BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: AB 1205
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|Author: |Gomez |
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|Version: |5/5/2015 |Hearing |7/1/2015 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Rebecca Newhouse |
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SUBJECT: The California River Revitalization and Greenway
Development Act of 2015
ANALYSIS:
Existing law:
1) Under the California Global Warming Solutions Act of 2006 (AB
32), requires the California Air Resources Board (ARB) to
adopt a statewide greenhouse gas (GHG) emissions limit
equivalent to 1990 levels by 2020 and to adopt rules and
regulations to achieve maximum technologically feasible and
cost-effective GHG emission reductions. (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 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) Prohibits the state from approving allocations for a measure
or program using GGRF moneys except after determining that
the use of those moneys furthers the regulatory purposes of
AB 32, and requires moneys from the GGRF be used to
facilitate the achievement of reductions of GHG emissions in
California. (HSC §39712)
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4) Authorizes expenditures from the GGRF for investments that
reduce GHG emissions associated with water use and supply,
land and natural resource conservation and management,
forestry, and sustainable agriculture. (HSC §39712)
5) Requires the Department of Finance, in the GGRF investment
plan, to allocate at least 25% of available moneys in the
GGRF to projects that provide benefits to disadvantaged
communities, and at least 10% to projects located within
disadvantaged communities. (HSC §39713 )
6) Under the California River Parkways Act of 2004, requires the
California Natural Resources Agency (CNRA) to provide grants
for river parkway projects that acquire land for river
parkways or for the restoration, protection, and development
of river parkways. (Public Resources Code §5750 et seq.)
7) Authorizes the Department of Water Resources to establish a
program of flood damage reduction and urban creek restoration
known as the Urban Streams Restoration Program. (Water Code
Section §7048)
8) Creates the Active Transportation Program in the California
Department of Transportation for the purpose of encouraging
increased use of active modes of transportation, such as
biking and walking. (Streets and Highways Code §2380)
This bill:
1) Makes various findings regarding the GHG emission reduction
benefits and environmental cobenefits of river systems.
2) Declares it is the intent of the Legislature to protect,
restore, and enhance a network of river systems and riparian
corridors.
3) Requires CNRA to establish a grant program for eligible
applicants to develop projects that assist with implementing
AB 32 and requires CNRA to prioritize funding for projects
that provide the greatest level of the following cobenefits:
a) Recreational access and improved human interactions,
especially in urban corridors and park-starved
AB 1205 (Gomez) Page 3
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communities.
b) Transportation mobility, especially pedestrian,
bicycle, and public transit.
c) Economic viability by promoting appropriate
development, especially in an urban setting.
d) Development of visitor-serving and interpretive
facilities.
e) Access and development of pocket parks, community
gardens, demonstration gardens, and other urban greening.
f) Species protections and the protection of habitat
strongholds, including improved wildlife corridors.
g) Improved resiliency in the face of unavoidable impacts
from climate change.
h) Improved water supply and water quality.
i) Job training and workforce development, especially
projects that involve disadvantaged youth and veterans.
j) Improved stormwater retention.
aa) Improvements along impaired water bodies.
4) Requires projects receiving grants to be consistent with AB
32, the California Water Action Plan, The Safeguarding
California Plan, and requirements for GGRF investments in
disadvantaged communities.
5) Requires CNRA to prioritize funding for projects with the
following characteristics:
a) Are consistent with a parkway, greenway, or urban
greening plan.
b) Leverage moneys from the Water Quality, Supply, and
Infrastructure Improvement Act of 2014 (Proposition 1).
c) Provide recreational access to a major metropolitan
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area of the state.
6) Creates the CalRIVER fund to receive appropriations from the
Legislature from bond proceeds and special funds, including,
but not limited to, GGRF.
Background
AB 1205 creates the CalRIVER program, with funding for the
program authorized from the GGRF. Whereas the use of GGRF
moneys is the jurisdiction of this committee, provisions
relating specifically to the need for, and details of, the
river revitalization program created in the bill, are within
the jurisdiction of the Senate Natural Resources Committee,
and are not considered in this analysis.
