Amended in Assembly August 18, 2015

Amended in Assembly June 9, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 199

Introduced by Assembly Member Eggman

(Coauthors: Assembly Members Dahle, Hadley, Harper, Rendon, Williams, and Wood)

January 29, 2015

An act to amend begin delete Section end delete begin insert Sections end insert 26003 begin insert and 26011.8 end insert of the Public Resources Code, relating to alternative energy, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 199, as amended, Eggman. Alternative energy: recycled feedstock.

Existing law establishes the California Alternative Energy and Advanced Transportation Financing Authority to provide financial assistance for projects that promote the use of alternative energies. Existing law, until January 1, 2021, authorizes the authority to approve a project for financial assistance in the form of a sales and use tax exclusion. Existing law prohibits the authority from granting sales and use tax exclusions that exceed $100,000,000 for each calendar year.

This bill would expand projects eligible for the sales and use tax exclusion to include projects that process or utilize recycled feedstock, but would not include a project that processes or utilizes recycled feedstock in a manner that constitutes disposal.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 26003 of the Public Resources Code, as
amended by Section 1 of Chapter 540 of the Statutes of 2013, is
amended to read:

26003.  

(a) As used in this division, unless the context
otherwise requires:

(1) (A) “Advanced manufacturing” means manufacturing
processes that improve existing or create entirely new materials,
products, and processes through the use of science, engineering,
or information technologies, high-precision tools and methods, a
high-performance workforce, and innovative business or
organizational models utilizing any of the following technology
areas:

(i) Microelectronics and nanoelectronics, including
semiconductors.

(ii) Advanced materials.

(iii) Integrated computational materials engineering.

(iv) Nanotechnology.

(v) Additive manufacturing.

(vi) Industrial biotechnology.

(B) “Advanced manufacturing” includes any of the following:

(i) Systems that result from substantive advancement, whether
incremental or breakthrough, beyond the current industry standard,
in the production of materials and products. These advancements
include improvements in manufacturing processes and systems
that are often referred to as “smart” or “intelligent” manufacturing
systems, which integrate computational predictability and
operational efficiency.

(ii) (I) Sustainable manufacturing systems and manufacturing
technologies that minimize the use of resources while maintaining
or improving cost and performance.

(II) Sustainable manufacturing systems and manufacturing
technologies do not include those required to be undertaken
pursuant to state or federal law or regulations, air district rules or
regulations, memoranda of understanding with a governmental
entity, or legally binding agreements or documents. The State Air
Resources Board shall advise the authority to ensure that the
requirements of this clause are met.

(2) (A) “Advanced transportation technologies” means
emerging commercially competitive transportation-related
technologies identified by the authority as capable of creating
long-term, high value-added jobs for Californians while enhancing
the state’s commitment to energy conservation, pollution and
greenhouse gas emissions reduction, and transportation efficiency.

(B) “Advanced transportation technologies” does not include
those projects required to be undertaken pursuant to state or federal
law or regulations, air district rules or regulations, memoranda of
understanding with a governmental entity, or legally binding
agreements or documents. The State Air Resources Board shall
advise the authority regarding projects that are excluded pursuant
to this subparagraph.

(3) (A) “Alternative sources” means devices or technologies
used for a renewable electrical generation facility, as defined in
paragraph (1) of subdivision (a) of Section 25741, a combined
heat and power system, as defined in Section 2840.2 of the Public
Utilities Code, distributed generation and energy storage
technologies eligible under the self-generation incentive program
pursuant to Section 379.6 of the Public Utilities Code, as
determined by the Public Utilities Commission, or a facility
designed for the production of renewable fuels, the efficient use
of which reduce the use of fossil or nuclear fuels, and energy
efficiency devices or technologies that reduce the need for new
electric generation and reduce emissions of toxic and criteria
pollutants and greenhouse gases.

(B) “Alternative sources” does not include a hydroelectric
facility that does not meet state laws pertaining to the control,
appropriation, use, and distribution of water, including, but not
limited to, the obtaining of applicable licenses and permits.

