BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 31|
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THIRD READING
Bill No: SB 31
Author: Pavley (D), et al
Amended: 5/5/09
Vote: 21
SENATE ENV. QUALITY COMMITTEE : 5-2, 4/20/09
AYES: Simitian, Corbett, Hancock, Lowenthal, Pavley
NOES: Runner, Ashburn
SENATE ENERGY, U. & C. COMMITTEE : 6-3, 4/27/09
AYES: Padilla, Corbett, Kehoe, Lowenthal, Simitian,
Wiggins
NOES: Benoit, Cox, Strickland
NO VOTE RECORDED: Calderon, Wright
SENATE APPROPRIATIONS COMMITTEE : 8-5, 5/26/09
AYES: Kehoe, Corbett, DeSaulnier, Hancock, Leno, Oropeza,
Wolk, Yee
NOES: Cox, Denham, Runner, Walters, Wyland
SUBJECT : California Global Warming Solutions Act of
2006: revenue
allocations
SOURCE : Environmental Entrepreneurs
Natural Resources Defense Council
DIGEST : This bill specifies that revenues generated
pursuant to AB 32 (Nunez and Pavley), Chapter 488, Statutes
of 2006, would be available for the purposes of carrying
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out the requirements of AB 32, including, but not limited
to AB 32 administration, renewable energy and energy
efficiency programs, investments in technologies to reduce
greenhouse gas emissions, and green jobs development and
training that will reduce greenhouse gas emissions.
ANALYSIS :
Existing law:
1. Requires the Air Resources Board (ARB) to determine the
1990 statewide greenhouse gas (GHG) emissions level and
approve a statewide GHG emissions limit that is
equivalent to that level, to be achieved by 2020. ARB
must adopt rules and regulations to achieve GHG emission
reductions from sources or categories of sources,
subject to specified requirements, pursuant to the
California Global Warming Solutions Act [AB 32 (Nunez),
Chapter 488, Statutes of 2006].
2. Authorizes ARB to adopt regulations, by January 1, 2011,
to establish a system of market-based declining annual
aggregate emissions limits for sources or categories of
sources of GHG emissions. Such regulations must ensure
that all market-based reductions are real, permanent,
quantifiable, verifiable, and enforceable by the state
(Section 38562 (d) (1) of the Health and Safety Code).
3. Requires ARB to do all of the following before including
a market-based compliance mechanism in its regulations:
(a) consider the potential for direct, indirect, and
cumulative emission impacts from these mechanisms,
including localized impacts in communities that are
already adversely impacted by air pollution, (b) design
any market-based compliance mechanism to prevent any
increase in the emissions of toxic air contaminants or
criteria air pollutants, and (c) maximize additional
environmental and economic benefits for California, as
appropriate, pursuant to Section 38570(b) of the Health
and Safety Code.
This bill:
1. Authorizes ARB to collect revenues pursuant to
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"compliance mechanisms" adopted by ARB as an alternative
to fees adopted by regulation which are consistent with
Section 57001 of the Act.
2. Stipulates that funds collected pursuant to the fees or
compliance mechanisms authorized by this act shall
include listed activities (i.e., costs of administering
the Act, renewable energy and energy efficiency
programs, investments in technologies to reduce GHG
emissions, and green jobs development and training).
3. Defines "auction" or "auctioning" as a publicly
accessible and recorded sale or transaction conducted by
means of oral or written exchanges, including exchanges
made in person or through electronic media, to the
highest bidder, of a limited quantity of allowances to
covered entities in a capped system, in which those
entities are prohibited from emitting pollution beyond
the amount authorized by allowances to be surrendered.
"Auction" or "auctioning" does not include any exchange
not subject to the laws governing financial transactions
within the jurisdiction of the state.
Comments
According to the author's fact sheet, this bill has two
principal purposes: (1) to give ARB additional guidance
regarding the use of revenues collected pursuant to ARB's
authority to collect fees through market mechanisms (e.g.,
auctions), and (2) to ensure that revenue collected
pursuant to AB 32 will be invested in ways that will reduce
GHG emissions, protect the health and safety of
Californians, and put us on the path to a new green
economy.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
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2011-12 Fund
ARB staffing costs Absorbable within
existing resources Special*
* Air Pollution Control Fund
SUPPORT : (Verified 5/28/09)
Environmental Entrepreneurs (co-source)
Natural Resources Defense Council (co-source)
American Federation of State, County and Municipal
Employees, AFL-CIO
American Lung Association
Coalition for Clean Air
Ella Baker Center for Human Rights
Environment California
Environmental Defense Fund
South Coast Air Quality Management District
The Trust for Public Land
Union of Concerned Scientists
OPPOSITION : (Verified 5/29/09)
California Chamber of Commerce
California Communities Against Toxics (unless amended)
California Independent Petroleum Association
California Manufacturers and Technology Association
California Taxpayers' Association
Southern California Edison
Western States Petroleum Association
ARGUMENTS IN SUPPORT : Proponents are especially
interested in the prospects that potential revenue streams
will have for addressing a variety of programs, as noted in
a letter submitted by the American Lung Association, "[I]n
keeping with the goals of AB 32, SB 31 will direct revenue
to be spent on activities that reduce GHG emissions while
protecting the health and safety of Californians. These
activities include: energy efficiency and renewable energy,
particularly for low-income consumers; research,
development, and deployment of low-carbon technologies,
especially those that will create co-benefits of reductions
of other harmful pollutants; and green jobs."
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ARGUMENTS IN OPPOSITION : According to the California
Chamber of Commerce:
"In order to implement SB 31, CARB [California Air
Resources Board] will have to develop guidelines or
regulations that lay forth a plan for distributing the
funds, if appropriated by the legislature. Developing
the criteria needed for distribution will require an
approval process, public workshops, public comments, and
the Office of Administrative Law review process, all of
which will add to the expense of implementing this
program.
"New CARB fees under SB 31 could reach billions of
dollars. The bill provides no guidance, no limits, and
no controls over the amount CARB could raise, or from
whom.
"Furthermore, CARB is considering a cap-and-trade system
that allocates emission credits from an auction system
that could impose new burdens in the tens of billions of
dollars for California companies, municipal utilities and
others. Lastly, local governments in California are
imposing their own global warming regulatory programs and
the federal government is likely to impose a national
global warming strategy.
"When AB 32 passed, its author Speaker Nunez submitted a
letter to the journal which states 'it is my intent that
any funds provided by Health and Safety Code Section
38597 are to be used solely for the direct costs incurred
in administering this division.' Thus, such legislation
that provides CARB greater authority to implement an
auction and to use the funds in addition to fees raised
for other purposes than administering costs goes well
beyond the intent of the bill.
"AB 32 allows ARB to include 'market based compliance
mechanisms' in its plan to achieve the 1990 target GHG
levels in the state. A market based compliance
mechanisms could include cap-and-trade systems or other
mechanisms that involve the recognition or distribution
of GHG emission allowances but AB 32 does not expressly
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sanction -- nor does it even mention -- distribution of
GHG allowances by an auction mechanism. An auction
mechanism would be complex and affect all or most of the
California economy and could raise and re-distribute
billions of dollars of auction revenues. Under
principles of California law, the complete absence of any
authority for ARB to adopt such a major program strongly
indicates that AB 32 does not provide auction authority
to ARB."
TSM:mw 6/1/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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