BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 1268 (Beall) - Natural Resources Climate Improvement Program.
Amended: May 7, 2014 Policy Vote: NR&W 7-1, EQ 6-1
Urgency: No Mandate: No
Hearing Date: May 19, 2014 Consultant: Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1268 would establish the Natural Resources
Climate Improvement Program under the California Air Resources
Board (ARB) to assist in the development and implementation of
regionally integrated natural resource projects that maximize
greenhouse gas (GHG) emissions reductions or sequestration.
Fiscal Impact:
Ongoing costs of $1.9 million (special*) to the ARB for the
development of grant guidelines and administration of
competitive grant programs.
Unknown ongoing costs and cost pressures, possibly in the
hundreds of thousands to millions of dollars (special*), to
the Natural Resource Agency (agency) to identify and conduct
research on how to reduce or sequester GHG emissions in the
natural resources sector.
Unknown ongoing costs, likely in the mid-tens of thousands
of dollars (special*) to the agency to administer technical
assistance grants.
Unknown ongoing costs, likely in the low millions
(special*), to develop, administer, and oversee financial
assistance programs at the ten conservancies.
Ongoing costs of at least $400,000 (special*) for the
Department of Fish and Wildlife (DFW) and the Wildlife
Conservation Board (WCB) to develop, administer, and oversee
financial assistance programs.
* Greenhouse Gas Reduction Fund
Background: The California Global Warming Solutions Act of 2006
(aka AB 32/act) (Health and Safety Code §38500 et seq.) requires
the ARB to adopt GHG reduction measures by regulations to reduce
the statewide GHG emissions to 1990 levels by 2020. One of the
key AB 32 implementation programs is the Cap-and-Trade Program.
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Under this program, ARB establishes an overall limit or cap on
GHG emissions from specified industries. Facilities subject to
the cap may reduce their own emissions or purchase allowances
from others to emit GHGs, including from facilities that have
reduce3d emissions more than required. Allowances are auctioned
off by ARB. To date, ARB has completed six auctions, resulting
in a total of $663 million in proceeds, which are deposited into
the Greenhouse Gas Reduction Fund. The monies in this fund may
only be used to facilitate the achievement of GHG emission
reductions in California consistent with AB 32.
Existing law establishes a number of conservancies that
generally have the mission to enhance and restore important
habitat lands, provide for public restoration, educational
opportunities, and restore watersheds. Ten of these
conservancies have their own board and staff.
Chapter 4 of Division 2 of the Fish and Game Code (§1320 et
seq.) establishes the Wildlife Conservation Board, which is
required to investigate, study, and determine what areas within
the State are most essential and suitable for wildlife
production and preservation, and will provide suitable
recreation. The WCB is housed within DFW.
Proposed Law: This bill would establish the Natural Resources
Climate Improvement Program to assist in the development and
implementation of regionally integrated natural resource
projects that maximize GHG emissions reductions or
sequestrations. This program would be funded by the Greenhouse
Gas Reduction Fund.
ARB would be required to develop guidelines, in coordination
with the agency, for that would:
Ensure that funded projects use consistent accounting and
modeling approaches to estimate and monitor GHG emissions and
reductions.
Promote natural resource projects that protect existing GHG
emission sinks.
Promote projects that would assist the state in reaching
climate goals beyond 2020.
Prioritize projects that are consistent with the
implementation of county or regional land use GHG reductions
plans or programs.
Ensure projects are consistent with ARB's Investment Plan.
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Prioritize projects that have co-benefits for climate change
adaptation or resilience or air quality.
Ensure projects maximize benefits.
Promote the use of the best climate science and GHG emission
reduction analytics.
Promote project consistency with the California Climate
Adaptation Strategy.
Provide for public participation in the development of any new
grant programs.
Ensure that any GHG emission reductions resulting from funded
projects are not eligible to be sold as offsets.
Ensure that projects are selected through a competitive
process based on GHG reductions and co-benefits.
Under this program, the agency, in coordination with the ARB,
would be required to:
Provide annual updates to the Strategic Growth Council on
critical issues related to climate change.
Notify the state conservancies and WCB of any major
infrastructure projects that would impact projects that are
funding.
Identify and conduct climate research on how to reduce or
sequester GHG emissions in the natural resources sector.
Promote the implementation of the climate Adaptation Strategy.
Provide technical assistance grants to project applicants from
disadvantaged communities applying for funding from the state
conservancies or the WCB.
This program would also require the state conservancies and the
WCB to identify, develop, and implement projects within their
jurisdictions that are consistent with the program's guidelines.
Funding could be provided for projects that:
Manage and restore public or private lands to increase carbon
sequestration and reduce GHG emissions.
