BILL ANALYSIS �
SB 1228
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: SB 1228
AUTHOR: Hueso
AMENDED: March 27, 2014
FISCAL: Yes HEARING DATE: April 30, 2014
URGENCY: No CONSULTANT: Rebecca Newhouse
SUBJECT : TRADE CORRIDORS IMPROVEMENT FUND
SUMMARY :
Existing law :
1) Under the California Global Warming Solutions Act of 2006
(commonly referred to as AB 32), 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, 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.).
2) 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
three-year investment plan for the moneys deposited in GGRF.
(Government Code �16428.8).
3) Requires moneys from 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 GHG emissions in this
state through investments that may include strategic
planning and development of sustainable infrastructure
projects, including transportation and housing. (Health and
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Safety Code �39712).
4) Pursuant to the Highway Safety, Traffic Reduction, Air
Quality, and Port Security Bond Act of 2006 (Proposition
1B), establishes the Trade Corridors Improvement Fund (TCIF)
and provides for transfer of $2 billion of general
obligation bond proceeds to TCIF for infrastructure
improvements along federally designated Trade Corridors of
National Significance or other high-volume freight corridors
in California as determined by the California Transportation
Commission (CTC). (Government Code �8879.23 et seq.).
This bill :
1)Continues the existence of TCIF indefinitely in order to
receive funds from non-Proposition 1B sources, and governs
the distribution of non-Proposition 1B funds.
2)Requires CTC, when allocating any GGRF monies transferred to
TCIF, to require these projects to demonstrate how they will
reduce emissions consistent with the goals and objectives of
GGRF.
3)Requires CTC to allocate non-Proposition 1B monies in TCIF
for infrastructure improvements along federally designated
"Trade Corridors of National Significance" or other
high-volume freight corridors in California, as determined
by CTC.
4)Requires CTC to allocate TCIF funds in a manner that
addresses the state's most urgent needs, balances the
demands of various land ports of entry and seaports,
provides reasonable geographic balance among the state's
regions, and prioritizes projects that improve trade
corridor mobility while reducing emissions of diesel
particulate and other pollutant emissions.
5)Requires the CTC, when allocating TCIF funds, to consider the
speed and volume of large cargo traveling through the
distribution system, a reasonably consistent and predictable
amount of time for cargo to travel from one point to another
within the system, and a reduction in the recurrent daily
hours of delay.
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6) Requires the CTC to incorporate into its annual report to
the Legislature a summary of its TCIF-related activities,
including, at a minimum, a description and location of the
projects funded by TCIF, the status of each project, and a
description of the mobility and air-quality improvements the
program is achieving.
COMMENTS :
1)Purpose of Bill . The author states that California's land
and sea ports of entry serve as key international commercial
gateways for the more than $500 billion in products entering
and exiting the United States each year. Long wait times at
border ports of entry delay access to intermediary goods,
lead to problems in the manufacturing chain, and create
significant negative traffic congestion and air-quality
impacts. The author states that in order to leverage fully
California's trade-related economic opportunities, the state
needs a modern, robust, and multimodal goods movement
network. Investing in infrastructure improvements at sea
ports of entry can help federally designated marine highways
provide large reductions in GHG emissions and air pollutants,
relieve traffic congestion and wear and tear on highways, and
provide an influx of economic activity throughout the state.
This bill provides that to the extent GGRF cap-and-trade money
is allocated to TCIF, projects funded with that money must
demonstrate how they will reduce GHG emissions consistent
with the goals and objectives of GGRF.
2)Cap-and-trade auction revenue . 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
the following:
a) 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.
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b) 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 GHG
emissions through strategic planning and development of
sustainable infrastructure projects, are eligible
investments of GGRF.
c) 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 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.
3)Legal consideration of cap-and-trade auction revenues . The
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.
4)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
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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 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.
