BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: AB 2653
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|Author: |Eduardo Garcia, et al. |
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|Version: |6/15/2016 |Hearing |6/29/2016 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Rebecca Newhouse |
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SUBJECT: Greenhouse Gas Reduction Fund: report.
ANALYSIS:
Existing law:
1) Under the California Global Warming Solutions Act of 2006,
requires the California Air Resources Board (ARB) to
determine the 1990 statewide greenhouse gas (GHG) emissions
level, to approve a statewide GHG emissions limit equivalent
to that level that will be achieved by 2020, and to adopt GHG
emissions reductions measures by regulation. ARB is
authorized to include the use of market-based mechanisms to
comply with the regulations. (Health and Safety Code (HSC)
§38500 et seq.)
2) Establishes the Greenhouse Gas Reduction Fund (GGRF) as a
special fund in the State Treasury; requires that all moneys,
except for fines and penalties, collected pursuant to a
market-based mechanism be deposited in the fund; and requires
the Department of Finance (DOF), in consultation with the
state board and any other relevant state agency, to develop,
as specified, a three-year investment plan for the moneys
deposited in the GGRF. (Government Code §16428.8)
3) Requires that GGRF moneys be used to facilitate the
achievement of reductions of GHG emissions in the state
consistent with the Global Warming Solutions Act of 2006.
Appropriations of the GGRF funds in the annual budget are
required to be consistent with the three-year investment
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plan. (HSC §39712)
4) Requires the GGRF investment plan to allocate a minimum of
25% of the funds to projects that benefit disadvantaged
communities and to allocate 10% of the funds to projects
located within disadvantaged communities. (HSC §39713)
5) Requires DOF to submit an annual report to the Legislature on
the status of projects funded by GGRF moneys.
This bill requires the annual report submitted by DOF on
projects funded through GGRF include the following information:
1) GHG reductions attributable to each project;
2) Actions and outcomes from actions taken to assist residents
of disadvantaged communities, and other target populations,
as specified, with the business, employment, and training
opportunities offered through activities funded through the
GGRF;
3) Geographic locations, industry sector, and number of
employees of the business entities, as defined, receiving
GGRF moneys;
4) The number of jobs created, including wage levels reported in
ranges, as specified, by the business entities receiving GGRF
moneys;
5) The amount of other public and private moneys leveraged with
GGRF moneys.
6) Requires that state agencies expending GGRF moneys condition
the acceptance of those moneys on the recipient providing
information necessary to meet the above reporting
requirements.
7) Requires the data received in order to meet the above
reporting requirements be available to the public.
8) Requires the Secretary of the California Environmental
Protection Agency (CalEPA) to post a link to the report on
specified Internet websites.
9) Specifies that target populations means communities and
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groups of individuals that experience high levels of
unemployment or poverty, and authorizes the California
Workforce Development Board (WDB) and the Governor's Office
of Business and Economic Development (GO-Biz) identify those
populations.
Background
1) Cap-and-trade auction revenue. Since November 2012, ARB has
conducted 15 cap-and-trade auctions, generating over $4
billion in proceeds to the state.
State law specifies that the auction revenues must be used to
facilitate the achievement of GHG emissions reductions and
outlines various categories of allowable expenditures.
Statute further requires the Department of Finance (DOF), in
consultation with ARB and any other relevant state agency, to
develop a three-year investment plan for the auction
proceeds, which are deposited in the GGRF.
SB 535 (de León, Chapter 830, Statutes of 2012) requires DOF,
in the investment plan, to allocate at least 25% of available
moneys in the GGRF to projects that provide benefits to
disadvantaged communities, and at least 10% to projects
located within disadvantaged communities.
Additionally, SB 862 (Committee on Budget and Fiscal Review,
Chapter 36, Statutes of 2014) requires ARB to develop
guidelines on maximizing benefits for disadvantaged
communities by agencies administering GGRF funds, and
guidance for administering agencies on GHG emissions
reduction reporting and quantification methods.
Legal consideration of cap-and-trade auction revenues. The
2012-13 Budget analysis of cap-and-trade auction revenue by
the Legislative Analyst's Office noted that, based on an
opinion from the Office of Legislative Counsel, the auction
revenues should be considered mitigation fee revenues, and
their use requires that a clear nexus exist between an
activity for which a mitigation fee is used and the adverse
effects related to the activity on which that fee is levied.
Therefore, in order for their use to be valid as mitigation
fees, revenues from the cap-and-trade auction must be used to
mitigate GHG emissions or the harms caused by GHG emissions.
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In 2012, the California Chamber of Commerce filed a lawsuit
against the ARB claiming that cap-and-trade auction revenues
constitute illegal tax revenue. In November 2013, the
superior court ruling declined to hold the auction a tax,
concluding that it is more akin to a regulatory fee. The
plaintiffs filed an appeal with the 3rd District Court of
Appeal in Sacramento in February of 2014, and that case is
pending.
