BILL ANALYSIS Ó AB 2722 Page 1 Date of Hearing: May 18, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2722 (Burke) - As Amended April 20, 2016 ----------------------------------------------------------------- |Policy |Natural Resources |Vote:|6 - 3 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: The bill creates the Transformative Climate Communities Program (Program), to be administered by the Strategic Growth Council (SGC) and funded by AB 32 cap-and-trade revenues. Specifically, this bill: 1)Allocates up to $250 million from of Greenhouse Gas Revenue Funds (GGRF), upon appropriation by the Legislature, to SGC to administer the program. 2)Requires SGC, in coordination with the Assistant Secretary for Environmental Justice and Tribal Affairs at California Environmental Protection Agency (CalEPA), to award competitive AB 2722 Page 2 grants to eligible entities, including: a) Nonprofit organizations; b) Community-based organizations; c) Faith-based organizations; d) Coalitions or associations of nonprofit organizations; e) Community development finance institutions; f) Community development corporations; and, g) Local agencies. 1)Requires grants to be awarded for the development and implementation of transformative climate community plans that contribute to greenhouse gas (GHG) emission reductions and demonstrate potential climate, economic, workforce, health, and environmental benefits in disadvantaged communities, as specified. Grants may be awarded over multiple years. 2)Requires SGC and all funded entities to identify additional public and private funds and coordinate a network of technical assistance providers, as specified. FISCAL EFFECT: AB 2722 Page 3 1)Cost pressures of up to $250 million (GGRF) to fund the Program. 2)Increased costs of $5 million for SGC to develop and implement the program. This figure is based on the Governor's proposed budget which provides $100 million for an Administration proposed Transformative Climate Communities Program (GGRF) 3)Increased costs to the Air Resources Board (ARB) of less than $150,000 (GGRF) if eligible projects fit within existing GGRF project categories. If eligible projects are outside current existing GGRF project categories, ARB estimates increased initial costs of approximately $670,000 for two years, and ongoing annual costs of $520,000 (GGRF) to develop quantification methodologies, disadvantaged community criteria, reporting criteria, and expenditure records 4)Minor, absorbable costs for CalEPA. COMMENTS: 1)Purpose. According to the author, this bill establishes a new program to ensure California is making comprehensive, cross-cutting, and transformative climate investments to achieve multiple GHG, public health, and economic benefits in our state's most vulnerable communities. This bill will help cities, local jurisdictions, and communities accelerate sustainability plans to meet the state's climate change goals. 2)Background. The California Global Warming Solutions Act of 2006 (AB 32). AB 32 requires ARB to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and adopt regulations, including market-based compliance mechanisms, to AB 2722 Page 4 achieve maximum technologically feasible and cost-effective GHG emission reductions. As part of the implementation of AB 32 market-based compliance measures, ARB adopted a cap-and-trade program that caps the allowable statewide emissions and provides for the auctioning of emission credits, the proceeds of which are quarterly deposited into the GGRF available for appropriation by the Legislature. SB 535 (De León), Chapter 830, Statutes of 2012, requires no less than 10% of cap-and-trade revenues fund projects located within disadvantaged communities, and that 25% of available revenues fund projects that benefit those communities. The 2014-15 Budget Act allocated cap-and-trade revenues for the 2014-15 fiscal year and established a long-term plan for the allocation of cap-and-trade revenues beginning in fiscal year 2015-16. The Budget continuously appropriates 35% of cap-and-trade funds for investments in transit, affordable housing, and sustainable communities. Twenty-five percent of the revenues are continuously appropriated to continue the construction of high-speed rail. The remaining 40% are to be appropriated annually by the Legislature for investments in programs that include low-carbon transportation, energy efficiency and renewable energy, and natural resources and waste diversion. AB 2722 Page 5 An expenditure plan for the 40% was not included in the 2015-16 Budget Act, with the exception of $227 million appropriated to continue funding for specified existing programs. The remaining 2015-16 revenues, along with 2016-17 revenues, totaling $3.1 billion are available for appropriation this year. The 2016-17 proposed budget includes $100 million to create a new Transformative Climate Communities Program, but did not include much detail on the specifics of the program. This bill is intended to expand upon this proposal. 3)Disadvantaged Communities and Environmental Justice. SB 535 (De León), Chapter 830, Statutes of 2012, requires no less than 10% of cap-and-trade revenues fund projects located within disadvantaged communities, and that 25% of available revenues fund projects that benefit those communities. In October 2014, CalEPA released its list of disadvantaged communities for the purpose of SB 535. CalEPA relied on CalEnviroScreen to identify the areas disproportionately burdened by and vulnerable to multiple sources of pollution. CalEnviroScreen is a tool that assesses all census tracts in California to identify the areas disproportionally affected and vulnerable to multiple sources of pollution. Areas (census tracts) identified as disadvantaged for SB 535's purposes by CalEnviroScreen include: the majority of the San Joaquin Valley; much of Los Angeles and the Inland Empire; pockets of other communities near ports, freeways, and major industrial facilities such as refineries and power plants; and AB 2722 Page 6 large swaths of the Coachella Valley, Imperial Valley and Mojave Desert. According to the Office of Environmental Health Hazard Assessment (OEHHA), approximately 8 million Californians (21%) live in zip codes that are considered "highly impacted" by environmental, public health, and socioeconomic stressors. Nearly half of all Californians live within six miles of a facility that is a significant GHG emitter and they are disproportionately people of color. In February of 2014, CalEPA issued an Environmental Justice Program Update, which included four main areas for future actions: 1)Increase efforts to eliminate discrimination on the basis of race, national origin, ethnic group identification, religion, age, sex, sexual orientation, color, genetic information, or disability in any program or activity conducted or funded by the state; 2)Develop guidance to promote a sound legal framework for CalEPA to advance environmental justice goals and objectives; 3)Lead an agency-wide working group dedicated to increase compliance with environmental laws in communities with relatively higher environmental burdens; and, 4)Add additional indicators to CalEnviroScreen to identify disadvantaged communities for the purpose of GGRF expenditures. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081 AB 2722 Page 7