BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 2722|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 2722
Author: Burke (D)
Amended: 8/16/16 in Senate
Vote: 21
SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 6/29/16
AYES: Wieckowski, Hill, Jackson, Leno, Pavley
NOES: Gaines, Bates
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 51-26, 6/2/16 - See last page for vote
SUBJECT: Transformative Climate Communities Program
SOURCE: California Environmental Justice Alliance
Greenlining Institute
DIGEST: This bill creates the Transformative Climate Communities
Program, administered by the Strategic Growth Council (SGC), to
award competitive grants for the development of transformative
climate community plans, and projects that implement plans, which
contribute to greenhouse gas emissions reductions and demonstrate
other benefits, as specified, in disadvantaged communities.
ANALYSIS:
Existing law:
1) Requires, under the California Global Warming Solutions Act of
2006 (also known as AB 32), the California Air Resources Board
AB 2722
Page 2
(ARB) to determine the 1990 statewide greenhouse gas (GHG)
emissions level and approve a statewide GHG emissions limit
that is equivalent to that level, to 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 these regulations. (Health and Safety Code §38500
et seq.)
2) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the
State Treasury, requires all moneys, except for fines and
penalties, collected pursuant to a market-based mechanism be
deposited in the fund. (Government Code §16428.8)
3) Prohibits the state from approving allocations for a measure
or program using GGRF moneys except after determining that the
use of those moneys furthers the regulatory purposes of AB 32,
and requires moneys from the GGRF be used to facilitate the
achievement of reductions of GHG emissions in California. (HSC
§39712)
4) Appropriates, continuously, 60% of GGRF moneys to transit,
affordable housing and sustainable communities, including 20%
continuously appropriated to the SGC for the Affordable
Housing and Sustainable Communities Program. (HSC §39719)
This bill:
1) Establishes the Transformational Climate Communities Program
(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) States the intent of the Legislature that private resources
can "more effectively be catalyzed to support innovative
community and climate transformation in disadvantaged
communities."
3) Requires the SGC, in coordination with the Assistant Secretary
for Environmental Justice and Tribal Affairs at California
AB 2722
Page 3
Environmental Protection Agency (CalEPA), to award competitive
grants to eligible entities, including nonprofit
organizations, community-based organizations, faith-based
organizations, coalitions or associations of nonprofit
organizations, community development finance institutions,
community development corporations, local agencies, and joint
powers authorities.
4) Directs SGC 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.
5) Authorizes SGC to award a grant over multiple years.
6) Specifies 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.
7) Requires SGC, 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) 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.
9) Requires SGC 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.
10)Requires SGC to conduct at least three public workshops,
consider any feedback, and post draft guidelines on their
website before adopting the guidelines and selection criteria.
11)Specifies that the bill will only become operative if AB 1613
AB 2722
Page 4
(Committee on Budget) is enacted and becomes effective on or
before January 1, 2017, and AB 1613 appropriates $205 million
from the GGRF, as specified.
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, 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 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 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.
AB 2722
Page 5
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.
2) Governor's Transformative Climate Communities budget proposal.
The Governor's 2016-17 budget proposal requests $100 million
to establish the Program, administered by the SGC, 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
environmental benefits."
The Senate and Assembly budget plans for fiscal year 2016-17
include a $400 million and $100 million appropriation from the
GGRF for "local climate programs."
AB 2722
Page 6
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 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."
2) What types of investments will be supported through the
program? AB 2722 does not prescribe the types of projects
that are eligible for funding, or provide categorical guidance
for plans and projects that may be funded under the Program.
Instead, the bill specifies that the Program will fund
"neighborhood-level transformative" plans that include
"multiple, coordinated greenhouse gas emissions reduction
projects." The bill also requires that plans and projects
awarded grants by SGC demonstrate an "integrated, innovative,
crosscutting" approach and "provide multiple benefits to the
community and demonstrate community engagement and leadership
in all phases."
The Governor's proposal includes investments in energy,
transportation, active transportation, housing, urban,
greening, land use, water and waste efficiency, and other
areas, as possible projects that could be funded through the
Program.
The sponsors of the bill have provided examples of the types
of projects that might be funded through the Program. These
include community-led planning in National City to develop a
land use plan to build a vibrant, healthy community with
affordable housing, equitable transit, safe pedestrian
walkways, and increased clean energy. Other examples from the
sponsors include an urban greening project in the San Fernando
AB 2722
Page 7
Valley to increase green infrastructure and active
transportation, and an affordable housing development in South
Los Angeles that includes community gardens, open space, and a
community room and commercial space that serves the local
community.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
Unknown ongoing costs, between the high hundreds of
thousands to low millions (GGRF) for the SGC to develop,
administer, and oversee the financial assistance programs.
Approximately $715,000 annually in years one and two for
ARB, and approximately $550,000 ongoing (GGRF).
Unknown, potentially significant, costs (GGRF) to CalEPA
for consultation.
SUPPORT: (Verified8/15/16)
California Environmental Justice Alliance (co-source)
Greenling Institute (co-source)
Audubon California
California Association of Local Conservation Corps
California Equity Leaders Network
California League of Conservation Voters
California Pan Ethnic Health Network
Coalition for Clean Air
Fresno Economic Opportunities Commission
Health Officers Association of California
Los Angeles Neighborhood Land Trust
Lutheran Office of Public Policy - California
AB 2722
Page 8
National Audubon Society
PAN North America
Sierra Club California
TransForm
Union of Concerned Scientists
Valley Clean Air Now
OPPOSITION: (Verified8/15/16)
None received
ARGUMENTS IN SUPPORT: Supporters state that the Program will
foster an integrative collaborative approach to comprehensively
address the burdens of disproportionately impacted communities
that have suffered from decades of environmental pollution and
neglect. They also state that the Program moves out of the
project-specific silos that has characterized most GGRF spending
thus far and instead, the bill promotes multi-stakeholder
collaborations and leverages a range of funding sources,
including private sector, to achieve large-scale impact in a
holistic manner.
ASSEMBLY FLOOR: 51-26, 6/2/16
AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown,
Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper,
Dababneh, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo
Garcia, Gatto, Gipson, Gomez, Gonzalez, Gray, Roger Hernández,
Holden, Irwin, Jones-Sawyer, Levine, Linder, Lopez, Low,
McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk,
Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,
Thurmond, Ting, Weber, Williams, Wood, Rendon
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Chávez, Dahle, Beth Gaines, Gallagher, Grove, Harper, Jones,
Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte,
Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Daly, Gordon, Hadley
Prepared by:Rebecca Newhouse / E.Q. / (916) 651-4108
8/16/16 17:50:30
AB 2722
Page 9
**** END ****