BILL ANALYSIS
AB 892
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Date of Hearing: April 13, 2009
ASSEMBLY COMMITTEE ON TRANSPORTATION
Mike Eng, Chair
AB 892 (Furutani) - As Introduced: February 26, 2009
SUBJECT : Goods Movement Emission Reduction Program (GMERP)
SUMMARY : Allows the reallocation of unspent Proposition 1B
funds, authorized for reducing emissions from the transport or
shipment of freight, to either be reallocated by the local
entity for another similar project or, if the local entity is
unable to spend the funds, be reallocated by the California Air
Resources Board (ARB) under its adopted guidelines.
Specifically, this bill :
1)Authorizes unspent Proposition 1B funds, appropriated for
reducing emissions from the transport or shipment of freight,
to be reallocated by an applicant to a backup project covered
in the original grant agreement that was approved by ARB.
2)If the applicant has no replacement projects available for
funding as listed in the grant award approved by ARB, requires
the unspent funds to be returned to ARB to be awarded pursuant
to its guidelines. Specifies that the guidelines require ARB
to give first priority for grant award funding to projects
that are both in the same emission source category and in the
same trade corridor as the original project. Establishes, as
a second priority, projects that are only in the same trade
corridor as the original project.
3)Requires that all funds reallocated by the applicant or
re-awarded by ARB to be liquidated within four years of the
date of the award of the original contract.
EXISTING LAW :
1)Establishes ARB to set statewide air quality standards and
regulate emissions from motor vehicles, fuels, and consumer
products. ARB, along with the 35 local air quality districts
that regulate other sources of air pollution, monitors air
pollution and administers regulatory and incentive programs to
improve air quality. Establishes ARB as the lead entity for
implementation of the Global Warming Solutions Act of 2006.
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2)As approved by the statewide voters in November 2006,
Proposition 1B authorizes the state to sell approximately $20
billion of general obligation bonds to fund transportation
projects to relieve congestion, improve the movement of goods,
improve air quality, and enhance the safety and security of
the transportation system. Of the $20 billion, allocates $1
billion to ARB for emission reductions, not otherwise required
by law or regulation, from activities related to the movement
of freight along California's trade corridors (commencing at
the state's airports, seaports and land ports of entry).
3)Pursuant to SB 88 (Senate Committee on Budget and Fiscal
Review), Chapter 181, Statutes of 2007 establishes legislative
priorities and provides guidance to ARB for administering the
$1 billion GMERP. The GMERP provides funds for the
replacement, repower, or retrofit of heavy-duty trucks,
locomotives, commercial harbor craft, ocean-going vessels
related to freight, and cargo-handling equipment with cleaner
technology alternatives. Requires ARB to develop program
guidelines by December 31, 2007. Requires ARB to perform
accountability and auditing requirements to ensure that
expenditure of bond proceeds, less administrative costs, meets
quantifiable emission reduction objectives in a timely manner,
and to ensure that the emission reductions will continue in
California for the project lifetime. Further, AB 201
(Assembly Committee on Budget), Chapter 187, Statutes of 2007
provides a technical clarification to SB 88.
4)Pursuant to Governor's Executive Order S-02-07, issued on
January 2007, directs all state government entities
responsible for expending bond proceeds to establish and
document a three part accountability structure, basically
highlighting the importance of transparency and accountability
in administering the over $40 billion in bond funding approved
by voters in 2006.
FISCAL EFFECT : Unknown
COMMENTS : The author contends that "Air quality is a critical
issue affecting many communities in California. Health problems
have been linked to poor air quality. The intent of Proposition
1B's Goods Movement Emission Reduction Program (GMERP) is to
combat and improve air quality by funding air quality management
projects? Due to a slowing economy, some GMERP recipients are
backing out of their contracts and returning the GMERP funds to
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the districts. This may occur because a company cannot fund
their share of the project, or the company is simply going out
of business. Although the local air districts have dozens of
qualified projects waiting to receive GMERP funding, current law
does not allow the air district to apply the returned funds to
otherwise qualified projects. Funds must be returned to the
main Prop 1B account, re-appropriated by the Legislature, and
then awarded by ARB. Many air quality districts in the state
have air quality improvement projects that are ready to be
implemented and meet the intended purpose of Proposition 1B
funds."
Proposition 1B, approved by voters in 2006, authorizes $1
billion in bond funding to ARB to cut freight emissions in four
priority trade corridors. As established by ARB, the proposed
funding targets for each trade corridor are as follows:
1)$550 million: Los Angeles/Inland Empire trade corridor.
2)$250 million: Central Valley and Sacramento region trade
corridor.
3)$140 million: San Francisco Bay Area trade corridor.
4)$ 60 million: San Diego/Border trade corridor.
The major sources eligible for bond funding include heavy-duty
trucks, locomotives, shore side power for cargo ships,
commercial harbor craft, cargo handling equipment, and
infrastructure for electrification of truck stops, distribution
centers, and other places trucks congregate.
According to ARB, The GMERP is a partnership between ARB and
local agencies (air districts and ports) to quickly reduce air
pollution emissions and health risk from freight movement along
California's priority trade corridors. ARB awards funding to
local agencies; those agencies then use a competitive process to
provide incentives to equipment owners to upgrade to cleaner
technology. No project can be funded unless the project is
sponsored by an applicant. Returned funds or unspent funds from
obligated contracts received by the applicant prior to the end
of a requirement to liquidate funds within four years of the
date of the award of a contract between the applicant and a
contractor revert to the Prop 1B GMERP account for allocation
upon appropriation by the Legislature.
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Cost-effectiveness : According to the ARB GMERP guidelines, ARB
considers the cost effectiveness of projects to determine
project competitiveness and eligibility. According to the
guidelines, "cost effectiveness" means the total
pollutant-weighted emission reductions over
the project life, per dollar of state funding invested. By
allowing projects to be reselected within the priorities
established by this bill, i.e. within the program source and
trade corridor, will this bill result in maximizing the emission
reduction benefits and achieve the earliest possible health risk
reduction in communities heavily impacted by goods movement as
directed by current statute?
Arguments in support of the bill : Writing in support of this
bill, the South Coast Air Quality Management District contends
that "this bill assures that the funding allocated to air
quality districts remains in the district. Air Quality
districts should be able to hold on to their funding when GMERP
recipients back out of contracts and apply this funding to
projects on queue that will improve air quality in the district.
In order to effectively improve air quality in poor air quality
districts, the district should be able to utilize returned GMERP
funding to the next approved project. If the funding is
returned to the Legislature to be re-appropriated, there is no
guarantee that the funding will be re-appropriated to the same
district. This prohibits the district from effectively funding
projects that will assist in improving air quality for that
district."
Suggested Committee Amendments : The suggested committee
amendments are basically technical in nature; however, one
provision would require ARB to report substantive project
changes from the project listing in the approved grant agreement
with ARB. As this would be reported to the Legislature on an
annual basis (existing law pursuant to SB 88), the applicant and
ARB would be held accountable for any substantive project
changes. Another provision would allow unspent funds that
revert back to ARB sufficient time for appropriation by them.
REGISTERED SUPPORT / OPPOSITION :
Support
South Coast Air Quality Management District (sponsor)
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Automobile Club of Southern California
Bay Area Air Quality Management District
California Air Pollution Control Officers Association
Opposition
None on file
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093