BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 400
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|Author: |Lara |
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|Version: |4/22/2015 |Hearing | April 29, 2015 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|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,
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 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, 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)
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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, and
authorizes those
funds to be allocated for the purpose of reducing greenhouse
gas emissions. Annual budget appropriations of GGRF funds
are required to be consistent with the investment plan. (HSC
§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 moneys within disadvantaged communities.
(HSC §39713)
5. Continuously appropriates 25% of GGRF moneys to the
High-Speed Rail Authority for acquisition and construction,
environmental review and design, and other capital costs, as
well as repayments of loans made to the authority, for the
initial operating segment and Phase I Blended System. (HSC
§39719)
This bill:
1.Requires that at least 25% of the moneys appropriated to the
High-Speed Rail Authority for the initial operating segment
and the Phase I Blended System be allocated to environmental
mitigation measures and projects that reduce GHG emissions
from transportation sources, and provide a cobenefit of
improving air quality.
2.Specifies that priority for these expenditures be given to
measures and projects in communities that are located in areas
designated as extreme nonattainment.
3.Specifies that these projects may include, but are not limited
to, the following:
A. Public transit improvements that reduce congestion
by improving transit service or frequency of transit
service.
B. Transportation improvements that reduce congestion,
including network improvements and roadway modifications.
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C. Alternative transportation options, including
infrastructure improvements that support clean
transportation, facilitate bicycle and pedestrian use,
and connect bicycle and pedestrian routes to transit
facilities.
D. Natural systems, including rural and urban forests,
that reduce greenhouse gas emissions or increase the
sequestration of carbon.
E. Reduction of emissions directly associated with
construction of the high-speed rail project, including
the use of low and zero-emission equipment for
transportation and construction.
Background
1.Use of Cap and Trade Auction Revenue.
ARB has conducted ten cap-and-trade auctions, generating almost
$1.6 billion in proceeds to the state.
Several bills in 2012, and one in 2014, provide 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, 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. AB 1532 specifies that
reduction of greenhouse gas emissions through strategic planning
and development of sustainable infrastructure projects, are
eligible investments of GGRF.
SB 1018 (Budget Committee), Chapter 39, Statutes of 2012,
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created the GGRF, into which all auction revenue is to be
deposited. The legislation requires that before departments can
spend moneys 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.
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 is more akin to a regulatory fee.
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 allocation of funds
from the GGRF, but did not specify a monetary amount.
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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 cap-and-trade expenditures are
largely the same as the 2014-15 plan, albeit with larger amounts
proposed allocations for programs with continuous
appropriations, including the High-Speed Rail allocation ($250
million).
2.High-Speed Rail.
A. NEPA and CEQA.
The U.S. Surface Transportation Board, in a December 2014
ruling, voted 2-1 that the California Environmental
Quality Act, or CEQA, "is categorically pre-empted" in
connection with the Fresno-Bakersfield route of the
High-Speed Rail project.
Therefore, the environmental planning and review of this
segment of the project is governed solely by federal
statute pursuant to the National Environmental Protection
Act, or NEPA. Although an environmental assessment is
required for both the federal and state acts, NEPA, unlike
CEQA, does not require that the lead agency take any
action to implement mitigation measures to reduce
environmental damages caused by the proposed project or
legislation.
B. Components of the High-Speed Rail Route.
i) Initial Operating Section (IOS): According to
the High-Speed Rail Authority's 2012 Business Plan,
"the IOS of the California high-speed rail system
will connect Merced to the San Fernando Valley
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gateway to Los Angeles. This facility will be
transformational in creating a passenger rail nexus
between one of the fastest growing regions in the
state with the state's largest population center.
Among its many benefits will be the realization of
the state's highest intercity passenger rail
priority- closing the state's single largest gap in
intercity rail service-linking north and south at
Bakersfield to Palmdale. Immediate steps toward this
goal include the prioritization of environmental
clearance and other preliminary work necessary for
this gap closure."
ii) Phase I Blended System: The Phase I Blended
System refers to connecting San Francisco, the
Central Valley, and Los Angeles/Anaheim through a
combination of dedicated high-speed rail
infrastructure blended or integrated with existing
intercity and regional/commuter rail systems via
coordinated infrastructure.
C. Plan for Mitigation.
According to the High-Speed Rail Authority, high-speed
rail should begin reducing emissions in 2022, its first
year of operation. The California High-Speed Rail
Authority's June 2013 report, Contribution of the
High-Speed Rail Program to Reducing California's
Greenhouse Gas Emission Levels, notes that the "Authority
recognizes the importance of delivering this major
infrastructure project in a sustainable manner and is
committed not only to clean, renewable energy for system
operation, but also to mitigating identified environmental
impacts during construction." The report also states that
the "Authority is committed to achieving zero net GHG
emissions related to construction activities" and outlines
a plan for an urban forestry and tree planting program the
Authority to help offset direct GHG emissions associated
with construction and provide other environmental
benefits.
3.Extreme Nonattainment Areas.
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The National Ambient Air Quality Standards (NAAQS) are
standards established by the United States Environmental
Protection Agency under authority of the Clean Air Act that
apply for outdoor air throughout the country. These federal
standards exist for several air pollutants due to their
negative impact on public health above specified
concentrations, including ozone, particulate matter, oxides
of nitrogen, oxides of sulfur, carbon monoxide, and lead.
Nonattainment areas are regions that do not meet the national
primary or secondary ambient air quality standard for one of
those pollutants. There are several nonattainment
designations ranging from concentrations slightly above the
standard, termed marginal nonattainment, to extreme
nonattainment, where pollution levels far exceed the national
standard. The San Joaquin and South Coast air basins are
both in extreme nonattainment for ozone.
Comments
1. Purpose of Bill.
According to the author, "California's High Speed Rail
project will deliver the first high-speed rail system in the
nation, connecting the major population centers of the state.
High Speed Rail promises to contribute to economic
development and a cleaner environment, and create jobs and
preserve agricultural and protected lands. By 2029, the
system will run from San Francisco to the Los Angeles basin
in under three hours at speeds capable of over 200 miles per
hour.
"Through last year's budget, the legislature appropriated
hundreds of millions of cap and trade dollars to the High
Speed Rail Authority for acquisition, construction, planning,
and other costs associated with the project. SB 862 (Budget
and Fiscal Review Committee - 2014) continuously appropriated
25% of all cap and trade funds for the High Speed Rail
project.
"Once the project is completed, it will have a significant
beneficial effect on greenhouse gas emissions in California.
According to a 2013 report by the High Speed Rail Authority
titled "Contribution of the High-Speed Rail Program to
Reducing California's Greenhouse Gas Emission Levels" the
system will contribute to the State's goal to reduce
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greenhouse gasses once the Initial Operating Section is
operational, which is anticipated to happen in 2022.
SB 400 provides additional criteria to ensure that a portion
of the cap and trade revenues appropriated to the authority
are directed to projects and measures that provide an
immediate benefit of reducing emissions and improving air
quality. The bill will direct funding to transportation
projects that provide environmental mitigation opportunities,
many of which are identified in the 2013 report.
"Many of the communities along the proposed HSR route are in
regions that are disproportionally impacted by poor air
quality. Residents living in close proximity to heavily
congested transportation corridors through the Central Valley
and Los Angeles Basin already suffer adverse health effects
from increased emissions. This bill will prioritize projects
in those communities."
SOURCE: Author
SUPPORT:
None on file
OPPOSITION:
None on file
DOUBLE REFERRAL:
This measure was heard in the Senate Transportation and Housing
Committee on April 21, 2015, and passed out of committee with a
vote of 7-0.
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