BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 197


                                                                    Page  1


          (Without Reference to File)

          CONCURRENCE IN SENATE AMENDMENTS
          AB  
          197 (Eduardo Garcia)


          As Amended  August 19, 2016


          Majority vote


           -------------------------------------------------------------------- 
          |ASSEMBLY:  |      |(June 2, 2015) |SENATE: |23-13 |(August 22,      |
          |           |      |               |        |      |2016)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
           -------------------------------------------------------------------- 
                 (vote not relevant)


           ---------------------------------------------------------------------- 
          |                |     |                |                  |           |
          |                |     |                |                  |           |
          |COMMITTEE VOTE: |6-1  |(August 24,     |RECOMMENDATION:   |concur     |
          |                |     |2016)           |                  |           |
          |                |     |                |                  |           |
          |                |     |                |                  |           |
          |                |     |                |                  |           |
          |                |     |                |                  |           |
           ---------------------------------------------------------------------- 
          (Nat. Res.)




          Original Committee Reference:  U. & C.


          SUMMARY:  Creates the Joint Legislative Committee on Climate  
          Change Policies (JLCCCP), requires the Air Resources Board (ARB)  








                                                                     AB 197


                                                                    Page  2


          to prioritize direct emission reductions and consider social  
          costs when adopting regulations to reduce greenhouse gas (GHG)  
          emissions beyond the 2020 statewide limit, requires ARB to  
          prepare reports on sources of GHGs and other pollutants,  
          establishes six-year terms for voting members of ARB, and adds  
          two legislators as non-voting members of ARB.


          The Senate amendments delete the Assembly version of the bill,  
          and instead:


          1)State the following findings:


             a)   The California Global Warming Solutions Act of 2006 [AB  
               32 (Núñez), Chapter 488] authorizes ARB to adopt  
               regulations to achieve the maximum technologically feasible  
               and cost-effective GHG emissions reductions.


             b)   AB 32 requires ARB to reduce statewide GHG emissions to  
               at least the 1990 emissions level by 2020 and to maintain  
               and continue reductions thereafter.


             c)   Continuing to reduce GHG emissions is critical for the  
               protection of all areas of the state, but especially for  
               the state's most disadvantaged communities, as those  
               communities are affected first, and most frequently, by the  
               adverse impacts of climate change, including an increased  
               frequency of extreme weather events, such as drought, heat,  
               and flooding.  The state's most disadvantaged communities  
               also are disproportionately impacted by the deleterious  
               effects of climate change on public health.


             d)   ARB's actions to reduce GHG emissions must be done in a  
               manner that is transparent and accountable to the public  
               and the Legislature.  To this end, ARB must enhance the  
               accessibility of information used to inform and evaluate  
               regulatory measures developed to reduce GHG emissions.








                                                                     AB 197


                                                                    Page  3




             e)   Transparency and accountability also are essential to  
               ensuring the state's actions are done in an equitable  
               fashion that is protective and mindful of the effects on  
               the state's most disadvantaged communities.


             f)   In recognition of the need for ongoing, permanent  
               oversight over the implementation of the state's climate  
               policies, the Joint Legislative Committee on Climate Change  
               Policies will be established.  The committee will uniquely  
               provide an oversight perspective that connects the  
               jurisdictions of several legislative standing committees,  
               including those that have the issues of air quality,  
               transportation, energy, and local government within their  
               jurisdiction, which is critical given that the state has  
               integrated climate change policies throughout the  
               activities of many state agencies in addition to ARB.


          2)Create the JLCCCP, consisting of at least three Senators and  
            three Assembly Members, and require the committee to make  
            recommendations concerning the state's programs, policies, and  
            investments related to climate change.


          3)Authorize the JLCCCP to establish a panel of experts to  
            provide an independent analysis of the state policies.


          4)Define, for purposes of AB 32, "social costs" as an estimate  
            of the economic damages, including, but not limited to,  
            changes in net agricultural productivity; impacts to public  
            health; climate adaptation impacts, such as property damages  
            from increased flood risk; and changes in energy system costs,  
            per metric ton of GHG emission per year.


          5)Require ARB to publish emissions of GHGs, criteria pollutants  
            and, no later than January 1, 2018, toxic air contaminants,  
            for each facility that is a major source of GHG emissions  








                                                                     AB 197


                                                                    Page  4


            required to report its emissions pursuant to AB 32.


          6)Require ARB to annually appear before the JLCCCP to present  
            ARB's informational report on emissions of GHGs, criteria  
            pollutants, and toxic air contaminants from all sectors  
            covered by the AB 32 scoping plan.


          7)Require ARB, when it adopts regulations to achieve GHG  
            emission reductions beyond the statewide limit, to consider  
            social costs and prioritize direct emission reductions at  
            large stationary, mobile, and other sources.


