BILL ANALYSIS
AB 231
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Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 231 (Huffman) - As Amended: April 29, 2009
Policy Committee: Natural
ResourcesVote:6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill establishes a trust fund for the deposit of fee
revenue collected for the implementation of AB 32 (N??ez,
Chapter 488, Statutes of 2006). Specifically, this bill:
1)Requires ARB to adopt fees on sources of greenhouse gas (GHG)
emissions by March 30, 2010, consistent with authority given
to ARB by AB 32.
2)Establishes the Climate Protection (CP) Trust Fund.
3)Requires that AB 32 fee revenues, as well as all other AB 32
compliance or penalty revenues, be deposited in the CP trust
fund instead of the Air Pollution Control Fund (APCF).
4)Specifies that the fees must be designed to allocate costs
based on the contribution of the source to statewide GHG
emissions and meet the following goals, among other purposes:
a) Reduce GHG emissions.
b) Minimize costs and maximize total benefits to
California, while achieving the statewide GHG limit.
c) Reduce disproportionate impacts on low-income
communities.
FISCAL EFFECT
1)One-time annual costs in 2009-10 of about $150,000 to
establish the CP trust fund. (General Fund or APCF)
AB 231
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2)Possible fee revenue, potentially in the hundreds of millions
of dollars annually. (CP trust fund)
3)Potential shift in funds, possibly in hundreds of millions of
dollars annually, from the APFC to the CP trust fund created
by this bill, to the extent this bill results in fee revenue.
(The fee revenue described above might have resulted from
actions ARB would have taken, absent this bill, based on
existing statutory authority. However, because this bill
requires ARB to adopt a fee that current law merely allows, this
analysis attributes the revenue to this bill.)
COMMENTS
1)Rationale. The author contends there is a danger of AB 32 fee
revenues commingling with other revenues also deposited into
the APCF and then being used to fund ARB's non-AB 32
activities. The author believes that establishment of the CP
trust fund, and codification of the parameters of the use of
revenues deposited into that fund, will better ensure that AB
32 fee revenue will be used for purposes consistent with AB
32.
2)Background.
a) AB 32 Emissions Limit. AB 32 requires California to
limit its emissions of GHGs so that, by 2020, those
emissions are equal to what they were in 1990. To that end,
AB 32 requires ARB to quantify the state's 1990 GHG
emissions and to adopt, by January 1, 2009, a "scoping
plan" that describes the board's plan for achieving the
maximum technologically feasible and cost-effective
reductions of GHG emissions reductions by 2020. In keeping
with AB 32, ARB adopted its AB 32 scoping plan in December
of 2008. Consistent with AB 32, the scoping plan includes
both direct regulatory measures and market-based compliance
mechanisms, such as emissions taxes and a "cap-and-trade"
emissions allowance program.
b) AB 32 Provides Fee Authority to ARB. AB 32 authorizes,
but does not require, ARB to adopt fees to be paid by the
sources of GHG emissions. The statute directs that fee
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revenues be deposited into the APFC.
Thus far, ARB has proposed to use its fee authority only to
fund its and other state agencies' AB 32 implementation
costs and to repay currently outstanding AB 32 loans from
other state funds. The fee revenue necessary for these
purposes is estimated at $55 million per year. ARB is
scheduled to adopt the AB 32 fee in June 2009.
ARB may generate additional revenue as a result of its use
of market-based mechanisms to limit GHG emissions. This
revenue, potentially in the hundreds of millions of
dollars, may result from the auction of cap-and-trade
emission allowances or from the imposition of an emissions
tax.
c) Air Pollution Control Fund. The money in the APCF is
available to ARB to carry out its air pollution control
duties. Revenues in the fund mainly result from penalties
paid by manufacturers or distributors of motor vehicles for
violations of regulations, cargo tank certification and
direct import vehicle certification fees, penalties for
violation of abatement orders and regulations, and various
fees imposed on non-vehicular sources of air emissions.
3)Related Legislation. AB 1405 (De Leon), also before this
committee, creates a Community Benefits Fund, with related
provisions. AB 1405 passed Natural Resources on a vote of
6-3.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081