(4) “Authority” means the California Alternative Energy and
Advanced Transportation Financing Authority established pursuant
to Section 26004, and any board, commission, department, or
officer succeeding to the functions of the authority, or to which
the powers conferred upon the authority by this division shall be
given.

(5) “Cost” as applied to a project or portion of the project
financed under this division means all or part of the cost of
construction and acquisition of all lands, structures, real or personal
property or an interest in the real or personal property, rights,
rights-of-way, franchises, easements, and interests acquired or
used for a project; the cost of demolishing or removing any
buildings or structures on land so acquired, including the cost of
acquiring any lands to which those buildings or structures may be
moved; the cost of all machinery, equipment, and furnishings,
financing charges, interest prior to, during, and for a period after,
completion of construction as determined by the authority;
provisions for working capital; reserves for principal and interest
and for extensions, enlargements, additions, replacements,
renovations, and improvements; the cost of architectural,
engineering, financial, accounting, auditing and legal services,
plans, specifications, estimates, administrative expenses, and other
expenses necessary or incidental to determining the feasibility of
constructing any project or incident to the construction, acquisition,
or financing of a project.

(6) “Financial assistance” includes, but is not limited to, loans,
loan loss reserves, interest rate reductions, proceeds of bonds issued
by the authority, bond insurance, loan guarantees or other credit
enhancements or liquidity facilities, contributions of money, or a
combination thereof, as determined by, and approved by the
resolution of, the board.

(7) (A) “Participating party” means a person, federal or state
agency, department, board, authority, or commission, state or
community college, or university, or a city or county, regional
agency, public district, school district, or other political entity
engaged in the business or operations in the state, whether
organized for profit or not for profit, that applies for financial
assistance from the authority for the purpose of implementing a
project.

(B) (i) For purposes of Section 6010.8 of the Revenue and
Taxation Code, “participating party” means an entity specified in
subparagraph (A) that seeks financial assistance pursuant to Section
26011.8.

(ii) For purposes of Section 6010.8 of the Revenue and Taxation
Code, an entity located outside of the state, including an entity
located overseas, is considered to be a participating party and is
eligible to apply for financial assistance pursuant to Section
26011.8 if the participating party commits to, and demonstrates
that, the party will be opening a manufacturing facility in the state.

(iii) It is the intent of the Legislature by adding clause (ii) to
clarify existing law and ensure that an out-of-state entity or
overseas entity is eligible to apply for financial assistance pursuant
to Section 26011.8.

(8) (A) “Project” means a land, building, improvement to the
land or building, rehabilitation, work, property, or structure, real
or personal, stationary or mobile, including, but not limited to,
machinery and equipment utilized in the state, whether or not in
existence or under construction, that utilizes, or is designed to
utilize, an alternative source, or that is utilized for the design,
technology transfer, manufacture, production, assembly,
distribution, or service of advanced transportation technologies or
alternative source components.

(B) “Project,” for purposes of Section 26011.8 and Section
6010.8 of the Revenue and Taxation Code, begin delete means tangible personal
property that primarily processes recycled feedstock that is intended
to be reused in the production of another product or utilizes
recycled feedstock in the production of another product or soil
amendment, or that is utilized in the state for the design,
manufacture, production, or assembly of advanced manufacturing,
advanced transportation technologies, or alternative source
products, components, or systems. “Project” does not include
tangible personal property that processes or utilizes recycled
feedstock in a manner that would constitute disposal as defined in
subdivision (b) of Section 40192. end delete begin insert is defined in Section 26011.8. end insert

begin delete

(9) “Recycled feedstock” means materials that would otherwise
be destined for disposal, having completed its intended end use
and product lifecycle.

(10)

end delete

begin insert (9) end insert  “Revenue” means all rents, receipts, purchase payments,
loan repayments, and all other income or receipts derived by the
authority from a project, or the sale, lease, or other disposition of
alternative source or advanced transportation technology facilities,
or the making of loans to finance alternative source or advanced
transportation technology facilities, and any income or revenue
derived from the investment of money in any fund or account of
the authority.

(b) This section shall become inoperative on July 1, 2016, and,
as of January 1, 2017, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2017, deletes or
extends the dates on which it becomes inoperative and is repealed.