1) Cap-and-trade auction revenue. ARB has conducted 11
cap-and-trade auctions. The first 10 have generated almost
$1.6 billion in proceeds to the state.
Several bills in 2012, and one in 2014, provided legislative
direction for the expenditure of auction proceeds including:
SB 535 (de Leon, 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 communities.
AB 1532 (J. Perez, 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 specifies that reduction of
greenhouse gas emissions through water use and supply,
land and natural resource conservation and management,
forestry, and sustainable agriculture, are eligible
investments of GGRF.
SB 1018 (Budget and Fiscal Review Committee,
Chapter 39, Statutes of 2012) created the GGRF, into
which all auction revenue is to be deposited. The
legislation requires that before departments can spend
moneys from the GGRF, they must prepare a record
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specifying: (1) how the expenditures will be used, (2)
how the expenditures will further the purposes of AB 32
(Nunez and Pavley, Chapter 488, Statutes of 2006), (3)
how the expenditures will achieve GHG emission
reductions, (4) how the department considered other
non-GHG-related objectives, and (5) how the department
will document the results of the expenditures.
SB 862 (Budget and Fiscal Review Committee,
Chapter 36, Statutes of 2014) requires the ARB to
develop guidelines on maximizing benefits for 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, 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 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's 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.
AB 32 auction revenue investment plan. The first three-year
investment plan for cap-and-trade auction proceeds, submitted
by Department of Finance, in consultation with ARB and other
state agencies in May of 2013, identified sustainable
communities and clean transportation, energy efficiency and
clean energy, and natural resources and waste diversion as
the three sectors that provide the best opportunities, in
that order, for achieving the legislative goals and
supporting the purposes of AB 32. For natural resources
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investments, the plan recommends funding ecosystem management
projects for their ability to sequester carbon, as well as
their co-benefits to human health and the environment.
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. SB
862 (Budget and Fiscal Review Committee), the 2014 budget
trailer bill, established a long-term cap-and-trade
expenditure plan by continuously appropriating portions of
the funds for designated programs or purposes. The
legislation appropriates 25% for the state's high-speed rail
project, 20% for affordable housing and sustainable
communities grants, 10% to the Transit and Intercity Rail
Capital Program, and 5% for low-carbon transit operations.
The remaining 40% is available for annual appropriation by
the Legislature.
Of that 40%, the Governor's 2015-16 budget proposal
appropriates $40 million towards wetland and watershed
restoration to be administered by the Department of Fish and
Wildlife.
The 2015-16 Budget bill passed both houses on June 15 of this
year, but excluded any appropriation of cap-and-trade auction
revenue.
1) River and Stream Restoration. California has two grant
programs in statute that restore rivers and streams: 1) the
Urban Streams Restoration Program and 2) the California River
Parkways Program. Both programs are primarily funded through
the Safe Drinking Water, Water Quality and Supply, Food
Control, River and Coastal Protection Bond Act of 2006
(Proposition 84).
The California River Parkways Program was created pursuant to
the California Rivers Parkways Act of 2004. The Natural
Resources Agency is currently soliciting for a one-time
funding round of approximately $7.6 million dollars for the
acquisition, restoration, protection and development of river
parkways, with a cap for an individual project at $500
thousand. This funding cycle will award the last of
Proposition 84 moneys for the program. Projects are required
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to meet at least two of the following objectives: 1)
providing compatible recreation opportunities, 2) protecting
or restoring riverine or riparian habitat, 3) providing flood
management benefits, 4) conversion of developed riverfront
land to river parkways, and 5) providing facilities to
support river conservation. Over 60 projects have been
funded through the program.
