BILL ANALYSIS
AB 118
Page 1
Date of Hearing: January 11, 2010
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Nancy Skinner, Chair
AB 118 (Logue) - As Amended: January 4, 2010
SUBJECT : California Global Warming Solutions Act of 2006 (AB
32)
SUMMARY : Suspends AB 32 until the state unemployment rate is
5.5 percent or lower for four consecutive quarters.
EXISTING LAW requires the Air Resources Board (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. Among its provisions, AB 32 authorizes the
Governor to delay deadlines for individual regulations, or for
the state in the aggregate, for up to one year at a time in the
event of extraordinary circumstances, catastrophic events, or
threat of significant economic harm.
THIS BILL :
1)Suspends AB 32 until the state unemployment rate (currently
12.3 percent) is 5.5 percent or lower for four consecutive
quarters, and requires AB 32 to be suspended any time in the
future that unemployment rises above 5.5 percent for four
quarters, until unemployment drops below 5.5 percent.
2)Prohibits ARB and any other state agency from acting on
regulations pursuant to AB 32 during a suspension and provides
that existing regulations, adopted prior to January 2011,
shall be inoperative during a suspension.
3)Requests that local agencies refrain from adopting rules,
regulations, and policies that derive authority from AB 32,
and repeal or revise rules adopted prior to January 2011,
during a suspension.
4)Provides that the provisions of the bill are severable.
5)Contains related findings and declarations suggesting that
implementation of AB 32 would impose significant economic
harm.
AB 118
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FISCAL EFFECT : Unknown
COMMENTS :
1)Unemployment below 5.5 percent is unusual. According to labor
statistics published by the Employment Development Department
(EDD), the state's unemployment rate is currently 12.3 percent
and has been above 5.5 percent since July 2007. A survey of
EDD data shows that 5.5 percent is an uncommonly low
employment rate. Since 1976, there have been just three
periods when unemployment has remained below 5.5 percent for
four or more quarters: January 1988 through December 1989,
October 1999 through June 2001, and October 2005 through June
2007. The many significant clean air and energy efficiency
programs adopted over the past 30 years in California, with
well-documented public health and consumer benefits, would
have been thwarted if their implementation had been dependent
on unemployment remaining below 5.5 percent.
2)Is AB 32 to blame for unemployment? The author has not
offered, and the committee has been unable to find, any
evidence that implementation of AB 32 has contributed to the
rise in unemployment since the bill was enacted three years
ago. It seems premature to draw conclusions about AB 32's
effect on employment or the economy in general because very
few regulations have been implemented at this time. However,
most existing studies suggest positive effects, such as
relatively high employment growth in "green jobs" and
significant private investment in clean technology businesses
within California, despite generally negative trends for the
economy as a whole. The most notable exception is a study of
the costs of AB 32 on small businesses prepared by Sanjay
Varshney for the California Small Business Roundtable. The
Varshney study estimates that the annual costs resulting from
the implementation of AB 32 to small businesses are likely to
result in loss of more than $182.6 billion in gross state
output, the equivalent of more than 1.1 million jobs, nearly
$76.8 billion in labor income, and nearly $5.8 billion in
indirect business taxes. It is worth noting that the Varshney
study considers only potential compliance costs and does not
consider any savings or benefits derived from clean technology
investments and innovation. The study also appears to
overestimate the exposure of the average business to the costs
it attributes to AB 32. So it seems the study overstates
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costs and understates benefits in formulating its dramatic
cost estimates.
3)Would this bill produce the intended effect? It's not clear
that this bill, if enacted, would actually sidetrack the
implementation of regulations to reduce GHG emissions, as
apparently intended. Many of the measures identified by ARB
to achieve the GHG reductions AB 32 calls for have been
developed pursuant to laws separate from AB 32 that would not
be suspended under this bill. This includes the three largest
measures identified by ARB, which account for nearly half the
total GHG reductions necessary to achieve AB 32's 2020 limit
(vehicle GHG standards, increased energy efficiency, and the
renewable portfolio standard).
4)AB 32 already contains an administrative "safety valve." The
same Governor who would have to sign this bill if passed by
the Legislature, already has general emergency powers under
the Emergency Services Act and specific authority under AB 32
to suspend implementation of regulations if circumstances
warrant.
REGISTERED SUPPORT / OPPOSITION :
Support
Southern California Contractors Association
Opposition
American Lung Association of California
Audubon California
California League of Conservation Voters
Defenders of Wildlife
Ella Baker Center for Human Rights
Nature Conservancy
Natural Resources Defense Council
Planning and Conservation League
Sierra Club California
Union of Concerned Scientists
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092