SEC. 2.  

Section 26003 of the Public Resources Code, as
amended by Section 2 of Chapter 540 of the Statutes of 2013, is
amended to read:

26003.  

(a) As used in this division, unless the context
otherwise requires:

(1) (A)  “Advanced transportation technologies” means
emerging commercially competitive transportation-related
technologies identified by the authority as capable of creating
long-term, high value-added jobs for Californians while enhancing
the state’s commitment to energy conservation, pollution and
greenhouse gas emissions reduction, and transportation efficiency.

(B) “Advanced transportation technologies” does not include
those projects required to be undertaken pursuant to state or federal
law or regulations, air district rules or regulations, memoranda of
understanding with a governmental entity, or legally binding
agreements or documents. The State Air Resources Board shall
advise the authority regarding projects that are excluded pursuant
to this subparagraph.

(2) (A) “Alternative sources” means devices or technologies
used for a renewable electrical generation facility, as defined in
paragraph (1) of subdivision (a) of Section 25741, a combined
heat and power system, as defined in Section 2840.2 of the Public
Utilities Code, distributed generation and energy storage
technologies eligible under the self-generation incentive program
pursuant to Section 379.6 of the Public Utilities Code, as
determined by the Public Utilities Commission, or a facility
designed for the production of renewable fuels, the efficient use
of which reduce the use of fossil or nuclear fuels, and energy
efficiency devices or technologies that reduce the need for new
electric generation and reduce emissions of toxic and criteria
pollutants and greenhouse gases.

(B) “Alternative sources” does not include a hydroelectric
facility that does not meet state laws pertaining to the control,
appropriation, use, and distribution of water, including, but not
limited to, the obtaining of applicable licenses and permits.

(3) “Authority” means the California Alternative Energy and
Advanced Transportation Financing Authority established pursuant
to Section 26004, and any board, commission, department, or
officer succeeding to the functions of the authority, or to which
the powers conferred upon the authority by this division shall be
given.

(4) “Cost” as applied to a project or portion of the project
financed under this division means all or part of the cost of
construction and acquisition of all lands, structures, real or personal
property or an interest in the real or personal property, rights,
rights-of-way, franchises, easements, and interests acquired or
used for a project; the cost of demolishing or removing any
buildings or structures on land so acquired, including the cost of
acquiring any lands to which those buildings or structures may be
moved; the cost of all machinery, equipment, and furnishings,
financing charges, interest prior to, during, and for a period after,
completion of construction as determined by the authority;
provisions for working capital; reserves for principal and interest
and for extensions, enlargements, additions, replacements,
renovations, and improvements; the cost of architectural,
engineering, financial, accounting, auditing and legal services,
plans, specifications, estimates, administrative expenses, and other
expenses necessary or incidental to determining the feasibility of
constructing any project or incident to the construction, acquisition,
or financing of a project.

(5) “Financial assistance” includes, but is not limited to, loans,
loan loss reserves, interest rate reductions, proceeds of bonds issued
by the authority, bond insurance, loan guarantees or other credit
enhancements or liquidity facilities, contributions of money, or a
combination thereof, as determined by, and approved by the
resolution of, the board.

(6) (A) “Participating party” means a person, federal or state
agency, department, board, authority, or commission, state or
community college, or university, or a city or county, regional
agency, public district, school district, or other political entity
engaged in the business or operations in the state, whether
organized for profit or not for profit, that applies for financial
assistance from the authority for the purpose of implementing a
project.

(B) (i) For purposes of Section 6010.8 of the Revenue and
Taxation Code, “participating party” means an entity specified in
subparagraph (A) that seeks financial assistance pursuant to Section
26011.8.

(ii) For purposes of Section 6010.8 of the Revenue and Taxation
Code, an entity located outside of the state, including an entity
located overseas, is considered to be a participating party and is
eligible to apply for financial assistance pursuant to Section
26011.8 if the participating party commits to, and demonstrates
that, the party will be opening a manufacturing facility in the state.

