BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1697


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1697 (Bonilla)


          As Amended  August 15, 2016


          Majority vote


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          |ASSEMBLY:  |80-0  |(May 31, 2016) |SENATE: |27-11 |(August 18,      |
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          Original Committee Reference:  J., E.D., & E.


          SUMMARY:  Expands the project preference and selection criteria  
          under the Alternative and Renewable Fuel and Vehicle Technology  
          Program (Program) to more effectively target workforce training  
          opportunities that are aligned with clean technology and  
          alternative/renewable fuel career pathways.


          The Senate amendments make technical clarifying changes.


          EXISTING LAW:  


          1)Establishes the Program, administered through the State Energy  
            Resources Conservation and Development Commission  
            (Commission), for the purpose of providing a variety of  
            funding opportunities that assist in the development and  
            deployment of technology and alternative and renewable fuels  








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            in the marketplace.  
          2)Authorizes the Commission to provide preferences to those  
            projects that maximize the Program's goals, based on specified  
            criteria, and limits workforce related funding to alternative  
            and renewable fuel feedstock production and extraction;  
            renewable fuel production, distribution, transport, and  
            storage; high-performance and low-emission vehicle technology  
            and high tower electronics; automotive computer systems; mass  
            transit fleet conversion, servicing, and maintenance; and  
            other sectors or occupations related to the purposes of this  
            chapter.


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee:


          1)One-time CEC costs of approximately $50,000 for outreach and  
            information technology costs.  (ARFVT Fund)
          2)Ongoing CEC costs of approximately $150,000 annually and 1  
            personnel year (PY) of staff to update program regulations,  
            incorporate changes to the workforce development component,  
            and administer the revised program.  (ARFVT Fund)   


          COMMENTS:  To address the long-term goals of reducing the  
          emissions of greenhouse gases in California, the Legislature  
          approved and the Governor signed the California Alternative and  
          Renewable Fuel, Vehicle Technology, Clean Air and Carbon  
          Reduction Act of 2007 that established the Alternative and  
          Renewable Fuel and Vehicle Technology Program.  The Program is  
          administered through the Commission, which each year awards up  
          to $100 million in grants to support the development and  
          deployment of innovative technologies related to alternative  
          fuel and vehicle types.  Although workforce development is among  
          the list of eligible activities, funding for training has been  
          limited.  Of the $100 million available each year, the  
          Commission planned to set aside $2.5 million in 2014-15 and $3  
          million in 2015-16 for workforce related investments.


          This bill modifies the selection criteria to provide grant  








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          applications for workforce-related activities a more equal  
          playing field among the various authorized funding purposes. 


          California's High-Carbon Economy:  California is home to over 38  
          million people, providing the state with one of the most diverse  
          populations in the world, often comprising the single largest  
          concentration of nationals outside their native country.  In  
          2014, this diverse group of business owners and workers produced  
          $2.3 trillion in goods and services; $174.1 billion of which  
          were exported to over 220 countries around the world.   
          California's 2014 Gross Domestic Product (GDP) ranks the state  
          economy as the eighth largest in the world.


          Many policy makers and economists describe California as having  
          not a single economy, but having a highly integrated network of  
          a dozen or so regional economies.  While biotech has a  
          comparative advantage in some regions, information technology  
          drives growth in others.  This economic diversity is one of the  
          reasons California was able to so aggressively move out of the  
          recession, ranking number two in the nation by Business Insider  
          for fastest growing economy in the nation in August 2014 and as  
          having the fourth best overall economy in March 2015.   


          There are approximately 19 million people within the California  
          labor force, generally contributing to 11 industry sectors,  
          including government.  The chart below displays California  
          employment by industry sector, based on the 2015 annual average.  
           The Trade, Transportation, and Utility sector is the largest  
          employment sector and the second largest contributor to the GDP.  
           In 2014 (most recent data available), this sector contributed  
          $351 billion to the California economy and supported jobs in  
          other industry sectors including Manufacturing, Professional  
          Services, and Financial Activities.  While providing significant  
          economic advantages, these same industry sectors are primary  
          contributors to the state's greenhouse gas emissions.  


          In January 2015, Governor Brown announced a commitment to set  
          new greenhouse gas emissions reduction targets.  The Governor's  








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          Integrated Plan calls for:


          1)50% of the state's electricity to come from renewable energy  
            sources by 2030;


          2)A 50% reduction in petroleum by 2030;


          3)Doubling the energy efficiency savings at existing buildings  
            by 2030;


          4)A Carbon sequestration strategy that involves new management  
            techniques for the state's working landscapes, including  
            farms, ranch lands, forests, and wetlands;


          5)A reduction in short-lived climate pollutants; and 


          6)Mitigation strategies to safeguard California against the  
            impacts of climate change.


