The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of 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 as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. 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 fund. Existing law requires the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects that provide benefits to disadvantaged communities, as defined, and a minimum of 10% to projects located in those disadvantaged communities. Existing law authorizes the allocation of 10% for projects located in disadvantaged communities to be used for projects included in the minimum allocation of 25% for projects that provide benefits to disadvantaged communities.

This bill would instead require the investment plan to allocate (1) a minimum of 25% of the available moneys in the fund to projects located within, and benefiting individuals living in, disadvantaged communities, (2) an additional minimum of 5% to projects that benefit low-income households or to projects located within, and benefiting individuals living in, low-income communities located anywhere in the state, and (3) an additional minimum of 5% either to projects that benefit low-income households that are outside of, but within a ¹/₂ mile of, disadvantaged communities, or to projects located within the boundaries of, and benefiting individuals living in, low-income communities that are outside of, but within a ¹/₂ mile of, disadvantaged communities.

The bill would become operative only if AB 1613 of the 201516 Regular Session is enacted and becomes effective on or before January 1, 2017.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of 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 as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. 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 fund. Existing law requires the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects that provide benefits to disadvantaged communities, as defined, and a minimum of 10% to projects located in those disadvantaged communities. Existing law authorizes the allocation of 10% for projects located in disadvantaged communities to be used for projects included in the minimum allocation of 25% for projects that provide benefits to disadvantaged communities.

This bill would instead require the investment plan to allocate (1) a minimum of 25% of the available moneys in the fund to projects located within, and benefiting individuals living in, disadvantaged communities, (2) an additional minimum of 5% to projects that benefit low-income households or to projects located within, and benefiting individuals living in, low-income communities located anywhere in the state, and (3) an additional minimum of 5% either to projects that benefit low-income households that are outside of, but within a ¹/₂ mile of, disadvantaged communities, or to projects located within the boundaries of, and benefiting individuals living in, low-income communities that are outside of, but within a ¹/₂ mile of, disadvantaged communities.

The bill would become operative only if AB 1613 of the 201516 Regular Session is enacted and becomes effective on or before January 1, 2017.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of 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 as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. 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 fund. Existing law requires the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects that provide benefits to disadvantaged communities, as defined, and a minimum of 10% to projects located in those disadvantaged communities. Existing law authorizes the allocation of 10% for projects located in disadvantaged communities to be used for projects included in the minimum allocation of 25% for projects that provide benefits to disadvantaged communities.

This bill would instead require the investment plan to allocate (1) a minimum of 25% of the available moneys in the fund to projects located within, and benefiting individuals living in, disadvantaged communities, as described, and (2) an additional minimum of 5% to projects that benefit low-income households or to projects located within, and benefiting individuals living in, low-income communities, as defined. communities located anywhere in the state, and (3) an additional minimum of 5% either to projects that benefit low-income households that are outside of, but within a ¹/₂ mile of, disadvantaged communities, or to projects located within the boundaries of, and benefiting individuals living in, low-income communities that are outside of, but within a ¹/₂ mile of, disadvantaged communities.

The bill would become operational operative only if AB 1613 of the 201516 Regular Session is enacted and becomes effective on or before January 1, 2017.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of 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 as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. 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. fund. Existing law requires the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects that provide benefits to disadvantaged communities, as defined, and a minimum of 10% to projects located in those disadvantaged communities. Existing law provides that authorizes the allocation of 10% for projects located in disadvantaged communities may to be used for projects included in the minimum allocation of 25% for projects that provide benefits to disadvantaged communities.

This bill would instead require the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects located within, and benefiting individuals living in, disadvantaged communities, as described, and an additional minimum of 5% to projects that benefit low-income households or to projects located within, and benefiting individuals living in, low-income communities, as defined.

The bill would make the operation of its provisions contingent upon the enactment of become operational only if AB 1613 of the 201516 Regular Session and the appropriation of $205,000,000 in that act from the Greenhouse Gas Reduction Fund. is enacted and becomes effective on or before January 1, 2017.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of 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 as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. 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 the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects that provide benefits to disadvantaged communities, as defined, and a minimum of 10% to projects located in those disadvantaged communities. Existing law provides that the allocation of 10% for projects located in disadvantaged communities may be used for projects included in the minimum allocation of 25% for projects that provide benefits to disadvantaged communities.

This bill would instead require the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects located within, and benefiting individuals living in, disadvantaged communities, as described, and an additional minimum of 20% 5% to projects that benefit low-income households or to projects located within, and benefiting individuals living in, low-income communities, as defined.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of 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 as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. 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 the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects that provide benefits to disadvantaged communities, as defined, and a minimum of 10% to projects located in those disadvantaged communities. Existing law authorizes provides that the allocation of 10% for projects located in disadvantaged communities to may be used for projects included in the minimum allocation of 25% for projects that provide benefits to disadvantaged communities.

This bill would instead require the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects located within, and benefitting benefiting individuals living in, disadvantaged communities, as described, and a an additional minimum of 20% to projects that benefit low-income households, as specified, with a fair share of those moneys targeting households with incomes at or below 200% of the federal poverty level. households or to projects located within, and benefiting individuals living in, low-income communities, as defined.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act requires the board to adopt greenhouse gas emission limits and emission reduction measures by regulation, and authorizes the state board to include the use of market-based compliance mechanisms to comply with the regulations. mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. 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 the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects that provide benefits to disadvantaged communities communities, as defined, and a minimum of 10% to projects located in disadvantaged communities. Existing law provides that authorizes the allocation of 10% for projects located in disadvantaged communities may to be used for projects included in the minimum allocation of 25% for projects that provide benefits to disadvantaged communities.

This bill would instead require the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects located within, and benefitting individuals living in, disadvantaged communities and a separate and additional unspecified percentage a minimum of 20% to projects that benefit low-income households, as specified, with a fair share of those moneys targeting households with incomes at or below 200% of the federal poverty level.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act requires the board to adopt greenhouse gas emission limits and emission reduction measures by regulation, and authorizes the state board to include the use of market-based compliance mechanisms to comply with the regulations. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. 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 the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects that provide benefits to disadvantaged communities and a minimum of 10% to projects located in disadvantaged communities. Existing law provides that the allocation of 10% for projects located in disadvantaged communities may be used for projects included in the minimum allocation of 25% for projects that provide benefits to disadvantaged communities.

This bill would instead require the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects located within, and benefitting individuals living in, disadvantaged communities and a separate and additional 25% unspecified percentage to projects that benefit low-income households, as specified, with a fair share of those moneys targeting households with incomes at or below 200% of the federal poverty level.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act requires the board to adopt greenhouse gas emission limits and emission reduction measures by regulation, and authorizes the state board to include the use of market-based compliance mechanisms to comply with the regulations. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. 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 the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects that provide benefits to disadvantaged communities and a minimum of 10% to projects located in disadvantaged communities. Existing law provides that the allocation of 10% for projects located in disadvantaged communities may be used for projects included in the minimum allocation of 25% for projects that provide benefits to disadvantaged communities.

