BILL ANALYSIS �
SB 1122
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: SB 1122
AUTHOR: Pavley
AMENDED: March 24, 2014
FISCAL: Yes HEARING DATE: April 2, 2014
URGENCY: No CONSULTANT: Rebecca
Newhouse
SUBJECT : SUSTAINABLE COMMUNITIES: STRATEGIC GROWTH COUNCIL
SUMMARY :
Existing law :
1) Establishes the Strategic Growth Council (Council),
consisting of the Director of State Planning and Research,
several agency secretaries, and one member of the public,
and tasks the Council with managing and awarding grants and
loans to support the planning and development of
sustainable communities (Public Resources Code �75120).
2) Requires each transportation planning agency to prepare and
adopt a regional transportation plan directed at achieving
a coordinated and balanced regional transportation system,
including, but not limited to, mass transportation,
highway, railroad, maritime, bicycle, pedestrian, goods
movement, and aviation facilities and services, and
requires that the plan consider both the short-term and
long-term future (Government Code �65080).
3) Requires the California Air Resources Board (ARB) to set
regional targets for greenhouse gas emissions reductions
from passenger vehicle use for 2020 and 2035 for each
region covered by one of the state's metropolitan planning
organizations (MPO) and requires the MPOs to prepare a
sustainable communities strategy (SCS), which contains land
use, housing and transportation strategies, that if
implemented would allow the region to meet its GHG emission
reduction target, as a part of its regional transportation
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plan (Government Code �65080).
4) Under the California Global Warming Solutions Act of 2006,
requires the ARB to determine the 1990 statewide GHG
emissions level and approve a statewide GHG emissions limit
that is equivalent to that level, to be achieved by 2020,
and to adopt GHG emissions reductions measures by
regulation. ARB is authorized to include the use of
market-based mechanisms to comply with these regulations
(Health and Safety Code �38500 et seq.).
5) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the
State Treasury and requires all moneys, except for fines
and penalties, collected pursuant to a market-based
mechanism be deposited in the fund and requires the
Department of Finance, in consultation with the state board
and any other relevant state agency, to develop, as
specified, a 3-year investment plan for the moneys
deposited in the GGRF (Government Code �16428.8).
6) Requires moneys from the GGRF be used to facilitate the
achievement of reductions of greenhouse gas emissions in
this state consistent with the California Global Warming
Solutions Act of 2006, and authorizes those funds to be
allocated for the purpose of reducing greenhouse gas
emissions in this state through investments that may
include strategic planning and development of sustainable
infrastructure projects, including transportation and
housing (Health and Safety Code �39712).
This bill :
1) Requires the Council to manage and award financial
assistance to various local governmental organizations to
support sustainable communities through the development,
adoption or implementation of a regional plan that improves
air and water quality, improves natural resource
protection, increases the availability of affordable
housing, meets the goals of AB 32, encourages sustainable
land use, and meets specified requirements of regional
transportation plans, including sustainable community
strategies.
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2) Requires that the Council expend moneys from the GGRF, upon
appropriation by the Legislature, for the purposes listed
above.
3) Authorizes the Council to adopt criteria and requirements
for regional grant programs, including, among other things,
methods for evaluating project effectiveness and requiring
that projects be selected through a competitive public
process based on GHG emissions reductions.
4) Requires the Council, in consultation with ARB and MPOs, to
establish standards for integrated modeling systems and
measurement methods.
5) Requires the Council, in consultation with the California
Transportation Commission and ARB, to establish standards
for the use of funds to ensure compliance.
6) Provides that eligible uses of the moneys include any of
the following:
a) Transportation network and demand management.
b) Public transportation.
c) Road and bridge maintenance; operations and retrofits
for complete streets, bike and pedestrian safety
enhancements; and urban greening.
d) Clean transportation fueling infrastructure and
support.
e) Multimodal network connectivity to reduce travel
distances and improve access to parks, schools, jobs,
housing, and markets for rural and urban communities
including neighborhood scale planning.
f) Development and adoption of local plans and land use
policies that help to implement regional plans.
g) Community infrastructure.
h) Multi-use facilities and accommodations for
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bicyclists, pedestrians, and neighborhood electric
vehicles.
i) Administrative costs and development and use of
evaluation, monitoring, and verification systems.
7) Requires the Council to review the implementation of this
section on an annual basis and authorizes them to revise
the criteria and requirements.
8) Requires moneys allocated for the regional grant programs
to be allocated in each region on a per capita basis.
9) Authorizes the Council to award financial assistance to a
city, county, city and county, or regional agency for the
development and implementation of agricultural, natural
resources, and open-space land protections that reduce
greenhouse gas emissions and are consistent with the
implementation of sustainable communities strategies,
alternative planning strategies, or other regional
greenhouse gas emissions reduction plans.
COMMENTS :
1) Purpose of Bill . According to the author, "The Council's
main purpose is to help coordinate the various land use,
transportation, and housing strategies that will achieve
the greenhouse gas reduction target for those sectors
established in SB 375 and approved by the Air Resources
Board. To that end, the Council was allocated $90 million
from Prop 84 to award grants that supported the planning
objectives of SB 375 as well as specified projects. Those
funds have been completely appropriated to the Council.