          Meeting these new policy goals will require substantial  
          restructuring within the economy, especially for manufacturing,  
          energy production, and transport-related activities.  Both  
          workers and businesses will be impacted, requiring retraining,  
          retooling, and repositioning.  While this transition opens new  
          opportunities for some, it also places new burdens on those that  
          have not necessarily recovered from the impact of the Financial  
          Crisis and subsequent recession.  


          California's current economy appears to be diverging in two  
          disparate directions.  On the one hand, state unemployment in  
          April 2016 was at a seven-year low (5.3%) and certain businesses  
          and regions are experiencing strong economic growth.  On the  
          other hand, there were areas of the state and certain population  
          groups who remain economically distressed with high unemployment  








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          rates among blacks (10.4%), Hispanics (7.1%), young workers  
          (19.6%), and inland California [Imperial County at (18.9%) and  
          Colusa at (16.2%)].   


          Transitioning to a lower carbon economy has economic costs,  
          which the state has been slow to acknowledge and address.  The  
          state has tools to help make this transition less of a hardship  
          for impacted workers, businesses, and communities.  This bill  
          proposes the expanded use of an existing funding source to help  
          retrain workers who face potential unemployment when their  
          middle-skill jobs are eliminated.


          Career Pathways in the Clean Tech Industries:  According to the  
          Air Resources Board, their initial analysis on the employment  
          impact of AB 32 (Núñez), Chapter 488, Statutes of 2006, showed  
          that the utility industry would be the most significantly  
          impacted.  Employment losses could be nearly as high as 15%.  A  
          related policy brief by University of California, Berkley's  
          Center for Labor Research and Education found that  
          implementation of AB 32 would likely present significant  
          workforce challenges and that a successful transition to green  
          technologies would require a well-trained technical and  
          blue-collar labor force.  In the absence of careful and  
          farsighted implementation strategies, the policy brief stated  
          that California could lose businesses to other regions and  
          ultimately result in trading well-paying jobs for new jobs of  
          lesser quality.


          According to the 2015-16 Investment Plan for the Program, the  
          Commission has three active interagency agreements on workforce,  
          including $7.25 million with Employment Development Department  
          (EDD), $9.5 million with the Employment Training Panel, and $5.5  
          million with the California Community Colleges Chancellor's  
          Office.  For the same time period, the Commission was setting  
          aside an additional $3 million.












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           ----------------------------------------------------------------- 
          |    Interagency Agreements for Workforce Training Activities     |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 
          |------------+---------+----------+---------+---------+-----------|
          |Partner     |Funded   |Match     |Trainees |Businesse|Municipalit|
          |Agency      |Training |Contributi|         |s        |ies        |
          |            |(in      |ons (in   |         |Assisted |Assisted   |
          |            |million) |millions) |         |         |           |
          |            |         |          |         |         |           |
          |            |         |          |         |         |           |
          |------------+---------+----------+---------+---------+-----------|
          |Employment  |  $7.0   |   $9.9   | 12,675  |   92+   |    14+    |
          |Training    |         |          |         |         |           |
          |Panel       |         |          |         |         |           |
          |            |         |          |         |         |           |
          |            |         |          |         |         |           |
          |------------+---------+----------+---------+---------+-----------|
          |Employment  |  $7.25  |  $7.25   |   999   |   36+   |    --     |
          |Development |         |          |         |         |           |
          |Department  |         |          |         |         |           |
          |            |         |          |         |         |           |
          |            |         |          |         |         |           |
          |------------+---------+----------+---------+---------+-----------|
          |Community   |  $5.5   |   N/A    |   N/A   |   480   |    --     |
          |College     |         |          |         |         |           |
          |Chancellor's|         |          |         |         |           |
          | Office     |         |          |         |         |           |
          |            |         |          |         |         |           |
          |            |         |          |         |         |           |
          |------------+---------+----------+---------+---------+-----------|
          |Total       | $19.75  |  $17.4   | 13,674  |  608+   |    14+    |
          |            |         |          |         |         |           |
          |            |         |          |         |         |           |
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          |    Source:  2015-16 Investment Plan for the Alternative and     |
          |          Renewable Fuel and Vehicle Technology Program          |
          |                                                                 |
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          Here is an example of the type of work being undertaken through  
          these interagency agreements:  The Employment Training Panel and  
          Blue Sky received a $59,280 grant for 19 employees to receive  
          training to update their manufacturing skills.  Participants  
          included yard workers, operations and maintenance staff,  
          refiners, and drivers in the processing and distribution of  
          biodiesel products.


          Analysis Prepared by:Toni Symonds / J., E.D., & E. / (916)  
          319-2090                    FN: 0004401