BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 726 (Lara) - California Global Warming Solutions Act of 2006:
Western Climate Initiative, Incorporated.
Amended: April 8, 2013 Policy Vote: EQ 9-0
Urgency: No Mandate: No
Hearing Date: May 13, 2013 Consultant: Marie Liu
This bill may meet the criteria for referral to the Suspense
File.
Bill Summary: SB 726 would make several new requirements of the
Western Climate Initiative, Inc. (WCI), including requiring WCI
to comply with the Bagley-Keen Open Meeting Act, comply with the
California Public Records Act, report to the Legislature
regarding emission reductions achieved, and cease further work
on behalf of the state until its California voting board members
are confirmed by the Senate. This bill would also require that
expenditures and allocations of monies to WCI be included in the
Governor's budget for ARB.
Fiscal Impact:
Minor costs to comply with the Bagley-Keene Open Meeting
Act.
Potential costs in the tens of thousands of dollars from
the Cost of Implementation (COI) Account (special) to comply
with the Public Records Act, depending on the number and
complexity of actual requests.
Possible, but unlikely, costs in the tens of thousands of
dollars to low hundreds of thousands from the COI Account
for temporary cessation of work by the WCI on behalf of the
state, depending on the length of the cessation.
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 was on November 2013 and will continue quarterly.
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Revenues are deposited in the GHG Reduction Fund (fund).
WCI, Inc. is an independent nonprofit corporation formed to
develop compliance, tracking, and market monitoring functions
for jurisdictions participating in the auctions. The Board of
Directors includes officials from California and the Canadian
provinces of Quebec and British Columbia. The Californian
members are the Secretary for Environmental Protection (EPA) or
his/her designee, the Chairperson of the Air Resources Board
(ARB) or his/her designee, an ex officio member appointed by the
Assembly, and an ex officio member appointed by the Senate.
Proposed Law: This bill would require WCI to cease all work on
behalf of the state commencing January 1, 2014 until the Chair
of ARB and the Secretary of CalEPA are confirmed by the Senate.
This bill would require WCI to annually report to the Governor
and the Legislature on the GHG reductions achieved and general
plans to foster relationships with other localities.
This bill would subject WCI to the Bagley-Keene Open Meeting Act
and the California Public Records Act and would require that
expenditures to WCI be included in the Governor's budget for
ARB.
Staff Comments: This bill potentially results in a temporary
halt of services that WCI provides for the state. The length of
this hold is completely dependent on Senate action to confirm
the CA members of the WCI board. Should there be no halt in
services or a very brief one (on the order of days or maybe
weeks), there will likely be minimal or no cost to the state.
However, if the hold continues, the state will need to replace
the credit tracking and market monitoring services that is
currently provided by WCI and is integral to the state's cap and
trade program. ARB estimates that this could cost in the tens of
thousands to low hundreds of thousands of dollars to contract
out for these services. Because it will take approximately six
months to secure such contracts such contract costs won't be
incurred unless the hold is for a long period of time, however
staff work to begin soliciting such contracts will begin
immediately. If the hold continues on the order of months, there
would be additional, but speculative, costs for the delay of a
credit auction. Staff believes the Senate is likely to have
timely confirmation hearings so that costs due to the
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confirmation requirement of this bill are possible, but
unlikely.
Staff notes that several clarifications are needed regarding the
confirmation requirement in the bill. First, this bill requires
that the Senate confirm the voting CA members of the WCI.
However the voting members of WCI are the Chair of the ARB and
the Secretary of EPA. Both these people have technically been
confirmed already by the Senate for their existing position.
Presumably the bill intends that they be subject to Senate
confirmation separately for their role on WCI. Additionally, it
is unclear what would occur if either the chair or secretary
were denied confirmation and whether confirmation would be
required every time a new chair or secretary was appointed.
This bill also requires WCI to report to the Legislature
annually on the emission reductions achieved pursuant to the
Western Climate Initiative and on their general plans to partner
with other localities, states, and nations in order to reduce
GHG emissions in California. Staff notes that these reporting
responsibilities might be more appropriate to ask of the ARB as
WCI does not track GHG emission reductions nor does it reach out
to other localities to foster relations.
The cost to comply with the California Public Records Act (PRA)
will vary depending on the scope of the request. Cost recovery
for PRA requests also vary depending on the request as statute
allows agencies to recover copy costs in all cases and research
costs in some cases. Noting this variability, costs are likely
in the low tens of thousands for a conservative number of
requests annually.