BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1717


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          Date of Hearing:  April 11, 2016


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 1717  
          (Hadley) - As Amended March 18, 2016


          SUBJECT:  Greenhouse Gas Reduction Fund


          SUMMARY:   Redirects the 25% of Greenhouse Gas Reduction Fund  
          (GGRF) revenues that are currently continuously appropriated to  
          high-speed rail to the Transit and Intercity Rail Capital  
          Program (TIRCP).  Specifically, this bill:  


          1)Makes various findings and declarations relating to the  
            Legislature's intent with the passage of SB 535 (de León),  
            Chapter 830, Statutes of 2012, which required that a minimum  
            of 25% GGRF funds be used to benefit disadvantaged communities  
            and SB 862 (Committee on Budget and Fiscal Review), Chapter  
            36, Statues of 2014, which directed 25% of GGRF funds to  
            high-speed rail.



          2)Requires the 25% of GGRF funds continuously appropriated to  
            the high-speed rail project to be redirected to the TIRCP, if  
            the California High-Speed Rail Authority selects an  
            alternative Initial Operating Segment (IOS) other than what  
            was identified in the 2012 business plan.










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          EXISTING LAW:  


          1)Establishes the California High-Speed Rail Authority  
            (Authority) and vests with it the responsibility to develop  
            and implement a high-speed rail system in California.  
          Requires the California Air Resources Board (ARB), pursuant to  
          AB 32 (Núñez), Chapter 488, Statutes of 2006, to develop a plan  
          of how to reduce statewide greenhouse gas emissions to 1990  
          levels by 2020.  Under AB 32, ARB is authorized to include the  
          use of market-based mechanisms to comply with these regulations  
          (cap and trade).



          2)Establishes the GGRF in the State Treasury and requires all  
            money collected pursuant to cap and trade, with limited  
            exceptions, be deposited into the fund and makes the GGRF  
            funds available for appropriation by the Legislature.
          3)Continuously appropriates 25% of GGRF funds for the high-speed  
            rail project.


          4)Creates the TIRCP, administered by the California State  
            Transportation Agency (CalSTA),   and continuously  
            appropriates 10% of GGRF funds for the program. 


          5)Requires that a minimum of 25% of GGRF expenditures be used to  
            benefit disadvantaged communities.    


          FISCAL EFFECT:  Unknown


          COMMENTS:  SB 862 created a variety of programs to help reach  
          the state's greenhouse gas emission reduction goals and  
          appropriated cap and trade revenues to these programs.  Included  








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          in SB 862 is a 10% continuous appropriation for TIRCP, which is  
          managed by the CalSTA, and a 25% continuous appropriation for  
          high-speed rail project, which is managed by the Authority.   
          Regarding the high-speed rail appropriation, SB 862 specifically  
          appropriated the funds for the IOS and Phase I Blended System as  
          described in the 2012 business plan.  





          The Authority's Revised 2012 Business Plan (and the 2014  
          Business Plan) defined the IOS as a 300-mile segment from Merced  
          to the San Fernando Valley with service starting in 2022.  Full  
          Phase I of the system, which includes the IOS, was defined as  
          520 miles from San Francisco to Los Angeles and Anaheim, with  
          service starting in 2026.  





          In February of this year, the Authority released its "Draft 2016  
          Business Plan" that proposed a shift from a southern-oriented  
          IOS as previously identified to a northern IOS, from San Jose to  
          north of Shafter in Kern County, dubbed the Silicon Valley to  
          Central Valley line.  The northern IOS includes the current  
          construction underway in the Central Valley from Madera to Wasco  
          in Kern County and would continue to Gilroy and end at Diridon  
          Station in San Jose.  





          The author asserts that, since SB 862 appropriated funds for the  
          IOS and Phase 1 Blended System as set forth in the 2012 Business  
          Plan and since a different IOS is now proposed, the 









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          SB 862 appropriation cannot not be used on the revised IOS.  AB  
          1717 directs those funds instead to CalSTA for the TIRCP. 





          Committee concerns:  





          1)SB 862 provides funding for the IOS and Phase I Blended with  
            cap and trade funds, as described in the 2012 Business Plan.   
            Although the IOS orientation is proposed to shift, all  
            sections of the newly proposed northern IOS are included in  
            the Phase I Blended as defined in the 2012 Business Plan.   
            Consequently, since the SB 862 appropriation provides funding  
            for the Phase 1 Blended, and since all sections of the  
            proposed northern IOS are included in the Phase 1 Blended,  
            then arguably the SB 862 appropriation can be applied to the  
            northern IOS.  



          2)The author uses as further evidence that SB 862 appropriation  
            was envisioned for a purpose other than what is currently  
            proposed by the Authority, a letter dated June 14, 2014, from  
            the Authority to Senator Fran Pavley.  In that letter, the  
            Authority committed to use the cap and trade funds granted to  
            their agency through SB 862 to "accelerate work on the segment  
            from Burbank to Palmdale...  The Burbank-Palmdale segment,  
            which potentially could become an operating segment on its  
            own, would accelerate benefits to the Los Angeles region."   
            This intent was formally adopted by the Authority Board of  
            Directors in Resolution #HSRA 14-19 that resolved that, "The  
            Authority Board concurs with the priority to move forward with  








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            the approach outlined in the CEO's letter to State Senator  
            Fran Pavley, including the prioritization of the Palmdale to  
            Burbank project section for expenditure of cap and trade  
            proceeds as they become viable and in accordance with  
            provisions of the law."



            Although the letter to State Senator Pavley does convey a  
            commitment to accelerate work on the Burbank to Palmdale  
            sections, that level of specificity was not referenced in SB  
            862 as a requirement for the appropriation.  





          3)AB 1717 includes the following two legislative findings and  
            declarations that are particularly troublesome:



             a)   "SB 862 specifies that any subsequent decision by the  
               High-Speed Rail Authority to deprioritize southern  
               California and direct construction funding for an  
               alternative route would not be eligible for funding;" and,



             b)   "SB 862 requires that any redirection of cap-and-trade  
               investments away from some of the state's most  
               disadvantaged communities in southern California would  
               require reauthorization by the Legislature."  



            Although one might interpret SB 862 to have this intent and  
            meaning, SB 862 does not actually include these specific  
            requirements.  Given the litigious nature of this project  








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            already, the Legislature should be careful not to muddy the  
            facts with misleading findings.





          Double referral:  This bill will be referred to the Assembly  
          Natural Resources Committee should it pass out of this  
          committee.





          Previous legislation: SB 862 (Committee on Budget and Fiscal  
          Review), Chapter 36, Statues of 2014, continuously appropriated  
          25% of GGRF funds to the high-speed rail project and 10% to the  
          TIRCP.





          SB 535 (de León), Chapter 830, Statutes of 2012, required, among  
          other things, that a minimum of 25% of the moneys available in  
          GGRF be used to benefit disadvantaged communities.





          REGISTERED SUPPORT / OPPOSITION:




          Support









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          Howard Jarvis Taxpayer Association




          Opposition


          None on file




          Analysis Prepared by:Melissa White / TRANS. / (916) 319-2093