BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 400 (Lara) - California Global Warming Solutions Act of 2006:
Greenhouse Gas Reduction Fund.
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|Version: April 23, 2015 |Policy Vote: T. & H. 7 - 0, |
| | E.Q. 7 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 18, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 400 would require the High Speed Rail Authority
(HSRA) to spend at least 25% of the money it receives from the
Greenhouse Gas Reduction Fund (GGRF) on environmental mitigation
measures and projects that reduce GHG emissions from
transportation sources.
Fiscal
Impact: Unknown costs pressures to the GGRF (special) as a
result of expanding the eligible uses of the GGRF funds that are
continuously appropriated for the project.
Background: Under the California Global Warming Act of 2006 (also known as
AB 32), the California Air Resources Board (ARB) is required to
establish a statewide greenhouse gas (GHG) emissions limit such
that by 2020 California reduces its GHG emissions to the level
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they were in 1990. The act authorizes the ARB to include the use
of market-based mechanisms to comply with these regulations.
Under that authority, the ARB established the Cap-and-Trade
Program in which ARB establishes an overall limit, or "cap," on
GHG emissions from specified industries. As part of the
Cap-and-Trade Program, ARB auctions off GHG emission allowances
as mitigation fees. To date, ARB has completed 10 auctions,
taking in a total of $1.6 billion in proceeds.
Revenues from Cap-and-Trade are deposited into the GGRF and must
be expended in furtherance of AB 32 and result in reduction of
GHG emissions. In 2014, the Legislature enacted SB 862
(Committee on Budget and Fiscal Review) Chapter 36, Statutes of
2014, a budget trailer bill which establishes a long-term
cap-and-trade expenditure plan by continuously appropriating
portions of the funds for designated programs or purposes. One
of these purposes is the initial operating segment and Phase I
Blended System of the High Speed Rail project, to which SB 862
commits 25% of annual revenues to the GGRF.
The HSRA must use these funds for the following:
Acquisition and construction of the project
Environmental review and design costs of the project.
Other Capital costs of the project
Repayment of any loans made to the HSRA to fund the
project.
Proposed Law:
This bill would expand the eligible uses of the continuously
appropriated GGRF funds to the HSRA to also include
environmental mitigation projects that reduce GHG emissions from
transportation sources and provide a cobenefit of improving air
quality. The HSRA must use at least 25% of the continuously
appropriated GGRF funds for this purpose. Eligible projects may
include, but are not limited to, the following:
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Public transit improvements that reduce congestion by
improving service
Transportation improvements that reduce congestion,
including network improvements and roadway modifications
Alternative transportation options including
infrastructure improvements
Natural systems that reduce GHG emissions or increase
the sequestration of carbon
Reduction of emissions directly associated with
construction of the HSR project including the use of low
and zero-emission equipment.
Staff
Comments: By expanding the eligible uses of the GGRF funds
dedicated to the HSRA, this bill creates a cost pressure on the
GGRF. At this time it unknown how large this cost pressure is
because according to the HSRA, a consolidated budget for
mitigation has not yet been determined. However, staff believes
it's reasonable to assume that the cost pressures could be in
the millions of dollars.
Staff notes that the High Speed Rail (HSR) project may have no
legally required mitigations since the federal Surface
Transportation Board has declared that CEQA is preempted, though
this is being challenged in the courts. The HSR will have to
comply with NEPA, though NEPA only requires a lead agency to
identify potential environmental impacts, not to mitigate them.
The HSRA however has made a public commitment to make all stages
of construction GHG emission neutral. If the HSRA follows
through with this commitment and has considered these
mitigations as part of the project budget for the initial
operating segment and Phase I Blended system, this bill would
ultimately have no costs, so long as the mitigation budget is
larger than 25% of the GGRF funds.
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On the other hand, if the mitigation projects planned by the
HSRA do not exceed 25% of the GGRF funds, then this bill will
effectively increase the overall costs for the early phases of
HSR.
The HSRA authority believes that this bill can also have
indirect costs. They note that to the extent that its funding is
restricted for specific purposes, it makes it more difficult to
leverage the funds to draw down other potential funding sources.
The cost of the effect is undeterminable and potentially
speculative.
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