BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
           
          Bill No:            SB 951
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          |Author:    |McGuire                                              |
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          |-----------+-----------------------+-------------+----------------|
          |Version:   |3/17/2016              |Hearing      |4/20/2016       |
          |           |                       |Date:        |                |
          |-----------+-----------------------+-------------+----------------|
          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Rebecca Newhouse                                     |
          |           |                                                     |
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          SUBJECT:  Transportation:  Golden State Patriot Passes Program

            ANALYSIS:
          
          Existing law:  
          
          1) Under the California Global Warming Solutions Act of 2006  
             (also known as AB 32), 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. (Government Code §16428.8)

          3) Prohibits the state from approving allocations for a measure  
             or program using GGRF moneys except after determining that  
             the use of those moneys furthers the regulatory purposes of  
             AB 32, and requires moneys from the GGRF be used to  
             facilitate the achievement of reductions of GHG emissions in  
             California.  (HSC §39712)

          This bill:  








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          1)Creates the Golden State Patriot Passes Program administered  
             by the state Department of Transportation (Caltrans) to  
             provide free access to transit services for veterans, as  
             specified.   
             
          2)Provides an annual appropriation of $3 million in GGRF moneys  
             for fiscal years 2017-18 to 2020-21 for this program.

          3)Requires Caltrans, in coordination with ARB, to develop  
             guidelines for participating transit providers to demonstrate  
             that proposed expenditures will reduce GHG emissions and  
             increase veteran mobility.   

          4)Requires Caltrans, by January 1, 2018, to select three transit  
             operator applicants to receive program funding.   
             Specifically:

             a)    Prohibits Caltrans from selecting an applicant that  
                already provides veterans with free access to transit  
                services in its service area.

             b)    Requires Caltrans to select applicants that serve  
                entirely different counties.  

             c)    Provides that Caltrans shall select one applicant that  
                primarily serves an urban area, one that primarily serves  
                a suburban area, and one that primarily serves a rural  
                area (to be defined by Caltrans based on Census data).   
                Sets maximum allocations of $2 million for an urban area  
                applicant, $900,000 for a suburban area applicant, and  
                $100,000 for a rural area applicant.

          5)Limits applicants to public agencies including, but not  
             limited to, transit operators within a city or county.

          6)Requires a transit operator that is selected for the program  
             to provide a local match for any state funding it receives.  

          7)Requires Caltrans to ensure that benefits are provided by the  
             program to disadvantaged communities.  

          8)Requires participating transit operators to submit a report to  
             Caltrans by February 1, 2021 and requires Caltrans to submit  
             a report to the Legislature by August 1, 2021.  The reports  








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             shall include, but not be limited to, cost, use of moneys,  
             estimated reduction in GHG emissions, and ridership.  

          9)Provides that in order to participate in the program, a  
             veteran must provide a veterans identification card issued by  
             a veterans service organization, or a driver's license or  
             identification card identifying the holder as a veteran.  

          10)Sunsets the program on January 1, 2022.











































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            Background
          
          1) Sonoma County Veterans Subsidized Fare Program.  Sonoma  
             County launched a pilot program on January 1, 2015 to provide  
             veterans free use of Sonoma County Transit.  Specifically, a  
             veteran showing a VA identification card or a Sonoma County  
             Veterans identification card upon boarding a bus rides free,  
             and Sonoma County Transit is reimbursed by the county.  The  
             county budgeted $45,000 (general fund) for this program for  
             the year and came in under budget.  The county board of  
             supervisors unanimously voted in November to make the program  
             permanent as of January 1, 2016.  

             From January through June 2015, nearly 14,000 veteran trips  
             were provided through this program, with the majority of  
             trips occurring on weekdays.  During this period, veteran  
             ridership increased by 34%.  Approximately 19% of trips  
             occurred on the route that serves the VA Outpatient Clinic.   
             During this period, 845 Sonoma County Veterans identification  
             cards were issued.  County staff estimated that about half of  
             these ID cards were issued specifically in relation to this  
             program.  


          2) Cap-and-trade auction revenue.  Since November 2012, ARB  
             has conducted 14 cap-and-trade auctions, generating over  
             $4 billion in proceeds to the state. 





             State law specifies that the auction revenues must be  
             used to facilitate the achievement of GHG emissions  
             reductions and outlines various categories of allowable  
             expenditures.  Statute further requires the Department  
             of Finance, in consultation with ARB and any other  
             relevant state agency, to develop a three-year  
             investment plan for the auction proceeds, which are  
             deposited in the GGRF. ARB is required to develop  
             guidance for administering agencies on reporting and  
             quantifying methodologies for programs and projects  








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             funded through the GGRF to ensure the investments  
             further the regulatory purposes of AB 32.





             Disadvantaged communities. SB 535 (de León, Chapter 830,  
             Statutes of 2012) requires the Department of Finance, in  
             the investment plan, to allocate at least 25% of  
             available moneys in the GGRF to projects that provide  
             benefits to disadvantaged communities, and at least 10%  
             to projects located within disadvantaged communities. 





