The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature. Existing law 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 Greenhouse Gas Reduction Fund. Existing law requires moneys in the fund to be used to facilitate the reduction of greenhouse gas emissions and, where applicable and to the extent feasible, to foster job creation by promoting in-state greenhouse gas emissions reduction projects carried out by California workers and businesses.

This bill would, for projects involving hiring, require priority be given to projects involving hiring that include partnerships with training entities that have a proven track record of placing disadvantaged workers in support the targeted training and hiring of workers from disadvantaged communities for career-track jobs.

The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature. Existing law 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 Greenhouse Gas Reduction Fund. Existing law requires moneys in the fund to be used to facilitate the reduction of greenhouse gas emissions and, where applicable and to the extent feasible, to foster job creation by promoting in-state greenhouse gas emissions reduction projects carried out by California workers and businesses.

This bill would, for projects involving hiring, require a state agency that allocates moneys from the fund to prioritize projects that include project labor agreements with targeted hire goals, community workforce agreements that connect local residents to jobs or training opportunities, or partnerships priority be given to projects that include partnerships with training entities that have a proven track record of placing disadvantaged workers in career-track jobs.

The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature. Existing law 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 Greenhouse Gas Reduction Fund.

This bill would require a state agency that allocates moneys from the fund to prioritize projects that include project labor agreements with targeted hire goals, community workforce agreements that connect local residents to jobs or training opportunities, or partnerships with training entities that have a proven track record of placing disadvantaged workers in career-track jobs.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1030 (Ridley-Thomas) - California Global Warming Solutions Act of 2006: Greenhouse Gas Reduction Fund.

This bill does not meet the criteria for referral to the Suspense File.

Bill Summary:

AB 1030 would require that the spending of the Greenhouse Gas Reduction Fund (GGRF) for projects that involve hiring be prioritized for projects that support targeted training and hiring of workers from disadvantaged communities for career-track jobs.

Fiscal Impact:

Likely minor and absorbable costs to the GGRF (special) to the various state agencies with programs that expend GGRF funds.

Background:

The California Global Warming Solutions Act of 2006 (referred to as AB 32, HSC §38500 et seq.) requires the California Air Resources Board (ARB) to determine the 1990 statewide greenhouse gas (GHG) emissions level, to approve a statewide GHG emissions limit equivalent to that level that will 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 the regulations. All monies, except for fines and penalties, collected pursuant to a market-based mechanism are deposited in the Greenhouse Gas Reduction Fund (GGRF) (Government Code §16428.8).

Existing law requires that the GGRF only be used to facilitate the achievement of reductions of GHG emissions consistent with AB 32 (HSC §39710 et seq.). To this end, the Department of Finance, in consultation with the ARB and any other relevant state agencies, is required to develop, as specified, a three-year investment plan for the moneys deposited in the GGRF. The investment plan must allocate a minimum of 25% of the funds to projects that benefit disadvantaged communities and to allocate 10% of the funds to projects located within disadvantaged communities. Additionally, the ARB, in consultation with CalEPA, is required to develop funding guidelines for administering agencies receiving allocations of GGRF funds that include a component for how agencies should maximize benefits to disadvantaged communities.

Existing law, in addition to requiring that GGRF be used to reduce GHG emissions, also requires that the expenditures take into account the following factors to the extent feasible:

• Maximizing economic, environmental, and public health benefits to the state;

• Fostering job creation by promoting programs carried out by California workers and businesses;

• Complimenting efforts to improve air quality;

• Directing investment towards the most disadvantaged communities and households in the state;

• Providing opportunities for community institutions to participate in and benefit from statewide efforts to reduce GHG emissions;

• Lessen the impacts and effects of climate change on the state’s communities, economy, and environment.

Proposed Law:

AB 1030 would require that the spending of the GGRF for projects that involve hiring also be prioritized for projects that support targeted training and hiring of workers from disadvantaged communities for career-track jobs.

Staff Comments:

There are a large number of agencies that may use GGRF monies for projects that involve hiring including the State Transportation Agency, the Department of Transportation, the California Energy Commission, the Department of Water Resources, the Department of Fish and Wildlife, the Department of Forestry and Fire, and CalRecycle. Of the various agencies that have programs funded by GGRF that responded to inquiries for costs, none reported anticipates costs associated by this bill because either (1) they are already taking into account projects that will hire and train workers from disadvantaged communities or (2) this prioritization will occur on the natural by prioritizing projects located in disadvantaged communities.