Budget allocations. SB 862 (Committee on Budget and Fiscal
Review, Chapter 36, Statutes of 2014), a budget trailer bill,
established a long-term cap-and-trade expenditure plan by
continuously appropriating portions of the funds for
designated programs or purposes. The legislation
appropriates 25% for the state's high-speed rail project, 20%
for affordable housing and sustainable communities grants,
10% to the Transit and Intercity Rail Capital Program, and 5%
for low-carbon transit operations. The remaining 40% is
available for annual appropriation by the Legislature.
The Governor's 2016-17 proposed budget appropriates over $3
billion to a variety of programs and projects in the
transportation, energy, natural resources, and waste
diversion sectors.
2) GGRF goals and DOF annual report. AB 1532 (Pérez, Chapter
807, Statutes of 2012) requires GGRF investments achieve GHG
emissions reductions and, where applicable and to the extent
feasible, maximize economic, environmental, and public health
benefits to the state; foster in-state job creation;
complement efforts to improve air quality; direct investment
toward the most disadvantaged communities and households in
the state; and provide opportunities for businesses, public
agencies, nonprofits, and other community institutions to
participate in and benefit from GHG emission reduction
efforts.
AB 1532 also requires DOF to submit an annual report to the
Legislature on the status and outcomes of projects funded
from the GGRF. The 2016 Annual Report describes the status of
funded programs and lists funded projects and also provides
estimates of the GHG reductions expected from project
investments and statistics on benefits to disadvantaged
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communities, demand for funding, and leveraging of funds.
Specifically, the report states that for implemented projects
funded through GGRF, 51% of investments provided benefits to
disadvantaged communities, with 39% of GGRF investments
directed within disadvantaged communities. The report also
includes greenhouse gas reductions for awarded projects by
sector. DOF has provided additional information, along with
the report, that includes more specific project information,
including location, GHG emission reductions, general
environmental and economic cobenefits, as well as the number
of projects and funds within and providing benefits to
disadvantaged communities.
Comments
1) Purpose of Bill. According to the author, "Since the
enactment of the California Global Warming Solutions Act of
2006, California has been committed to taking actions to
reduce its own greenhouse gas emissions and serve as a
catalyst for others to undertake their own emission reduction
actions.
"One of the primary financing methods being used by the
state, are the proceeds from the cap-and-trade auction
revenues. The use of these funds is guided by the three-year
Climate Change Investment Plan, which is designed to
identify: near-term and long-term GHG emission reduction
goals by sector; gaps in current state strategies; and,
priority programmatic investments of moneys in the Greenhouse
Gas Reduction Fund. Annually, the Department of Finance
reports on programs funded with Greenhouse Gas Reduction Fund
moneys.
"While the Investment Plan and annual updates include
relevant information, California needs to establish routine,
quantified, consistent, and public reporting of the actions
and outcomes of the expenditures of these funds. Having
access to this level of data can assist the legislature in
making good decisions related to new funding, modifications
to existing activities in order to fill gaps, review goals
and objectives, and to ensure that all areas of the state and
type/size of business are making this important economic
transition to a lower carbon economy."
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2) Environmental benefits. Economic benefits are an important
cobenefit from GGRF investments in all areas of the state,
but especially in disadvantaged communities and areas with
high poverty and unemployment. However, as disadvantaged
communities experience disproportionately high pollution
burdens, environmental and public health benefits from GGRF
projects, including improved air quality and water quality,
and greener, walkable communities, can also work to improve
health outcomes and quality of life in these communities and
across the state.
The bill should be amended to require the report include, in
addition to GHG emissions reductions, other environmental and
public health benefits, as applicable, for projects funded
through GGRF.
3) Target populations. The bill requires the annual GGRF
benefits report include outcomes from actions taken to
provide economic benefits to disadvantaged communities and
"target populations." The bill authorizes, but does not
require, the WDB and GO-Biz to identify target populations.
In order to ensure these target populations are identified to
fulfill reporting requirements in the bill, an amendment is
needed to require WDB and GO-Biz to identify target
populations.
4) Outcomes for business opportunities in disadvantaged
communities. AB 2653 requires the report to include actions,
and outcomes from those actions, for business opportunities
offered through activities funded through GGRF in
disadvantaged communities or target populations, as
specified.
AB 2653 also requires the report include specific information
regarding the number of jobs created, including wage levels
of those jobs for all businesses receiving money from GGRF.
As this requirement for job creation and wage level
information applies to all recipient businesses, including
those in disadvantaged communities, it is not clear what
additional "outcomes" would be required in the report with
regard to "business opportunities" in disadvantaged
communities and target populations. To avoid confusion and
redundancies for agencies gathering information required for
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the report, the author may wish to clarify this provision.
SOURCE: Author
SUPPORT:
None received
OPPOSITION:
None received
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