BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 400


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          Date of Hearing:  June 29, 2015 


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          SB  
          400 (Lara) - As Amended June 1, 2015


          SENATE VOTE:  27-9


          SUBJECT:  California Global Warming Solutions Act of 2006:   
          Greenhouse Gas Reduction Fund.


          SUMMARY:  Requires the High Speed Rail Authority (HSRA) to fund  
          projects that offset construction impacts of the high speed rail  
          project.  Specifically, this bill:  


          1)Requires HSRA to allocate 25% of appropriated cap-and-trade  
            funds to projects that reduce greenhouse gas (GHG) emissions  
            and improve air quality in disadvantaged communities and  
            designated non-attainment areas.  Suggested qualifying  
            projects include, but are not limited to:


             a)   Public transit improvements that reduce congestion;


             b)   Transportation improvements that reduce congestion;


             c)   Alternative transportation options;








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             d)   Natural systems such as rural and urban forests that  
               reduce GHG emissions or increase the sequestration of  
               carbon; and,


             e)   Use of low- and zero-emission equipment for  
               transportation construction.


          2)Makes related, technical amendments.


          EXISTING LAW:                   


          1)Created HSRA in 1996 to direct development and implementation  
            of an intercity high-speed rail service that is fully  
            coordinated with other public transportation services.  In  
            2008, voters approved Proposition 1A authorizing $9.95 billion  
            in general obligation bonds for the high-speed rail program  
            and related commuter rail services.  

          2)Requires, pursuant to AB 32 (Nunez), Chapter 488, Statutes of  
            2006, the California Air Resources Board (ARB) to adopt GHG  
            emissions reductions measures to achieve the goal of reducing  
            GHG emissions to 1990 levels by 2020, including market-based  
            mechanisms (e.g., cap-and-trade program). 

          3)Established the Greenhouse Gas Reduction Fund (GGRF) in the  
            State Treasury and required all cap-and trade proceeds to be  
            deposited into the fund

          4)Requires the Department of Finance (DOF) to develop a  
            three-year investment plan guide expenditure of cap-and-trade  
            auction revenues to achieve GHG emissions reductions  
            consistent with AB 32.









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          5)Requires the GGRF investment plan to allocate, at a minimum,  
            25% GGRF money to benefit disadvantaged communities and to  
            allocate 10% of GGRF moneys within disadvantaged communities.   


          6)Continuously appropriates 25% of the GGRF to HSRA for  
            acquisition, construction, environmental review and design of  
            the initial operating segment and Phase I Blended System. 

          FISCAL EFFECT:  Unknown


          


          COMMENTS:  The communities along the high-speed rail corridor  
          through California's Central Valley suffer from some of the  
          state's worst air quality.  In fact last year, the American Lung  
          Association noted that, despite vast improvements over the last  
          few decades, the Central Valley still has the nation's highest  
          levels of ozone and fine particle pollution.

          The author introduced SB 400 out of concern for communities like  
          these that are already burdened by nearby, heavily congested  
          highway corridors.  He notes that, while the high-speed rail  
          project will eventually reduce GHG emissions and air pollution,  
          the project will be detrimental to the Central Valley in the  
          short-term due to the environmental impacts from construction.    
           


          Recognizing concerns such as these, HSRA committed to achieving  
          zero-net GHG emissions related to construction activities,  
          material deliveries, and worker travel.  For example, the  
          authority has committed to planting trees to offset the first  
          phases of construction.  Furthermore, HSRA is working with the  
          San Joaquin Unified Air Pollution Control District (District) to  
          provide additional mitigation for construction emissions.  Under  
          a Memorandum of Understanding (MOU) between HSRA and the  








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          District, each quarter the HSRA construction contractor will  
          submit a list of equipment that has been used during the quarter  
          along with the number of miles driven or hours used.  HSRA will  
          then pay the District a dollar value equivalent to be used for  
          programs to, for example, replace aging farm and other  
          high-polluting equipment.  This mitigation is intended to  
          complement requirements that HSRA already imposes on its  
          construction contractor to use clean construction vehicles.   
          HSRA expects that it could pay the District approximately $40  
          million under the terms of the MOU.  HSRA has undertaken these  
          measures despite the fact that the U.S. Transportation Board  
          ruled that California's environmental review laws are federally  
          pre-empted; consequently, the project is not required to comply  
          with the California Environmental Quality Act, including  
          requirements to mitigate environmental impacts. 


          The author appears to believe these efforts by HSRA are  
          insufficient; hence he introduced 
          SB 400 to direct 25% of the cap-and-trade money directed to the  
          high-speed rail project (or $125 million if cap-and-trade  
          auctions bring in $2 billion annually as anticipated) to  
          projects that benefit communities in designated extreme  
          non-attainment areas.   
           
          Committee concerns:  The author's frustration about the impacts  
          to disadvantaged communities in the Central Valley and elsewhere  
          are understandable.  However, SB 400 raises a number of  
          legitimate concerns:

          1)Re-directing 25% from HSRA's only steady funding source could  
            threaten completion of the project and jeopardize any future  
            environmental benefits that might be realized.  The project is  
            already sorely underfunded and SB 400 would exacerbate that  
            problem.  

          2)SB 400 is intended to offset environmental impacts due to  
            construction but does not impose any requirement that the  
            re-directed dollars be spent in communities near the  








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            construction zones.  Instead, SB 400 requires monies to be  
            spent in areas designated as extreme non-attainment areas.   
            California has two extreme non-attainment areas:  the San  
            Joaquin Valley and the South Coast Air Basin.  Conceivably, SB  
            400 could result in millions of dollars being spent in  
            Southern California, hundreds of miles from the high-speed  
            rail construction sites.

          3)The amount of mitigation required by SB 400 (worth about $125  
            million annually) may have little or no relation to the actual  
            construction-related environmental impacts and will  
            significantly drive up the cost of the high-speed rail  
            project.

          The committee may wish to consider the following dichotomy:   
          Should high-speed rail project dollars be spent to achieve  
          definitive, near-term environmental benefits in the state's most  
          disadvantaged communities or should those dollars be spent to  
          increase the likelihood that the high-speed rail project will be  
          completed and its promised environmental benefits potentially  
          realized?

          Double referral:  This bill will be referred to the Assembly  
          Natural Resources Committee should it pass out of this committee


          Previous legislation: AB 32 (Nunez), Chapter 488, Statutes of  
          2006, required ARB to develop a plan of how to reduce emissions  
          to 1990 levels by 2020.





          SB 535 (De Leon), Chapter 830, Statutes of 2012, required DOF,  
          when developing the three-year investment plan for cap-and-trade  
          to allocate 25% of these funds to projects that provide benefits  
          to disadvantaged communities and to allocate a minimum of 10% to  
          projects located in disadvantaged communities.








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          SB 862 (Committee on Budget and Fiscal Review), Chapter 36,  
          Statutes of 2014, established a long-term cap-and-trade  
          expenditure plan by continuous appropriation and designated 25%  
          of annual cap-and-trade proceeds to the HSRA.





          REGISTERED SUPPORT / OPPOSITION:




          Support


          Coalition For Clean Air




          Opposition


          None on file




          Analysis Prepared by:Victoria Alvarez / TRANS. / (916)  
          319-2093










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