BILL ANALYSIS �
SB 1572
Page 1
SENATE THIRD READING
SB 1572 (Pavley)
As Amended August 22, 2012
Majority vote
SENATE VOTE :23-13
NATURAL RESOURCES 6-3 APPROPRIATIONS 11-5
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|Ayes:|Chesbro, Brownley, |Ayes:|Gatto, Blumenfield, |
| |Dickinson, Huffman, | |Bradford, Charles |
| |Monning, Skinner | |Calderon, Campos, Davis, |
| | | |Fuentes, Hall, Hill, |
| | | |Cedillo, Mitchell |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight, Grove, Halderman |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Specifies expenditures of up to $161 million in the
2012-13 fiscal year derived from the auction of greenhouse gas
(GHG) allowances pursuant to the cap-and-trade program adopted
by the Air Resources Board (ARB) pursuant to AB 32 (N��ez),
Chapter 488, Statutes of 2006. Specifically, this bill :
1)Creates the Greenhouse Gas Reduction Account (GGRA) and
requires all revenues, except for fines and penalties,
collected by ARB from the auction or sale of allowances
pursuant to a market-based compliance mechanism to be
deposited in the GGRA and available, upon appropriation by the
Legislature, for the purposes of this bill.
2)Requires, notwithstanding any other law, 50% of auction
revenues collected in the 2012-13 fiscal year, or $161
million, whichever is less, that are not used by the
Department of Finance (DOF) to offset General Fund
expenditures pursuant to the Budget Act, to be available for
priority projects listed in this bill.
3)Provides that any funds appropriated, but not allocated by the
administering agency by the end of the 2012-13 fiscal year,
revert back to the GGRA to be expended according to a
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long-term expenditure plan in accordance with subsequent
legislation.
4)Provides that no funds will be expended pursuant to this bill
if the total auction revenues in the 2012-13 fiscal year are
less than $550 million.
5)Requires projects funded by the bill to comply with the
following criteria:
a) Achieve greenhouse gas emissions reductions at a
reasonable cost.
b) Rapidly achieve budgetary savings for families, small
businesses, schools, universities, companies regulated
under the cap-and-trade program, community institutions,
and state, local, and regional governments.
c) Advance the purposes of the cap-and-trade program, in
particular the purpose of the auction to reduce the risk of
market manipulation and windfall profits.
d) Protect existing jobs in the state by minimizing
leakage.
e) Benefit the most adversely impacted and disadvantaged
communities to the maximum extent feasible.
f) Provide opportunities, where appropriate, for small
businesses, schools, local governments, not-for-profit
entities, state and local certified conservation corps,
state conservancies, and other community institutions to
participate in and benefit from statewide and regional
efforts to reduce greenhouse gas emissions.
6)Requires allocation of funds according to the following
categories:
a) Public university projects - The greater of 12.5% or
$20.9 million to the Higher Education Climate Solutions
Fund for allocation to public university governing boards
for GHG reduction projects and activities at public
universities regulated under the cap-and-trade program,
including, but not limited to, the following projects and
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activities:
i) Energy efficiency upgrades that reduce electricity
and natural gas consumption at university-controlled
facilities.
ii) Procurement of biomethane or biogas that displaces
natural gas usage at university facilities.
iii) Procurement of carbon-neutral electricity that
displaces conventional electricity generation at
university facilities.
iv) Administrative costs not to exceed 1%.
In order to be eligible for funds from the Higher Education
Climate Solutions Fund, a public university shall:
i) Agree to make an additional investment in GHG
abatement projects and activities, equal in value to
25%of the funds it receives.
ii) Submit to the Legislature a five-year investment
plan detailing the projects and activities to be funded
with an anticipated allocation.
iii) Submit an annual report to the Legislature
describing the disposition of funds received in the
previous calendar year and the planned expenditures for
allowance revenue in the coming calendar year.
b) Rapid transition assistance for industrial facilities -
The greater of 16.5%, or $31.3 million to the Public
Utilities Commission (PUC) to carry out the self-generation
incentive program, subject to the following limitations:
i) Incentives shall only be available to covered
entities under the cap-and-trade program.
ii) The PUC shall not award incentives for emissions
reduction measures that are otherwise specifically
required by statute, regulation, or court order.
c) Residential energy efficiency - The greater of 8.5% or
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$10.4 million to the Department of Community Services and
Development for expenditure pursuant to the Weatherization
Assistance Program. The Department shall expend at least
50% within multi-family rental housing developments subject
to specified affordability restrictions.
d) Energy in agriculture priority projects - The greater of
6.1% or $4.2 million to the California Energy Commission
(CEC) for expenditure in accordance with the Agricultural
Industry Energy Program, including the adoption of
renewable energy and energy-efficient technologies and
management practices that reduce GHG emissions, energy and
water use, production costs, and minimize negative
environmental impacts while improving economic
sustainability.
e) Sustainable land use and transportation - The greater of
24.5 percent or $31.3 million to the Strategic Growth
Council (SGC) for allocation to metropolitan planning
organizations, or, within the Southern California
Association of Governments region, to a county
transportation commission, or to other local governmental
entities in regions not within a metropolitan planning
organization, that further the purposes of specified
regional planning processes.
i) Project funding determinations shall be made at the
regional level in accordance with statewide criteria
developed by the SGC that prioritize investments in
projects that:
(1) Cost-effectively reduce GHG emissions and
provide other co-benefits.