The ARB does not believe this bill will require them to change their GGRF spending guidelines as those guidelines already speak to job creation.

Staff notes that there are multiple bills being considered by both houses of the Legislature that propose projects that would be eligible to receive GGRF funds. It is unclear how these bills will interact with each other. Staff notes that a discussion on the spending of GGRF is anticipated in August as part of a budget discussion.

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SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: AB 1030

SUBJECT: California Global Warming Solutions Act of 2006: Greenhouse Gas Reduction Fund.

ANALYSIS:

Existing law:

1. Requires, under the California Global Warming Solutions Act of 2006 (also known as AB 32), the California 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. AB 32 authorizes ARB to adopt a regulation that establishes a market-based mechanism with declining annual aggregate emission limits for sources that emit GHGs. (Health and Safety Code (HSC) §38500 et seq.)

2. Establishes the Greenhouse Gas Reduction Fund (GGRF) in the State Treasury, 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 ARB and any other relevant state agency, to develop, as specified, a three-year investment plan for the moneys deposited in the GGRF. (Government Code §16428.8)

3. Requires moneys from the GGRF be used to facilitate the achievement of reductions of GHG emissions in this state consistent with AB 32, and authorizes a range of GHG reduction investments and establishes several additional policy objectives, including fostering job creation by promoting in-state GHG emissions reduction projects carried out by California workers and businesses. (HSC §39712)
   
   

4. Requires the GGRF investment plan to allocate, at a minimum, 25% of the funds to benefit disadvantaged communities, and to allocate 10% of GGRF moneys within disadvantaged communities. (HSC §39713)
   
   

This bill requires that, for projects funded by GGRF moneys and that involve hiring, prioritization be given to projects that include partnerships with training entities that have a proven track record of placing disadvantaged workers in career-track jobs.

Background

1. Cap and Trade auction revenue. ARB has conducted eleven cap-and-trade auctions. The first 10 have generated almost $1.6 billion in proceeds to the state.

Several bills in 2012 provided legislative direction for the expenditure of auction proceeds including:

• SB 535 (de León, 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. Pérez, 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 outlines categories of eligible GGRF investments, and establishes priorities when investing GGRF moneys, including maximizing economic, environmental, and public health benefits to the state, foster job creation by promoting in-state GHG emissions reductions, and directing investment toward the most disadvantaged communities and households in the state.

• SB 862 (Budget Committee, Chapter 36, Statutes of 2014) requires the ARB to develop guidelines on maximizing benefits for disadvantaged communities by agencies administering GGRF funds, and guidance for administering agencies on GHG emission reduction reporting and quantification methods.

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, according to the report, 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 and Morning Star Packing Company 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 is more akin to a regulatory fee. The plaintiffs filed an appeal with the 3rd District Court of Appeal in Sacramento in February of last year.

Budget allocations. The 2014-15 Budget allocates $832 million in GGRF revenues to a variety of transportation, energy, and resources programs aimed at reducing GHG emissions. Various agencies are in the process of implementing this funding. The budget agreement specifies how the state will allocate most cap-and-trade auction revenues in 2015-16 and beyond. For all future revenues, the legislation appropriates 25% for the state’s high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to intercity capital rail projects, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature.

2. Maximizing benefits to disadvantaged communities. Pursuant to requirements in SB 862 of last year, ARB staff released preliminary guidance in the fall of last year on approaches that agencies can use to maximize the benefits of investments to disadvantaged communities and how agencies can determine whether their GGRF investments are located within, or provide benefits to, disadvantaged communities, as required by SB 535.

The guidance establishes screening criteria to determine whether a specific project qualifies toward the 25% target of funds providing benefits to a disadvantaged community, or the 10% target of investments spent within a disadvantaged community. The guidelines specify that benefits must be “direct, meaningful, and assured.”

