BILL ANALYSIS
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Date of Hearing: April 27, 2009
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Nancy Skinner, Chair
ACR 14 (Niello) - As Amended: March 27, 2009
SUBJECT : California Global Warming Solutions Act of 2006
SUMMARY : Calls upon the Air Resources Board (ARB) to perform a
more accurate and complete economic analysis prior to proceeding
with regulations to implement AB 32. Calls upon the Governor to
use his authority under AB 32 to adjust deadlines for adoption
of regulations.
EXISTING LAW :
1)Requires ARB, pursuant to AB 32, 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.
2)Requires ARB to adopt a "scoping plan" for AB 32
implementation by January 1, 2009, including an evaluation of
the total potential costs and total potential economic and
non-economic benefits to California's economy, environment,
and public health, using the best available economic models,
emission estimation techniques, and other scientific methods.
3)Requires ARB, when adopting AB 32 regulations, to rely upon
the best available economic and scientific information and its
assessment of existing and projected technological
capabilities.
4)Authorizes the Governor, in the event of extraordinary
circumstances, catastrophic events, or threat of significant
economic harm, to adjust the applicable AB 32 deadlines for
individual regulations, or for the state in the aggregate, to
the earliest feasible date after that deadline.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background. Pursuant to AB 32, ARB prepared and adopted a
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scoping plan last year. Following its own procedures, ARB
solicited peer review of the scoping plan's economic analysis.
In addition, the author of this resolution requested a review
of the scoping plan's economic analysis by the Legislative
Analyst's Office (LAO). Both the peer reviewers and the LAO
were critical of ARB's methods and conclusions. The LAO's
findings were presented to this Committee at an informational
hearing on March 9. In brief, the LAO presented four primary
criticisms of the scoping plan:
a) Inconsistent and Incomplete Evaluation of Costs and
Savings
b) Macroeconomic Modeling Lacks Analytical Rigor
c) Limited Role of Economic Analysis in Scoping Plan
Development
d) Failure to Lay Out an "Investment Pathway"
2)Does a controversial preliminary economic analysis justify
delaying AB 32 implementation? This resolution suggests that
LAO's criticisms justify delaying implementation of
regulations to reduce GHG emissions. LAO did not recommend
stopping or delaying AB 32 implementation, but suggested the
Legislature provide oversight to ensure that AB 32 is
implemented cost-effectively and efficiently, and that the
gaps and weaknesses in the economic analysis LAO identified
are addressed.
It's important to note that the scoping plan's economic
analysis, like its proposed GHG emission reduction measures,
is preliminary. More detailed economic analysis will
accompany every proposed regulation to reduce GHG emissions.
Each regulation adopted pursuant to AB 32 will have to be
considered and validated based on a variety of factors,
including a regulation-specific analysis of economic impacts.
3)Related legislation. AB 1033 (Nielsen), pending in this
Committee, requires any state or local agency, before adopting
a regulation to reduce GHG emissions, to evaluate existing
regulations and obtain an independent third-party economic
impact analysis of any regulation determined to impose costs
over $1 million.
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REGISTERED SUPPORT / OPPOSITION :
Support
California Grocers Association
California Council for Environmental and Economic Balance
California Dump Truck Owners Association
California Manufacturers & Technology Association
Opposition
Planning and Conservation League
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092