Protect agricultural and open space lands to reduce GHG
emissions and preserve carbon sequestration potential.
Sequester carbon or reduce GHG emissions with natural systems
Research and develop methods to increase carbon sequestration
and decrease GHG emissions through the use and management of
natural resources, and methods to measure and verify the
benefits.
Divert organic waste to bioenergy and composting.
The conservancies and WCB would be required to give priority to
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projects that have regional implementation, the ability to
leverage public and private funding, co-benefits potential, the
potential to be replicated, use existing programs, and "consider
geographic and socioeconomic issues."
Related Legislation: AB 2348 (Stone) of 2014 contains similar
language to SB 1268. (In Assembly Appropriations, Suspense
file)
SB 1217 (Leno) of 2014 directs the Strategic Growth Council to
review the impacts of climate change in the state to capital
outlay and public infrastructure projects. (In Senate
Appropriations, set for hearing on 5/19)
SB 511 (Lieu, 2013) would have required the agency, in
coordination with the ARB, to develop guidelines and award
grants that enhance GHG avoidance and sequestration associated
with natural resources. (Held under submission by the Senate
Appropriations Committee, later amended to address another
subject matter)
Staff Comments: This bill intends to establish the framework for
the spending of cap-and-trade revenues in the natural resources
sector. The Governor's 2014-15 proposed budget includes $850
million in cap-and-trade revenues to various projects, of which
$80 million was identified for the natural resources sector ($30
million for wetlands and watershed restoration through the
Department of Fish and Wildlife and $50 million for urban
forestry projects through CalFire).
Regarding the provisions that would require ARB to develop of
guidelines: This bill would have the ARB develop guidelines for
the expenditure of cap-and-trade revenues. However, the bill is
unclear as to whether these guidelines are meant to create a
grant program (or programs) or whether the guidelines are more
of a framework that would guide the future development of grant
programs. Staff recommends that the purpose of the guidelines be
clarified.
If this bill is interpreted to authorize ARB to create
guidelines for grant programs which it would administer, ARB
estimates needing approximately $1.9 million and 10 positions to
develop the guidelines. Two additional positions for a total
cost of $2.1 million would be needed once the guidelines are
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developed to administer the programs. These costs are based $50
million being appropriated to the grant program. This estimate
is within the typical range for administrative costs for grant
programs (5%).
Staff notes that there is a wide range of conceivable grant
programs that could fit the guidelines that will be established
pursuant to this bill. However, many of the potential grant
programs could be similar to existing programs within the
Resources Agency. Staff recommends that the agency should be in
charge of the guideline development, in coordination with the
ARB, in order to better utilize the existing program expertise
within the agency.
Regarding the provisions that establish new responsibilities for
the agency: This bill would require the agency to identify and
conduct climate research to improve the state's understanding of
how to reduce or sequester GHG emissions in the natural
resources sector. The agency notes that such research can have
significant costs. As a reference point, in the Governor's
proposed budget, the agency requested $5 million for a climate
change assessment.
The agency would also incur costs to develop a technical
assistance grants program to assist applicants from
disadvantaged communities applying for funding from the
conservancies or the WCB. Staff notes that in many existing
competitive grant programs within the agency, the administering
department is required to offer technical assistance to all
applicants. Providing assistance directly allows applicants to
be assisted by those that understand the program best, the staff
of the administering department. Staff recommends that the bill
require any grant program to provide technical assistance to
interested applicants, especially those from disadvantaged
communities, instead of creating a stand-alone technical
assistance grant program.
Regarding the provisions requiring the conservancies and the WCB
to implement GHG reduction and sequestration projects: The costs
to the ten conservancies and WCB to implement a financial
assistance program will vary greatly depending on the amount of
monies that they will be administering. Assuming that each
entity would be administering at least $2 million in assistance
and assuming that administrative costs are 5%, collective costs
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would be in the low millions. Staff notes that regardless of the
amount appropriated for the financial assistance programs, a
minimal level of additional staffing may be needed at each
entity as the conservancies and WCB do not necessarily have
existing staff with expertise related to GHG emissions and
sequestration. For example, WCB and DFW anticipate costs of at
least $400,000 annually to administer additional a significant
increase in projects. These costs would include assistance to
grantees and potential grantees to assist with assessing the GHG
emission impact of the projects, assure the accurate monitoring
of projects, development of the necessary analytical tools to
assess the ability of potential projects to reduce GHG emissions
or to sequester carbon, and accounting needs. Staff notes that
these costs represent a minimum as the actual staffing needs
will depend on the amount of monies that the WCB will be
administering.
Staff notes that the bill requires projects that are under the
Natural Resources Climate Improvement Program to be selected
through a competitive process. However, the conservancies and
WCB have traditionally not run competitive programs.