BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                             Senator Bob Wieckowski, Chair
                                 2015 - 2016  Regular 

          Bill No:           SB 189           Hearing Date:     04/15/2014
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          |Author:   |Hueso                                                 |
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          |Version:  |3/26/2015                                             |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Rebecca Newhouse                                      |
          |:         |                                                      |
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          Subject:  Clean Energy and Low-Carbon Economic and Jobs Growth  
          Blue Ribbon Committee

            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 and approve a statewide GHG emissions limit that is  
               equivalent to that level, to be achieved by 2020, and to  
               adopt GHG emission reduction measures by regulation (Health  
               and Safety Code §38500 et seq.).  The Act requires the ARB to  
               appoint an Economic and Technology Advancement Advisory  
               Committee (ETAAC) to advise on technological research and  
               development opportunities.

            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, and requires the Department of  
               Finance, 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 moneys from the GGRF be used to facilitate the  
               achievement of reductions of GHG emissions in this state  
               consistent with the California Global Warming Solutions Act  
               of 2006.  Annual budget appropriations of GGRF funds are  







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               required to be consistent with the investment plan. (Health  
               and Safety Code §39712) 

            4.   Requires the GGRF investment plan to allocate, at a  
               minimum, 25% of the funds to benefit disadvantaged  
               communities, and to allocate 10% of GGRF monies within  
               disadvantaged communities. (HSC §39713)

            5.   Under the California Alternative and Renewable Fuel,  
               Vehicle Technology, Clean Air, and Carbon Reduction Act of  
               2007 (HSC §43865 et seq.) funded through various vehicle and  
               vessel related surcharges, requires the State Energy  
               Resources Conservation and Development Commission (CEC) to  
               implement the Alternative and Renewable Fuels and Vehicle  
               Technology Program (ARFVTP) to provide funding measures to  
               develop and deploy technologies and alternative and renewable  
               fuels in the marketplace to help attain the state's climate  
               change policies.  The CEC is required to develop an  
               investment plan for the program in consultation with an  
               advisory committee, pursuant to specified requirements. An  
               evaluation of the efforts funded by the ARFVTP that includes  
               research, development, and deployment efforts funded by this  
               program is required every two years, beginning in 2011. 

            6.   Under the California Clean Energy Jobs Act, (Proposition 39  
               passed on November 6, 2012) requires that $550 million be  
               transferred to the Clean Energy Jobs Fund for five fiscal  
               years, beginning in 2013, is available for appropriation by  
               the Legislature for eligible projects to improve energy  
               efficiency and expand clean energy generation in schools.   
               The Act also creates a Citizen's Oversight Board to review  
               and assess effectiveness of expenditures from the Fund.   
               (Public Resources Code §26200)

            7.   Under the Electric Utility Industry Restructuring Act,  
               authorizes the Public Interest Renewable Energy Program  
               administered by the CEC, to support the operation of existing  
               renewable facilities as well as the development of new and  
               emerging renewable technologies. 

            8.   Establishes the Governor's Office of Business and Economic  
               Development (GO-Biz) within the Governor's Office for the  
               purpose of serving as the lead state entity for economic  
               strategy and marketing of California on issues relating to  








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               business development, private sector investment and economic  
               growth.  (GOV §§12096 - 12098.5)

            9.   Under the California Green Collar Jobs Act of 2008  
               (Unemployment Insurance Code §15000), establishes the Green  
               Collar Jobs Council to focus on developing the framework,  
               funding, strategies, programs, policies, partnerships, and  
               opportunities necessary to address the growing need for a  
               highly skilled and well-trained workforce to meet the needs  
               of California's emerging green economy. 

            10.  Establishes the Commission for Economic Development to  
               provide continuing bipartisan legislative, executive branch  
               and private sector support and guidance for the best possible  
               overall economic development of the state. (GOV §§14999.8 and  
               14999.9)

          This bill:  

          1. Creates the Clean Energy and Low-Carbon Economic and Jobs  
             Growth Blue Ribbon Committee to consist of five members  
             appointed by the Governor and two members appointed by the  
             Speaker of the Assembly and the Committee on Rules and requires  
             the members to have expertise in economic, financial,  
             clean-energy economic growth, job creation, workforce  
             standards, and employment opportunities for disadvantaged  
             workers.
           
          2. Requires the Committee to advise state agencies on the most  
             effective ways to spend clean energy and greenhouse gas-related  
             funds in order to implement policies to maximize economic and  
             employment benefits in the state and requires the Committee to  
             do the following:

             A.    Develop guidance for tracking and reporting jobs outcomes  
                for state clean energy and low-carbon investments and use  
                that information to evaluate jobs outcomes.

