BILL ANALYSIS Ó AB 2292 Page 1 Date of Hearing: April 12, 2016 ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS Luis Alejo, Chair AB 2292 (Gordon) - As Amended April 4, 2016 SUBJECT: California Communities Environmental Health Screening SUMMARY: Requires additional factors to be considered in the California Communities Environmental Health Screening (CalEnviroScreen). Specifically, this bill: 1) Requires the California Environmental Protection Agency (CalEPA), by July 1, 2017, to further update the identification of disadvantaged communities (DAC) through the CalEnviroScreen for investment opportunities, to include factors that include areas of the state that are disproportionately impacted by: a. High poverty rates; b. High rent burden and severe rent burden where households pay more than 50% of their household income in gross rent; and, AB 2292 Page 2 c. High cost of living. EXISTING LAW: 1) Requires CalEPA to develop a methodology that identifies priority community areas for investment opportunities related to the Greenhouse Gas Reduction Fund (GGRF). Requires that these "priority community investment areas" be identified and updated at least every two years based on specified geographic, socioeconomic, and environmental hazard criteria. To meet this requirement OEHHA has developed CalEnviroScreen. (Health and Safety Code § 39711) 2) Requires the Office of Environmental Health Hazard Assessment (OEHHA) to develop and maintain a system of environmental indicators to provide policymakers and the public with information to evaluate the effectiveness of CalEPA's programs in improving environmental quality and protecting public health throughout the state, including environmental quality and public health in low-income communities and communities of color, and to assist CalEPA in making budget decisions that address the most significant environmental concerns, among other objectives for the system. (Public Resources Code (PRC) § 71080 (a)) 3) Requires OEHHA to update its CalEnviroScreen 2.0 tool by using any relevant environmental data relating to known impacts of air pollution, water pollution, and toxic sites on the environmental quality of the communities in the California-Mexico border region. (PRC § 71090 (b)(1)) FISCAL EFFECT: Unknown. AB 2292 Page 3 COMMENTS: Need for the bill: According to the author, "SB 535 called for the formation of a tool to use both environmental and economic factors to identify disadvantaged communities for investment opportunities. The current methodology of that tool, CalEnviroScreen, does not include a number of metrics important to capture poverty and economic disadvantage and subsequently may not completely fulfill the mission of SB 535 to classify California's most impacted and disadvantaged communities. Currently, CalEnviroScreen only includes one metric out of 19 to reflect poverty, and does not factor in other important economic factors such as cost of living or rent burden. As we are currently in the midst of a housing crisis, there are some Californians paying more than half of their income on rent. Ultimately, this results in a tool which does not capture some of California's most chronically neglected and poverty-stricken neighborhoods, and we believe that the inclusion of additional factors that focus on economic disadvantage would make CalEnviroScreen a tool to more effectively tackle issues of environmental justice." Senate Bill (SB) 535: Pursuant to the authorities provided in AB 32 (Nuñez, Chapter 488, Statutes of 2006), the California Air Resources Board implemented the cap-and-trade program as one of several strategies to reduce greenhouse gas emissions. Funds received from the program are deposited into the GGRF and appropriated by the Legislature. They must be used for programs that further reduce emissions of greenhouse gases. In 2012, the Legislature passed SB 535 (De Léon, Chapter 830, Statutes of 2012), directing at least 25% of the funds from the AB 2292 Page 4 GGRF to go to projects that provide a benefit to disadvantaged communities (DACs), and requiring a minimum of 10% of the funds to be directed to projects located within those communities. SB 535 directed CalEPA to identify DACs based on geographic, socioeconomic, public health, and environmental hazard criteria, including: a) Areas disproportionately affected by environmental pollution and other hazards that can lead to negative public health effects, exposure, or environmental degradation; and, b) Areas with concentrations of people that are of low income, high unemployment, low levels of homeownership, high rent burden, sensitive populations, or low levels of educational attainment. The intent of SB 535 was, specifically, to direct resources to the state's most impacted and disadvantaged communities to ensure activities taken pursuant to AB 32 will provide economic and health benefits to these communities, and to ensure that investments made per AB 32 will achieve additional emission reductions and mitigate direct health impacts on California's most impacted DACs. CalEnviroScreen: To comply with the requirements set forth in SB 535, OEHHA developed CalEnviroScreen (also known as CES 2.0), which uses existing environmental, health, and socioeconomic data to determine the extent to which communities across the state are burdened by and vulnerable to pollution. CalEnviroScreen uses the following metrics to identify the 25% most disadvantaged census tracts: Pollution burden indicators: ozone, PM2.5 (particulate matter <2.5 microns), diesel, drinking water, pesticides, toxic releases, traffic, cleanups, groundwater, hazardous waste, AB 2292 Page 5 impaired waters, and solid