The interim guidance also recommends that agencies expending GGRF moneys maximize the percentage of those funds that are allocated for projects that benefit disadvantaged communities, preferably in a way that exceeds the minimum 10% and 25% investment targets. The guidelines also suggest that agencies give priority to those projects that maximize benefits to disadvantaged communities when selecting projects for a given investment by scoring criteria that favors projects which provide multiple benefits or the most significant benefits.

The guidance lists some common needs of disadvantaged communities, as identified by community advocates, including the need to create living wage jobs that increase family income, provide access to health insurance, retirement benefits and have long-term job retention. The guidance suggests that administering agencies, to the maximum extent possible, make investments that result in benefits that either address an important need commonly identified by disadvantaged community residents or address a key factor that caused the area to be identified as a disadvantaged community, and cite unemployment levels as one example.

Comments

1. Purpose of Bill. According to the author, “AB 1030 will generate new workforce opportunities for disadvantaged workers through the prioritization of projects that not only accelerate emission reductions across the State but that have inclusive training policies for workers facing barriers to employment.”

2. Amendment. AB 1030 currently requires, where applicable and to the extent feasible, that for projects funded through cap-and-trade auction revenue that involve hiring, projects that include partnerships with training entities that have a proven track record of placing disadvantaged workers in career-track jobs be prioritized. It is not clear what “a proven track record” entails. Additionally, specifying prioritization to partnerships with those training entities that have “a proven track record” may unnecessarily narrow the universe of investment-worthy projects to achieve the goal of placing disadvantaged workers in career-track jobs and GHG emissions reductions. Also, the term “disadvantaged worker” is not defined.

Instead of specifying “partnerships with training entities that have a proven track record” and using the term “disadvantaged workers,” an amendment is needed to broaden and clarify the bill to specify that, for projects that involve hiring, GGRF moneys prioritize projects that support the training and hiring of workers from disadvantaged communities for career-track jobs.

SOURCE:

PolicyLink

SUPPORT:

California Black Health Network

California Rural Legal Assistance Foundation

Communities United for Restorative Youth Justice

Fathers & Families of San Joaquin

La Cooperativa Campesina de California

Latino Coalition for a Healthy California

Leadership Counsel for Justice and Accountability

National Employment Law Project

Peace4Kids

Physicians for Social Responsibility – Los Angeles

Strategic Concepts in Organizing and Policy Education

Urban Habitat

Valley Latino Environmental Advancement Project

OPPOSITION:

None received

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ASSEMBLY THIRD READING

ATR Bill Id:AB 1030

Author:(Ridley-Thomas)

As Amended Ver:May 5, 2015

Majority vote

SUMMARY: Requires state agencies allocating moneys from the Greenhouse Gas Reduction Fund (GGRF) for projects that involve hiring to prioritize projects that include partnerships with training entities that have a proven track record of placing disadvantaged workers in career-track jobs.

EXISTING LAW:

1. Requires the Air Resources Board (ARB), pursuant to California Global Warming Solutions Act of 2006 [AB 32 (Núñez), Chapter 488, Statutes of 2006], to adopt a statewide greenhouse gas (GHG) emissions limit equivalent to 1990 levels by 2020 and adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions.

2. Establishes the GGRF 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 (i.e., the cap-and-trade program adopted by ARB under AB 32) to be deposited in the GGRF and available for appropriation by the Legislature.

3. Establishes the GGRF Investment Plan and Communities Revitalization Act [AB 1532 (John A. Pérez), Chapter 807, Statutes of 2012] to set procedures for the investment of GHG allowance auction revenues. AB 1532 authorizes a range of GHG reduction investments and establishes several additional policy objectives, including fostering job creation by promoting in-state GHG emissions reduction projects carried out by California workers and businesses.

4. Prohibits the allocation of GGRF for a measure or program except after determining, based on the available evidence, that the use of those moneys furthers the regulatory purposes of AB 32 and is consistent with law.

5. Requires the investment plan to allocate: a) a minimum of 25% of the available moneys in the fund to projects that provide benefits to identified disadvantaged communities; and, b) a minimum of 10% of the available moneys in the fund to projects located within identified disadvantaged communities [SB 535 (De León), Chapter 830, Statutes of 2012].

FISCAL EFFECT: According to the Assembly Appropriations Committee, unknown, likely absorbable costs.

