with the investment plan.
SB 511 (Lieu)
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The Administrative Procedure Act (APA, beginning at Section
11340 of the Government Code) prohibits state agencies from
issuing or enforcing any rule, regulation, order, or standard of
general application unless it has been issued as a regulation
under the APA. The purpose of the APA is to provide the public
with meaningful opportunity to participate in the adoption of
state regulations and to ensure that regulations are clear,
necessary, and legally valid. Staff notes that exempting the
agency's guidelines from the APA may reduce administrative costs
for the agency, at least initially, but possibly at the expense
of a less vigorous review of the guidelines than is provided
under the APA process.
Proposed Author Amendments: Delete existing language and insert
language to create the Natural Resources Climate Mitigation
Program under which the Secretary of the Natural Resources
Agency, in consultation with the ARB, would be required to
develop guidelines that promote projects based on the potential
to increase climate benefits, prioritize projects that are
consistent with land use GHG reduction plans, and ensure that
the appropriate level of funding for disadvantaged communities
is achieved.