BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1550| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1550 Author: Gomez (D) Amended: 8/16/16 in Senate Vote: 21 SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-1, 6/29/16 AYES: Wieckowski, Hill, Jackson, Leno, Pavley NOES: Gaines NO VOTE RECORDED: Bates SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16 AYES: Lara, Beall, Hill, McGuire, Mendoza NOES: Bates, Nielsen ASSEMBLY FLOOR: 54-23, 6/2/16 - See last page for vote SUBJECT: Greenhouse gases: investment plan: disadvantaged communities SOURCE: Author DIGEST: This bill requires 25% of Greenhouse Gas Reduction Fund (GGRF) revenues to be spent on projects located within and benefiting disadvantaged communities (DACs), and an additional 5% to be spent on projects that benefit low-income households or are within, and benefit low-income communities, as defined. ANALYSIS: Existing law: AB 1550 Page 2 1)Requires, under the California Global Warming Solutions Act of 2006, the California Air Resources Board (ARB) to determine the 1990 statewide greenhouse gas (GHG) emissions level, to approve a statewide GHG emissions limit equivalent to that level that will be achieved by 2020, and to adopt GHG emissions reductions measures by regulation. ARB is authorized to include the use of market-based mechanisms to comply with the regulations. (Health and Safety Code (HSC) §38500 et seq.) 2)Establishes GGRF and requires that moneys collected pursuant to a market-based mechanism be deposited in the fund. (Government Code §16428.8) 3)Requires that GGRF moneys be used to facilitate the achievement of reductions of GHG emissions in the state consistent with the Global Warming Solutions Act of 2006. (HSC §39712) 4)Requires the GGRF investment plan allocate a minimum of 25% of the funds to projects that benefit DACs and to allocate 10% of the funds to projects located within DACs. (HSC §39713) 5)Requires the California Environmental Protection Agency (CalEPA) to identify DACs for GGRF investment opportunities and requires those communities be identified based on geographic, socioeconomic, public health, and environmental hazard criteria. (HSC §39711) This bill: 1)Requires 25% of the GGRF be allocated for projects located within the boundaries of, and benefiting individuals in, DACs. AB 1550 Page 3 2)Requires 5% of GGRF revenues to be spent to benefit low-income households or to projects located within the boundaries of, and benefiting individuals in, low-income communities. 3)Defines "low-income households" as households with incomes at or below 80% of the statewide median income or with household incomes at or below the threshold designated by the Department of Housing and Community Development (HCD), as specified. 4)Defines "low-income communities" as census tracts with median household incomes at or below 80 percent of the statewide median income or with median household incomes at or below the threshold designated as low income by the HCD, as specified. 5)Requires funds benefitting DACs and funds benefitting low-income households or low-income communities to be counted separately for the purposes of meeting the targets. 6)Specifies that the bill will only become operative if AB 1613 (Committee on Budget) is enacted and becomes effective on or before January 1, 2017, and AB 1613 appropriates $205 million from the GGRF. Background 1)Cap-and-trade auction revenue. Since November 2012, ARB has conducted 15 cap-and-trade auctions, generating over $4 billion in proceeds to the state. State law requires auction revenues be used to facilitate the achievement of GHG emissions reductions and outlines various categories of allowable expenditures. Statute further requires Department of Finance (DOF), with ARB and any other relevant state agency, to develop a three-year investment plan for the auction proceeds, which are deposited in the GGRF. AB 1550 Page 4 SB 535 (de León, Chapter 830, Statutes of 2012) requires DOF, in the investment plan, to allocate at least 25% of available moneys in the GGRF to projects that provide benefits to DACs, and at least 10% to projects located within DACs. Additionally, SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014) requires ARB to develop guidelines on maximizing benefits for DACs by agencies administering GGRF funds, and guidance for administering agencies on GHG emissions reduction reporting and quantification methods. Budget allocations. SB 862, a 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 bill 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. The Governor's 2016-17 proposed Budget appropriates over $3 billion to a variety of programs and projects in the transportation, energy, natural resources, and waste diversion sectors. 