BILL ANALYSIS Ó SB 400 Page 1 Date of Hearing: August 19, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair SB 400 (Lara) - As Amended June 1, 2015 ----------------------------------------------------------------- |Policy |Transportation |Vote:|15 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Natural Resources | |6 - 2 | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill: 1)Requires the High-Speed Rail Authority (HSRA) to allocate at SB 400 Page 2 least 25% of the cap-and-trade revenues received by the authority for mitigation measures and projects to reduce or offset greenhouse gas (GHG) emissions generated by construction of the high-speed rail project. 2)Stipulates that priority for the allocation per (1) is for projects in communities located in areas designated as extreme nonattainment. FISCAL EFFECT: Under current law, 25% of annual cap-and-trade revenues are allocated to the high-speed rail project. Assuming $2 billion in total cap-and-trade revenues for 2015-16, $500 million would be allocated to high-speed rail, of which $125 million would be allocated for construction-related mitigation pursuant to this bill. (This allocation would vary based on total cap-and-trade revenues in any given year.) To the extent this allocation exceeds the level of funding currently necessary or contemplated for mitigation (see below), the bill will increase overall project costs. COMMENTS: 1)Purpose. The communities along the high-speed rail corridor through California's Central Valley suffer from some of the state's, and the nation's, worst air quality. The author introduced SB 400 out of concern for such communities, which are burdened by nearby, heavily congested highway corridors. He asserts 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. SB 400 Page 3 2)HSRA Actions. The authority has 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 has entered into a Memorandum of Understanding (MOU) whereby HSRA will pay the District quarterly based on the use and impact of construction equipment on the project, with the payments 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. 3)Concerns. This bill raises several concerns: a) The high-speed rail project is severely underfunded. Other than one-time state bond and federal funds, the cap-and-trade revenues are the only ongoing funding source for the project, thus diverting a significant portion of these revenues for mitigation could exacerbate the overall funding situation. b) Though SB 400 is intended to offset the environmental impacts from construction, the bill, by authorizing expenditures in areas designated as extreme nonattainment areas, allows funds to be spent in communities outside the construction zones. c) The amount of mitigation required may not bear related to the actual construction-related impacts. d) At least 25% of total cap-and-trade revenues are already earmarked to benefit disadvantage communities, including a 10% allocation directly within such communities. SB 400 Page 4 Analysis Prepared by:Chuck Nicol / APPR. / (916) 319-2081