             B.    Develop guidance to measure the quantity and quality of  
                jobs created by state investments in clean energy and  
                low-carbon investments, as well as guidance to measure the  
                geographic and demographic distribution of jobs, in  
                consultation with the Labor and Workforce Development  
                Agency.








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             C.    Advise state agencies on the most effective ways to  
                require responsible contractor standards, and minimum worker  
                training and skill certifications to ensure high-quality  
                work for state clean energy and low-carbon investments, and  
                the most effective ways to connect disadvantaged communities  
                and other target populations to good quality jobs created by  
                those investments.

             D.    Advise state agencies on the most effective ways to align  
                state clean energy and low-carbon training funds with  
                existing state workforce development investments and  
                strategies.

             E.    Provide annual updates to the Governor and appropriate  
                policy and fiscal Legislative committees on the committee's  
                activities.

          3. Requires CEC, PUC, ARB, and any other state agency responsible  
             for implementing clean energy and low-carbon policies and  
             programs to submit an annual progress report to the Governor  
             and appropriate Legislative committees describing how they  
             implemented or responded to the advice, guidance, and any  
             recommendations provided by the Blue Ribbon committee.

          4. Specifies that the above reporting requirement is inoperative  
             on January 1, 2021.

          Background

          1.Workforce and Economic Development Efforts at the State Level.

            There are a number of entities throughout state government aimed  
            at increasing workforce and economic development efforts, with a  
            particular emphasis on emerging technology, green jobs and the  
            green economy.  

            GO-Biz: The Governor's Office of Business and Economic  
            Development Office (GO-Biz) serves as California's single point  
            of contact for economic development and job creation efforts.   
            GO-Biz markets the business and investment opportunities  
            available in California by working in partnership with local,  
            regional, federal, and other state public and private  
            institutions to encourage business development and investment in  








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            the state.  

            The iHub Program within GO-Biz  designate 'iHubs' within the  
            state to stimulate partnerships, economic development, and job  
            creation by leveraging assets to provide an innovation platform  
            for startup businesses, economic development organizations,  
            business groups, and venture capitalists.  These assets may  
            include, but are not limited to, research parks, technology  
            incubators, universities, and federal laboratories. 

            Commission for Economic Development: The commission, consisting  
            of the Lieutenant Governor as Chairperson, three each appointed  
            by Senate Committee on Rules and Assembly Speaker, and 10  
            members appointed by the Governor, was established to provide  
            bipartisan legislative, executive branch and private sector  
            support and guidance for the best possible overall economic  
            development of the state.  The commission is tasked with:

               (a)    Assessing specific regional or local economic  
                 development problems and making recommendations for solving  
                 problems.

               (b)    Providing a forum for ongoing dialogue on economic  
                 issues between state government and the private sector.

               (c)    Recommending, where deemed appropriate, legislation to  
                 require evaluation of demonstration and ongoing economic  
                 development projects and programs to ensure continued cost  
                 effectiveness.

               (d)    Identifying and reporting important secondary effects  
                 on economic development of programs and regulations which  
                 may have other primary purposes.

               (e)    Undertaking specialized studies and preparing  
                 specialized reports at the request of the Governor or  
                 Legislature.

               (f)    Reporting its activities, findings and recommendations  
                 to the Governor and the Legislature annually.

               (g)    Considering programs to further the economic  
                 development of the state.
               








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            California Workforce Investment Board:  The CWIB is charged with  
            developing a unified, strategic planning process to coordinate  
            various education, training, and employment programs into an  
            integrated workforce development system that supports economic  
            development. As such, the CWIB has adopted "sector strategies"  
            as the statewide framework for workforce development and works  
            with partners, including other state agencies, to support the  
            emergence of effective statewide and regionally driven sector  
            initiatives.

            Green Collar Jobs Council:  AB 3018 (Núñez, Chapter 312,  
            Statutes of 2008) created the California Green Collar Jobs  
            Council (GCJC) to perform specified tasks related to addressing  
            the workforce needs that accompany California's growing green  
            economy under the purview of the CWIB.  The GCJC makes  
            recommendations and creates strategies for comprehensive and  
            effective workforce training opportunities to help prepare  
            California's current and future workforce to meet the skills  
            demand from businesses supporting the energy efficiency and  
            clean energy sectors.  The GCJC is also tasked with developing,  
            collecting, analyzing, and distributing statewide and regional  
            labor market data on California's new and emerging green  
            industries workforce needs, trends, and job growth and  
            identifying funding resources and making recommendations on how  
            to expand and leverage these funds.  CWIB is required to report  
            annually to the Legislature on the status of GCJC activities,  
            grants awarded, and its development and implementation of a  
            green workforce strategic initiative.  
          