This bill would instead require the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects located within within, and benefitting individuals living in, disadvantaged communities and a separate and additional 25% to projects that benefit low-income households. households, as specified, with a fair share of those moneys targeting households with incomes at or below 200% of the federal poverty level.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act requires the board to adopt greenhouse gas emission limits and emission reduction measures by regulation, and authorizes the state board to include the use of market-based compliance mechanisms to comply with the regulations. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. 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 the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects that provide benefits to disadvantaged communities and a minimum of 10% to projects located in disadvantaged communities. Existing law provides that the allocation of 10% for projects located in disadvantaged communities may be used for projects included in the minimum allocation of 25% for projects that provide benefits to disadvantaged communities.

This bill would instead require the investment plan to allocate a minimum of 25% of the available moneys in the fund to projects located within disadvantaged communities and a separate and additional 25% to projects that benefit low-income households.

(Without Reference to File)

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1550

Author:(Gomez)

As Amended Ver:August 23, 2016

Majority vote

Original Committee Reference: NAT. RES.

SUMMARY: Requires that 25% of the Greenhouse Gas Reduction Fund (GGRF) be spent on projects located within disadvantaged communities (DACs), and requires that an additional 5% be spent on projects that benefit low-income households.

The Senate amendments:

1. Reduce the amount dedicated for projects that benefit low-income households from 20% to 5%.
2. Allocate 5% of the GGRF to projects that benefit low-income households and that are located within a half mile around a disadvantaged community.
3. Specify that this bill will only become operative if AB 1613 (Committee on Budget) of the current legislative session is chaptered and $205 million is appropriated from the GGRF.
4. Make related technical changes.

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. AB 32 authorizes ARB to permit the use of market-based compliance mechanisms to comply with GHG reduction regulations, once specified conditions are met.
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 to set procedures for the investment of GHG allowance auction revenues. Authorizes a range of GHG reduction investments and establishes several policy objectives, including:
   1. Maximize economic, environmental, and public health benefits;
   2. Foster job creation;
   3. Complement efforts to improve air quality;
   4. Direct investment toward the most disadvantaged communities and households in the state;
   5. Provide opportunities for businesses, public agencies, nonprofits, and other community institutions to participate in and benefit from statewide efforts to reduce GHG emissions; and,
   6. Lessen the impacts and effects of climate change on the state's communities, economy, and environment.
4. Requires the investment plan to allocate a) a minimum of 25% of the available moneys in the GGRF to projects that provide benefits to identified DACs, and b) a minimum of 10% of the available moneys in the GGRF to projects located within identified DACs.

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. Increased GGRF expenditures in DACs and for low-income households and to low-income communities.
2. Increased annual ongoing costs of up to $465,000 (GGRF) for ARB to modify existing guidelines and tracking systems, provide guidance to administering agencies, and conduct outreach.
3. Unknown cost to administering agencies to update tracking systems, track GGRF expenditures in DACs and low-income communities, and report to ARB regarding expenditures in these communities.

COMMENTS: Since November 2012, ARB has conducted 15 cap-and-trade auctions, generating over $4 billion in proceeds to the state. State law requires auction revenues be used to facilitate the achievement of GHG emissions reductions and outlines various categories of allowable expenditures. Statute further requires Department of Finance (DOF), with ARB and any other relevant state agency, to develop a three-year investment plan for the auction proceeds, which are deposited in the GGRF.

SB 535 (de León), Chapter 830, Statutes of 2012 requires DOF, in the investment plan, to allocate at least 25% of available moneys in the GGRF to projects that provide benefits to DACs, and at least 10% to projects located within DACs. Additionally, SB 862 (Committee on Budget and Fiscal Review), Chapter 36, Statutes of 2014 requires ARB to develop guidelines on maximizing benefits for DACs by agencies administering GGRF funds, and guidance for administering agencies on GHG emissions reduction reporting and quantification methods.

SB 862 (Committee on Budget and Fiscal Review), Chapter 36, Statutes of 2014 continuously appropriated portions of the GGRF for designated purposes. The bill continuously appropriated 25% for the state's high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to the Transit and Intercity Rail Capital Program, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature. The Governor's 2016-17 proposed budget would have appropriated over $3 billion to a variety of programs and projects in the transportation, energy, natural resources, and waste diversion sectors.

CalEnviroScreen was developed by the Office of Environmental Health Hazard Assessment, at the request of CalEPA and pursuant to SB 535, to identify those communities in California that are the most vulnerable and pollution-burdened. Using CalEnviroScreen, the California Environmental Protection Agency (CalEPA) identified DACs throughout California in October 2014. The current version incorporates 19 indicators, including those for exposures, environmental effects, sensitive populations, and socioeconomic factors. Census tracts in the top 25th percentile of cumulative CalEnviroScreen scores have been designated DACs for the purposes of SB 535. The areas where the majority of DACs were identified included the San Joaquin Valley, parts of Los Angeles and the Inland Empire, and large portions of the Coachella Valley and Mojave Desert, in addition to communities located near industrial areas and major roadways.

In 2014, ARB published interim guidance for meeting the requirements associated with GGRF appropriations, as well as maximizing benefits to DACs, for agencies appropriated GGRF moneys. This guidance was finalized and released in late 2015. In meeting the SB 535 requirement, the guidance states that agencies should first assess whether projects will be located within a DAC, as identified through CalEnviroScreen, and whether the project will provide direct benefits to that community, consistent with specific criteria in the guidance document for each program type. If investments meet this requirement, then the guidance specifies that the projects and administrative funds count towards both the 10% and 25% requirements for GGRF investments within, and providing benefits to, DACs.

If the project is not within the DAC, the guidance directs agencies to evaluate whether the project provides direct, meaningful, and assured benefits in accordance with specified criteria for each project type. Projects within a half-mile of a DAC and that provide increased service or access to those communities, or projects that result in at least 25% of project work hours performed by residents of disadvantaged communities, may count towards the 25% of GGRF money required to benefit DACs.

AB 1532 (Pérez), Chapter 807, Statutes of 2012 requires DOF to submit an annual report to the Legislature on the status and outcomes of projects funded from the GGRF. The 2016 Annual Report states that for implemented projects funded by GGRF, 51% of investments provided benefits to DACs, and 39% of GGRF investments were for projects located within DACs.

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0004911

 THIRD READING  

Bill No: AB 1550

Author:

:

Vote:

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-1, 6/29/16

AYES: Wieckowski, Hill, Jackson, Leno, Pavley

NOES: Gaines

NO VOTE RECORDED: Bates

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 54-23, 6/2/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill requires a minimum of 25% of Greenhouse Gas Reduction Fund (GGRF) moneys be spent on projects located within and benefiting disadvantaged communities (DACs), and an additional minimum of 10% of GGRF moneys be spent on projects that benefit low-income households or are within, and benefit low-income communities, as specified.

Senate Floor Amendments of 8/18/16 strike the specification that the bill only becomes operative if $205 million from the GGRF is appropriated through AB 1613 (Committee on Budget).