"The Council will finish the awarding of those funds in its
next cycle of grants. To continue the work of the Council
and to help achieve the transportation, land use, and
housing objectives of SB 375, this bill proposes that the
Council be authorized to make grants with funds
appropriated to it from auction revenues derived from the
cap-and-trade program of AB 32."
2) Background . The Strategic Growth Council (Council) was
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established in 2008 by SB 732 (Steinberg) Chapter 13,
Statutes of 2008. The Council is comprised of eight members
representing six state agencies, the Office of Planning and
Research and a public member appointed by the Governor.
The Council is responsible for coordinating a variety of
state programs and activities related to sustainable
communities and the environment, such as the implementation
of SB 375 (Steinberg) Chapter 728, Statutes of 2007, which
incorporates sustainable community development into
transportation planning.
In addition, the Council is tasked with managing and
awarding financial assistance to support the planning and
development of sustainable communities. The Department of
Conservation currently administers this financial
assistance, on behalf of the Council, through the
Sustainable Communities Planning Grant and Incentives
Program. The program is funded by $129 million appropriated
from the Safe Drinking Water, Water Quality and Supply,
Flood Control, River and Coastal Protection Bond Act of
2006 (Proposition 84) for sustainable communities planning
and urban greening.
There is approximately $16 million in remaining funds for
sustainable communities and $23 million remaining for urban
greening. Applications for both grant programs are
currently being reviewed and recommendations for this third
and final round of awards will go before the Council for
approval in June.
The Governor's budget requests $100 million in 2014-15 and
$100 million in 2015-16 from cap-and-trade revenue to
establish an SB 375-related grant program within the Office
of Planning and Research to be administered by the Council.
If the budget is approved with that appropriation, SB 1122
requires those funds be allocated by the Council for the
planning, development and implementation of sustainable
communities.
SB 375 . The Sustainable Communities and Climate Protection
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Act of 2008, SB 375, requires ARB to set regional targets
for GHG emissions reductions from passenger vehicle use.
In 2010, ARB established these targets for 2020 and 2035
for each region covered by one of the state's MPOs. ARB
will periodically review and update the targets, as needed.
SB 375 also requires each of California's MPOs to prepare a
sustainable communities strategy (SCS) as part of its
regional transportation plan (RTP).
The SCS contains land use, housing, and transportation
strategies that, if implemented, would allow the region to
meet its GHG emission reduction targets. Once adopted by
the MPO, the RTP/SCS guides the transportation policies and
investments for the region. ARB must review the adopted
SCS to confirm and accept the MPO's determination that the
SCS, if implemented, would meet the regional GHG targets.
If the combination of measures in the SCS would not meet
the regional targets, the MPO must prepare a separate
alternative planning strategy to meet the targets.
ARB estimates that the 2020 and 2035 targets of the SB 375
program represent reductions of greenhouse gas emission
from passenger vehicles and light trucks of over three
million metric tons of CO2 per year in 2020 and 15 million
metric tons of CO2 per year in 2035.
SB 1122 requires monies allocated to the Council from the
cap-and-trade revenues to achieve various environmental
objectives and meet the goals of AB 32 and SB 375 for GHG
emissions reductions.
The eligible projects listed in SB 1122 eligible for
cap-and-trade funds would assist both the development of
sustainable community strategies and the implementation of
those strategies to integrate land use, transportation and
housing. Many of the listed projects clearly facilitate
GHG emission reductions, namely multi-use facilities and
accommodations for bicyclists, pedestrians, and
neighborhood electric vehicles, public transportation
projects and others. However, SB 1122 also authorizes
cap-and-trade monies to be used for road and bridge
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maintenance, as well as operations and retrofits for
complete streets. Although these projects represent
important transportation expenditures, it is not clear how
these expenditures would meet the goals of AB 32.
3) Cap-and-trade auction revenue . The ARB has conducted six
auctions of GHG emission allowances so far. These auctions
have resulted in approximately $663 million in proceeds to
the state.
Several bills in 2012 provided legislative direction for
the expenditure of auction proceeds including SB 535 (de
Leon) Chapter 830, Statutes of 2012, AB 1532 (J. Perez)
Chapter 807, Statutes of 2012, and SB 1018 (Budget
Committee) Chapter 39, Statutes 2012.
SB 535 (de Leon) Chapter 830, Statutes of 2012, requires
that 25% of auction revenue be used to benefit
disadvantaged communities and requires that 10% of auction
revenue be invested in disadvantaged communities.
AB 1532 (J. Perez) Chapter 807, Statutes of 2012, directs
the Department of Finance to develop and periodically
update a three-year investment plan that identifies
feasible and cost-effective GHG emission reduction
investments to be funded with cap-and-trade auction
revenues. AB 1532 specifies that reduction of greenhouse
gas emissions through strategic planning and development of
sustainable infrastructure projects, are eligible
investments of GGRF.