(iii) It is the intent of the Legislature by adding clause (ii) to
clarify existing law and ensure that an out-of-state entity or
overseas entity is eligible to apply for financial assistance pursuant
to Section 26011.8.

(7) (A) “Project” means a land, building, improvement to the
land or building, rehabilitation, work, property, or structure, real
or personal, stationary or mobile, including, but not limited to,
machinery and equipment utilized in the state, whether or not in
existence or under construction, that utilizes, or is designed to
utilize, an alternative source, or that is utilized for the design,
technology transfer, manufacture, production, assembly,
distribution, or service of advanced transportation technologies or
alternative source components.

(B) “Project,” for purposes of Section 26011.8 and Section
6010.8 of the Revenue and Taxation Code, begin delete means tangible personal
property that primarily processes recycled feedstock that is intended
to be reused in the production of another product or utilizes
recycled feedstock in the production of another product or soil
amendment, or that is utilized in the state for the design,
manufacture, production, or assembly of advanced transportation
technologies or alternative source products, components, or
systems. “Project” does not include tangible personal property that
processes or utilizes recycled feedstock in a manner that would
constitute disposal as defined in subdivision (b) of Section 40192. end delete
begin insert is defined in Section 26011.8. end insert

begin delete

(8) “Recycled feedstock” means materials that would otherwise
be destined for disposal, having completed its intended end use
and product lifecycle.

end delete begin delete

(9)

end delete

begin insert (8) end insert  “Revenue” means all rents, receipts, purchase payments,
loan repayments, and all other income or receipts derived by the
authority from a project, or the sale, lease, or other disposition of
alternative source or advanced transportation technology facilities,
or the making of loans to finance alternative source or advanced
transportation technology facilities, and any income or revenue
derived from the investment of money in any fund or account of
the authority.

(b) This section shall become operative on July 1, 2016.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 26011.8 of the end insert begin insert Public Resources Code end insert begin insert , as
amended by Section 3 of Chapter 540 of the Statutes of 2013, is
amended to read: end insert

26011.8.  

(a) The purpose of this section is to promote the
creation of California-based manufacturing, California-based jobs,
advanced manufacturing, the reduction of greenhouse gases, or
reductions in air and water pollution or energy consumption. In
furtherance of this purpose, the authority may approve a project
for financial assistance in the form of the sales and use tax
exclusion established in Section 6010.8 of the Revenue and
Taxation Code.

begin delete

(b) For purposes of this section, “project” means a project as
defined in subparagraph (B) of paragraph (8) of subdivision (a) of
Section 26003.

end delete begin insert

(b) For purposes of this section, the following terms have the
following meanings:

end insert begin insert

(1) “Project” means tangible personal property if at least 50
percent of its use is either to process recycled feedstock that is
intended to be reused in the production of another product or using
recycled feedstock in the production of another product or soil
amendment, or tangible personal property that is used in the state
for the design, manufacture, production, or assembly of advanced
manufacturing, advanced transportation technologies, or
alternative source products, components, or systems. “Project”
does not include tangible personal property that processes or uses
recycled feedstock in a manner that would constitute disposal as
defined in subdivision (b) of Section 40192.

end insert begin insert

(2) “Recycled feedstock” means materials that would otherwise
be destined for disposal, having completed their intended end use
and product lifecycle.

end insert begin insert

(3) Soil amendments” may include “compost,” as defined in
Section 14525 of the Food and Agricultural Code, “fertilizing
material,” as defined in Section 14533 of the Food and
Agricultural Code, “gypsum” or “phosphatic sulfate gypsum,”
as those terms are defined in Section 14537 of the Food and
Agricultural Code, or a substance distributed for the purpose of
promoting plant growth or improving the quality of crops by
conditioning soils through physical means.

end insert

(c) The authority shall publish notice of the availability of
project applications and deadlines for submission of project
applications to the authority.

(d) The authority shall evaluate project applications based upon
all of the following criteria:

(1) The extent to which the project develops manufacturing
facilities, or purchases equipment for manufacturing facilities,
located in California.

(2) The extent to which the anticipated benefit to the state from
the project equals or exceeds the projected benefit to the
participating party from the sales and use tax exclusion.