waste; and, Population characteristics: age, asthma, low birth weight, low education, linguistic isolation, poverty, and unemployment. Concerns with the current CalEnviroScreen: According to the Bay Area Air Quality Management District (BAAQMD), the current version of the CalEnviroScreen is ill-suited for allocating GGRF funds to DACs. Specifically, the BAAQMD believes the tool, with its complex multivariate analysis of 19 variables, fails to identify as disadvantaged hundreds of Bay Area census tracts that are clearly very disadvantaged in the real world. The BAAQMD asserts that, "a single variable, even extreme poverty, is heavily watered down by the existing CalEnviroScreen." As it relates to the San Francisco Bay Area region, a March 2015 research brief by the Silicon Valley Institute for Regional Studies, Poverty in the San Francisco Bay Area, found that federal poverty statistics may underestimate economic hardship in the region. The report shows that using federal definitions of the poverty line may not be appropriate in the San Francisco Bay area because an inordinate percentage of income is spent on severe rent and high cost of living, such that these factors must be considered separately to income in California to truly capture economic burden. AB 2292 Page 6 Some stakeholders are concerned that DACs are being left out under the current CalEnviroScreen. According to the BAAQMD and the Metropolitan Transportation Commission (MTC), "CES2.0 only identifies 85 Bay Area census tracts as disadvantaged- 4% of the statewide total - even though we have 17% of the state's households living in poverty, when adjusted for cost of living?38% of the Bay Area's census tracts identified as DAC's by CES2.0 have median household income above 80 percent of the statewide median? [T]his same misalignment occurs across the state; hundreds of low income communities are excluded, while far more affluent ones are included." The MTC found that in Sacramento, only 28% of lower income residents are included in CES2.0, while in San Diego only 13% of lower income residents are included. In these two regions combined, CES2.0 excludes 1.3 million lower income residents. Even in Los Angeles County, the MTC states, where CES2.0 corresponds more closely with income, 27% of lower-income census tracts are excluded - totaling 259 census tracts, home to over 955,000 residents. Inclusion of poverty as a new indicator: AB 2292 proposes to include "high poverty rates" as a new indicator in the CalEnviro Screen. The October 2014 CalEnviroScreen Version 2.0 Report stated that, "[p]overty is an important social determinant of health. AB 2292 Page 7 Numerous studies have suggested that impoverished populations are more likely than wealthier populations to experience adverse health outcomes when exposed to environmental pollution." It continues, "[b]ecause low socioeconomic status often goes hand-in-hand with high unemployment, the rate of unemployment is a factor commonly used in describing [DACs]. On an individual level, unemployment is a source of stress, which is implicated in poor health reported by residents of such communities. Lack of employment and resulting low income often oblige people to live in neighborhoods with higher levels of pollution and environmental degradation." Under the current version of CalEnviroScreen, data from the American Community Survey (ACS), which is an ongoing survey of the U.S. population conducted by the U.S. Census Bureau, are used to assess poverty. The ACS releases results annually based on a sub-sample of the population and includes more detailed information on socioeconomic factors such as poverty. Multiple years of data are pooled together to provide more reliable estimates for geographic areas with small population sizes. The most recent results available at the census tract scale are the 5-year estimates for 2008-2012. Consistent with that, the aforementioned research brief, Poverty in the San Francisco Bay Area, found that, "the standard definition of poverty is still a useful tool to determine the AB 2292 Page 8 extent of severe economic hardship. And, since the federal poverty statistics are reported regularly and at a fine geographic level, they enable a highly detailed analysis over time and within regions." While CalEnviroScreen 2.0 currently includes poverty as an indicator, according to the author, codifying poverty under this bill clarifies that poverty shall be a standalone indicator, in addition to the existing indicators and proposed indicators under this bill. However, as the bill is written, just requiring CalEnviroScreen to include areas of the state that are disproportionately impacted by high poverty rates may not accomplish the author's intent. The author may wish to consider including more detail on the inclusion of high poverty rates as a factor to ensure his intent is realized. Inclusion of high rent burden as a new indicator: The intent of AB 2292, as understood, is to make sure communities with high poverty rates that are in high cost of living regions are recognized by the CalEnviroScreen. Specifically, AB 2292 proposes including three new metrics, including high rent burden and severe rent burden where households pay more than 50% of their household income in gross rent. Under state law, per SB 535, CalEPA is required to consider concentrations of residents in areas that are low income, high unemployment, low levels of homeownership, and high rent burden. AB 2292 Page 9 Currently, federal census data does not indicate rent burdens higher than 50% of income, nor does it provide data at a gradient, county level. However, OEHHA is currently evaluating how to meet the intent of