          8)Require each scoping plan update to identify for each emission  
            reduction measure:


             a)   The range of projected GHG emissions reductions that  
               result from the measure;


             b)   The range of projected air pollution reductions that  
               result from the measure; and


             c)   The cost-effectiveness, including avoided social costs,  
               of the measure.


          9)Establish terms of six years for each of the 14 voting members  
            of ARB, require ARB to establish initial staggered terms,  
            permit reappointment, and provide that the six local air  
            district representatives must maintain their air district  
            board membership to remain on ARB.


          10)Add two members of the Legislature as ex officio, non-voting  
            members, one appointed by the Senate Rules Committee and one  
            appointed by the Speaker of the Assembly.









                                                                     AB 197


                                                                    Page  5



          11)Require ARB to make available on its Web site the emissions  
            of GHGs, criteria pollutants, and toxic air contaminants  
            throughout the state broken down to a local and sub-county  
            level for stationary sources and to at least a county level  
            for mobile sources.  Requires the emissions reported to  
            include data on the emissions of criteria pollutants and toxic  
            air contaminants emitted by stationary sources as provided to  
            ARB by air districts.  Requires the information to be  
            displayed graphically and updated at least once a year.


          12)Provide the bill becomes operative only if SB 32 (Pavley) of  
            the current legislative session is enacted and becomes  
            effective on or before January 1, 2017.


          EXISTING LAW:  


          1)Establishes ARB consisting of 14 members.  Twelve members  
            serve at the pleasure of the Governor and are subject to  
            confirmation by the Senate.  These members are appointed on  
            the basis of interest and ability in the field of air  
            pollution control, understanding of the needs of the general  
            public in connection with air pollution problems, and  
            additional specific qualifications, including six members from  
            specified air districts.  Two members are appointed by  
            Legislature, one by the Senate Committee on Rules, and one by  
            the Speaker of the Assembly.  These members must work directly  
            with communities in the state that are most significantly  
            burdened by, and vulnerable to, high levels of pollution,  
            including communities with diverse racial and ethnic  
            populations and low-income populations.  Members serve  
            part-time, with the exception of the Chair, who is appointed  
            by the Governor and serves full-time.  ARB's primary duties  
            are controlling motor vehicle emissions, coordinating  
            activities of air districts for the purposes of the federal  
            Clean Air Act, and implementing AB 32.
          2)Requires ARB, pursuant to AB 32, to adopt a statewide GHG  
            emissions limit equivalent to the 1990 level by 2020 and adopt  
            regulations to achieve maximum technologically feasible and  








                                                                     AB 197


                                                                    Page  6


            cost-effective GHG emission reductions.  


          FISCAL EFFECT:  According to the Senate Appropriations Committee  
          (prior version):


          1)One-time costs of $100,000 (various special funds) to the ARB  
            for construction to enlarge the hearing room dais and to  
            provide the equipment needed to accommodate two additional  
            board members. 


          2)$233,000 annually (Cost of Implementation Fund) to the ARB for  
            staffing needs to support new board members and develop  
            ranking criteria. 


          COMMENTS:  The 5th assessment report from the Intergovernmental  
          Panel on Climate Change (IPCC) notes that atmospheric  
          concentrations of global warming pollutants have risen to levels  
          unseen in the past 800,000 years.  Carbon dioxide concentrations  
          have increased by 40% since pre-industrial times.  There is  
          broad scientific consensus that these global GHG emission  
          increases are leading to higher air and water temperatures, as  
          well as rising sea levels.  Sea level is expected to rise 17 to  
          66 inches by 2100, and the frequency of extreme events such as  
          heat waves, wildfires, floods, and droughts is expected to  
          increase.


          Pursuant to AB 32, ARB approved the first Scoping Plan in 2008.   
          The Scoping Plan outlined a suite of measures aimed at achieving  
          1990-level emissions, a reduction of 80 million metric tons of  
          CO2 (MMT CO2e).  Average emission data in the Scoping Plan  
          reveal that transportation accounts for almost 40% of statewide  
          GHG emissions, and electricity and commercial and residential  
          energy sector account for over 30% of statewide GHG emissions.   
          The industrial sector, including refineries, oil and gas  
          production, cement plants, and food processors, was shown to  
          contribute 20% of California's total GHG emissions. 









                                                                     AB 197


                                                                    Page  7



          The 2008 Scoping Plan recommended that reducing GHG emissions  
          from the wide variety of sources that make up the state's  
          emissions profile could best be accomplished through a  
          cap-and-trade program along with a mix of other strategies  
          including a low carbon fuel standard (LCFS), light-duty vehicle  
          GHG standards, expanding and strengthening existing energy  
          efficiency programs, and building and appliance standards, a 33%  
          Renewable Portfolio Standard (RPS), and regional  
          transportation-related GHG targets.  Pursuant to authority under  
          AB 32, the ARB adopted a Low Carbon Fuel Standard in 2009, and a  
          cap-and-trade program approved on December 13, 2011.


