BILL ANALYSIS Ó
AB 1550
Page 1
(Without Reference to File)
CONCURRENCE IN SENATE AMENDMENTS
AB
1550 (Gomez)
As Amended August 23, 2016
Majority vote
--------------------------------------------------------------------
|ASSEMBLY: |54-23 |(June 2, 2016) |SENATE: | |(August 31, |
| | | | |26-11 |2016) |
| | | | | | |
| | | | | | |
--------------------------------------------------------------------
Original Committee Reference: NAT. RES.
SUMMARY: Requires that 25% of the Greenhouse Gas Reduction Fund
(GGRF) be spent on projects located within disadvantaged
communities (DACs), and requires that an additional 5% be spent
on projects that benefit low-income households.
The Senate amendments:
1)Reduce the amount dedicated for projects that benefit
low-income households from 20% to 5%.
AB 1550
Page 2
2)Allocate 5% of the GGRF to projects that benefit low-income
households and that are located within a half mile around a
disadvantaged community.
3)Specify that this bill will only become operative if AB 1613
(Committee on Budget) of the current legislative session is
chaptered and $205 million is appropriated from the GGRF.
4)Make related technical changes.
EXISTING LAW:
1)Requires the Air Resources Board (ARB), pursuant to California
Global Warming Solutions Act of 2006 (AB 32 (Núñez), Chapter
488, Statutes of 2006), to adopt a statewide greenhouse gas
(GHG) emissions limit equivalent to 1990 levels by 2020 and
adopt regulations to achieve maximum technologically feasible
and cost-effective GHG emission reductions. AB 32 authorizes
ARB to permit the use of market-based compliance mechanisms to
comply with GHG reduction regulations, once specified
conditions are met.
2)Establishes the GGRF and requires all moneys, except for fines
and penalties, collected by ARB from the auction or sale of
allowances pursuant to a market-based compliance mechanism
(i.e., the cap-and-trade program adopted by ARB under AB 32)
to be deposited in the GGRF and available for appropriation by
the Legislature.
3)Establishes the GGRF Investment Plan and Communities
Revitalization Act to set procedures for the investment of GHG
allowance auction revenues. Authorizes a range of GHG
reduction investments and establishes several policy
objectives, including:
a) Maximize economic, environmental, and public health
AB 1550
Page 3
benefits;
b) Foster job creation;
c) Complement efforts to improve air quality;
d) Direct investment toward the most disadvantaged
communities and households in the state;
e) Provide opportunities for businesses, public agencies,
nonprofits, and other community institutions to participate
in and benefit from statewide efforts to reduce GHG
emissions; and,
f) Lessen the impacts and effects of climate change on the
state's communities, economy, and environment.
4)Requires the investment plan to allocate a) a minimum of 25%
of the available moneys in the GGRF to projects that provide
benefits to identified DACs, and b) a minimum of 10% of the
available moneys in the GGRF to projects located within
identified DACs.
FISCAL EFFECT: According to the Senate Appropriations
Committee:
1)Increased GGRF expenditures in DACs and for low-income
households and to low-income communities.
2)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.
3)Unknown cost to administering agencies to update tracking
systems, track GGRF expenditures in DACs and low-income
AB 1550
Page 4
communities, and report to ARB regarding expenditures in these
communities.
COMMENTS: 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.
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.
SB 862 (Committee on Budget and Fiscal Review), Chapter 36,
Statutes of 2014 continuously appropriated portions of the GGRF
for designated purposes. The bill continuously appropriated 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 would have appropriated over $3 billion to a
variety of programs and projects in the transportation, energy,
natural resources, and waste diversion sectors.
CalEnviroScreen was developed by the Office of Environmental
Health Hazard Assessment, at the request of CalEPA and pursuant
to SB 535, to identify those communities in California that are
AB 1550
Page 5
the most vulnerable and pollution-burdened. Using
CalEnviroScreen, the California Environmental Protection Agency
(CalEPA) identified 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 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.
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 25% of GGRF money required to benefit
DACs.
AB 1532 (Pérez), Chapter 807, Statutes of 2012 requires DOF to
submit an annual report to the Legislature on the status and
AB 1550
Page 6
outcomes of projects funded from the GGRF. The 2016 Annual
Report states that for implemented projects funded by GGRF, 51%
of investments provided benefits to DACs, and 39% of GGRF
investments were for projects located within DACs.
Analysis Prepared by:
Elizabeth MacMillan / NAT. RES. / (916) 319-2092
FN: 0004911