SB 535 with regards to inclusion of high rent burden for its release of CalEnviroScreen version 3.0. While mandating inclusion of "high rent burden and severe rent burden where households pay more than 50% of their household income in gross rent" may be consistent with the evaluations OEHHA is currently working on, it may presume the ability to include an accurate metric or reliable set of data before OEHHA completes its own investigation and opens a public comment period. The committee may wish to consider an amendment to clarify that these factors shall be included where feasible. Inclusion of high cost of living as a new indicator: As with the author's intent for including poverty as a new indicator, specifically including high cost of living as a definitive indicator underscores the intent of SB 535 to adequately ensure that socioeconomics are appropriately accounted for in the CalEnviroScreen. AB 2292 Page 10 As such, there are other state metrics used for evaluating poverty, rent and cost of living that could inform the revisions to the CalEnviroScreen envisioned by this bill. For instance, similar to how the CalEnviroScreen is used to determine DACs for GGRF investments, the California Department of Housing and Community Development (Department) uses State Income Limits (SIL) to determine applicant eligibility (based on level of household income) and to calculate affordable housing cost for applicable housing assistance programs. The Department is required under current law to update the SIL for the low, very-low, and extremely-low income categories when the U.S. Department of Housing and Urban Development (HUD) updates its Section 8 program income limits. The Department has developed a metric for incorporating, by county, median income, cost of living, and housing costs into determining Section 8 housing, and updates this metric (SIL) every year. Information like this could inform the inclusion of the new indicators required under AB 2292. Recent changes: The CalEnviroScreen was updated pursuant to AB 1059 (E. Garcia, Chapter 584, Statutes of 2015) in October 2014 to include additional data along the US-Mexico border. In addition, the scoring for many of the previously existing AB 2292 Page 11 indicators was also adjusted. For example, unemployment has been associated with poor health outcomes and psychosocial stress in communities. An indicator using the 5-year estimate of the unemployment rate (2008-2012) was included as a Socioeconomic Factor in CalEnviroScreen 2.0. OEHHA plans to release another updated version of CalEnviroScreen (version 3.0) sometime this year. GGRF Budget: The 2015-2016 Budget allocated a total of $1.4 billion from the GGRF, and the Governor's proposed FY 2016-2017 Budget includes $1 billion in GGRF expenditures. The remaining 2015-2016 revenues, along with 2016-2017 revenues, are available for appropriation this year. Including ongoing accruing revenues, there is currently more than $3 billion in cap-and-trade revenues in the GGRF for investments. That could result in around $750 million in investments in projects that benefit disadvantaged communities as identified by CalEnviroScreen. Ensuring the CalEnviroScreen accurately implements the intent of SB 535 is important to many communities hoping to reap the investment benefits. The 2016 Annual Report of Cap and Trade Auction Proceeds includes an analysis of funds spent within and benefiting disadvantaged communities, excluding high speed rail spending. According to the report, 39% of expenditures were for projects located within disadvantaged communities and 51% of the overall funding benefited disadvantaged communities. Modifications to the CalEnviroScreen could result in communities not previously identified as a DAC being eligible for GGRF AB 2292 Page 12 investments, while other communities that were previously identified as eligible could be found to be ineligible. Technical amendment: In order to ensure the proposed factors are based on the best available data, the Committee may wish to amend the bill as follows: On page 3, line 14, the bill should be amended as follows: (b) No later than July 1, 2017, the California Environmental Protection Agency shall update the identification of disadvantaged communities for investment opportunities related to this chapter, as established pursuant to subdivision (a), to include factors, based on best available data, that include, but need not be limited to, areas of the state that are disproportionately impacted by any of the following: Related legislation: 1) AB 1550 (Gomez) would require that 25% of the GGRF be spent on projects located within DACs, and requires that an additional 25% be spent on projects that benefit low-income households. This bill was heard in the Assembly Natural Resources Committee on April 4, where it was approved on a 7 - 0 vote. 2) AB 1815 (Alejo) would require the GGRF Investment Plan to allocate technical assistance funds to CalEPA to assist DACs and low-income communities in developing greenhouse gas reduction project funding proposals. This bill was heard in the Assembly Natural Resources Committee on April 4, where it was approved on a 7 - 2 vote. AB 2292 Page 13 3) AB 1968 (Steinorth) would require that 10% of the funding continuously appropriated to the Affordable Housing and Sustainable Communities Program to be allocated to certain cities and counties. It has been referred to the Assembly Housing & Community Development Committee. REGISTERED SUPPORT / OPPOSITION: Support Bay Area Air Quality Management District Sierra Club California Opposition None on file. Analysis Prepared by:Paige Brokaw / E.S. & T.M. / (916) 319-3965 AB 2292 Page 14