(3) The extent to which the project will create new, permanent
jobs in California.

(4) To the extent feasible, the extent to which the project, or the
product produced by the project, results in a reduction of
greenhouse gases, a reduction in air or water pollution, an increase
in energy efficiency, or a reduction in energy consumption, beyond
what is required by federal or state law or regulation.

(5) The extent of unemployment in the area in which the project
is proposed to be located.

(6) Any other factors the authority deems appropriate in
accordance with this section.

(e) At a duly noticed public hearing, the authority shall approve,
by resolution, project applications for financial assistance.

(f) Notwithstanding subdivision (j), and without regard to the
actual date of any transaction between a participating party and
the authority, any project approved by the authority by resolution
for the sales and use tax exclusion pursuant to Section 6010.8 of
the Revenue and Taxation Code before March 24, 2010, shall not
be subject to this section.

(g) The Legislative Analyst’s Office shall report to the Joint
Legislative Budget Committee on the effectiveness of this program,
on or before January 1, 2019, by evaluating factors, including, but
not limited to, the following:

(1) The number of jobs created by the program in California.

(2) The number of businesses that have remained in California
or relocated to California as a result of this program.

(3) The amount of state and local revenue and economic activity
generated by the program.

(4) The types of advanced manufacturing, as defined in
paragraph (1) of subdivision (a) of Section 26003, utilized.

(5) The amount of reduction in greenhouse gases, air pollution,
water pollution, or energy consumption.

(h) The exclusions granted pursuant to Section 6010.8 of the
Revenue and Taxation Code for projects approved by the authority
pursuant to this section shall not exceed one hundred million dollars
($100,000,000) for each calendar year.

(i) (1) The authority shall study the efficacy and cost benefit
of the sales and use tax exemption as it relates to advanced
manufacturing projects. The study shall include the number of jobs
created, the costs of each job, and the annual salary of each job.
The study shall also consider a dynamic analysis of the economic
output to the state that would occur without the sales and use tax
exemption. Before January 1, 2017, the authority shall submit to
the Legislature, consistent with Section 9795 of the Government
Code, the result of the study.

(2) Before January 1, 2015, the authority shall, consistent with
Section 9795 of the Government Code, submit to the Legislature
an interim report on the efficacy of the program conducted pursuant
to this section. The study shall include recommendations on
program changes that would increase the program’s efficacy in
creating permanent and temporary jobs, and whether eligibility
for the program should be extended or narrowed to other
manufacturing types. The authority may work with the Legislative
Analyst’s Office in preparing the report and its recommendations.

(j) (1) Except as provided in paragraph (2), this section shall
become inoperative on July 1, 2016, and, as of January 1, 2017,
is repealed, unless a later enacted statute, that becomes operative
on or before January 1, 2017, deletes or extends the dates on which
it becomes inoperative and is repealed. The sale or purchase of
tangible personal property of a project approved before June 30,
2016, shall continue to be excluded from sales and use taxes
pursuant to Section 6010.8 of the Revenue and Taxation Code for
the period of time set forth in the authority’s resolution approving
the project pursuant to this section.

(2) Notwithstanding paragraph (1), the authority’s obligation
to submit to the Legislature a report pursuant to paragraph (2) of
subdivision (i) shall remain operative until the submission of the
report.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 26011.8 of the end insert begin insert Public Resources Code end insert begin insert , as
amended by Section 4 of Chapter 540 of the Statutes of 2013, is
amended to read: end insert

26011.8.  

(a) The purpose of this section is to promote the
creation of California-based manufacturing, California-based jobs,
the reduction of greenhouse gases, or reductions in air and water
pollution or energy consumption. In furtherance of this purpose,
the authority may approve a project for financial assistance in the
form of the sales and use tax exclusion established in Section
6010.8 of the Revenue and Taxation Code.

begin delete

(b) For purposes of this section, “project” means a project as
defined in subparagraph (B) of paragraph (7) of subdivision (a) of
Section 26003.