Through the Urban Streams Restoration Program, the Department
of Water Resources provides grants to local communities for
projects to reduce flooding and erosion and associated
property damage, restore, enhance or protect the natural
ecological values of streams, and promote community
involvement, education and stewardship. Since 1985, the
program has provided more than 270 grants ranging from $1,000
to $1 million to communities throughout California. The
projects have included stream cleanups, bank stabilization
projects, revegetation efforts, recontouring of channels to
improve floodplain function and occasional acquisition of
strategic floodplain properties or easements. The last
funding cycle for the program was in 2014, where over $8
million was awarded to 13 project proposals.
Proposition 1. The Water Quality, Supply, and Infrastructure
Improvement Act of 2014 (Proposition 1) authorizes $7.545
billion in general obligation bonds to fund ecosystems and
watershed protection and restoration, water supply
infrastructure projects, including surface and groundwater
storage, and drinking water protection. Specifically, $1.495
billion is designated for competitive grants for multibenefit
ecosystem and watershed restoration projects.
Comments
1) Purpose of Bill. According to the author, "Given the vast
potential for using our river systems to reduce and sequester
greenhouse gas emissions, and no existing integrated,
statewide grant program to deliver these benefits, this bill
would establish CalRIVER. The program would be especially
useful in incentivizing projects that integrate stormwater,
natural resource improvements, as well as reductions in
vehicle miles traveled. Without CalRIVER, the state would
continue to miss opportunities to harness the climate values
of our riparian corridors for greenhouse gas reductions, as
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well as the many other co-benefits associated with these
projects."
2) GHG emission reduction priorities. As noted in the
background, the GGRF investment identified sustainable
communities and clean transportation, energy efficiency and
clean energy, and natural resources and waste diversion as
the three sectors that provide the best opportunities, in
that order, for achieving the legislative goals and
supporting the purposes of AB 32. The natural resources
sector (in addition to waste diversion) is third on the
priority list.
The investment plan, in reference to the natural resources
and waste diversion sectors, states, "while this combined
category represents less than ten percent of GHG emissions,
there is potential for achieving greater reductions and
realizing significant co-benefits to human health and the
environment."
So while natural resources is recommended for funding from
GGRF, it is recommended for a smaller appropriation of GGRF
moneys than other sectors, since, although significant
opportunities for cobenefits exist, the GHG emissions
reduction potential of projects in the natural resources
sector is significantly lower than for clean transportation
and energy investments.
The 2014-15 Budget appropriated $25 million to the Department
of Fish and Wildlife for wetlands and watershed restoration.
The Governor's 2015-16 budget proposal increases this
appropriation to $40 million.
3) Other sources of funding available. AB 1205 creates the
CalRIVER fund and authorizes the transfer of bond fund
moneys, and special funds, including, but not limited to,
river parkway and urban creek programs, and the GGRF. As
noted in the background, the California River Parkways
Program and the Urban Streams Restoration Program have
completed, or are in the process of completing, their last
funding cycles. However, the newly enacted Proposition 1
assigns over $1.45 billion toward the protection of rivers,
lakes, streams, coastal waters and watersheds. Proposition 1
calls out the protection and restoration of rural and urban
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watersheds to improve storage capacity, stormwater resource
management and greenhouse gas reduction, the restoration of
river parkways, the implementation of watershed adaptation
project to reduce climate impacts, the restoration of
ecosystems, the reduction of pollution, and other goals, as
purposes of the $1.45 billion of Proposition 1 funding.
Additionally, $100 million is designated for project to
protect and enhance urban creeks. Proposition 1 also requires
$20 million go toward a competitive program to fund
multibenefit watershed and urban rivers enhancement projects.
Many of the goals specified in Proposition 1 are also
prioritized as cobenefits in AB 1205. It is likely that a
significant portion of the river restoration activities to
date have had some level of GHG reduction of sequestration
benefit due to restoration of riparian habitats and
opportunities for active transport in urban settings,
however, AB 1205 differs from other river restoration
efforts, in that the stated goal of the CalRIVER program is
the reduction or sequestration of GHGs.
Although projects to protect, restore, and enhance river
systems and riparian corridors are critically important,
authorizing GGRF moneys for this program, when money is
already available for similar efforts, potentially takes away
funding for other measures to reduce GHGs that do not have
multiple other sources of funding.