             To meet the SB 535 mandate, the Office of Environmental  
             Health Hazard Assessment, under the California  
             Environmental Protection Agency's (CalEPA) guidance,  
             developed a tool (termed CalEnviroScreen) to assess and  
             rank census tracts across the state that are  
             disproportionately affected by multiple types of  
             pollution and areas with vulnerable populations. CalEPA  
             has designated 25% of census tracts in California as  
             disadvantaged communities for the purpose of investing  
             cap-and-trade proceeds. 


              


             Additionally, SB 862 (Committee on Budget and Fiscal  
             Review, Chapter 36, Statutes of 2014) requires ARB to  
             develop guidelines on maximizing benefits for  
             disadvantaged communities by agencies administering GGRF  
             funds.





             Legal consideration of cap-and-trade auction revenues.   








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             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, subject to the "Sinclair  
             Nexus Test."  This test requires that a clear nexus must  
             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.  The LAO concluded, based on  
             the opinion, that 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.  In February of 2014, the  
             plaintiffs filed an appeal with the 3rd District Court  
             of Appeal in Sacramento. That case is currently pending.





             Budget allocations.  SB 862 (Committee on Budget and  
             Fiscal Review, Chapter 36, Statutes of 2014) established  
             a long-term cap-and-trade expenditure plan by  
             continuously appropriating portions of the funds for  
             designated programs or purposes.  The legislation  
             appropriates 25% for the state's high-speed rail  
             project, 20% for affordable housing and sustainable  
             communities grants, 10% to the Transit and Intercity  
             Rail Capital Program, and 5% for low-carbon transit  
             operations.  The remaining 40% is available for annual  
             appropriation by the Legislature. 










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             The Governor's 2016-17 proposed budget appropriates over  
             $3 billion to a variety of programs and projects in the  
             transportation, energy, natural resources, and waste  
             diversion sectors.




            Comments
          
          1) Purpose of Bill.  According to the author there is a  
             significant need to not only provide better services for  
             California's roughly two million veterans, but also to make  
             sure all our veterans, especially the most vulnerable, have  
             access and transportation to these services.  Only 19% of  
             veterans in California utilize the benefits to which they are  
             entitled.  Approximately 26% of veterans report having a  
             disability; of these, 32% indicate that their disability has  
             interfered with obtaining or holding a job.  Additionally,  
             18-30 year-old veterans living in poverty are 3.5 times more  
             likely to become homeless as compared to non-veteran adults  
             living in poverty.  The author states that, with veterans  
             being more vulnerable to unemployment and homelessness, it is  
             paramount to provide them with affordable means to succeed.  

          2) Does This Bill Advance the Goals of AB 32? Any projects  
             funded through GGRF moneys are required to facilitate the  
             achievement of GHG emission reductions and advance the  
             regulatory purposes of AB 32.

             It is not clear that the appropriation in SB 951 advances the  
             regulatory purposes of AB 32 and reduces GHG emissions.  Only  
             in cases where a veteran was switching from car travel to bus  
             travel might there be a reduction of GHG emissions. However,  
             it is unclear what that level of GHG emissions reductions  
             might be, and whether that transit shift is taking place for  
             veterans participating in the Sonoma County pilot program.   
             In fact, it seems that the intent of the author with this  
             bill is to provide services to veterans who currently do not  
             have the means to transport themselves, or pay for public  
             transportation.  In these cases where veterans were already  








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             using public transit but having to pay, or walking or riding  
             bicycles, there would not be GHG emissions reductions under  
             this program.

             Legal risk. As noted in the background, the issue of whether  
             auction proceeds constitute an illegal tax is currently under  
             appeal. The more tenuous the nexus between GGRF investments  
             and GHG emissions reductions, the greater the legal risk that  
             future court decisions may find those GGRF revenue  
             allocations illegitimate, with possible consequences  
             including invalidation of that particular appropriation or of  
             the overall legislative allocation of GGRF.

          3) Amendment needed.  Although the program created in SB 951 has  
             a laudable goal of helping veterans access transit, it is not  
             clear that the program would result in GHG emissions  
             reductions.  An amendment is needed to strike the $3 million  
             appropriation from the GGRF, as well as other provisions  
             relating to funding from GGRF, from the bill.  The author  
             should work to find a more appropriate funding source as the  
             bill moves forward. 

            Related/Prior Legislation

          AB 2222 (Holden) provides a continuous appropriation of $50  
          million per year from the GGRF for the Transit Pass Program, to  
          be administered by Caltrans.  This program would support transit  
          pass programs of public agencies that provide free or  
          reduced-fare transit passes to public school students and  
          community college, California State University, and University  
          of California students.  AB 2222 requires at least 50% of  
          program funding to benefit disadvantaged communities.  This bill  
          is pending in the Assembly Transportation Committee.
            
          SOURCE:                    Author  

           SUPPORT:               

          American GI Forum of California
          AMVETS - Department of California
          California Association of County Veterans Service Officers
          Gamaliel of California
          Military Officers Association of America, California Council of  
                         Chapters








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          Military Order of the Purple Heart of the U.S.A., Inc.,  
                         Department of California
          Sonoma County Board of Supervisors
          VFW - Department of California
          Vietnam Veterans of America - California State Council
           
           OPPOSITION:    

          CalTax  

           DOUBLE REFERRAL:

          This measure was heard in the Senate Transportation and Housing  
          Committee on March 29, 2016, and passed out of committee with a  
          vote of 10-0.
                                          
                                      -- END --