ANALYSIS:

Existing law:

1. Requires, under the California Global Warming Solutions Act of 2006, 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. (Health and Safety Code (HSC) §38500 et seq.)
2. Establishes GGRF and requires that moneys collected pursuant to a market-based mechanism be deposited in the fund. (Government Code §16428.8)
3. Requires that GGRF moneys be used to facilitate the achievement of reductions of GHG emissions in the state consistent with the Global Warming Solutions Act of 2006. (HSC §39712)
4. Requires the GGRF investment plan allocate a minimum of 25% of the funds to projects that benefit DACs and to allocate a minimum of 10% of the funds to projects located within DACs. (HSC §39713)
5. Requires the California Environmental Protection Agency (CalEPA) to identify DACs for GGRF investment opportunities and requires those communities be identified based on geographic, socioeconomic, public health, and environmental hazard criteria. (HSC §39711)

This bill:

1. Revises the requirement that 25% of the GGRF be expended to benefit DACs and 10% of GGRF be expended within DACs to instead require that a minimum of 25% of the GGRF be allocated for projects located within the boundaries of, and benefiting individuals in, DACs.

1. Requires a minimum of 5% of GGRF revenues to be spent to benefit low-income households or to projects located within the boundaries of, and benefiting individuals in, low-income communities anywhere in the state.
2. Requires a minimum of 5% of GGRF revenues to be spent to benefit low-income households that are outside of, but within a half mile of, DACs, or to projects located within the boundaries of, and benefiting individuals in, low-income communities that are outside of, but within a half mile of, DACs.
3. Defines “low-income households” as households with incomes at or below 80% of the statewide median income or with household incomes at or below the threshold designated as low-income by the Department of Housing and Community Development (HCD), as specified.
4. Defines “low-income communities” as census tracts with median household incomes at or below 80 percent of the statewide median income or with median household incomes at or below the threshold designated as low income by the HCD, as specified.
5. Requires funds benefitting DACs, funds benefitting low-income households or low-income communities anywhere and the state, and funds benefiting low-income households and low-income communities within a half mile of DACs, to be counted separately for the purposes of meeting the targets.
6. Specifies that the bill will only become operative if AB 1613 (Committee on Budget) is enacted and becomes effective on or before January 1, 2017.

Background

1. Cap-and-trade auction revenue. Since November 2012, ARB has conducted 16 cap-and-trade auctions, generating over $4 billion in proceeds to the state.

State law requires auction revenues be used to facilitate the achievement of GHG emissions reductions and outlines various categories of allowable expenditures. Statute further requires Department of Finance (DOF), with ARB and any other relevant state agency, to develop a three-year investment plan for the auction proceeds, which are deposited in the GGRF.

SB 535 (de León, Chapter 830, Statutes of 2012) requires DOF, in the investment plan, to allocate at least 25% of available moneys in the GGRF to projects that provide benefits to DACs, and at least 10% to projects located within DACs. Additionally, SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014) requires ARB to develop guidelines on maximizing benefits for DACs by agencies administering GGRF funds, and guidance for administering agencies on GHG emissions reduction reporting and quantification methods.

Budget allocations. SB 862, a Budget Trailer Bill, established a long-term cap-and-trade expenditure plan by continuously appropriating portions of the funds for designated programs or purposes. The bill appropriates 25% for the state’s high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to the Transit and Intercity Rail Capital Program, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature. The Governor’s 2016-17 proposed Budget appropriates over $3 billion to a variety of programs and projects in the transportation, energy, natural resources, and waste diversion sectors.

1. CalEnviroScreen and DACs. CalEnviroScreen was developed by the Office of Environmental Health Hazard Assessment, at the request of CalEPA and pursuant to the GGRF Investment Plan and Communities Revitalization Act (SB 535), to determine a list of DACs in California that are the most vulnerable and pollution-burdened.

Using CalEnviroScreen, CalEPA determined a list of DACs throughout California in October 2014. The current version incorporates 19 indicators, including those for exposures, environmental effects, sensitive populations, and socioeconomic factors. Census tracts in the top 25th percentile of cumulative CalEnviroScreen scores have been designated DACs for the purposes of
SB 535.

The areas where the majority of DACs were identified included the San Joaquin Valley, parts of Los Angeles and the Inland Empire, and large portions of the Coachella Valley and Mojave Desert, in addition to communities located near industrial areas and major roadways.

1. ARB guidance on GGRF. In 2014, ARB published interim guidance for meeting the requirements associated with GGRF appropriations, as well as maximizing benefits to DACs, for agencies appropriated GGRF moneys. This guidance was finalized and released in late 2015.

In meeting the SB 535 requirement, the guidance states that agencies should first assess whether projects will be located within a DAC, as identified through CalEnviroScreen, and whether the project will provide direct benefits to that community, consistent with specific criteria in the guidance document for each program type. If investments meet this requirement, then the guidance specifies that the projects and administrative funds count towards both the 10% and 25% requirements for GGRF investments within, and providing benefits to, DACs.

If the project is not within the DAC, the guidance directs agencies to evaluate whether the project provides direct, meaningful, and assured benefits in accordance with specified criteria for each project type. Projects within a half-mile of a DAC and that provide increased service or access to those communities, or projects that result in at least 25% of project work hours performed by residents of DACs, may count towards the SB 535 mandate requiring a minimum of 25% of GGRF money benefit DACs.

1. GGRF benefits report. AB 1532 (Pérez, Chapter 807, Statutes of 2012) requires DOF to submit an annual report to the Legislature on the status and outcomes of projects funded from the GGRF. The 2016 Annual Report describes states that for implemented projects funded through GGRF, 51% of investments provided benefits to DACs, with 39% of GGRF investments directed within DACs.

Comments

Purpose of Bill. According to the author, “Low-income communities and communities of color are and will continue to be disproportionately impacted by the effects of our changing climate. As we think about how to structure our state’s climate programs – as we discuss percentages and parameters – this is a reality we cannot ignore and must strive to remedy. AB 1550 builds on the successes of our climate equity efforts to date by ensuring a greater investment in California’s environmentally and socioeconomically disadvantaged populations. The bill requires that at least 25% of cap-and-trade funds be spent on projects located directly within disadvantaged communities, as identified by the state’s environmental health screening tool, to ensure that the level of investment in DACs equals their share of the population.

“While CalEnviroScreen is a valuable tool for capturing cumulative impacts in communities, it is widely recognized that there are poor and working-class households that lie outside of DACs – but that struggle to make ends meet and spend a large portion of their incomes on necessitates – such as energy, water, housing, and transportation. If we wish to foster a shared, statewide commitment to tackling pressing environmental issues, we must take advantage of opportunities to reduce greenhouse gas emissions and build sustainable communities while lifting poor and working Californians out of poverty. A greater investment in California’s environmentally and socioeconomically disadvantaged populations has the potential to yield significant climate, public health, and cost benefits while helping bridge the ‘green divide’.”

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Increased GGRF expenditures in DACs (from 10% direct investment to 25%) and for low-income households and to low-income communities (from zero to five percent).
• Increased annual ongoing costs of up to $465,000 (GGRF) for ARB to modify existing guidelines and tracking systems, provide guidance to administering agencies, and conduct outreach.
• Unknown cost to administering agencies to update tracking systems, track GGRF expenditures in disadvantaged and low-income communities, and report to ARB regarding expenditures in these communities.