          ARB approved an update to the Scoping Plan in 2014.  The update  
          describes policies, actions, and strategies in the energy,  
          transportation, fuels, agriculture, waste, and natural lands  
          sectors as a means to continue emissions reductions in each of  
          these sectors.  The update also asserts that California is on  
          track to meet the near-term 2020 GHG limit and is well  
          positioned to maintain and continue reductions beyond 2020 as  
          required by AB 32.


          In 2005, Governor Schwarzenegger issued Executive Order S-3-05  
          and called for GHG emissions reductions to 1990 levels by 2020  
          and 80% below 1990 levels by 2050.  On April 29, 2015, Governor  
          Brown issued Executive Order B-30-15, which established an  
          interim statewide GHG emission reduction target to reduce GHG  
          emissions to 40% below 1990 levels by 2030, "in order to ensure  
          California meets its target of reducing greenhouse gas emissions  
          to 80% below 1990 levels by 2050."  The order also directed all  
          state agencies with jurisdiction over sources of GHG emissions  
          to implement measures, pursuant to statutory authority, to  
          achieve reductions of GHG emissions to meet the 2030 and 2050  
          GHG emissions reduction targets.


          On June 17, 2016, ARB released a "2030 Target Scoping Plan  
          Update Concept Paper."  The paper includes four potential  
          high-level concepts for achieving a 40% GHG reduction by 2030.   
          Concept 1 calls for enhancements to existing, successful  








                                                                     AB 197


                                                                    Page  8


          programs and implementation of SB 350.  It suggests investment  
          of funds from the cap-and-trade program in areas that would  
          further the goals of AB 32.  Concept 2 extends the actions in  
          Concept 1 to specifically address the industrial sector through  
          industrial facility caps.  It would have no cap-and-trade  
          regulation post-2020 and no statewide limit on GHG emissions.   
          Concept 3 focuses on transportation-oriented policy aimed at  
          ambitious reductions in vehicle miles traveled (VMT) and  
          increased number of zero-emission and plug-in vehicles by 2030.   
          It would not continue cap-and-trade regulation post-2020.   
          Concept 4 includes the same complementary policies as Concept 1,  
          but in lieu of a cap-and-trade program, suggests a carbon tax  
          applied at a value predetermined by a method such as economic  
          modeling or the use of United States Environmental Protection  
          Agency (US EPA) social cost of carbon.  It is not clear if this  
          scenario would ultimately achieve the 2030 target because it  
          would not include a statewide limit on GHG emissions, and it is  
          unknown how the monies generated by a carbon tax would be used.


          According to the author, "In order for California to remain an  
          economic and environmental leader the state will need to also be  
          a leader on issues related to equity.  Placing the health and  
          economic impacts of climate policy on vulnerable populations  
          second will stunt the state's prosperity.  A great degree of  
          transparency and investment in California's environmentally and  
          socioeconomically disadvantaged populations has the potential to  
          yield significant climate, economic, public health and quality  
          of life benefits while knocking down barriers to opportunity." 


          This bill provides direction to ARB regarding its actions to  
          achieve GHG reductions beyond the 2020 statewide limit,  
          including reiterating existing requirements of AB 32 and  
          introducing the consideration of "social costs," as defined.   
          Some elements of social cost, such as public health impacts, are  
          accounted for in ARB's current approach to analyzing economic  
          impacts and cost-effectiveness.  Other elements, changes to  
          agricultural productivity and property damage, are new and their  
          impact is unclear.  










                                                                     AB 197


                                                                    Page  9


          The bill further requires ARB to prioritize regulations that  
          result in direct emission reductions at large stationary, mobile  
          and other sources.  While this appears to favor direct "command  
          and control" regulation over market-based compliance mechanisms  
          or incentive programs, it is essentially consistent with the  
          current program and structure of AB 32, where ARB is required to  
          adopt regulations to achieve the maximum technologically  
          feasible and cost-effective GHG reductions, and authorized to  
          include the use of market-based compliance mechanisms.  In  
          practice, direct regulations are prioritized over cap-and-trade,  
          which operates as a backstop to achieve the reductions in excess  
          of reductions achieved by direct regulations that are necessary  
          to achieve the statewide limit. 


          This bill creates the JLCCCP to study climate change policies  
          and make recommendations to the Legislature.  In addition to a  
          broad "study and recommend" role, the committee is the venue for  
          presentation of annual report on emissions by ARB required by  
          the bill.


          This bill is contingent on SB 32 (Pavley), which requires ARB to  
          ensure that statewide GHG emissions are reduced to at least 40%  
          below the 1990 level by 2030.


          Analysis Prepared by:                                             
                          Lawrence Lingbloom / NAT. RES. / (916) 319-2092   
                                                                      FN:  
          0004908



















                                                                     AB 197


                                                                    Page  10