COMMENTS: The 2014 to 2015 Budget Act allocates cap-and-trade revenues for the 2014 to 2015 fiscal year and establishes a long-term plan for the allocation of cap-and-trade revenues beginning in fiscal year 2015 to 2016. The Budget continuously appropriates 35% of cap-and-trade funds for investments in transit, affordable housing, and sustainable communities. Twenty-five percent of the revenues are continuously appropriated to continue the construction of high-speed rail. The remaining 40% will be appropriated annually by the Legislature for investments in programs that include low-carbon transportation, energy efficiency and renewable energy, and natural resources and waste diversion.

SB 535 directed that, in addition to reducing GHG emissions, 25% of the proceeds from the GGRF must also go to projects that provide a benefit to disadvantaged communities, as identified by the California Environmental Protection Agency. A minimum of 10% of the funds must be for projects located within those communities.

According to the author, this bill presents an opportunity to generate new workforce training opportunities for disadvantaged workers through the prioritization of projects with inclusive training and hiring policies.

Analysis Prepared by: Lawrence Lingbloom / NAT. RES. / (916) 319-2092 FN: 0000492

Date of Hearing: May 20, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 1030

Author:(Ridley-Thomas) – As Amended Ver:May 5, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires state agencies allocating AB 32 cap and trade revenues for projects involving hiring, to prioritize projects that include partnerships with training entities with a proven track record of placing disadvantaged workers in career-track jobs.

FISCAL EFFECT:

Unknown, likely absorbable costs (Greenhouse Gas Reduction Funds).

COMMENTS:

1. Purpose. According to the author, this bill presents an opportunity to generate new workforce training opportunities for disadvantaged workers through the prioritization of projects with inclusive training and hiring policies.

2. Background. The California Global Warming Solutions Act of 2006 (AB 32) requires ARB to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and adopt regulations, including market-based compliance mechanisms, to achieve maximum technologically feasible and cost-effective GHG emission reductions.
   
   

As part of the implementation of AB 32 market-based compliance measures, ARB adopted a cap-and-trade program that caps the allowable statewide emissions and provides for the auctioning of emission credits, the proceeds of which are quarterly deposited into the GGRF available for appropriation by the Legislature.

The 2014-15 Budget Act allocates cap-and-trade revenues for the 2014-15 fiscal year and establishes a long-term plan for the allocation of cap-and-trade revenues beginning in fiscal year 2015-16.

The Budget continuously appropriates 35% of cap-and-trade funds for investments in transit, affordable housing, and sustainable communities. Twenty-five percent of the revenues are continuously appropriated to continue the construction of high-speed rail. The remaining 40% will be appropriated annually by the Legislature for investments in programs that include low-carbon transportation, energy efficiency and renewable energy, and natural resources and waste diversion.

3. Disadvantaged Communities. SB 535 (De León), Chapter 830, Statutes of 2012, requires no less than 10% of cap-and-trade revenues fund projects located within disadvantaged communities, and that 25% of available revenues fund projects that benefit those communities.

In October 2014, CalEPA released its list of disadvantaged communities for the purpose of SB 535. CalEPA relied on CalEnviroScreen, to identify the areas disproportionately burdened by, and vulnerable to, multiple sources of pollution. CalEnviroScreen is a tool that assesses all census tracts in California to identify the areas disproportionally affected and vulnerable to multiple sources of pollution.

Areas (census tracts) identified as disadvantaged for SB 535's purposes by CalEnviroScreen include: the majority of the San Joaquin Valley; much of Los Angeles and the Inland Empire; pockets of other communities near ports, freeways, and major industrial facilities such as refineries and power plants; and large swaths of the Coachella Valley, Imperial Valley and Mojave Desert.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 27, 2015

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Das Williams, Chair

ABPCA Bill Id:AB 1030

Author:(Ridley-Thomas) – As Introduced Ver:February 26, 2015

SUBJECT: California Global Warming Solutions Act of 2006: Greenhouse Gas Reduction Fund

SUMMARY: Requires state agencies allocating moneys from the Greenhouse Gas Reduction Fund (GGRF) to prioritize projects based on specified employment-related factors.