            The GCJC issued a Proposed Jobs and Workforce Development  
            Program Elements for Carbon Reduction Investments in California  
            in January 2014 which proposed "a common approach to workforce  
            development and job creation for California's multiple public  
            investments in carbon reduction initiatives under the umbrella  
            of AB 32."  According to the proposal:

            "California's energy efficiency, clean energy, and clean  
            transportation programs currently invest several billion dollars  
            each year in incentive programs, public works projects, and a  
            variety of other contracts and subsidies?While the primary  
            purpose of these programs is to meet our energy and carbon  
            reduction targets, these investments create and transform jobs  
            and businesses in a variety of industries in California,  
            particularly the energy, building and construction, and  








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            transportation industries. State agencies, utilities, and others  
            responsible for these programs are therefore drivers of economic  
            development and job creation, in addition to their primary role  
            in implementing energy and environmental policy."  The GCJC  
            states "specific program elements for California's carbon  
            reduction public investment programs?can support a skilled  
            workforce that performs the quality work necessary to accomplish  
            the state's ambitious energy and environmental goals, while  
            providing career-track jobs for California residents, including  
            those from historically disadvantaged communities."

          1.Clean Energy and Low-Carbon Funds.

             A.   Energy Efficiency and Alternative Energy Programs.

          According to the Legislative Analyst's Office's report from  
          December 2012, "Energy Efficiency and Alternative Energy  
          Programs," excluding cap-and-trade auction revenue as well as  
          revenue from Proposition 39 (described below), "California  
          currently maintains over a dozen major programs that are intended  
          to support the development of energy efficiency and alternative  
          energy in the state.  Over the past 10 to 15 years, the state has  
          spent a combined total of roughly $15 billion on such efforts, the  
          vast majority of which has been funded by utility ratepayers.  The  
          state's incentive programs generally fall into one of the four  
          following categories: (1) energy efficiency programs, (2)  
          renewable energy programs, (3) alternative transportation and  
          low-carbon fuels programs, and (4) energy research programs." 

          A few examples include:

                           IOU Energy Efficiency Programs:  The PUC  
                    oversees the development and implementation of rebate  
                    and incentive programs by Investment Owned Utilities  
                    (IOU) for energy users in order to encourage the  
                    purchase of energy-efficient appliances and equipment.   
                    IOUs have also implemented programs to achieve long-term  
                    market transformations in the development of "zero net  
                    energy" buildings.  These programs are funded through  
                    ratepayer utility bills. 

                           Public Interest Renewable Energy Program: This  
                    program is implemented by CEC to support the operation  
                    of existing renewable facilities as well as the  








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                    development of new and emerging renewable technologies,  
                    and is funded through a surcharge on IOU electricity  
                    bills. 
                                                  
                           Alternative and Renewable Fuel and Vehicle  
                    Technology Program: This program is implemented by the  
                    CEC and funded through vehicle-related surcharges for  
                    administering financial assistance in the form of loans  
                    and grants to help transform vehicles and fuels to meet  
                    the state's climate change goals.

          Additional revenue for greenhouse gas emission reduction as well  
          as energy efficiency programs has been generated from the  
          cap-and-trade program and from the passage of Proposition 39.

             A.   Cap and Trade Auction Revenue Funds. 

          ARB conducted nine cap-and-trade auctions between November 2012  
          and November 2014, generating a total of $970 million in proceeds  
          to the state. A tenth auction was held jointly with Quebec in  
          February of this year, but the proceeds have not yet been  
          published. 

          Several bills in 2012, and one in 2014, provided legislative  
          direction for the expenditure of auction proceeds including SB 535  
          (de León) Chapter 830, Statutes of 2012, AB 1532 (J. Pérez)  
          Chapter 807, Statutes of 2012, SB 1018 (Budget Committee) Chapter  
          39, Statutes 2012, and SB 862 (Budget Committee) Chapter  36,  
          Statutes of 2014.

          SB 535 (de León) Chapter 830, Statutes of 2012, requires that 25%  
          of auction revenue be used to benefit disadvantaged communities  
          and requires that 10% of auction revenue be invested in  
          disadvantaged communities. 