SUPPORT: (Verified 8/15/16)

Alameda County Board of Supervisors

Amigos de los Rios

Asian Pacific Environmental Network

Asian Pacific Policy and Planning Council

California Association of Local Conservation Corps

California Bicycle Coalition

California Black Health Network

California Center for Public Health Advocacy

California Environmental Justice Alliance

California Housing Partnership Corporation

California Interfaith Power & Light

California League of Conservation Voters

California ReLeaf

California Urban Forests Council

California Vanpool Authority

California Voices for Progress

Canopy

Catholic Charities

Catholic Charities, Diocese of Stockton

Center for Community Action and Environmental Justice

Center on Race, Poverty and the Environment

Central California Asthma Collaborative

Central Coast Alliance United for a Sustainable Economy

Central Coast Energy Services

City Project

Coalition for Clean Air

Communities for a Better Environment

Community Action to Fight Asthma

Community Health for Asian Americans

Defenders of Wildlife

Energy Solidarity Cooperative

Environment California

Environmental Defense Fund

Environmental Health Coalition

Fallbrook Land Conservancy

Filipino/American Coalition for Environmental Solidarity

Fresno Economic Opportunities Commission

Fresno Interdenominational Refugee Ministries

Friends Committee on Legislation of California

Grayson Neighborhood Council

Green Education, Inc.

Green for All

Greenlining Institute

Greenspace-The Cambria Land Trust

GRID Alternatives

Growing Together

Huntington Beach Tree Society, Inc.

Liberty Hill Foundation

Little Tokyo Service Center

Los Angeles Conservation Corps

Los Angeles Neighborhood Land Trust

Move LA

National Parks Conservation Association

Natural Resources Defense Council

Pacific Asian Consortium in Employment

Pacoima Beautiful

People Organizing to Demand Environmental and Economic Rights

Physicians for Social Responsibility – Los Angeles

Placer Land Trust

Propel Fuels

Public Advocates

Regional Asthma Management and Prevention

Rising Sun Energy Center

Rural County Representatives of California

Sacramento Tree Foundation

Safe Routes to School National Partnership

Santa Clara Valley Open Space Authority

Save the Bay

SCOPE

Sierra Business Council

Sierra Climate Adaptation and Mitigation Partnership

Sierra Club California

Sierra Foothill Conservancy

Solar-Oversight

Stone Soup Fresno

Strategic Actions for a Just Economy

Strategic Concepts in Organizing and Policy Education

The Nature Conservancy

TransForm

Tree Davis

Tree San Diego

Truckee Donner Land Trust

Trust for Public Land

TRUST South LA

Union of Concerned Scientists

Urban Releaf

Valley Clean Air Now

Watershed Conservation Authority

OPPOSITION: (Verified 8/15/16)

Bay Area Air Quality Management District Legislative Committee

California Chamber of Commerce

California Taxpayers Association

Metropolitan Transportation Commission

ARGUMENTS IN SUPPORT: Supporters state that, since CalEnviroScreen classifies a quarter of the state’s population as living in DACs, at least a quarter of GGRF proceeds should be invested directly within the boundaries of DACs, which generally provides more assistance than simply “benefiting” these communities. They further note that low-income Californians often lack adequate and affordable transportation and housing choices, access to green spaces, and spend a significant percentage of their budget on necessities including fuel and energy, and for those reasons, AB 1550 directs additional investments to low-income households, communities and populations, as well.

ARGUMENTS IN OPPOSITION: The Metropolitan Transportation Commission and the Bay Area Air Quality Management District Legislative Committee state that AB 1550 would expand the state’s reliance upon a flawed definition of DACs that excludes many communities with poor socio-economic conditions. They also argue that this bill has the effect of encouraging growth and development in locations where residents have greater exposure to environmental harm. California Chamber of Commerce and California Taxpayers Association argue that ARB lacks the authority to raise revenue through auction of allowances.

ASSEMBLY FLOOR: 54-23, 6/2/16

AYES: Achadjian, Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dodd, Eggman, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine, Linder, Lopez, Low, Mathis, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Santiago, Mark Stone, Thurmond, Weber, Williams, Wood, Rendon

NOES: Travis Allen, Baker, Bigelow, Chávez, Dahle, Beth Gaines, Gray, Grove, Hadley, Harper, Jones, Kim, Maienschein, Mayes, Melendez, Obernolte, Olsen, Patterson, Salas, Steinorth, Wagner, Waldron, Wilk

NO VOTE RECORDED: Daly, Frazier, Ting

Prepared by:

8/24/16 18:31:53

**** END ****

 THIRD READING  

Bill No: AB 1550

Author:

:

Vote:

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-1, 6/29/16

AYES: Wieckowski, Hill, Jackson, Leno, Pavley

NOES: Gaines

NO VOTE RECORDED: Bates

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 54-23, 6/2/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill requires a minimum of 25% of Greenhouse Gas Reduction Fund (GGRF) moneys be spent on projects located within and benefiting disadvantaged communities (DACs), and an additional minimum of 5% of GGRF moneys be spent on projects that benefit low-income households or are within, and benefit low-income communities, as defined.

Senate Floor Amendments of 8/18/16 strike the specification that the bill only becomes operative if $205 million from the GGRF is appropriated through AB 1613 (Committee on Budget).

ANALYSIS:

Existing law:

1. Requires, under the California Global Warming Solutions Act of 2006, 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. (Health and Safety Code (HSC) §38500 et seq.)
2. Establishes GGRF and requires that moneys collected pursuant to a market-based mechanism be deposited in the fund. (Government Code §16428.8)
3. Requires that GGRF moneys be used to facilitate the achievement of reductions of GHG emissions in the state consistent with the Global Warming Solutions Act of 2006. (HSC §39712)
4. Requires the GGRF investment plan allocate a minimum of 25% of the funds to projects that benefit DACs and to allocate a minimum of 10% of the funds to projects located within DACs. (HSC §39713)
5. Requires the California Environmental Protection Agency (CalEPA) to identify DACs for GGRF investment opportunities and requires those communities be identified based on geographic, socioeconomic, public health, and environmental hazard criteria. (HSC §39711)

This bill:

1. Revises the requirement that 25% of the GGRF be expended to benefit DACs and 10% of GGRF be expended within DACs to instead require that 25% of the GGRF be allocated for projects located within the boundaries of, and benefiting individuals in, DACs.

1. Requires 5% of GGRF revenues to be spent to benefit low-income households or to projects located within the boundaries of, and benefiting individuals in, low-income communities.
2. Defines “low-income households” as households with incomes at or below 80% of the statewide median income or with household incomes at or below the threshold designated as low-income by the Department of Housing and Community Development (HCD), as specified.
3. Defines “low-income communities” as census tracts with median household incomes at or below 80 percent of the statewide median income or with median household incomes at or below the threshold designated as low income by the HCD, as specified.
4. Requires funds benefitting DACs and funds benefitting low-income households or low-income communities to be counted separately for the purposes of meeting the targets.
5. Specifies that the bill will only become operative if AB 1613 (Committee on Budget) is enacted and becomes effective on or before January 1, 2017.

