BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 207|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 207
Author: Wieckowski (D)
Amended: 3/24/15
Vote: 21
SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 4/15/15
AYES: Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: California Global Warming Solutions Act of 2006:
Greenhouse Gas Reduction Fund
SOURCE: Author
DIGEST: This bill requires the expenditure record, prepared by
state agencies to which Greenhouse Gas Reduction Fund (GGRF)
monies have been appropriated, to be published on the Internet
web sites of both the administering agency and the California
Air Resources Board (ARB) prior to the agency expending any of
the appropriated GGRF monies.
ANALYSIS:
Existing law:
1)Requires, under the California Global Warming Solutions Act of
2006 (AB 32, Nunez, Chapter 488, Statutes of 2006), the ARB to
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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 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 ARB 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
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.
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Background
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
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.
SB 535 (de León, Chapter 830, Statutes of 2012) required 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 and Fiscal Review 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
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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 and Fiscal Review Committee, Chapter 36,
Statutes of 2014) required 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.
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 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
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
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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 (Budget and Fiscal Review Committee, Chapter 36, Statutes
of 2014) established the requirements that ARB develop
guidelines for agencies administering GGRF funds.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified 4/27/15)
None received
OPPOSITION: (Verified 4/27/15)
None received
Prepared by:Rebecca Newhouse / E.Q. / (916) 651-4108, Laurie
Harris / E.Q. / (916) 651-4108
4/29/15 16:07:25
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