          AB 1532 (J. Pérez) Chapter 807, Statutes of 2012, requires that  
          GGRF monies be used to facilitate the reduction of GHG emissions  
          and further the regulatory purposes of AB 32.  The bill also  
          directs the Department of Finance to develop and periodically  
          update a three-year investment plan that identifies feasible and  
          cost-effective GHG emission reduction investments to be funded  
          with cap-and-trade auction revenues. 

          SB 1018 (Budget Committee) Chapter 39, Statutes of 2012, created  








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          the GGRF, into which all auction revenue is to be deposited. The  
          legislation requires that before departments can spend monies from  
          the GGRF, they must prepare a record specifying: (1) how the  
          expenditures will be used, (2) how the expenditures will further  
          the purposes of AB 32 (Nuñez, Pavley) Chapter 488, Statutes of  
          2006, (3) how the expenditures will achieve GHG emission  
          reductions, (4) how the department considered other  
          non-GHG-related objectives, and (5) how the department will  
          document the results of the expenditures. 

          SB 862 (Budget Committee) Chapter 36, Statutes of 2014, requires  
          the ARB to develop guidelines on maximizing benefits for  
          disadvantaged communities by agencies administering GGRF funds,  
          and guidance for administering agencies on GHG emission reduction  
          reporting and quantification methods.

             B.   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. 

          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's more akin to a regulatory fee. 

             C.   AB 32 Auction Revenue Investment Plan.  

          The first three-year investment plan for cap-and-trade auction  
          proceeds, submitted by Department of Finance, in consultation with  
          ARB and other state agencies in May of 2013, identified  
          sustainable communities and clean transportation as one of the key  
          sectors that provide the best opportunities for achieving the  
          legislative goals and supporting the purposes of AB 32.  The plan  
          recommended the aforementioned sector receive the largest  








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          allocation of funds from the GGRF, but did not specify a monetary  
          amount.  


















































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             D.   Budget Allocations. 

          The 2014-15 budget allocates $832 million in GGRF revenues to a  
          variety of transportation, energy, and resources programs aimed at  
          reducing GHG emissions.  Various agencies are in the process of  
          implementing this funding.  The budget agreement specifies how the  
          state will allocate most cap-and-trade auction revenues in 2015-16  
          and beyond.  For all future revenues, the legislation appropriates  
          25% for the state's high-speed rail project, 20% for affordable  
          housing and sustainable communities grants, 10% to intercity  
          capital rail projects, and 5% for low-carbon transit operations.   
          The remaining 40% is available for annual appropriation by the  
          Legislature.

          The Governor's proposed 2015-16 budget assumes the receipt of $650  
          million in cap-and-trade auction revenues in 2014-15 and $1  
          billion in 2015-16.  The Governor's proposed 2015-16 cap-and-trade  
          expenditures are largely the same as the 2014-15 plan, albeit with  
          larger amounts allocated for affordable housing and sustainable  
          communities grants, the transit and intercity rail capital  
          program, and the low-carbon transit operations.

          1.Prop 39 Revenue.

            The California Clean Energy Jobs Act was created with the  
            approval of Proposition 39 in the November 6, 2012, statewide  
                            general election.  Under the initiative, up to $550 million  
            annually is available to be appropriated by the Legislature for  
            eligible projects to improve energy efficiency and expand clean  
            energy generation. The 2014-15 California Budget Act  
            appropriated $354 million of Proposition 39 revenue primarily  
            for school and community college energy efficiency projects. 
          
            Comments
          
          1. Purpose of Bill. 

             According to the author, "As the Legislature and the Governor  
             articulate next steps for our clean energy and climate  
             policies, it is important to have a permanent and formal  
             committee that can advise agencies implementing such policies  
             on the best ways to maximize expenditure of public funds to  
             ensure the state achieves the greatest economic growth and job  








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             creation. SB 189 would establish a high-level expert Blue  
             Ribbon Committee to serve that role of advising state clean  
             energy and climate actions to ensure maximum job creation and  
             economic benefits to California."

             The author notes that the bill was created through  
             collaboration with the Office of the Senate President  
             Pro-Tempore, and is part of the California Climate Leadership  
             Package.  

          2. Legislative Intent. 

             The bill's findings and declarations state that ARB, PUC and  
             CEC have all created advisory committees to help better  
             understand the implications of their clean energy and climate  
             policies and that the purpose of the bill is to create a single  
             independent blue ribbon committee to provide advice to agencies  
             on the most effective ways to maximize the state's economic  
             benefits and jobs growth via investments in a cleaner economy. 