Background

1. Cap-and-trade auction revenue. Since November 2012, ARB has conducted 16 cap-and-trade auctions, generating over $4 billion in proceeds to the state.

State law requires auction revenues be used to facilitate the achievement of GHG emissions reductions and outlines various categories of allowable expenditures. Statute further requires Department of Finance (DOF), with ARB and any other relevant state agency, to develop a three-year investment plan for the auction proceeds, which are deposited in the GGRF.

SB 535 (de León, Chapter 830, Statutes of 2012) requires DOF, in the investment plan, to allocate at least 25% of available moneys in the GGRF to projects that provide benefits to DACs, and at least 10% to projects located within DACs. Additionally, SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014) requires ARB to develop guidelines on maximizing benefits for DACs by agencies administering GGRF funds, and guidance for administering agencies on GHG emissions reduction reporting and quantification methods.

Budget allocations. SB 862, a Budget Trailer Bill, established a long-term cap-and-trade expenditure plan by continuously appropriating portions of the funds for designated programs or purposes. The bill appropriates 25% for the state’s high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to the Transit and Intercity Rail Capital Program, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature. The Governor’s 2016-17 proposed Budget appropriates over $3 billion to a variety of programs and projects in the transportation, energy, natural resources, and waste diversion sectors.

1. CalEnviroScreen and DACs. CalEnviroScreen was developed by the Office of Environmental Health Hazard Assessment, at the request of CalEPA and pursuant to the GGRF Investment Plan and Communities Revitalization Act (SB 535), to determine a list of DACs in California that are the most vulnerable and pollution-burdened.

Using CalEnviroScreen, CalEPA determined a list of DACs throughout California in October 2014. The current version incorporates 19 indicators, including those for exposures, environmental effects, sensitive populations, and socioeconomic factors. Census tracts in the top 25th percentile of cumulative CalEnviroScreen scores have been designated DACs for the purposes of
SB 535.

The areas where the majority of DACs were identified included the San Joaquin Valley, parts of Los Angeles and the Inland Empire, and large portions of the Coachella Valley and Mojave Desert, in addition to communities located near industrial areas and major roadways.

1. ARB guidance on GGRF. In 2014, ARB published interim guidance for meeting the requirements associated with GGRF appropriations, as well as maximizing benefits to DACs, for agencies appropriated GGRF moneys. This guidance was finalized and released in late 2015.

In meeting the SB 535 requirement, the guidance states that agencies should first assess whether projects will be located within a DAC, as identified through CalEnviroScreen, and whether the project will provide direct benefits to that community, consistent with specific criteria in the guidance document for each program type. If investments meet this requirement, then the guidance specifies that the projects and administrative funds count towards both the 10% and 25% requirements for GGRF investments within, and providing benefits to, DACs.

If the project is not within the DAC, the guidance directs agencies to evaluate whether the project provides direct, meaningful, and assured benefits in accordance with specified criteria for each project type. Projects within a half-mile of a DAC and that provide increased service or access to those communities, or projects that result in at least 25% of project work hours performed by residents of DACs, may count towards the SB 535 mandate requiring a minimum of 25% of GGRF money benefit DACs.

1. GGRF benefits report. AB 1532 (Pérez, Chapter 807, Statutes of 2012) requires DOF to submit an annual report to the Legislature on the status and outcomes of projects funded from the GGRF. The 2016 Annual Report describes states that for implemented projects funded through GGRF, 51% of investments provided benefits to DACs, with 39% of GGRF investments directed within DACs.

Comments

Purpose of Bill. According to the author, “Low-income communities and communities of color are and will continue to be disproportionately impacted by the effects of our changing climate. As we think about how to structure our state’s climate programs – as we discuss percentages and parameters – this is a reality we cannot ignore and must strive to remedy. AB 1550 builds on the successes of our climate equity efforts to date by ensuring a greater investment in California’s environmentally and socioeconomically disadvantaged populations. The bill requires that at least 25% of cap-and-trade funds be spent on projects located directly within disadvantaged communities, as identified by the state’s environmental health screening tool, to ensure that the level of investment in DACs equals their share of the population.

“While CalEnviroScreen is a valuable tool for capturing cumulative impacts in communities, it is widely recognized that there are poor and working-class households that lie outside of DACs – but that struggle to make ends meet and spend a large portion of their incomes on necessitates – such as energy, water, housing, and transportation. If we wish to foster a shared, statewide commitment to tackling pressing environmental issues, we must take advantage of opportunities to reduce greenhouse gas emissions and build sustainable communities while lifting poor and working Californians out of poverty. A greater investment in California’s environmentally and socioeconomically disadvantaged populations has the potential to yield significant climate, public health, and cost benefits while helping bridge the ‘green divide’.”

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Increased GGRF expenditures in DACs (from 10 percent direct investment to 25 percent) and for low-income households and to low-income communities (from zero to five percent).
• Increased annual ongoing costs of up to $465,000 (GGRF) for ARB to modify existing guidelines and tracking systems, provide guidance to administering agencies, and conduct outreach.
• Unknown cost to administering agencies to update tracking systems, track GGRF expenditures in disadvantaged and low-income communities, and report to ARB regarding expenditures in these communities.

SUPPORT: (Verified 8/15/16)

Alameda County Board of Supervisors

Amigos de los Rios

Asian Pacific Environmental Network

Asian Pacific Policy and Planning Council

California Association of Local Conservation Corps

California Bicycle Coalition

California Black Health Network

California Center for Public Health Advocacy

California Environmental Justice Alliance

California Housing Partnership Corporation

California Interfaith Power & Light

California League of Conservation Voters

California ReLeaf

California Urban Forests Council

California Vanpool Authority

California Voices for Progress

Canopy

Catholic Charities

Catholic Charities, Diocese of Stockton

Center for Community Action and Environmental Justice

Center on Race, Poverty and the Environment

Central California Asthma Collaborative

Central Coast Alliance United for a Sustainable Economy

Central Coast Energy Services

City Project

Coalition for Clean Air

Communities for a Better Environment

Community Action to Fight Asthma

Community Health for Asian Americans

Defenders of Wildlife

Energy Solidarity Cooperative

Environment California

Environmental Defense Fund

Environmental Health Coalition

Fallbrook Land Conservancy

Filipino/American Coalition for Environmental Solidarity

Fresno Economic Opportunities Commission

Fresno Interdenominational Refugee Ministries

Friends Committee on Legislation of California

Grayson Neighborhood Council

Green Education, Inc.

Green for All

Greenlining Institute

Greenspace-The Cambria Land Trust

GRID Alternatives

Growing Together

Huntington Beach Tree Society, Inc.