EXISTING LAW:

1. Requires the Air Resources Board (ARB), pursuant to California Global Warming Solutions Act of 2006 [AB 32 (Núñez), Chapter 488, Statutes of 2006], 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, once specified conditions are met.
   
   

3. Establishes the GGRF 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 (i.e., the cap-and-trade program adopted by ARB under AB 32) to be deposited in the Fund and available for appropriation by the Legislature.

4. Establishes the GGRF Investment Plan and Communities Revitalization Act [AB 1532 (John A. Pérez), Chapter 807, Statutes of 2012] to set procedures for the investment of GHG allowance auction revenues. AB 1532 authorizes a range of GHG reduction investments and establishes several additional policy objectives, including fostering job creation by promoting in-state GHG emissions reduction projects carried out by California workers and businesses.

5. Prohibits the allocation of GGRF for a measure or program except after determining, based on the available evidence, that the use of those moneys furthers the regulatory purposes of AB 32 and is consistent with law.
   
   

6. Requires the investment plan to allocate: 1) a minimum of 25% of the available moneys in the fund to projects that provide benefits to identified disadvantaged communities; and, 2) a minimum of 10% of the available moneys in the fund to projects located within identified disadvantaged communities [SB 535 (De Leon), Chapter 830, Statutes of 2012].

THIS BILL requires a state agency that allocates GGRF to prioritize a project that includes any of the following:

1. Project labor agreements with targeted hire goals.

2. Community workforce agreements that connect local residents to jobs or training opportunities.

3. Partnerships with training entities that have a proven track record of placing disadvantaged workers in career-track jobs.

FISCAL EFFECT: Unknown

COMMENTS:

1. Background. The 2014-15 Budget Act allocates cap-and-trade revenues for the 2014-15 fiscal year and establishes a long-term plan for the allocation of cap-and-trade revenues beginning in fiscal year 2015-16. The Budget continuously appropriates 35 percent of cap-and-trade funds for investments in transit, affordable housing, and sustainable communities. Twenty-five percent of the revenues are continuously appropriated to continue the construction of high-speed rail. The remaining 40 percent will be appropriated annually by the Legislature for investments in programs that include low-carbon transportation, energy efficiency and renewable energy, and natural resources and waste diversion.

SB 535 directed that, in addition to reducing greenhouse gas emissions, a quarter of the proceeds from the GGRF must also go to projects that provide a benefit to disadvantaged communities, as identified by the California Environmental Protection Agency (CalEPA). A minimum of 10 percent of the funds must be for projects located within those communities.

2. Author's statement:

AB 1030 presents a tremendous opportunity to generate new workforce training and job opportunities for disadvantaged workers through the prioritization of good projects that not only accelerate emission reductions across the state, but that have inclusive training and hiring policies for workers facing barriers to employment and that create good paying career track jobs with benefits.

3. Is GGRF the right lever? First and foremost, GGRF moneys must be used to facilitate GHG emission reductions consistent with AB 32. It is not clear how a state agency will reconcile that requirement with this bill's requirement to prioritize a project that includes a project labor agreement, community workforce agreement, or partnership with a training entity. The author and the committee may wish to consider amendments to clarify that these employment-related priorities are subordinate to the objective of reducing GHG emissions.

It is also evident that many legitimate uses of GGRF do not involve hiring or training of employees or contractors. Therefore, the author and the committee may wish to consider amendments to limit the scope of the bill to projects with a hiring or training element.

4. Author's amendments. The author has indicated his intent to remove project labor agreements and community workforce agreements from the bill (i.e., striking page 2, line 35-page 3, line 2), leaving training partnerships as the only factor.

REGISTERED SUPPORT / OPPOSITION:

Support

California Black Health Network

California Rural Legal Assistance Foundation

Communities United for Restorative Youth Justice

Fathers & Families of San Joaquin

Latino Coalition for a Healthy California

Leadership Counsel for Justice & Accountability

Physicians for Social Responsibility, Los Angeles

Urban Habitat

Valley Latino Environmental Advancement Project

Opposition

Plumbing-Heating-Cooling Contractors Association of California

Western Electrical Contractors Association

Analysis Prepared by: Lawrence Lingbloom / NAT. RES. / (916) 319-2092