BILL ANALYSIS
AB 231
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Date of Hearing: April 20, 2009
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Nancy Skinner, Chair
AB 231 (Huffman) - As Introduced: February 5, 2009
SUBJECT : California Global Warming Solutions Act of 2006:
Climate Protection Trust Fund
SUMMARY : Revises extent and purpose of the Air Resources
Board's (ARB) authority to levy greenhouse gas (GHG) emission
fees pursuant to AB 32 and establishes a Trust Fund for deposit
of fee revenues.
EXISTING LAW requires ARB, pursuant to AB 32, to adopt a
statewide 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 ARB to adopt fees to be paid by the
sources of GHG emissions regulated pursuant to AB 32. Fee
revenues must be deposited in the Air Pollution Control Fund and
may be spent for purposes of carrying out AB 32.
THIS BILL :
1)Requires ARB to adopt fees on sources of GHG emissions by
March 30, 2010.
2)Establishes the Trust Fund for deposit of fee revenues, as
well as all other compliance or penalty revenues, in place of
the Air Pollution Control Fund.
3)Specifies that the fee must be designed to allocate costs
based on the contribution of the source to statewide GHG
emissions and meet the following goals:
a) Minimize costs and maximize total benefits to
California, while achieving the statewide GHG limit.
b) Reduce disproportionate impacts on low-income
communities.
c) Provide incentives to reduce GHG emissions.
d) Implement any market-based compliance mechanisms adopted
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by ARB.
4)Authorizes ARB to set the fee amount itself or through a
market mechanism.
5)Limits the total amount of fees collected to the reasonable
costs of implementing AB 32.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background. AB 32 authorizes ARB to adopt via regulation "a
schedule of fees to be paid by the sources of greenhouse gas
emissions" and deposit revenues into the Air Pollution Control
Fund. AB 32 also authorizes, but does not require, the use of
market-based mechanisms to achieve GHG emission reductions,
provided specified conditions are met.
Thus far, ARB has proposed only to use its fee authority for
the limited purpose of funding its own and other state
agencies' AB 32 implementation costs, and to repay loans of
other state funds that previously have been approved by the
Legislature for these purposes. The fee revenue necessary for
these purposes is estimated at $55 million per year. The
proposed administrative fee is scheduled for adoption by ARB
in June 2009. It's possible that a more expansive fee on GHG
emitters, the auction of GHG emission allowances, or another
market mechanism will produce significantly higher revenues
over the course of AB 32 implementation.
2)Bill makes implementation of market-based compliance
mechanisms an explicit goal of AB 32. The four goals
articulated in the bill (on page 2, lines 16-23) are somewhat
inconsistent with AB 32. In particular, the fourth goal,
"implement any market-based compliance mechanisms adopted by
the state board," seems to alter the priorities outlined in AB
32, which favor direct GHG emission reductions over
market-based compliance. The author and the committee may
wish to consider deleting this goal and including, as the
primary goal, "reducing greenhouse gas emissions," which is
the primary goal of AB 32.
3)Purposes of market-set fees and "reasonable costs of
implementing" limit are unclear. The language in subdivision
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(c) (page 3, lines 1-4) suggests that a "fee" could be
established by a market mechanism absent approval by ARB. To
maintain the validity of the fee, the amount should be set by
ARB, not by a market mechanism. Further, the language creates
a new and undefined limit on fees, prohibiting collection of
fees that "exceed the reasonable costs of implementing" AB 32.
This differs from the current description of the fee's
purpose, "carrying out this division," which the bill repeats
on page 3, lines 13-14. To maintain consistency with AB 32,
the author and the committee may wish to consider deleting
these provisions.
4)Related legislation. AB 1405 (De Leon), also pending in this
Committee, creates a Community Benefits Fund, with related
provisions. AB 231 and AB 1405 amend the same section and
direct the expenditure of the same AB 32 revenues in
incompatible ways. The author and the committee may wish to
consider adopting amendments to move the provisions of this
bill to a new section, rather than amending the same existing
section as AB 1405, and related technical amendments to
resolve the conflict with AB 1405.
5)Suggested amendments. To address the issues described above,
the author and the committee may wish to consider the
following amendments:
SEC. 2. Section 38597.2 is added to the Health and
Safety Code, to read:
(b) The 38597.2. Except as otherwise provided in this
part, the fees established by the state board pursuant to this
section Section 38597 shall be designed to allocate the costs
of implementing this division based on the contribution of the
source to statewide emissions of greenhouse gases, and to meet
all of the following goals the goals of this division,
including, but not limited to:
(a) Reducing greenhouse gas emissions.
( 1 b) Minimize Minimizing costs and maximize maximizing
total benefits to California, while achieving the statewide
greenhouse gas emissions limit established pursuant to Section
38550.
( 2 c) Reduce Reducing disproportionate impacts on low-income
communities.
(3) Provide incentives to reduce greenhouse gas emissions.
(4) Implement any market-based compliance mechanisms
adopted by the state board.
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(c) The amount of fees per unit of greenhouse gas emissions
may be established directly by the state board or through a
market mechanism. The total amount of fees collected shall not
exceed the reasonable costs of implementing this division.
REGISTERED SUPPORT / OPPOSITION :
Support
Audubon California
American Federation of State, County and Municipal Employees,
AFL-CIO
Bolsa Chica Land Trust
Breathe California
California Coastal Coalition
California Land Trusts
Californians Against Waste
Cal Coast
Coalition for Clean Air
Defenders of Wildlife
Environment California
Environmental Defense Fund
Forests Forever
Los Angeles Conservation Corps
Natural Resources Defense Council
Planning and Conservation League
ReLeaf
Save the Redwoods
The Nature Conservancy
The Trust for Public Land
Union of Concerned Scientists
Opposition
California Business Properties Association
California Chamber of Commerce
California Council for Environmental and Economic Balance
California Independent Petroleum Association
California League of Food Processors
California Manufacturers & Technology Association
California Retailers Association
California Taxpayers' Association
Cal-Tax
Stop Hidden Taxes Coalition
National Federation of Independent Business
Western Electrical Contractors Association
AB 231
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Western States Petroleum Association
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092