Liberty Hill Foundation

Little Tokyo Service Center

Los Angeles Conservation Corps

Los Angeles Neighborhood Land Trust

Move LA

National Parks Conservation Association

Natural Resources Defense Council

Pacific Asian Consortium in Employment

Pacoima Beautiful

People Organizing to Demand Environmental and Economic Rights

Physicians for Social Responsibility – Los Angeles

Placer Land Trust

Propel Fuels

Public Advocates

Regional Asthma Management and Prevention

Rising Sun Energy Center

Rural County Representatives of California

Sacramento Tree Foundation

Safe Routes to School National Partnership

Santa Clara Valley Open Space Authority

Save the Bay

SCOPE

Sierra Business Council

Sierra Climate Adaptation and Mitigation Partnership

Sierra Club California

Sierra Foothill Conservancy

Solar-Oversight

Stone Soup Fresno

Strategic Actions for a Just Economy

Strategic Concepts in Organizing and Policy Education

The Nature Conservancy

TransForm

Tree Davis

Tree San Diego

Truckee Donner Land Trust

Trust for Public Land

TRUST South LA

Union of Concerned Scientists

Urban Releaf

Valley Clean Air Now

Watershed Conservation Authority

OPPOSITION: (Verified 8/15/16)

Bay Area Air Quality Management District Legislative Committee

California Chamber of Commerce

California Taxpayers Association

Metropolitan Transportation Commission

ARGUMENTS IN SUPPORT: Supporters state that, since CalEnviroScreen classifies a quarter of the state’s population as living in DACs, at least a quarter of GGRF proceeds should be invested directly within the boundaries of DACs, which generally provides more assistance than simply “benefiting” these communities. They further note that low-income Californians often lack adequate and affordable transportation and housing choices, access to green spaces, and spend a significant percentage of their budget on necessities including fuel and energy, and for those reasons, AB 1550 directs additional investments to low-income households, communities and populations, as well.

ARGUMENTS IN OPPOSITION: The Metropolitan Transportation Commission and the Bay Area Air Quality Management District Legislative Committee state that AB 1550 would expand the state’s reliance upon a flawed definition of DACs that excludes many communities with poor socio-economic conditions. They also argue that this bill has the effect of encouraging growth and development in locations where residents have greater exposure to environmental harm. California Chamber of Commerce and California Taxpayers Association argue that ARB lacks the authority to raise revenue through auction of allowances.

ASSEMBLY FLOOR: 54-23, 6/2/16

AYES: Achadjian, Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dodd, Eggman, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine, Linder, Lopez, Low, Mathis, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Santiago, Mark Stone, Thurmond, Weber, Williams, Wood, Rendon

NOES: Travis Allen, Baker, Bigelow, Chávez, Dahle, Beth Gaines, Gray, Grove, Hadley, Harper, Jones, Kim, Maienschein, Mayes, Melendez, Obernolte, Olsen, Patterson, Salas, Steinorth, Wagner, Waldron, Wilk

NO VOTE RECORDED: Daly, Frazier, Ting

Prepared by:

8/19/16 18:49:13

**** END ****

 THIRD READING  

Bill No: AB 1550

Author:

:

Vote:

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-1, 6/29/16

AYES: Wieckowski, Hill, Jackson, Leno, Pavley

NOES: Gaines

NO VOTE RECORDED: Bates

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 54-23, 6/2/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill requires 25% of Greenhouse Gas Reduction Fund (GGRF) revenues to be spent on projects located within and benefiting disadvantaged communities (DACs), and an additional 5% to be spent on projects that benefit low-income households or are within, and benefit low-income communities, as defined.

ANALYSIS:

Existing law:

1. Requires, under the California Global Warming Solutions Act of 2006, 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. (Health and Safety Code (HSC) §38500 et seq.)
2. Establishes GGRF and requires that moneys collected pursuant to a market-based mechanism be deposited in the fund. (Government Code §16428.8)
3. Requires that GGRF moneys be used to facilitate the achievement of reductions of GHG emissions in the state consistent with the Global Warming Solutions Act of 2006. (HSC §39712)
4. Requires the GGRF investment plan allocate a minimum of 25% of the funds to projects that benefit DACs and to allocate 10% of the funds to projects located within DACs. (HSC §39713)
5. Requires the California Environmental Protection Agency (CalEPA) to identify DACs for GGRF investment opportunities and requires those communities be identified based on geographic, socioeconomic, public health, and environmental hazard criteria. (HSC §39711)

This bill:

1. Requires 25% of the GGRF be allocated for projects located within the boundaries of, and benefiting individuals in, DACs.
2. Requires 5% of GGRF revenues to be spent to benefit low-income households or to projects located within the boundaries of, and benefiting individuals in, low-income communities.
3. Defines “low-income households” as households with incomes at or below 80% of the statewide median income or with household incomes at or below the threshold designated by the Department of Housing and Community Development (HCD), as specified.
4. Defines “low-income communities” as census tracts with median household incomes at or below 80 percent of the statewide median income or with median household incomes at or below the threshold designated as low income by the HCD, as specified.
5. Requires funds benefitting DACs and funds benefitting low-income households or low-income communities to be counted separately for the purposes of meeting the targets.
6. Specifies that the bill will only become operative if AB 1613 (Committee on Budget) is enacted and becomes effective on or before January 1, 2017, and AB 1613 appropriates $205 million from the GGRF.

Background

1. Cap-and-trade auction revenue. Since November 2012, ARB has conducted 15 cap-and-trade auctions, generating over $4 billion in proceeds to the state.

State law requires auction revenues be used to facilitate the achievement of GHG emissions reductions and outlines various categories of allowable expenditures. Statute further requires Department of Finance (DOF), with ARB and any other relevant state agency, to develop a three-year investment plan for the auction proceeds, which are deposited in the GGRF.

SB 535 (de León, Chapter 830, Statutes of 2012) requires DOF, in the investment plan, to allocate at least 25% of available moneys in the GGRF to projects that provide benefits to DACs, and at least 10% to projects located within DACs. Additionally, SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014) requires ARB to develop guidelines on maximizing benefits for DACs by agencies administering GGRF funds, and guidance for administering agencies on GHG emissions reduction reporting and quantification methods.

Budget allocations. SB 862, a Budget Trailer Bill, established a long-term cap-and-trade expenditure plan by continuously appropriating portions of the funds for designated programs or purposes. The bill appropriates 25% for the state’s high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to the Transit and Intercity Rail Capital Program, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature. The Governor’s 2016-17 proposed Budget appropriates over $3 billion to a variety of programs and projects in the transportation, energy, natural resources, and waste diversion sectors.

1. CalEnviroScreen and DACs. CalEnviroScreen was developed by the Office of Environmental Health Hazard Assessment, at the request of CalEPA and pursuant to the GGRF Investment Plan and Communities Revitalization Act (SB 535), to determine a list of DACs in California that are the most vulnerable and pollution-burdened.

Using CalEnviroScreen, CalEPA determined a list of DACs throughout California in October 2014. The current version incorporates 19 indicators, including those for exposures, environmental effects, sensitive populations, and socioeconomic factors. Census tracts in the top 25th percentile of cumulative CalEnviroScreen scores have been designated DACs for the purposes of
SB 535.

The areas where the majority of DACs were identified included the San Joaquin Valley, parts of Los Angeles and the Inland Empire, and large portions of the Coachella Valley and Mojave Desert, in addition to communities located near industrial areas and major roadways.

1. ARB guidance on GGRF. In 2014, ARB published interim guidance for meeting the requirements associated with GGRF appropriations, as well as maximizing benefits to DACs, for agencies appropriated GGRF moneys. This guidance was finalized and released in late 2015.