Is it appropriate to authorize GGRF funds for this program,
when other dedicated funding streams are available for river
restoration and protection?
4) GHG emissions. AB 1205 requires CNRA to establish a grant
program and authorizes the use of GGRF moneys for the
program, which are funds that are required to be used to
achieve GHG emission reductions. And although the bill
specifies project prioritization based on a list of
cobenefits, there is no requirement in the bill for the
prioritization of projects based on GHG emission reductions
or GHG sequestration potential.
5) Implementing AB 32? AB 1205 specifies that the CalRIVER
program assist the development of projects that assist the
state in implementing AB 32. This language is unclear, as
the implementation of AB 32 entails various actions such as
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mandatory GHG emissions reporting, regulations that achieve
the maximum technologically feasible and cost-effective
reduction of GHG emissions, imposition of fees for
administrative implementation costs, as well as the
preparation of a scoping plan. It may be more appropriate to
require the program to, instead, further the regulatory
purposes of AB 32, as required by any use of GGRF moneys, and
meet the requirements of the Greenhouse Gas Reduction Fund
Investment Plan and Communities Revitalization Act.
6) Vague language. SB 1205 requires the prioritization of
certain projects based on a list of cobenefits, including
"recreational access and improved human interactions,"
"economic viability by promoting appropriate development,"
and "improvements along impaired water bodies." It is not
clear what is meant by, or what projects would qualify as
having, improved human interactions, appropriate development,
or "improvements" along impaired water bodies.
7) Piece by piece. GGRF investments must facilitate the
achievement of GHG emissions reductions. However, after that
requirement is fulfilled, there are number of other policy
goals that should be considered, including benefits to
environmental quality, resource protection, public health and
the economy, as well as benefits to disadvantaged
communities. And although the fund is growing, it is still a
limited source of revenue. In order to create an optimized
investment strategy from GGRF moneys, proposals should not be
considered in isolation, but be assessed in aggregate to
determine what suite of measures best meets the requirements
of the fund, uses resources most efficiently, and maximizes
policy objectives.
As budget discussions on a cap-and-trade investment strategy
have been pushed to later this session, an opportunity exists
to have a comprehensive discussion on the universe of GGRF
proposals currently in the Legislature, during budget
negotiations this summer. If the Legislature feels that the
CalRIVER program established through AB 1205 is an
appropriate expenditure of GGRF moneys, then this measure
should also be considered through the budget process for
cap-and-trade expenditures, along with all other measures
proposing to expend, or authorize for expenditure, GGRF
moneys.
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SOURCE: Author
SUPPORT:
Audubon California
California Trout
LA River Revitalization Corporation
Los Angeles County Board of Supervisors
OPPOSITION:
CalTax
ARGUMENTS IN
SUPPORT: California Trout states that while AB 1205 will
focus on providing support to rivers and the lands adjacent to
them, its benefits
will be much broader and far-reaching. They note that investing
in river systems is
a valuable effort that allows for multiple economic, social, and
environmental
benefits. The Los Angeles Board of Supervisors states that AB
1205 would
provide an important funding mechanism for projects that are on
or adjacent to
riparian corridors that integrate stormwater, and natural
resource improvements,
and would also help to reduce vehicle miles travelled.
ARGUMENTS IN
OPPOSITION: CalTax is opposed to the bill because they
state it distorts the nature of a regulatory fee and that a true
regulatory fee must
comply with the principles of having a nexus to the payer, not
being imposed for
the purpose of generating revenue, and that they must be
reasonable. CalTax also
states that pending litigation will determine if the auction
component of the cap-
and-trade program constitutes an illegal tax, and by directing
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funds beyond the clear regulatory purposes, AB 1205 opens up the
cap-and-trade program to litigation risk.
DOUBLE REFERRAL:
If this measure is approved by the Senate Environmental Quality
Committee, the do pass motion must include the action to
re-refer the bill to the Senate Natural Resources and Water
Committee.
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