end delete begin insert

(b) For purposes of this section, the following terms have the
following meanings:

end insert begin insert

(1) “Project” means tangible personal property if at least 50
percent of its use is either to process recycled feedstock that is
intended to be reused in the production of another product or using
recycled feedstock in the production of another product or soil
amendment, or tangible personal property that is used in the state
for the design, manufacture, production, or assembly of advanced
transportation technologies or alternative source products,
components, or systems. “Project” does not include tangible
personal property that processes or uses recycled feedstock in a
manner that would constitute disposal as defined in subdivision
(b) of Section 40192.

end insert begin insert

(2) “Recycled feedstock” means materials that would otherwise
be destined for disposal, having completed their intended end use
and product lifecycle.

end insert begin insert

(3) Soil amendments” may include “compost,” as defined in
Section 14525 of the Food and Agricultural Code, “fertilizing
material,” as defined in Section 14533 of the Food and
Agricultural Code, “gypsum” or “phosphatic sulfate gypsum,”
as those terms are defined in Section 14537 of the Food and
Agricultural Code, or a substance distributed for the purpose of
promoting plant growth or improving the quality of crops by
conditioning soils through physical means.

end insert

(c) The authority shall publish notice of the availability of
project applications and deadlines for submission of project
applications to the authority.

(d) The authority shall evaluate project applications based upon
a net benefits test that includes all of the following criteria:

(1) The extent to which the project develops manufacturing
facilities, or purchases equipment for manufacturing facilities,
located in California.

(2) The extent to which the anticipated benefit to the state from
the project equals or exceeds the projected benefit to the
participating party from the sales and use tax exclusion.

(3) The extent to which the project will create new, permanent
jobs in California.

(4) To the extent feasible, the extent to which the project, or the
product produced by the project, results in a reduction of
greenhouse gases, a reduction in air or water pollution, an increase
in energy efficiency, or a reduction in energy consumption, beyond
what is required by federal or state law or regulation.

(5) The extent of unemployment in the area in which the project
is proposed to be located.

(6) Any other factors the authority deems appropriate in
accordance with this section.

(e) At a duly noticed public hearing, the authority shall approve,
by resolution, project applications for financial assistance.

(f) Notwithstanding subdivision (j), and without regard to the
actual date of any transaction between a participating party and
the authority, any project as defined in paragraph (7) of subdivision
(a) of Section 26003 approved by the authority by resolution for
the sales and use tax exclusion pursuant to Section 6010.8 of the
Revenue and Taxation Code before March 24, 2010, shall not be
subject to this section.

(g) The Legislative Analyst’s Office shall report to the Joint
Legislative Budget Committee on the effectiveness of this program,
on or before January 1, 2019, by evaluating factors, including, but
not limited to, the following:

(1) The number of jobs created by the program in California.

(2) The number of businesses that have remained in California
or relocated to California as a result of this program.

(3) The amount of state and local revenue and economic activity
generated by the program.

(4) The amount of reduction in greenhouse gases, air pollution,
water pollution, or energy consumption.

(h) The exclusions granted pursuant to Section 6010.8 of the
Revenue and Taxation Code for projects approved by the authority
pursuant to this section shall not exceed one hundred million dollars
($100,000,000) for each calendar year.

(i) The authority shall make every effort to expedite the
operation of this section, and shall adopt regulations for purposes
of implementing the section as emergency regulations in
accordance with Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code. For
purposes of that Chapter 3.5, including Section 11349.6 of the
Government Code, the adoption of the regulations shall be
considered by the Office of Administrative Law to be necessary
for the immediate preservation of the public peace, health and
safety, and general welfare.

(j) This section shall become operative on July 1, 2016, and
shall remain in effect only until January 1, 2021, and as of that
date is repealed. The sale or purchase of tangible personal property
of a project approved before January 1, 2021, shall continue to be
excluded from sales and use taxes pursuant to Section 6010.8 of
the Revenue and Taxation Code for the period of time set forth in
the authority’s resolution approving the project pursuant to this
section.

begin delete SEC. 3. end delete
begin insert SEC. 5. end insert   

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to provide incentives for the development of projects
that process or utilize recycled feedstock for the protection of the
public health and environment, it is necessary for this act to take
effect immediately.