BILL ANALYSIS �
SB 1572
Page 1
( Without Reference to File )
SENATE THIRD READING
SB 1572 (Pavley)
As Amended August 31, 2012
Majority vote
SENATE VOTE :23-13
NATURAL RESOURCES 6-2
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|Ayes:|Chesbro, Brownley, | | |
| |Dickinson, Huffman, | | |
| |Monning, Skinner | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Grove, Halderman | | |
| | | | |
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SUMMARY : Specifies expenditure of funds 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 and Pavley), Chapter 488, Statutes of
2006. Specifically, this bill :
1)Appropriates 80% of any auction revenues collected in the
2012-13 fiscal year, over and above those revenues used by the
Department of Finance (DOF) to offset General Fund
expenditures pursuant to the Budget Act, to ARB as follows:
a) Requires a specified record be prepared regarding use of
the funds.
b) Requires funds benefit "disadvantaged communities," as
defined by California Environmental Protection Agency
(CalEPA), to the maximum extent feasible.
c) Requires ARB to allocate 75% of the funds for GHG
reduction projects undertaken by industries covered by the
cap-and-trade program. Authorizes ARB to allocate any of
these funds to the Treasurer for use in accordance with his
or her authority under the California Pollution Control
Financing Authority (CPCFA) Act and authorizes CPCFA to
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provide rebates in the amount of the sales and use tax paid
on qualifying equipment.
d) Requires ARB to allocate 25% to the Strategic Growth
Council (SRC) to be awarded to metropolitan planning
organizations or councils of governments for regional and
local GHG reduction plans and to local governments and
non-profits for local climate innovation projects according
to specified criteria.
e) Requires the Treasurer and the SRC to report annually to
the Legislature, and ARB to publish, specified details
regarding projects and activities funded.
f) Provides that the provisions above are severable.
2)Appropriates to ARB any moneys collected by ARB in the 2012-13
fiscal year from the sale of allowances to the University of
California (UC) and the California State University (CSU) for
ARB to expend on GHG reduction projects undertaken by UC or
CSU. Requires the recipient to provide a direct or in kind
investment in GHG abatement projects to match 20% of the funds
received.
3)Establishes related findings regarding ARB's cap-and-trade
program and the purposes of the bill.
EXISTING LAW :
1)Requires ARB, pursuant to AB 32, to adopt a statewide GHG
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.
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4)Requires the Department of Finance (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 : Unknown
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 (Blumenfield), Chapter 21,
Statutes of 2012) 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 (Budget and Fiscal Review Committee), Chapter 39,
Statues 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
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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.
This bill appropriates 80% of any leftover 2012-13 auction
revenue not allocated by DOF. AB 1186 (Skinner) claims 20% of
the same leftover revenue for GHG reduction projects at schools.
The bill's allocation of funds for GHG reduction projects
undertaken by industries covered by the cap-and-trade program
may reward the most inefficient covered entities. Those that
have achieved the least emission reductions and therefore need
to purchase the most allowances will be eligible to receive the
most funds. Redistributing allowance revenue in this fashion
may reduce the incentive for private investment in emission
reductions that cap-and-trade is intended to create.
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092
FN: 0005848