             It is unclear whether the bill intends the Blue Ribbon  
             Committee to take the place of, or supersede, existing advisory  
             committees for these investments. 

          3. Where is the Committee Housed?

             The bill does not specify in which agency the Committee will be  
             located.  Should the bill be amended to specify which agency  
             the Blue Ribbon Committee will be affiliated with in order to  
             have access to administrative and physical resources necessary  
             to fulfill the requirements of SB 189?  Which agency will post  
             information regarding the Blue Ribbon Committee membership and  
             contact information for the Blue Ribbon Committee to ensure  
             transparency? 

             Additionally, the bill doesn't provide any guidance on how  
             often or when the Blue Ribbon Committee should meet.  Should  
             the bill specify how frequently the Blue Ribbon Committee is  
             required to conduct meetings?  

          4. Which Funds are Included and Which Agencies will be Advised?

             SB 189 requires that the Blue Ribbon Committee advise state  
             agencies on the most effective ways to expend clean energy and  








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             greenhouse gas-related funds and to implement policies in order  
             to maximize California's economic and employment benefits.  
             However, the bill does not specify which funds and investments  
             are included.  The state has numerous agencies that implement  
             programs on energy efficiency, renewable and alternative  
             energy, and GHG emissions reductions.  The author may wish to  
             provide clarity on this issue as the bill moves forward. 













































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          5. Who's Paying?

             Although the bill specifies that the members of the Blue Ribbon  
             Committee shall not receive per diem, SB 189 requires that the  
             members be reimbursed for their actual expenses incurred in  
             connection with the performance of their duties.  As the Blue  
             Ribbon Committee's work will advise various agencies on  
             multiple funds, which fund will be used to cover expenses?   
             Which fund will cover the costs associated with producing the  
             guidance documents and annual reports required in the bill? 

             As cap-and-trade auction revenues are considered mitigation  
             fees, these monies must be used to mitigate GHG emissions or  
             the harms caused by GHG emissions.  Therefore, because there is  
             not a clear nexus to GHG emissions reductions activities and  
             the activities of the Blue Ribbon Committee, the Blue Ribbon  
             Committee should not be funded with cap-and-trade auction  
             revenue, but with another fund that allows expenditures for job  
             growth and economic development advisory committees.  
                                
          6. So Many Reports. 

             SB 189 requires CEC, PUC, ARB, and any other agency responsible  
             for implementing clean energy and low-carbon policies, to  
             submit an annual report to the Governor and the Legislature  
             describing how it implemented or responded to the advice,  
             guidance, and recommendations from the Blue Ribbon Committee.

             Although it is important to report whether recommendations from  
             advisory committees are later incorporated into policies and  
             programs, agencies may have valid reasons for not incorporating  
             this advice or guidance, especially if the recommendations  
             conflict with other policy goals of the program.  Should there  
             be language in the bill that acknowledges this consideration? 

             Additionally, the cap-and-trade auction revenue is administered  
             by almost a dozen agencies.  Combined with reports from CEC,  
             PUC, and ARB, and agencies administering other clean energy and  
             low-carbon policies and programs (which are not defined in the  
             bill), this bill could require more than 15 new reports per  
             year until 2020.  

          7. Do we need another economic and green jobs  








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             council/committee/panel/commission? 

             As noted in the background section, there are several entities  
             in the state that already exist in order to advise on economic  
             activity and job growth.  For example, the CWIB is charged with  
             strategic planning process to coordinate various education,  
             training, and employment programs into an integrated workforce  
             development system that supports economic development. 

             The Commission for Economic Development was established to  
             provide support and guidance for advancing the overall economic  
             development of the state. 

             Additionally, the Green Jobs Council makes recommendations and  
             creates strategies for workforce training opportunities, as  
             well as develops, collects, analyzes, and distributes statewide  
             and regional labor market data on green industries workforce  
             needs and trends.  They also identify funding resources and  
             make recommendations on how to expand and leverage these funds.  
              

             Does the state need another body to advise on economic growth  
             and job creation for clean energy and low-carbon investments,  
             or can an existing entity that currently performs a similar  
             function be tasked with the requirements of the bill? 

            Related/Prior Legislation
          
          Double Referral to Senate Business, Professions and Economic  
          Development.  This measure was heard in Senate Business,  
          Professions and Economic Development Committee on April 6, 2015,  
          and passed out of committee with a vote of 7-1.
            
          SOURCE:                    Author  

           SUPPORT:               
          None on file  

           OPPOSITION:    
          None on file  

           










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