BILL ANALYSIS Ó SB 1328 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1328 (Lara) - As Amended June 21, 2016 ----------------------------------------------------------------- |Policy |Water, Parks and Wildlife |Vote:|12 - 3 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill authorizes the State Water Resources Control Board (SWRCB) to expend funds from the Greenhouse Gas Reduction Fund (GGRF), upon appropriation by the Legislature, to provide grants to public entities to implement stormwater and dry weather SB 1328 Page 2 runoff collection and treatment projects that are intended to reduce greenhouse gas (GHG) emissions by decreasing the demand for electricity needed to pump, transport, and deliver water from natural sources to serve water consumers, as specified. Specifically, this bill: 1) Provides eligible projects for funding include, but are not limited to, green infrastructure, rainwater, stormwater, dry weather runoff capture projects, and stormwater treatment facilities. 2) Specifies grant funds may be used for all phases of planning, design, and project construction and implementation. 3) Requires SWRCB to establish criteria for funding projects based on the demonstration of GHG emissions reductions and geographic conditions that facilitate stormwater and dry weather runoff collection. 4) Requires SWRCB to give preference to projects located in, and providing benefits to, a disadvantaged community or located within one-half mile of a channelized river. 5) Authorizes SWRCB to use or adapt the guidelines developed to implement the Storm Water Grant Program, which is funded in accordance with the Water Quality, Supply, and Infrastructure Improvement Act of 2014 (Proposition 1, Water Bond). FISCAL EFFECT: SB 1328 Page 3 1)Cost pressures, likely in the millions of dollars, to fund the program (GGRF). 2)Increased unknown administrative costs, likely 5% of the total program funds, for SWRCB to implement the program. According to SWRCB, an amendment is necessary to allow the use of GGRF for administrative costs rather than GF. 3)Up to approximately $565,000 (GGRF) annually for the Air Resources Board (ARB) to coordinate with SWRCB in developing and updating guidelines, developing quantification methodologies, and providing legal review. COMMENTS: 1)Purpose. According to the author, despite the availability of Water Bond funds for stormwater infrastructure, there are still significant barriers to increased implementation of stormwater projects. This bill provides assistance for the increased deployment of stormwater capture while also prioritizing projects located in disadvantaged communities and within a half mile of channelized rivers. 2)Background. The SWRCB, manages the Storm Water Grant Program to fund stormwater and dry weather runoff projects that best advance SWRCB's policy goals of improving water quality and realizing multiple benefits from the use of stormwater and dry weather runoff as resources. In November 2014, California voters approved Proposition 1 (Prop. 1), Water Quality, Supply and Infrastructure Improvement Act of 2014 (AB 1471, Rendon, Chapter 188). Of the $7.545 billion in general obligation bonds for water projects, Prop. 1 provides $200 million in grants for multi-benefit stormwater management projects SB 1328 Page 4 The State Water Project is the single largest user of energy in the state and consumes an average of 5 billion kWh/yr, accounting for about 2-3% of all electricity consumed in California. According to the California Energy Commission, water-related energy use in California consumes approximately 20% of the state's electricity and 30% of the state's non-power plant natural gas. The water sector uses electricity to pump, treat, transport, deliver, and heat water. Additionally, expected increases in groundwater pumping, water treatment, and water recycling due to drought conditions in the state, mean the energy intensity of water will likely increase. 3)GGRF. The California Global Warming Solutions Act of 2006 (AB 32, Chapter 488, Statutes of 2006) required ARB to adopt a statewide greenhouse gas (GHG) emissions limit equivalent to 1990 levels by 2020 and adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions. As part of its AB 32 implementation, ARB adopted a cap-and-trade program for which the proceeds from the auction or sale of GHG allowances are deposited in the GGRF available for appropriation by the Legislature. To date, cap-and-trade auction revenues have generated over $4 billion. However, the most recent auction, held last month, generated just over $10 million, much less than expected. The previous auction (February, 2016) generated over $500 million. The Governor proposed spending over $3 billion for a variety SB 1328 Page 5 of programs and projects in the transportation, energy, natural resources, and waste diversion sectors in the 2016-17 budget, however, the Legislature did not act upon these items. According to the Assembly Budget Committee, due to lower-than-expected auction revenues, decisions on cap-and-trade funding were deferred until after June 15, 2016. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081