(2) Integrate transportation, land use, and water
and other resource conservation strategies.
(3) Occur in regions with sustainable community
strategies that meet GHG emission reduction targets,
or in other regions, for equivalent blueprint plans or
other regional plans.
ii) Funds allocated by the SGC may be used for
integrated infrastructure development, design,
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construction, or planning, including modeling and
verification systems that impose GHG emission reduction
performance measurement tools for local and regional
actions, and operation and maintenance of transportation
infrastructure, provided that the integrated
infrastructure development, design, construction, or
planning or operation and maintenance measures are part
of a comprehensive regional or local plan that directly
results in overall GHG emission reduction and
co-benefits.
iii) Of funds available to the SGC, 40% shall be
available to the Department of Housing and Community
Development to be expended for loans for specified
affordable transit-oriented housing.
f) Goods movement - The greater of 9.3% or $12.5 million to
ARB for goods movement consistent with the goods movement
efficiency measures included in the AB 32 Scoping Plan.
g) Lower-Emission School Bus Program - The greater of 6.5%
or $5.2 million to ARB for the Lower-Emission School Bus
Program.
h) Clean Vehicle Rebate Project - The greater of 16.5% or
$31.3 million dollars to ARB for the Clean Vehicle Rebate
Project. Rebates shall only be available to households
with a combined gross annual income of less than $80,000
per year, and only one rebate shall be available per
qualifying household.
7)Requires agencies awarding funds to find that the project or
activity reduces GHG emissions in furtherance of AB 32 and to
submit quarterly reports to the Legislature with specified
information about funded projects and activities.
8)Provides that the provisions of the bill are severable.
9)Establishes related findings regarding ARB's cap-and-trade
program.
EXISTING LAW :
1)Requires ARB, pursuant to AB 32, to adopt a statewide GHG
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emissions limit equivalent to 1990 levels by 2020 and adopt
regulations to achieve maximum technologically feasible and
cost-effective GHG emission reductions.
2)Authorizes ARB to permit the use of market-based compliance
mechanisms to comply with GHG reduction regulations, to be
adopted by 2011 and operative by 2012, under limited
circumstances once specified conditions are met.
3)Creates the Greenhouse Gas Reduction Fund and requires all
moneys, except for fines and penalties, collected by ARB from
the auction or sale of allowances pursuant to a market-based
compliance mechanism to be deposited in the Fund and available
for appropriation by the Legislature.
4)Requires the DOF to submit proposed legislation, on or before
January 10, 2013, that provides a detailed spending plan for
moneys in the Fund, unless the Legislature passes a bill on or
before August 31, 2012, that establishes a long-term spending
strategy for moneys in the Fund. Requires any state agency,
prior to expending any moneys appropriated from the Fund, to
prepare a specified record.
5)Authorizes the DOF to allocate or otherwise use an amount of
at least $500 million from moneys deposited in the Fund, and
make commensurate reductions to General Fund expenditure
authority, to support the regulatory purposes of AB 32.
Requires ARB and DOF, at least 60 days prior to allocating any
funds to submit a plan for the expenditure or use of the funds
to the chairpersons of the Senate and Assembly Appropriations
Committees and the Chairperson of the Joint Legislative Budget
Committee. Prohibits the use of funds for the purpose of
developing a high-speed rail system for at least two years.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Cost of approximately $2 million to ARB in 2012-13 to
administer cap-and-trade auction revenue deposited in the GGRA
and publish information on its Web site. (Presumably ARB
would incur much of these costs absent this bill as a result
of the receipt and necessary administration of cap-and-trade
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auction revenue in 2012-13, which may total in the hundreds of
millions of dollars.)
2)One-time costs of an unknown, but presumably significant
amount, ranging from the hundreds of thousands to low millions
of dollars, to the various agencies identified in the bill to
administer priority project programs.
COMMENTS : According to ARB, a total reduction of 80 million
metric tons (MMT), or 16% compared to business as usual, is
necessary to reduce statewide GHG emissions to 1990 levels by
2020. ARB intends to achieve approximately 78% of the
reductions through identified "regulatory" measures. ARB
proposes to achieve the balance of reductions necessary to meet
the 2020 limit (approximately 18 MMT) through a cap-and-trade
program. The first auction of allowances in the cap-and-trade
program will take place on November 14, 2012, and the auctions
will be held quarterly thereafter.
The 2012-13 Budget Act (AB 1464) authorizes DOF to allocate at
least $500 million from cap-and-trade revenue, and make
commensurate reductions to General Fund expenditure authority,
to support the regulatory purposes of AB 32. The Resources
Budget Trailer Bill (SB 1018 (Committee on Budget and Fiscal
Review) Chapter 39, Statutes of 2012) creates the Greenhouse Gas
Reduction Fund for cap-and-trade auction revenues and requires
DOF to submit proposed legislation, on or before January 10,
2013, that provides a detailed spending plan for moneys in the
Fund, unless the Legislature passes a bill on or before August
31, 2012, that establishes a long-term spending strategy for
moneys in the Fund. AB 1532 (John A. P�rez) establishes
procedures for deposit and expenditure of cap-and-trade auction
revenues pursuant to an investment plan.
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092
FN: 0005423
SB 1572
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