BILL ANALYSIS Ó
AB 2181
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Date of Hearing: April 4, 2016
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
AB 2181
(Brown) - As Introduced February 18, 2016
SUBJECT: Public contracts: contract specifications
SUMMARY: Requires specified state departments, the University
of California, and the California State University to evaluate
greenhouse gas (GHG) emissions impacts of their projects and
incorporate GHG emissions considerations into their procurement
processes.
EXISTING LAW:
1)Requires the Air Resources Board (ARB), pursuant to California
Global Warming Solutions Act of 2006 (AB 32), to adopt a
statewide 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)Pursuant to AB 32, ARB has identified "covered entities" that
are subject to the state's cap-and-trade program.
3)Requires state agencies to do the following:
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a) Purchase products that contain specified minimum amounts
of postconsumer recycled-content material in 11 reportable
product categories: paper products; printing and writing
paper; mulch, compost, and cocompost; glass products;
lubricating oils; plastic products; paint; antifreeze;
tires; tire-derived products; and, metal products.
b) Ensure that at least 50% of the purchases in the product
categories are for recycled-content products.
c) Report annually to the California Department of
Resources Recycling and Recovery (CalRecycle) dollars spent
on recycled and non-recycled products purchased in the 11
categories.
d) Beginning in 2020, increases the buy-recycled
requirement to 75% of reportable purchases for all product
categories except paint, antifreeze, and tires.
4)Pursuant to the Public Contract Code, defines "the department"
as any of the following for any project under their
jurisdiction:
a) Department of Water Resources;
b) Department of Transportation;
c) Department of Boating and Waterways;
d) Department of Corrections and Rehabilitation;
e) Military Department (e.g., California Army National
Guard, California Air National Guard, California State
Military Reserve, and California Youth and Community
Programs); and,
f) Department of General Services.
THIS BILL:
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1)On or before January 1, 2018, requires the department, the
Regents of the University of California, and the trustees of
California State University to report to the Governor and the
Legislature on the GHG emissions that are associated with
energy-intensive products in projects within their
jurisdictions. Specifies that the emissions total take into
account the GHG emissions that are produced when the
energy-intensive product is manufactured or produced and the
GHG emissions associated with the transportation of the
energy-intensive product from the site of its manufacture to
the project site.
2)On and after January 1, 2018, requires the department, the
Regents, and the trustees to incorporate the GHG emissions
information into its procurement processes, including bid
specifications, to procure energy-intensive products with the
lowest GHG emissions profile that meet state quality and
safety standards.
3)Defines "project" as a project for infrastructure that is
estimated to cost $1 million or more.
4)Defines "energy-intensive product" as a product that is
produced by a company identified by ARB as "energy intensive,
trade exposed."
FISCAL EFFECT: Unknown
COMMENTS:
1)Author statement:
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Though California is committed to the reduction of GHG
emissions and supporting the development of its green
economy, the State has not fully addressed how it plans to
help traditional businesses comply with new environmental
regulations. Unfortunately, when new rules increase the
costs of manufacturing, California companies are at a
competitive disadvantage to businesses located in other
state and countries that have lower environmental
standards. Companies in our state that provide building
materials produced and shipped in California should not be
overlooked for infrastructure projects that will help us
achieve our important "green" goals. The Governor has
already issued two executive orders relating to the need
for the state to procure green building materials that are
manufactured in the state of California.
2)High speed rail sustainability policy. The California High
Speed Rail Authority is responsible for the development and
implementation of intercity high-speed rail service. In 2013,
the Authority adopted a sustainability policy that establishes
"priorities and objectives" for the construction and
implementation of the high-speed rail program, including:
energy; station communities and ridership; sustainable
infrastructure; natural resources; and, business and
management. These broad categories include a wide range of
goals and principals, including making energy efficiency a
priority in design, using renewable energy, maximizing GHG
emissions reductions, recycling steel and concrete, etc. On
March 8th, the Authority's board of directors (board) approved
a resolution to update the sustainability policy to:
a) Revise specifications and contract provisions to improve
materials life-cycle scores and other stated board
objectives;
b) Develop a means of scoring construction bids that
demonstrate compliance with the Authority's sustainability
policy;
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c) Develop a baseline of the materials currently being
installed for the project to determine their environmental
characteristics;
d) Carry out information sessions with industry providers
and contractors;
e) Complete climate change vulnerability research and
develop appropriate mitigation and adaptation strategies;
and,
f) Report to the board and the public on the overall
impacts of implementing sustainable infrastructure
principles in the high-speed rail program, and how such a
program furthers the state's low carbon, natural resources,
and community benefit goals.
According to the author, this bill is intended to require
other state entities that oversee infrastructure projects to
adopt a similar sustainability policy.
3)Our emissions have sprung a leak. Leakage refers to GHG
emissions reductions in state that are replaced by increased
GHG emissions out of state. AB 32 requires ARB to design
measures to minimize leakage. Industries for which
production is highly emissions intensive, which results in
high compliance costs, and industries facing strong
competition from out-of-state producers are generally at
highest risk of leakage. In order to minimize leakage risk,
ARB provides free allocations to at-risk industries
(identified by the North American Industry Classification
System codes) into high, medium, or low risk for leakage.
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Over time, ARB will reduce the percentage of free allocations
for medium and low risk industry sectors.
4)Leak prevention. This bill attempts to minimize leakage by
requiring departments that oversee infrastructure projects to
consider leakage caused by the use of products purchased out
of state and incorporate this information into its procurement
processes. This bill refers to companies identified as
"energy intensive, trade exposed" by ARB to capture industries
that are at risk of leakage. However, ARB does not identify
individual companies or products as "energy intensive, trade
exposed;" instead, ARB has assigned all industrial sectors
covered by the cap-and-trade program a leakage risk
classification of low, medium, or high. The author's office
has indicated that the bill is intended to cover cement, iron
and steel mills, rolled steel shape manufacturing, and flat
glass manufacturing. The committee may wish to amend the
bill to specify that the bill is limited to these products,
which are classified as high leakage risk by ARB.
5)Double referral. This bill has also been referred to the
Assembly Accountability and Administrative Review Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Gerdau Steel
United Steelworkers, District 12
AB 2181
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Opposition
None on file
Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916)
319-2092