BILL ANALYSIS
AB 892
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 892 (Furutani)
As Amended July 9, 2009
Majority vote
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|ASSEMBLY: |78-0 |(June 1, 2009) |SENATE: |38-0 |(August 27, |
| | | | | |2009) |
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Original Committee Reference: TRANS .
SUMMARY : Allows the reallocation of unspent Proposition 1B
funds, authorized for reducing emissions from the transport or
shipment of freight, to either be awarded 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.
The Senate amendments basically make technical changes that
clarify and conform this bill's language to current and actual
grant and contractual practices of ARB.
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.
2)States that, 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).
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3)States that 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 Goods Movement Emission Reduction
Program (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. Requires the submittal
of an annual report to the Legislature on its GMERP
activities. Further, AB 201 (Assembly Committee on Budget),
Chapter 187, Statutes of 2007, provides a technical
clarification to SB 88.
4)Directs, pursuant to Governor's Executive Order S-02-07 issued
on January 2007, 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.
AS PASSED BY THE ASSEMBLY , this bill:
1)Authorized unspent Proposition 1B funds, allocated for
reducing emissions from the transport or shipment of freight,
to be awarded by an applicant to a backup project covered in
the original grant agreement that was approved by ARB.
2)Required, if the applicant has no replacement projects
available for funding as listed in the grant award approved by
ARB, the unspent funds to be returned to ARB to be reallocated
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.
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3)Required that all funds awarded by the applicant or
reallocated by ARB to be liquidated within four years of the
date of the award of the original contract.
4)Authorized ARB to withhold disbursement of funds to the
applicant until the applicant is ready to transfer funds to
the contractor for liquidation.
5)Required ARB to include in their annual report to the
Legislature a description of any changes to the scope of grant
agreements or any changes to the award amounts as described in
the grant agreements.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill allows local agencies to reallocate GMERP
funds, potentially in the tens of millions of dollars, for local
projects that otherwise would be subject to reappropriation by
the Legislature and award by ARB.
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 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 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 required by SB 88, guidelines are
to be promulgated by ARB implementing the GMERP program.
Accordingly, the guidelines establish proposed funding targets
for each trade corridor.
SB 88 and the guidelines identify the major sources of pollution
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from goods movement activities that are eligible for bond
funding to 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 where 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 Proposition 1B GMERP account for
allocation upon appropriation by the Legislature.
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
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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."
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093
FN: 0002266