BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Bob Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 207 Hearing Date: 4/15/2015
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|Author: |Wieckowski |
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|Version: |3/24/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Laurie Harris, Rebecca Newhouse |
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Subject: California Global Warming Solutions Act of 2006:
Greenhouse Gas Reduction Fund
ANALYSIS:
Existing law:
1. Under the California Global Warming Solutions Act of 2006,
often referred to as AB 32 (Núñez, Pavley), Chapter 488,
Statutes 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 §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, 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 a state agency, prior to expending any moneys
appropriated to it from the GGRF, to prepare a record
(expenditure record) consisting of a description of the
expenditure, how the expenditure will further the regulatory
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purposes of AB 32 and contribute to achieving and maintaining
greenhouse gas emission reductions, how the agency considered
the applicability and feasibility of other non-greenhouse gas
reduction objectives, and how the agency will document the
results achieved from the expenditure. ARB is required to
develop guidance on reporting and quantification methods to
ensure the requirements of this section are met. (GOV
§16428.9)
This bill:
1.Requires the expenditure record, prepared by state agencies to
which GGRF monies have been appropriated, to be published on
the Internet web sites of both the administering agency and
the ARB prior to the agency expending any of the appropriated
GGRF monies.
2.Makes technical cleanup changes to existing language for
clarity and consistency with current language in code.
Background
1.Cap-and-Trade.
The cap-and-trade program is a market-based regulation that
sets a declining cap on total GHG emissions from sources
making up approximately 85% of statewide emissions. The
program is a key component of the State Air Resources Board's
Scoping Plan, which describes the state's approach to reduce
GHG emissions to 1990 levels by 2020 as set forth under AB 32.
Proceeds from the sales and auctions of GHG emissions permits
(allowances) in the cap-and-trade program are deposited in the
GGRF and are subsequently appropriated to 12 agencies for
administering programs that support the goals of AB 32 to
reduce GHG emissions.
2.Cap-and-Trade Auction Revenue.
ARB has conducted ten cap-and-trade auctions to date,
generating $1.6 billion in total proceeds to the state.
Appropriations from the first two fiscal years, 2013-14 and
2014-15, totaled more than $900 million. Several bills in
2012, and one in 2014, provided legislative direction for the
expenditure of auction proceeds.
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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, directed the
Department of Finance to develop and periodically update a
three-year investment plan. This plan identified feasible and
cost-effective GHG emission reduction investments to be funded
with cap-and-trade auction revenues, focusing on three
sectors, including: sustainable communities and clean
transportation, energy efficiency and clean energy, and
natural resources and waste diversion.
SB 1018 (Budget Committee) Chapter 39, Statutes of 2012,
created 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, (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.
3.ARB's Expenditure Record and Fiscal Procedures Guidance.
The ARB's 2014 "Cap-and-Trade Auction Proceeds Interim
Guidance to Agencies Administering Greenhouse Gas Reduction
Fund Monies: Expenditure Record and Fiscal Procedures"
document, prepared pursuant to SB 862, provides guidance to
assist state agencies receiving appropriations from the GGRF
in preparing their expenditure records.
The document states, "The final expenditure record and
memorandum [documenting concurrence between the agency and the
ARB] are public documents and will be posted on the ARB
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auction proceeds website," and "State agencies that receive
appropriations from the GGRF must prepare an expenditure
record for those fiscal year monies prior to expending any
monies on projects." Though stated in ARB's guidance
document, neither of these points are required in statute, and
as of today, not all agencies that receive GGRF monies have
expenditure records available on the ARB Internet web site.
Comments
1. Purpose of Bill.
According to the author, "Cap-and-trade auction revenue, with
proceeds to the state of over $1.6 billion since the initial
auction, has been appropriated to more than 11 different
agencies to administer a variety of programs in the 2014-15
fiscal year. In this and future fiscal years, auction revenue
will most likely continue to be distributed to other entities
over the course of the program as revenues from the program
increase. Current law requires these agencies to produce a
record documenting how their programs will reduce greenhouse
gas emissions, as well as further the regulatory purposes of
AB 32-a requirement necessary to ensure the use of the
revenue is justified. And although ARB has issued interim
guidance specifying the documents that these various agencies
create as public, this is not required by current law. SB 207
simply codifies this important provision in ARB's interim
guidelines to ensure statutorily enforceable transparency in
the expenditure record process so that both the public and
Legislature have timely and straightforward access to these
important records."
Related/Prior Legislation
AB 1532 (Pérez), Chapter 807, Statutes of 2012, SB 535 (De
León), Chapter 830, Statutes of 2012), and SB 1018 (Budget and
Fiscal Review Committee), Chapter 39, Statutes of 2012, together
established the GGRF and provided direction for how auction
proceeds received by the GGRF are appropriated and expended.
SB 862 (Committee on Budget and Fiscal Review) Chapter 36,
Statutes of 2014, established the requirements that ARB develop
guidelines for agencies administering GGRF funds.
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SOURCE: Author
SUPPORT: None on file
OPPOSITION: None on file
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