BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 1464 (De León) - California Global Warming Solutions Act of  
          2006:  greenhouse gas emissions reduction
          
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          |Version: April 11, 2016         |Policy Vote: E.Q. 7 - 0         |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 9, 2016       |Consultant: Narisha Bonakdar    |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary: SB 1464 requires the Department of Finance (DOF) and  
          the Air Resources Board (Board), in identifying priority  
          programmatic investments using Greenhouse Gas Reduction Fund  
          (GGRF) monies, to assess how proposed investments interact with  
          current state regulations, policies, and programs, and evaluate  
          if and how the proposed investments could be incorporated into  
          existing programs. The bill also requires the investment plan to  
          recommend metrics that would measure progress and benefits from  
          the proposed programmatic investments.

          Fiscal  
          Impact:  
           Approximately $145,000 (GGRF) annually for two years to Air  
            Resources Board for limited-term staffing costs.
           Approximately $150,000 (GGRF) annually for contracts for  
            modeling GGRF investments interactions with existing state  
            policies and analyzing emissions impacts from investment  
            concepts.








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          Background:  The California Global Warming Solutions Act of 2006 (referred  
          to as AB 32, HSC §38500 et seq.) requires the ARB to determine  
          the 1990 statewide greenhouse gas (GHG) emissions level, to  
          approve a statewide GHG emissions limit equivalent to that level  
          that will 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 the  
          regulations. Under this authority, the ARB initiated the  
          cap-and-trade program. All monies, except for fines and  
          penalties, collected pursuant to the cap-and-trade program  
          deposited in the GGRF (Government Code §16428.8). 
          Existing law requires that the GGRF only be used to facilitate  
          the achievement of reductions of GHG emissions consistent with  
          AB 32 (HSC §39710 et seq.). To this end, the DOF, in  
          consultation with the ARB and any other relevant state agencies,  
          is required to develop, as specified, a three-year investment  
          plan for the moneys deposited in the GGRF. The investment plan  
          must allocate a minimum of 25% of the funds to projects that  
          benefit disadvantaged communities and to allocate 10% of the  
          funds to projects located within disadvantaged communities.  
          Additionally, the ARB, in consultation with CalEPA, is required  
          to develop funding guidelines for administering agencies  
          receiving allocations of GGRF funds that include a component for  
          how agencies should maximize benefits to disadvantaged  
          communities.







          Proposed Law:  
            This bill requires the Investment Plan to recommend metrics  
          that would measure progress and benefits from the proposed  
          programmatic investments, and, in identifying priority  
          programmatic investments, requires the Investment Plan to do  
          both of the following: 
          1) Assess how proposed investments interact with current state  
             regulations, policies, and programs.


          2) Evaluate if and how proposed investments could be  








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             incorporated into existing programs.




          Related  
          Legislation:  AB 1532 (Pérez, Chapter 807, Statutes of 2012)  
          required DOF, in consultation with ARB and any other relevant  
          state entity, to develop a 3-year investment plan that includes  
          specified analysis and information and to submit the plan to the  
          Legislature.  The bill also required the DOF to submit a report  
          no later than March 1, 2014, and annually thereafter, to the  
          appropriate committees of the Legislature containing specified  
          information.


          Staff  
       Comments:1)  According to the author, "Cap-and-trade auction revenue, with  
          proceeds to the state of over $4 billion since the initial  
          auction, has been appropriated to more than 12 different  
          agencies to administer a variety of programs to reduce GHG  
          emissions and provide co-benefits, including benefits to  
          disadvantaged communities.  In 2012, the Legislature directed  
          the Department of Finance to prepare an investment plan every  
          three years to help guide Legislative appropriation of the  
          proceeds.  The Investment Plan is required to assess gaps in the  
          state's strategies to meet climate goals, and identify priority  
          investments.  However, as the Legislative Analyst's Office has  
          noted in their recent budget report, the Investment Plan does  
          not provide a robust analysis with which to evaluate proposals  
          for GGRF spending, including how proposed investments interact  
          with the current state programs.  Additionally, the LAO reports  
          the lack of specificity of benefits assigned to administration  
          budget proposals, and the difficulty this poses in evaluating  
          these proposals for funding.  On top of this, the GGRF fund  
          keeps growing, with the potential to fund a variety of new  
          programs.  SB 1464 requires the Investment Plan to consider how  
          proposed investments interact with current state programs, and  
          if those investments and programs can be incorporated into  
          current state programs.  SB 1464 also requires the investment  
          plan recommend metrics that would measure progress and benefits  
          from the proposed programmatic investments.  In this way, the  
          Investment Plan will better serve its original statutory  
          intent-to guide the Legislature in funding an optimized strategy  








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          of complementary investments to maximize GHG emissions  
          reductions and co-benefits from the GGRF, especially in those  
          communities disproportionately burdened by pollution." 


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