BILL ANALYSIS Ó
AB 2066
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Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2066 (Lackey) - As Amended April 18, 2016
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill requires every motor fuel service station to display
the average per-gallon cost of gasoline and diesel fuel
resulting from complying with AB 32 cap-and-trade requirements.
Specifically, this bill:
1)Requires the California Energy Commission (CEC), in
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consultation with the Legislative Analyst's Office (LAO), to
annually calculate the average-cost-per gallon across the
industry of refiners producing transportation fuels attributed
to compliance with the market-based mechanism adopted by the
California Air Resources Board (ARB) pursuant to the Global
Warming Solutions Act of 2006.
2)Includes this provision as part of an existing requirement to
display a list of applicable state and federal fuel taxes
conspicuously at or near the dispensing apparatus.
FISCAL EFFECT:
1)Increased annual costs of approximately $460,000 for the CEC
to perform the average-cost-per-gallon calculation (special
fund.)
2)Absorbable costs for the LAO to assist CEC in the annual
calculation.
3)Absorbable costs for the Department of Food and Agriculture to
oversee the additional labeling requirements at motor fuel
service stations.
4)No additional costs to ARB
COMMENTS:
1)Purpose. According to the author, Californians have the right
to know when they are paying higher fuel prices to support
government programs and the disclosure is most appropriately
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made where fuel is purchased. This bill requires CEC to
calculate an estimate of the cost per gallon added to fuel
prices for complying with the AB 32 Cap and Trade program.
Fuel stations would add this estimate to current signs
displaying federal and state fuel taxes.
2)Background. In 2006, AB 32 (Nunez), Chapter 488, Statutes of
2006, established the Global Warming Solutions Act of 2006,
which set the 2020 GHG emissions reduction goal into law. The
goal of AB 32 was to return California to 1990 levels of GHG
by 2020. Among other things, AB 32 authorized the ARB to
utilize a market-based compliance mechanism to meet the goal.
The market-based compliance mechanism developed and adopted
was the Cap-and-Trade program. According to the ARB, the
Cap-and-Trade program is a key element in California's climate
plan. The program is designed to provide covered entities the
flexibility to seek out and implement the lowest-cost options
to reduce emissions. It sets a statewide limit on sources
responsible for 85% of California's GHG emissions and
establishes a price signal needed to drive long-term
investment in cleaner fuels and more efficient use of energy.
In practice, the program utilizes market forces to drive
carbon producers to compete with each other to purchase a
finite number of permits to release carbon into the atmosphere
(or California Carbon Allowances, CCAs)-including carbon
released as a result of refining and burning motor fuel. As
the program decreases the supply of free and tradable CCAs,
the covered entities either pay more for CCAs or look to other
energy sources.
The Cap-and Trade program covers about 450 entities. The
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program went into effect for electric utilities and large
industrial facilities in 2013 and expanded to cover
distributors of transportation, natural gas, and other fuels
in 2015.
3)Fuel Service Station Disclosures. Existing law requires
several disclosures to the fuel consumer. For example,
service stations must display a list of applicable state and
federal fuel taxes per gallon of motor vehicle fuel sold from
the dispensing apparatus, the actual total price per gallon
with taxes, distinctions based on cash or credit payment, and
the name, brand, trademark, or trade name of the product, or
grade or brand name designation. This bill adds to the
existing disclosures.
4)Prior Related Legislation. AB 2656 (Jones) of 2014 would have
required each motor fuel transaction in this state to contain
specified information regarding the estimated cost of
compliance with any market-based compliance mechanism adopted
by the ARB. This bill was held on this Committee's Suspense
file.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081
AB 2066
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