BILL ANALYSIS                                                                                                                                                                                                    Ó

                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
          Bill No:            AB 1030
          |Author:    |Ridley-Thomas                                        |
          |Version:   |5/5/2015               |Hearing      | 7/1/2015       |
          |           |                       |Date:        |                |
          |Urgency:   |No                     |Fiscal:      |Yes             |
          |Consultant:|Rebecca Newhouse                                     |
          |           |                                                     |
          SUBJECT:  California Global Warming Solutions Act of 2006:  
          Greenhouse Gas Reduction Fund.

          Existing law:  
          1) Requires, under the California Global Warming Solutions Act  
             of 2006 (also known as AB 32), the California Air Resources  
             Board (ARB) to determine the 1990 statewide greenhouse gas  
             (GHG) emissions level and approve a statewide GHG emissions  
             limit that is equivalent to that level, to be achieved by  
             2020.  AB 32 authorizes ARB to adopt a regulation that  
             establishes a market-based mechanism with declining annual  
             aggregate emission limits for sources that emit GHGs. (Health  
             and Safety Code (HSC) §38500 et seq.)

          2) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the  
             State Treasury, requires all moneys, except for fines and  
             penalties, collected pursuant to a market-based mechanism be  
             deposited in the fund, and requires the Department of  
             Finance, in consultation with the ARB and any other relevant  
             state agency, to develop, as specified, a three-year  
             investment plan for the moneys deposited in the GGRF.   
             (Government Code §16428.8)

          3) Requires moneys from the GGRF be used to facilitate the  
             achievement of reductions of GHG emissions in this state  
             consistent with AB 32, and authorizes a range of GHG  
             reduction investments and establishes several additional  


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             policy objectives, including fostering job creation by  
             promoting in-state GHG emissions reduction projects carried  
             out by California workers and businesses.  (HSC §39712) 

          4) Requires the GGRF investment plan to allocate, at a minimum,  
             25% of the funds to benefit disadvantaged communities, and to  
             allocate 10% of GGRF moneys within disadvantaged communities.  
              (HSC §39713)

          This bill requires that, for projects funded by GGRF moneys and  
          that involve hiring, prioritization be given to projects that  
          include partnerships with training entities that have a proven  
          track record of placing disadvantaged workers in career-track  

          1) Cap and Trade auction revenue.  ARB has conducted eleven  
             cap-and-trade auctions.  The first 10 have generated almost  
             $1.6 billion in proceeds to the state.

             Several bills in 2012 provided legislative direction for the  
             expenditure of auction proceeds including:

                       SB 535 (de León, Chapter 830, Statutes of 2012)  
                  requires that 25% of auction revenue be used to benefit  
                  disadvantaged communities and requires that 10% of  
                  auction revenue be invested in disadvantaged  

                       AB 1532 (J. Pérez, Chapter 807, Statutes of 2012)  
                  directs the Department of Finance to develop and  
                  periodically update a three-year investment plan that  
                  identifies feasible and cost-effective GHG emission  
                  reduction investments to be funded with cap-and-trade  
                  auction revenues.  AB 1532 outlines categories of  
                  eligible GGRF investments, and establishes priorities  
                  when investing GGRF moneys, including maximizing  
                  economic, environmental, and public health benefits to  
                  the state, foster job creation by promoting in-state GHG  
                  emissions reductions, and directing investment toward  
                  the most disadvantaged communities and households in the  


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                       SB 862 (Budget Committee, Chapter 36, Statutes of  
                  2014) requires the ARB to develop guidelines on  
                  maximizing benefits for disadvantaged communities by  
                  agencies administering GGRF funds, and guidance for  
                  administering agencies on GHG emission reduction  
                  reporting and quantification methods.

             Legal consideration of cap-and-trade auction revenues.  The  
             2012-13 budget analysis of cap-and-trade auction revenue by  
             the Legislative Analyst's Office noted that, based on an  
             opinion from the Office of Legislative Counsel, the auction  
             revenues should be considered mitigation fee revenues, and  
             their use requires that a clear nexus exist between an  
             activity for which a mitigation fee is used and the adverse  
             effects related to the activity on which that fee is levied.  
             Therefore, according to the report, in order for their use to  
             be valid as mitigation fees, revenues from the cap-and-trade  
             auction must be used to mitigate GHG emissions or the harms  
             caused by GHG emissions. 