In meeting the SB 535 requirement, the guidance states that agencies should first assess whether projects will be located within a DAC, as identified through CalEnviroScreen, and whether the project will provide direct benefits to that community, consistent with specific criteria in the guidance document for each program type. If investments meet this requirement, then the guidance specifies that the projects and administrative funds count towards both the 10% and 25% requirements for GGRF investments within, and providing benefits to, DACs.

If the project is not within the DAC, the guidance directs agencies to evaluate whether the project provides direct, meaningful, and assured benefits in accordance with specified criteria for each project type. Projects within a half-mile of a DAC and that provide increased service or access to those communities, or projects that result in at least 25% of project work hours performed by residents of disadvantaged communities, may count towards the SB 535 mandate requiring a minimum of 25% of GGRF money benefit DACs.

1. GGRF benefits report. AB 1532 (Pérez, Chapter 807, Statutes of 2012) requires DOF to submit an annual report to the Legislature on the status and outcomes of projects funded from the GGRF. The 2016 Annual Report describes states that for implemented projects funded through GGRF, 51% of investments provided benefits to DACs, with 39% of GGRF investments directed within DACs.

Comments

Purpose of Bill. According to the author, “Low-income communities and communities of color are and will continue to be disproportionately impacted by the effects of our changing climate. As we think about how to structure our state’s climate programs – as we discuss percentages and parameters – this is a reality we cannot ignore and must strive to remedy. AB 1550 builds on the successes of our climate equity efforts to date by ensuring a greater investment in California’s environmentally and socioeconomically disadvantaged populations. The bill requires that at least 25% of cap-and-trade funds be spent on projects located directly within disadvantaged communities, as identified by the state’s environmental health screening tool, to ensure that the level of investment in DACs equals their share of the population.

“While CalEnviroScreen is a valuable tool for capturing cumulative impacts in communities, it is widely recognized that there are poor and working-class households that lie outside of DACs – but that struggle to make ends meet and spend a large portion of their incomes on necessitates – such as energy, water, housing, and transportation. If we wish to foster a shared, statewide commitment to tackling pressing environmental issues, we must take advantage of opportunities to reduce greenhouse gas emissions and build sustainable communities while lifting poor and working Californians out of poverty. A greater investment in California’s environmentally and socioeconomically disadvantaged populations has the potential to yield significant climate, public health, and cost benefits while helping bridge the ‘green divide’.”

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Increased GGRF expenditures in DACs (from 10 percent direct investment to 25 percent) and for low-income households and to low-income communities (from zero to five percent).
• Increased annual ongoing costs of up to $465,000 (GGRF) for ARB to modify existing guidelines and tracking systems, provide guidance to administering agencies, and conduct outreach.
• Unknown cost to administering agencies to update tracking systems, track GGRF expenditures in disadvantaged and low-income communities, and report to ARB regarding expenditures in these communities.

SUPPORT: (Verified 8/15/16)

Alameda County Board of Supervisors

Amigos de los Rios

Asian Pacific Environmental Network

Asian Pacific Policy and Planning Council

California Association of Local Conservation Corps

California Bicycle Coalition

California Black Health Network

California Center for Public Health Advocacy

California Environmental Justice Alliance

California Housing Partnership Corporation

California Interfaith Power & Light

California League of Conservation Voters

California ReLeaf

California Urban Forests Council

California Vanpool Authority

California Voices for Progress

Canopy

Catholic Charities

Catholic Charities, Diocese of Stockton

Center for Community Action and Environmental Justice

Center on Race, Poverty and the Environment

Central California Asthma Collaborative

Central Coast Alliance United for a Sustainable Economy

Central Coast Energy Services

City Project

Coalition for Clean Air

Communities for a Better Environment

Community Action to Fight Asthma

Community Health for Asian Americans

Defenders of Wildlife

Energy Solidarity Cooperative

Environment California

Environmental Defense Fund

Environmental Health Coalition

Fallbrook Land Conservancy

Filipino/American Coalition for Environmental Solidarity

Fresno Economic Opportunities Commission

Fresno Interdenominational Refugee Ministries

Friends Committee on Legislation of California

Grayson Neighborhood Council

Green Education, Inc.

Green for All

Greenlining Institute

Greenspace-The Cambria Land Trust

GRID Alternatives

Growing Together

Huntington Beach Tree Society, Inc.

Liberty Hill Foundation

Little Tokyo Service Center

Los Angeles Conservation Corps

Los Angeles Neighborhood Land Trust

Move LA

National Parks Conservation Association

Natural Resources Defense Council

Pacific Asian Consortium in Employment

Pacoima Beautiful

People Organizing to Demand Environmental and Economic Rights

Physicians for Social Responsibility – Los Angeles

Placer Land Trust

Propel Fuels

Public Advocates

Regional Asthma Management and Prevention

Rising Sun Energy Center

Rural County Representatives of California

Sacramento Tree Foundation

Safe Routes to School National Partnership

Santa Clara Valley Open Space Authority

Save the Bay

SCOPE

Sierra Business Council

Sierra Climate Adaptation and Mitigation Partnership

Sierra Club California

Sierra Foothill Conservancy

Solar-Oversight

Stone Soup Fresno

Strategic Actions for a Just Economy

Strategic Concepts in Organizing and Policy Education

The Nature Conservancy

TransForm

Tree Davis

Tree San Diego

Truckee Donner Land Trust

Trust for Public Land

TRUST South LA

Union of Concerned Scientists

Urban Releaf

Valley Clean Air Now

Watershed Conservation Authority

OPPOSITION: (Verified 8/15/16)

Bay Area Air Quality Management District Legislative Committee

California Chamber of Commerce

California Taxpayers Association

Metropolitan Transportation Commission

ARGUMENTS IN SUPPORT: Supporters state that, since CalEnviroScreen classifies a quarter of the state’s population as living in disadvantaged communities, at least a quarter of GGRF proceeds should be invested directly within the boundaries of DACs, which generally provides more assistance than simply “benefiting” these communities. They further note that low-income Californians often lack adequate and affordable transportation and housing choices, access to green spaces, and spend a significant percentage of their budget on necessities including fuel and energy, and for those reasons, AB 1550 directs additional investments to low-income households, communities and populations, as well.

ARGUMENTS IN OPPOSITION: The Metropolitan Transportation Commission and the Bay Area Air Quality Management District Legislative Committee state that AB 1550 would expand the state’s reliance upon a flawed definition of DACs that excludes many communities with poor socio-economic conditions. They also argue that this bill has the effect of encouraging growth and development in locations where residents have greater exposure to environmental harm. California Chamber of Commerce and California Taxpayers Association argue that ARB lacks the authority to raise revenue through auction of allowances.

