BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2181


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          Date of Hearing:  May 25, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2181 (Brown) - As Amended April 11, 2016


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          |Policy       |Natural Resources              |Vote:|6 - 1        |
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          |             |Accountability and             |     |8 - 0        |
          |             |Administrative Review          |     |             |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          


          SUMMARY:


          This bill requires specified state departments, the University  
          of California (UC), and the California State University (CSU) to  
          evaluate the impact of greenhouse gas (GHG) emissions on certain  
          infrastructure projects and incorporate GHG emissions  
          considerations into their procurement processes.  Specifically,  
          this bill:  








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          1)Requires specified state departments, UC, and CSU to report to  
            the Legislature by January 1, 2018, on GHG emissions  
            associated with specific emission-intensive products for  
            infrastructure projects costing $1 million or more.


          2)Defines the emissions-intensive products to be one produced by  
            the following industries:


             a)   cement manufacturing;
             b)   flat glass manufacturing;


             c)   iron and steel mills; and 


             d)   rolled steel shape manufacturing.





          1)Requires by January 1, 2018, specified state departments, UC,  
            and CSU to incorporate GHG information into their procurement  
            processes to procure emissions-intensive products with the  
            lowest GHG impacts.


          FISCAL EFFECT:


          1)The Department of Water Resources (DWR) anticipates a 3-5%  
            increase in costs which translates to an additional $3 to $5  








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            million increase on an annual construction budget of $100  
            million.


          2)The Department of Parks and Recreation (which now includes the  
            Department of Boating and Waterways) estimates costs would be  
            absorbable.  However, this assumes the science exists to  
            determine emissions of concrete development and  
            transportation, but they note they will not be able to  
            identify or report on this information unless it is provided  
            by the concrete companies.


          3)The California Department of Corrections and Rehabilitation  
            (CDCR) uses large amounts of the materials identified in this  
            bill and anticipates unknown increased project costs if the  
            costs of the materials increase.  CDCR also notes their lack  
            of ability to quantify or monetize GHG emissions across  
            project lines will result in verification difficulties.  This  
            may require the need to contract out for such expertise which  
            would also increase costs.


          4)UC estimates $2 million per year in reporting costs and  
            unknown increases in material costs and potential project  
            delays.  UC also notes this bill contradicts existing state  
            requirements for competitive bidding and selection of products  
            at the lowest cost.


          5)CSU estimates increased costs of $560,000 to $840,000 to  
            develop the data and tools necessary to integrate GHG as part  
            of selection criteria developed over a 5 to 7 year period.   
            Additionally, CSU estimates annual construction cost increases  
            of $35 million for a $1 billion construction spending budget  
            resulting from higher cost bidders receiving contracts.


          6)Unknown, potentially significant cost increases to the  








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            Department of Transportation, Military Department and  
            Department of General Services.


          COMMENTS:


          1)Purpose.  This bill requires state departments, including the  
            Department of Water Resources, Department of Transportation,  
            Department of Boating and Waterways, Department of Corrections  
            and Rehabilitation, Military Department, and Department of  
            General Services, as well as the UC and CSU to report to the  
            Legislature information about GHG emissions impacts of  
            infrastructure projects that cost $1 million or more.  


            Additionally, the entities must incorporate this information  
            into their procurement processes, including bid  
            specifications, to purchase emission-intensive products with  
            the lowest GHG emissions profile that meet state quality or  
            safety standards.  Instead, it requires state entities to  
            consider GHG emissions as a factor in evaluating potential  
            bidders under their procurement processes.  


            According to the author, this bill will "create a green  
            infrastructure/sustainability policy that would reduce the GHG  
            emissions associated with energy-intensive materials used in  
            the construction of large infrastructure projects."


            The author is focusing on specified industry sectors because  
            products in those areas are considered emission intensive.  
            This bill requires that the emission totals incorporated in  
            procurement processes must account for both the GHG emissions  
            that are produced when the product is manufactured or produced  
            and those associated with transporting the product from where  
            it is made to the job site.









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          2)Background. The Air Resources Board (ARB), pursuant to the  
            California Global Warming Solutions Act of 2006 (AB 32), is  
            required 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. 


            Governor's Executive Order B-30-15 directs state agencies to  
            employ full life-cycle cost accounting to evaluate and compare  
            infrastructure investments and alternatives.  Considering GHG  
            impacts beyond just the manufacturing impacts is in line with   
            this executive order.


          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081