             In 2012, the California Chamber of Commerce and Morning Star  
             Packing Company filed a lawsuit against the ARB claiming that  
             cap-and-trade auction revenues constitute illegal tax  
             revenue. In November 2013, the superior court ruling declined  
             to hold the auction a tax, concluding that it is more akin to  
             a regulatory fee.  The plaintiffs filed an appeal with the  
             3rd District Court of Appeal in Sacramento in February of  
             last year.

             Budget allocations. The 2014-15 Budget allocates $832 million  
             in GGRF revenues to a variety of transportation, energy, and  
             resources programs aimed at reducing GHG emissions.  Various  
             agencies are in the process of implementing this funding.   
             The budget agreement specifies how the state will allocate  
             most cap-and-trade auction revenues in 2015-16 and beyond.   
             For all future revenues, the legislation appropriates 25% for  
             the state's high-speed rail project, 20% for affordable  
             housing and sustainable communities grants, 10% to intercity  
             capital rail projects, and 5% for low-carbon transit  
             operations.  The remaining 40% is available for annual  
             appropriation by the Legislature.

          1) Maximizing benefits to disadvantaged communities.  Pursuant  
             to requirements in SB 862 of last year, ARB staff released  


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             preliminary guidance in the fall of last year on approaches  
             that agencies can use to maximize the benefits of investments  
             to disadvantaged communities and how agencies can determine  
             whether their GGRF investments are located within, or provide  
             benefits to, disadvantaged communities, as required by SB  

             The guidance establishes screening criteria to determine  
             whether a specific project qualifies toward the 25% target of  
             funds providing benefits to a disadvantaged community, or the  
             10% target of investments spent within a disadvantaged  
             community.  The guidelines specify that benefits must be  
             "direct, meaningful, and assured." 

             The interim guidance also recommends that agencies expending  
             GGRF moneys maximize the percentage of those funds that are  
             allocated for projects that benefit disadvantaged  
             communities, preferably in a way that exceeds the minimum 10%  
             and 25% investment targets.  The guidelines also suggest that  
             agencies give priority to those projects that maximize  
             benefits to disadvantaged communities when selecting projects  
             for a given investment by scoring criteria that favors  
             projects which provide multiple benefits or the most  
             significant benefits.

             The guidance lists some common needs of disadvantaged  
             communities, as identified by community advocates, including  
             the need to create living wage jobs that increase family  
             income, provide access to health insurance, retirement  
             benefits and have long-term job retention. The guidance  
             suggests that administering agencies, to the maximum extent  
             possible, make investments that result in benefits that  
             either address an important need commonly identified by  
             disadvantaged community residents or address a key factor  
             that caused the area to be identified as a disadvantaged  
             community, and cite unemployment levels as one example.
          1) Purpose of Bill.  According to the author, "AB 1030 will  
             generate new workforce opportunities for disadvantaged  
             workers through the prioritization of projects that not only  
             accelerate emission reductions across the State but that have  
             inclusive training policies for workers facing barriers to  


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          2) Amendment.  AB 1030 currently requires, where applicable and  
             to the extent feasible, that for projects funded through  
             cap-and-trade auction revenue that involve hiring, projects  
             that include partnerships with training entities that have a  
             proven track record of placing disadvantaged workers in  
             career-track jobs be prioritized.  It is not clear what "a  
             proven track record" entails. Additionally, specifying  
             prioritization to partnerships with those training entities  
             that have "a proven track record" may unnecessarily narrow  
             the universe of investment-worthy projects to achieve the  
             goal of placing disadvantaged workers in career-track jobs  
             and GHG emissions reductions.  Also, the term "disadvantaged  
             worker" is not defined.

             Instead of specifying "partnerships with training entities  
             that have a proven track record" and using the term  
             "disadvantaged workers," an amendment is needed to broaden  
             and clarify the bill to specify that, for projects that  
             involve hiring, GGRF moneys prioritize projects that support  
             the training and hiring of workers from disadvantaged  
             communities for career-track jobs.
          SOURCE:                    PolicyLink 


          California Black Health Network
          California Rural Legal Assistance Foundation
          Communities United for Restorative Youth Justice
          Fathers & Families of San Joaquin
          La Cooperativa Campesina de California
          Latino Coalition for a Healthy California
          Leadership Counsel for Justice and Accountability
          National Employment Law Project
          Physicians for Social Responsibility - Los Angeles
          Strategic Concepts in Organizing and Policy Education
          Urban Habitat
          Valley Latino Environmental Advancement Project


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          None received  
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