SB 1018 (Budget Committee) Chapter 39, Statutes of 2012,
created the GGRF, into which all auction revenue is to be
deposited. The legislation requires that before departments
can spend monies from the GGRF, they must prepare a record
specifying: (1) how the expenditures will be used, (2) how
the expenditures will further the purposes of AB 32, (3)
how the expenditures will achieve GHG emission reductions,
(4) how the department considered other non-GHG-related
objectives, and (5) how the department will document the
results of the expenditures.
Legal consideration of cap-and-trade auction revenues . The
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2012-13 budget analysis of cap-and-trade auction revenue by
the Legislative Analyst's Office noted that, based on an
opinion from the Office of Legislative Counsel, the auction
revenues should be considered mitigation fee revenues, and
their use requires that a clear nexus exist between an
activity for which a mitigation fee is used and the adverse
effects related to the activity on which that fee is
levied. Therefore, in order for their use to be valid as
mitigation fees, revenues from the cap-and-trade auction
must be used to mitigate GHG emissions or the harms caused
by GHG emissions.
In 2012, the California Chamber of Commerce filed a lawsuit
against the ARB claiming that cap-and-trade auction
revenues constitute illegal tax revenue. In November 2013,
the superior court ruling declined to hold the auction a
tax, concluding that it's more akin to a regulatory fee.
AB 32 auction revenue investment plan . The first three-year
investment plan for cap-and-trade auction proceeds,
submitted by Department of Finance, in consultation with
ARB and other state agencies in May of last year,
identified sustainable communities and clean transportation
as one of the key sectors that provide the best
opportunities for achieving the legislative goals and
supporting the purposes of AB 32. The plan recommended the
aforementioned sector receive the largest allocation of
funds from the GGRF. The other two areas recommended for
auction revenue allocation in the investment plan are
energy efficiency and clean energy, and natural resources
and waste diversion.
In particular, the investment plan lists development and
implementation of SCS plans, including rail modernization
and system integration, public transit with connectivity to
rail, livable communities and transit-oriented development,
and low-carbon freight equipment, zero-emission passenger
transportation as examples of projects in the sustainable
communities and clean transportation sector.
The investment plan stresses the important role of
integrated land use and transportation planning and the key
role that the Council could play. The plan notes,
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"Investment in land use planning and transportation
infrastructure and operations is needed to implement the
goals of SCS plans and support sustainable development
efforts at the regional and local level. In particular,
several activities are essential. These include: support of
the SCS development process at the regional level,
development of local planning efforts to reflect each
regional Strategy, and implementation of specific projects
at the local and regional levels to support development of
sustainable communities. Coordinating investments to
implement Sustainable Communities Strategies and related
projects will support more cost-effective implementation of
SB 375 and AB 32. The Strategic Growth Council is best
suited for this role."
4) Disadvantaged Communities. As noted above, SB 535 (de Leon)
requires 25% of the cap-and-trade funds be spent to benefit
disadvantaged communities and 10% be spent within
disadvantaged communities. The current AB 32 Investment
Plan notes that the Sustainable Communities Planning Grant
and Incentives Program run by the Council requires a
certain fraction dedicated for projects that serve
economically disadvantaged communities, which has resulted
in 29% of grants being awarded to those communities.
5) Issues for further consideration . SB 1122 requires that the
Council, in consultation with the California Transportation
Committee and ARB, to establish standards for the use of
moneys to ensure compliance with this division, but does
not include specific direction for what the Council must
consider for the selection of projects and the awarding of
funds, other than the requirement that the financial
assistance must meet various environmental and
sustainability goals.
In addition, the bill specifies that the Council may adopt
criteria and requirements for the development and
implementation of regional grant programs, where projects
are selected by a regional granting authority, which is not
defined in the bill.
As the bill moves forward, the author should continue to
work with stakeholders and committee staff to specify:
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a) the criteria and requirements that the Council should
develop to guide the Council's selection of eligible
projects and awarding of cap-and-trade funds, and
b) the local governmental entities that will be
authorized to serve as a regional granting authority.
1) Amendments .
a) SB 1122 does not specify how the SB 535 requirement
would be met. An amendment should be taken to require
the development of criteria by the Council to ensure
their allocations of cap-and-trade funds meet the
requirements of SB 535.
b) SB 1122 specifies that development and adoption of
local plans and land use policies that help to implement
regional plans are eligible to receive cap-and-trade
funds by the Council. An amendment is needed to clarify
that those regional plans must support the planning and
development of sustainable communities, improve air and
water quality, improve natural resource protection,
increase the availability of affordable housing, improve
transportation and meet the goals of AB 32 and SB 375.
2) Double Referral to Senate Rules Committee . If this measure
is approved by the Senate Environmental Quality Committee,
the do pass motion must include the action to re-refer the
bill to the Senate Rules Committee.
SOURCE : Author
SUPPORT : None on file
OPPOSITION : CalChamber
California League of Food Processors
California Manufacturers and Technology
Association
California Taxpayers Association
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