2)CalEnviroScreen and DACs. CalEnviroScreen was developed by the Office of Environmental Health Hazard Assessment, at the request of CalEPA and pursuant to the GGRF Investment Plan and Communities Revitalization Act (SB 535), to determine a list of DACs in California that are the most vulnerable and pollution-burdened. Using CalEnviroScreen, CalEPA determined a list of DACs throughout California in October 2014. The current version incorporates 19 indicators, including those for exposures, environmental effects, sensitive populations, and socioeconomic factors. Census tracts in the top 25th percentile of cumulative CalEnviroScreen scores have been AB 1550 Page 5 designated DACs for the purposes of SB 535. The areas where the majority of DACs were identified included the San Joaquin Valley, parts of Los Angeles and the Inland Empire, and large portions of the Coachella Valley and Mojave Desert, in addition to communities located near industrial areas and major roadways. 3)ARB guidance on GGRF. In 2014, ARB published interim guidance for meeting the requirements associated with GGRF appropriations, as well as maximizing benefits to DACs, for agencies appropriated GGRF moneys. This guidance was finalized and released in late 2015. In meeting the SB 535 requirement, the guidance states that agencies should first assess whether projects will be located within a DAC, as identified through CalEnviroScreen, and whether the project will provide direct benefits to that community, consistent with specific criteria in the guidance document for each program type. If investments meet this requirement, then the guidance specifies that the projects and administrative funds count towards both the 10% and 25% requirements for GGRF investments within, and providing benefits to, DACs. If the project is not within the DAC, the guidance directs agencies to evaluate whether the project provides direct, meaningful, and assured benefits in accordance with specified criteria for each project type. Projects within a half-mile of a DAC and that provide increased service or access to those communities, or projects that result in at least 25% of project work hours performed by residents of disadvantaged communities, may count towards the SB 535 mandate requiring a minimum of 25% of GGRF money benefit DACs. 4)GGRF benefits report. AB 1532 (Pérez, Chapter 807, Statutes AB 1550 Page 6 of 2012) requires DOF to submit an annual report to the Legislature on the status and outcomes of projects funded from the GGRF. The 2016 Annual Report describes states that for implemented projects funded through GGRF, 51% of investments provided benefits to DACs, with 39% of GGRF investments directed within DACs. Comments Purpose of Bill. According to the author, "Low-income communities and communities of color are and will continue to be disproportionately impacted by the effects of our changing climate. As we think about how to structure our state's climate programs - as we discuss percentages and parameters - this is a reality we cannot ignore and must strive to remedy. AB 1550 builds on the successes of our climate equity efforts to date by ensuring a greater investment in California's environmentally and socioeconomically disadvantaged populations. The bill requires that at least 25% of cap-and-trade funds be spent on projects located directly within disadvantaged communities, as identified by the state's environmental health screening tool, to ensure that the level of investment in DACs equals their share of the population. "While CalEnviroScreen is a valuable tool for capturing cumulative impacts in communities, it is widely recognized that there are poor and working-class households that lie outside of DACs - but that struggle to make ends meet and spend a large portion of their incomes on necessitates - such as energy, water, housing, and transportation. If we wish to foster a shared, statewide commitment to tackling pressing environmental issues, we must take advantage of opportunities to reduce greenhouse gas emissions and build sustainable communities while lifting poor and working Californians out of poverty. A greater investment in California's environmentally and socioeconomically disadvantaged populations has the potential to yield significant climate, public health, and cost benefits while helping bridge the 'green divide'." AB 1550 Page 7 FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee: Increased GGRF expenditures in DACs (from 10 percent direct investment to 25 percent) and for low-income households and to low-income communities (from zero to five percent). Increased annual ongoing costs of up to $465,000 (GGRF) for ARB to modify existing guidelines and tracking systems, provide guidance to administering agencies, and conduct outreach. Unknown cost to administering agencies to update tracking systems, track GGRF expenditures in disadvantaged and low-income communities, and report to ARB regarding expenditures in these communities. SUPPORT: (Verified8/15/16) Alameda County Board of Supervisors Amigos de los Rios Asian Pacific Environmental Network Asian Pacific Policy and Planning Council California Association of Local Conservation Corps California Bicycle Coalition California Black Health Network California Center for Public Health Advocacy AB 1550 Page 8 California Environmental Justice Alliance California Housing Partnership Corporation California Interfaith Power & Light California League of Conservation Voters California ReLeaf California Urban Forests Council California Vanpool Authority California Voices for Progress Canopy Catholic Charities Catholic Charities, Diocese of Stockton Center for Community Action and Environmental Justice Center on Race, Poverty and the Environment Central California Asthma Collaborative Central Coast Alliance United for a Sustainable Economy Central Coast Energy Services City Project Coalition for Clean Air Communities for a Better Environment Community Action to Fight Asthma Community Health for Asian Americans Defenders of Wildlife Energy Solidarity Cooperative Environment California Environmental Defense Fund Environmental Health Coalition Fallbrook Land Conservancy Filipino/American Coalition for Environmental Solidarity Fresno Economic Opportunities Commission Fresno Interdenominational Refugee Ministries Friends Committee on Legislation of California Grayson Neighborhood Council Green Education, Inc. Green for All Greenlining Institute Greenspace-The Cambria Land Trust GRID Alternatives Growing Together Huntington Beach Tree Society, Inc. Liberty Hill Foundation Little Tokyo Service Center Los Angeles Conservation Corps AB 1550 Page 9 Los Angeles Neighborhood Land Trust Move LA National Parks Conservation Association Natural Resources Defense Council Pacific Asian Consortium in Employment Pacoima Beautiful People Organizing to Demand Environmental and Economic Rights Physicians for Social Responsibility - Los Angeles Placer Land Trust Propel Fuels Public Advocates Regional Asthma Management and Prevention Rising Sun Energy Center Rural County Representatives of California Sacramento Tree Foundation Safe Routes to School National Partnership Santa Clara Valley Open Space Authority Save the Bay SCOPE Sierra Business Council Sierra Climate Adaptation and Mitigation Partnership Sierra Club California Sierra Foothill Conservancy Solar-Oversight Stone Soup Fresno Strategic Actions for a Just Economy Strategic Concepts in Organizing and Policy Education The Nature Conservancy TransForm Tree Davis Tree San Diego Truckee Donner Land Trust Trust for Public Land TRUST South LA Union of Concerned Scientists Urban Releaf Valley Clean Air Now Watershed Conservation Authority OPPOSITION: (Verified8/15/16) AB 1550 Page 10 Bay Area Air Quality Management District Legislative Committee California Chamber of Commerce California Taxpayers Association Metropolitan Transportation Commission ARGUMENTS IN SUPPORT: Supporters state that, since CalEnviroScreen classifies a quarter of the state's population as living in disadvantaged communities, at least a quarter of GGRF proceeds should be invested directly within the boundaries of DACs, which generally provides more assistance than simply "benefiting" these communities. They further note that low-income Californians often lack adequate and affordable transportation and housing choices, access to green spaces, and spend a significant percentage of their budget on necessities including fuel and energy, and for those reasons, AB 1550 directs additional investments to low-income households, communities and populations, as well. ARGUMENTS IN OPPOSITION: The Metropolitan Transportation Commission and the Bay Area Air Quality Management District Legislative Committee state that AB 1550 would expand the state's reliance upon a flawed definition of DACs that excludes many communities with poor socio-economic conditions. They also argue that this bill has the effect of encouraging growth and development in locations where residents have greater exposure to environmental harm. California Chamber of Commerce and California Taxpayers Association argue that ARB lacks the authority to raise revenue through auction of allowances. ASSEMBLY FLOOR: 54-23, 6/2/16 AYES: Achadjian, Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dodd, Eggman, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine, Linder, Lopez, Low, Mathis, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Santiago, Mark Stone, Thurmond, AB 1550 Page 11 Weber, Williams, Wood, Rendon NOES: Travis Allen, Baker, Bigelow, Chávez, Dahle, Beth Gaines, Gray, Grove, Hadley, Harper, Jones, Kim, Maienschein, Mayes, Melendez, Obernolte, Olsen, Patterson, Salas, Steinorth, Wagner, Waldron, Wilk NO VOTE RECORDED: Daly, Frazier, Ting Prepared by:Rebecca Newhouse / E.Q. / (916) 651-4108 8/16/16 18:01:52**** END ****