5)Proposition 1B and TCIF . SB 1266 (Perata), Chapter 25,
Statutes of 2006, authorized the sale of nearly $20B in
general obligation bonds for transportation projects, upon
voter approval. In November 2006, voters approved
Proposition 1B, the Highway Safety, Traffic Reduction, Air
Quality, and Port Security Bond Act of 2006. Proposition 1B
authorized the issuance of $19.9B in 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.
Proposition 1B created the TCIF and funded it with $2B of the
total bond proceeds. Proposition 1B directed the Legislature
to appropriate these funds for infrastructure improvements
along federally designated "Trade Corridors of National
Significance" or other high-volume freight corridors in
California as determined by CTC. Proposition 1B required
CTC, in determining project eligibility, to consult the state
trade infrastructure and goods movement plan, the trade
infrastructure and goods movement plans adopted by regional
transportation planning agencies, regional transportation
plans, and the statewide port master plan. Proposition 1B
provided that eligible projects included, but were not
limited to, improvements to highway capacity and operations,
the freight rail system, ports, truck corridors, and border
access, as well as to surface transportation to facilitate
goods movement to and from airports.
Although CTC has fully programmed the entire $2B of Proposition
1B funds in the TCIF, it has been able to program additional
projects as savings have materialized. CTC has extended the
program by two years, to fiscal year 2015-16, to take
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advantage of any further contract savings that may occur.
The Legislative Analyst's Office Analysis of the 2008-09 Budget
Bill noted that prior to Proposition 1B, the state did not
dedicate transportation funding specifically to trade
corridor mobility; furthermore, the state had not
traditionally provided state funds for projects such as
freight rail improvements. CTC decided to try to establish
TCIF as an ongoing program, rather than a one-time bond
program. CTC adopted the initial TCIF program of 79
projects, totaling $3.1 billion, in April 2008 - deliberately
over-programming TCIF in anticipation of additional revenue
sources becoming available, including State Highway Account
funds. Additional revenue did not materialize due to
economic conditions, and CTC ended up working with
stakeholders to eliminate the over-programming.
No uncommitted Proposition 1B monies remain in the TCIF, nor
does this bill appropriate further funds to the TCIF. This
bill cites cap-and-trade monies as a potential funding
source.
6)Governor's budget proposal . The Governor's 2014-15 budget
proposal appropriates $850 million dollars in cap-and-trade
revenue to fund projects including rail modernization,
sustainable communities, low carbon transportation, water and
energy efficiency, watershed and wetlands restoration and
waste diversion. For low carbon transportation, the proposal
allocates $200 million for the ARB to accelerate the
transition to low carbon freight and passenger
transportation, with a priority for disadvantaged
communities.
SB 1228, opening up the Trade Corridors Improvement Fund, to
accept funds from sources other than Bond money, specifies
various eligible projects including highway capacity
improvements to more efficiently move freight, improvements
to enhance the ability to move goods from land ports and
seaports to distribution centers, projects to enhance the
capacity and efficiency of land ports, and other goods
movement efficiency measures.
The above projects are consistent with the Governor's
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proposal and the cap-and-trade investment plan to the extent
that these projects promote low-carbon freight, and result in
GHGs emission reduction from the medium and heavy-duty
vehicle sector.
7)Proposals to expend cap and trade auction revenues . There are
a number of bills this session that propose to spend cap and
trade auction revenues for new or existing programs.
Concurrently, the Governor's budget proposal appropriates
$850 million auction revenues for various GHG emission
reduction programs in several agencies, and Pro Tempore
Steinberg has released an alternate proposal on a long-range
cap-and-trade revenue investment plan. There will need to be
coordination among authors as these measures move forward so
that these proposals create a cohesive investment strategy
for maximizing GHG emission reductions and project
cobenefits.
8)Double-referral . This bill is double-referred to the
Committees on Transportation & Housing and Environmental
Quality. The bill was heard in the Transportation & Housing
Committee on April 22, 2014, and passed out with a vote of
10-0.
SOURCE : San Diego Regional Chamber of Commerce
SUPPORT : None on file
OPPOSITION : None on file