BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2722 (Burke) - Transformative Climate Communities Program
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|Version: August 2, 2016 |Policy Vote: E.Q. 5 - 2 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 8, 2016 |Consultant: Narisha Bonakdar |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 2722 establishes the Transformational Climate Communities
Program (Program) within the Strategic Growth Council (Council)
to fund the development and implementation of neighborhood-level
transformative climate community plans.
Fiscal
Impact:
Unknown ongoing costs, potentially between the high
hundreds of thousands to low millions (Greenhouse Gas
Reduction Fund) for the Council to develop, administer, and
oversee the financial assistance programs.
Approximately $715,000 annually in years one and two for
the Air Resources Board (ARB), and approximately $550,000
ongoing (Greenhouse Gas Reduction Fund).
Unknown, potentially significant, costs (Greenhouse Gas
Reduction Fund) to the California Environmental Protection
Agency (CalEPA) for consultation.
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Background: The California Global Warming Solutions Act of 2006 (referred
to as AB 32) 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. Under this authority, the ARB initiated the
cap-and-trade program. All monies, except for fines and
penalties, collected pursuant to the cap-and-trade program are
deposited in the Greenhouse Gas Reduction Fund (GGRF). Existing
law requires that the GGRF only be used to facilitate the
achievement of reductions of GHG emissions consistent with AB 32
(HSC §39710 et seq.).
To this end, the Department of Finance, in consultation with the
ARB and any other relevant state agencies, is required to
develop a three-year investment plan for the moneys deposited in
the GGRF. The investment plan must 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. Additionally, the ARB, in
consultation with CalEPA, is required to develop funding
guidelines for administering agencies receiving allocations of
GGRF funds that include a component for how agencies should
maximize benefits to disadvantaged communities.
SB 535 (de León, Chapter 830, Statutes of 2012) requires the
Department of Finance, 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
AB 2722 (Burke) Page 2 of
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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.
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 early 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.
Governor's Transformative Climate Communities budget proposal.
The Governor's 2016-17 budget proposal requests $100 million to
establish the Transformational Climate Communities Program,
administered by the Council, to support local climate action
implementation in the top five percent disadvantaged communities
in California. According to the proposal, "Funding would support
projects that integrate multiple, cross-cutting approaches to
reduce GHGs, and that the program combines climate investments
within a local area for catalytic impact-including investments
in energy, transportation, active transportation, housing,
urban, greening, land use, water and waste efficiency, and other
areas-while also increasing job training, economic, health and
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environmental benefits."
The Senate and Assembly budget plans included a $400 million and
$100 million appropriation from the GGRF for "local climate
programs."
Proposed Law:
This bill:
1) Establishes the Program to fund the development and
implementation of neighborhood-level transformative climate
community plans that include multiple GHG emissions reduction
projects that provide local economic, environmental, and
health benefits that are directly connected to communities
most impacted by pollution and vulnerable to climate change.
2) Requires the Council, in coordination with the Assistant
Secretary for Environmental Justice and Tribal Affairs at
CalEPA, to award competitive grants to eligible entities, as
specified.
3) Directs the Council to award grants for plans and projects
that implement plans that contribute to the reduction of GHG
emissions and demonstrate potential climate, economic,
workforce, health, and environmental benefits located in
communities that have a demonstrated need for climate,
economic, workforce, health, and environmental benefits.
4) Authorizes the Council to award a grant over multiple years.
5) Requires the Council to weigh economic, environmental, and
health benefits equally with climate benefits.
6) States that, in order to be eligible for funding under the
program, a plan, and a project that implements a plan, must
demonstrate that it will achieve a reduction in GHG
emissions.
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7) Requires the Council, in awarding grants, to prioritize
plans, and projects that implement plans, that maximize, to
the extent feasible, climate, public health, environmental,
workforce, and economic benefits.
8) Requires the Council, in coordination with the member
agencies, the ARB and other state entities, to develop
guidelines and selection criteria for the implementation of
the Program.
9) Requires the Council to conduct at least three public
workshops, consider any feedback, and post draft guidelines
on their website before adopting the guidelines and selection
criteria.
10)Defines "economic benefits" as high-quality, well-paid
employment opportunities for residents, benefits for small
businesses, and benefits for minority-, LGBT-, woman-, or
disabled veteran-owned small businesses in the plan's region.
Defines "LGBT" as lesbian, gay, bisexual, or transgender.
11)Requires the Council to "endeavor to identify" additional
public and private sources of funding to sustain and expand
the Program and a network of technical assistance providers
to assist in plan development, implementation, and project
financing.
Staff
Comments:1) Purpose of Bill. According to the author, "Assembly Bill 2722
establishes the Transformative Climate Communities Program
administered by the Strategic Growth Council to ensure that
California is making investments that reduce greenhouse gases
and also demonstrate co-benefits for the economy, workforce, and
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the health of California's most vulnerable communities. AB 2722
creates a one stop shop for cities, counties, and
community-based organizations to fund multiple projects that
reduce greenhouse gas emissions. Our state has been a strong
leader in the fight against climate change and reducing
pollution, and AB 2722 is a step to ensure that we leave no
community behind."
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