BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 398 (Leyva) - Green Assistance Program
          
           ----------------------------------------------------------------- 
          |                                                                 |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Version: April 14, 2015         |Policy Vote: E.Q. 6 - 1         |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Urgency: No                     |Mandate: No                     |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Hearing Date:  May 11, 2015     |Consultant: Marie Liu           |
          |                                |                                |
           ----------------------------------------------------------------- 


          This bill meets the criteria for referral to the Suspense File. 


          Bill  
          Summary:  SB 398 would create a technical assistance and  
          outreach program, administered by the secretary of the  
          California Environmental Protection Agency (CalEPA), for small  
          businesses and small nonprofits who are interested in applying  
          for grants from programs funded by the Greenhouse Gas Reduction  
          Fund (GGRF).


          Fiscal  
          Impact:  Cost pressures in the millions of dollars from the  
          General Fund or possibly the GGRF to the CalEPA for technical  
          assistance, outreach, and application preparation assistance. 


          Background:  Under the California Global Warming Solutions Act of 2006  
          (referred to as AB 32, HSC §38500 et seq.) 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  







          SB 398 (Leyva)                                         Page 1 of  
          ?
          
          
          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.  All  
          monies, except for fines and penalties, collected pursuant to a  
          market-based mechanism are deposited in the Greenhouse Gas  
          Reduction Fund (GGRF) (Government Code §16428.8).
          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, as specified, 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. Section 39718  
          allows the GGRF, upon appropriation, to be used by the ARB and  
          administering agencies for administrative purposes. 


          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.




          Proposed Law:  
            This bill would require the secretary of CalEPA to administer  
          a technical assistance program, named the Green Assistance  
          Program, for small businesses, small nonprofits, and  
          disadvantaged communities to apply for project funding from the  
          GGRF. The secretary would be authorized to define what  








          SB 398 (Leyva)                                         Page 2 of  
          ?
          
          
          constitutes a small business and a small nonprofit. The  
          technical assistance may include information on the available  
          GGRF-funded programs as well as assistance in application  
          preparation and submission.
          The secretary would also be required to coordinate outreach  
          activities to eligible program applicants.


          This bill requires the program to be funded using existing  
          resources. 




          Related  
          Legislation:  AB 156 (Perea) would require the GGRF Investment  
          plan to allocate technical assistance funds to the ARB for a  
          technical assistance program for eligible applicants assisting  
          disadvantaged communities and other communities as specified. AB  
          156 is currently on the Assembly Appropriations Suspense file.


          Staff  
          Comments:  The 2014-15 budget appropriated GGRF funds for a wide  
          range of purposes including affordable housing, sustainable  
          communities, low carbon transportation, energy efficiency  
          upgrades, wetlands and watershed restoration, and waste  
          diversion. These programs are managed by 11 departments, only  
          some of which are part of CalEPA. 
          This bill would require several categories of assistance- (1)  
          basic information on available programs, (2) referrals to  
          designated contact people administering the program),  and (3)  
          assistance during the application preparation and submission  
          process. The first two categories, depending on the level of  
          interest by small business owners, small nonprofits, and  
          disadvantaged communities, will likely require only a small  
          increase in necessary positions at the agency, if at all.  
          However, the third type of assistance, presuming it involves  
          assisting the applicant in developing their application, could  
          require a significant number of new positions as assistance in  
          writing an application should not be done by the given program  
          staff of the administering agency to ensure impartiality in the  
          funding awards process. Also, additional staff would be  
          necessary because CalEPA inherently does not have detailed  








          SB 398 (Leyva)                                         Page 3 of  
          ?
          
          
          knowledge about programs that are run by departments outside its  
          jurisdiction.


          While this bill will create substantial new workload for the  
          secretary, the bill requires that the secretary use existing  
          resources to create the Green Assistance Program. It is unclear  
          what funding that CalEPA could redirect for this purpose. Staff  
          notes that the secretary currently has 62 support positions  
          funded by various special funds, including the Cost of  
          Implementation Account (which funds the administration of AB 32)  
          and the General Fund, but not the GGRF. The Cost of  
          Implementation Account and the General Fund are likely the only  
          two existing funding sources that can legally be used to support  
          the activities required in this bill. Given that this bill may  
          require expenditures that exceed what the secretary currently  
          receives from either of these funds and that these existing  
          positions have other existing responsibilities, the costs for  
          this bill cannot be absorbed by the agency.


          While the secretary does not currently receive an appropriation  
          from the GGRF fund, the GGRF may be considered as a future  
          funding source for the Green Assistance Program. However, staff  
          notes that it is questionable whether the use of GGRF monies to  
          implement this bill is appropriate. Existing law requires that  
          GGRF monies be used to facilitate GHG emissions (HSC §39712) or  
          for administrative purposes (HSC §39718(b)). The program  
          envisioned in this bill does not neatly fall into either of  
          these categories. In regards to GHG reductions, the purpose of  
          the program in this bill is to help certain entities apply for  
          GGRF monies. Technical assistance in itself does not result in  
          GHG emissions though GHG emissions may eventually be achieved if  
          the technical assistance results in a project being completed.  
          Is this nexus close enough to satisfy HSC §39712? In regards to  
          administrative costs, technical assistance is frequently  
          considered an administrative cost in many funding programs.  
          However, the technical assistance being offered in this bill is  
          unique in that it includes assistance in actually preparing  
          applications, not just providing general guidance. Arguably such  
          assistance is no longer an administrative activity. 











          SB 398 (Leyva)                                         Page 4 of  
          ?
          
          

                                      -- END --