ASSEMBLY FLOOR: 54-23, 6/2/16

AYES: Achadjian, Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dodd, Eggman, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine, Linder, Lopez, Low, Mathis, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Santiago, Mark Stone, Thurmond, Weber, Williams, Wood, Rendon

NOES: Travis Allen, Baker, Bigelow, Chávez, Dahle, Beth Gaines, Gray, Grove, Hadley, Harper, Jones, Kim, Maienschein, Mayes, Melendez, Obernolte, Olsen, Patterson, Salas, Steinorth, Wagner, Waldron, Wilk

NO VOTE RECORDED: Daly, Frazier, Ting

Prepared by:

8/16/16 18:01:52**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1550 (Gomez) - Greenhouse gases: investment plan: disadvantaged communities

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on August 11, 2016

Bill Summary:

AB 1550 requires 25 percent of the AB 32 Greenhouse Gas Reduction Fund (GGRF) revenues to be spent on projects located within and benefiting disadvantaged communities, and an additional 20 percent to be spent on projects that benefit low-income households or are within low-income communities, as defined.

Fiscal Impact:

• Increased GGRF expenditures in disadvantaged communities (from 10 percent direct investment to 25 percent) and for low-income households and to low-income communities (from 0 to 5 percent).
• Increased annual ongoing costs of up to $465,000 (GGRF) for the California Air Resources Board (ARB) to modify existing guidelines and tracking systems, provide guidance to administering agencies, and conduct outreach.
• Unknown cost to administering agencies to update tracking systems, track GGRF expenditures in disadvantaged and low-income communities, and report to ARB regarding expenditures in these communities.

Committee Amendments:

• Reduce the amount of GGRF that must be spent in low-income areas, from 20 percent to 5 percent.
• Make enactment contingent upon enactment of AB 1613.

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SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1550 (Gomez) - Greenhouse gases: investment plan: disadvantaged communities

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 1550 requires 25 percent of the AB 32 Greenhouse Gas Reduction Fund (GGRF) revenues to be spent on projects located within and benefiting disadvantaged communities, and an additional 20 percent to be spent on projects that benefit low-income households or are within low-income communities, as defined.

Fiscal Impact:

• Increased GGRF expenditures in disadvantaged communities (from 10 percent direct investment to 25 percent) and for low-income households and to low-income communities (from 0 to 20 percent).
• Increased annual ongoing costs of up to $465,000 (GGRF) for the California Air Resources Board (ARB) to modify existing guidelines and tracking systems, provide guidance to administering agencies, and conduct outreach.
• Unknown cost to administering agencies to update tracking systems, track GGRF expenditures in in disadvantaged and low-income communities, and report to ARB regarding expenditures these communities.

Background:

The California Global Warming Solutions Act of 2006. 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. Auction proceeds are quarterly deposited into the GGRF, and available for appropriation by the Legislature.

The 2014-15 Budget Act allocated cap-and-trade revenues for the 2014-15 fiscal year and established 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% are to 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.

An expenditure plan for the 40% was not included in the 2015-16 Budget Act, with the exception of $227 million appropriated to continue funding for specified existing programs. The remaining 2015-16 revenues, along with 2016-17 revenues, totaling $3.1 billion are available for appropriation this year.

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

Proposed Law:

This bill:

1. Requires 25 percent of GGRF revenues to be spent on projects located within and benefiting disadvantaged communities.
2. Requires 20 percent of GGRF revenues to be spent on low-income households or to projects located within the boundaries of, and benefiting individuals living in, low-income communities.
3. Defines low-income households as households with incomes at or below 80% of the statewide median income or with median incomes at or below the threshold designated by the Department of Housing and Community Development (HCD), as specified.
4. Defines “low-income communities” as census tracts with median household incomes at or below 80 percent of the statewide median income or with median household incomes at or below the threshold designated as low income by the HCD’s list of state income limits adopted pursuant to Section 50093.
5. Requires funds benefitting disadvantaged communities and funds benefitting low-income households to be counted separately for the purposes of meeting the targets.

Staff Comments:

Purpose of Bill. According to the author, “Low-income communities and communities of color are and will continue to be disproportionately impacted by the effects of our changing climate. As we think about how to structure our state’s climate programs – as we discuss percentages and parameters – this is a reality we cannot ignore and must strive to remedy. AB 1550 builds on the successes of our climate equity efforts to date by ensuring a greater investment in California’s environmentally and socioeconomically disadvantaged populations. The bill requires that at least 25% of cap-and-trade funds be spent on projects located directly within disadvantaged communities, as identified by the state’s environmental health screening tool, to ensure that the level of investment in DACs equals their share of the population. The bill also requires an additional 20% of funds to benefit low-income households.

“While CalEnviroScreen is a valuable tool for capturing cumulative impacts in communities, it is widely recognized that there are poor and working-class households that lie outside of DACs – but that struggle to make ends meet and spend a large portion of their incomes on necessitates – such as energy, water, housing, and transportation. If we wish to foster a shared, statewide commitment to tackling pressing environmental issues, we must take advantage of opportunities to reduce greenhouse gas emissions and build sustainable communities while lifting poor and working Californians out of poverty.

“A greater investment in California’s environmentally and socioeconomically disadvantaged populations has the potential to yield significant climate, public health, and cost benefits while helping bridge the ‘green divide’.”

Taking a larger piece out of a smaller pie. The most recent auction in May of 2016 yielded a sale of only 2% of the state allowances, resulting in only $10 million of cap-and-trade revenues for the state (of the $500 million projected). This bill would result in a larger portion of moneys for disadvantaged communities and low-income households, which, in turn, will result in a significant reduction of funds available for emissions reduction projects in the rest of the state. To the extent that administering agencies focus on meeting the requirements outlined in this bill more than funding projects that yield the greatest GHG emission reductions, this bill could result in less efficient and effective uses of GGRF monies.

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SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: AB 1550

SUBJECT: Greenhouse gases: investment plan: disadvantaged communities.

ANALYSIS:

Existing law:

1. Under the California Global Warming Solutions Act of 2006, 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. (Health and Safety Code (HSC) §38500 et seq.)
2. Establishes the Greenhouse Gas Reduction Fund (GGRF) as a special fund in the State Treasury; requires that 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 the GGRF. (Government Code §16428.8)
3. Requires that GGRF moneys be used to facilitate the achievement of reductions of GHG emissions in the state consistent with the Global Warming Solutions Act of 2006. Appropriations of the GGRF funds in the annual budget are required to be consistent with the three-year investment plan. (HSC §39712)
4. Under the GGRF Investment Plan and Communities Revitalization Act, requires the California Environmental Protection Agency (CalEPA) to identify disadvantaged communities for investment opportunities related to the Act. (HSC §39711)
5. Requires the GGRF investment plan to 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. (HSC §39713)
6. Requires the California Environmental Protection Agency (CalEPA) to identify disadvantaged communities for GGRF investment opportunities and requires those communities be identified based on geographic, socioeconomic, public health, and environmental hazard criteria. (HSC §39711)
7. Requires the ARB, in consultation with the California Environmental Protection Agency (CalEPA), 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. (HSC §39715)

This bill:

1. Revises the requirement that 25% of the GGRF be expended to benefit disadvantaged communities to require that the funding be allocated for projects located within the boundaries of, and benefiting individuals in, disadvantaged communities.
2. Requires that an additional 20% of the GGRF be allocated for projects that benefit low-income households.
3. Defines “low-income household” as those with household incomes at or below 80% of the statewide median income or with household incomes at or below the threshold designated as low income by the Department of Housing and Community Development’s list of state income limits.
4. Requires that, to the extent feasible, a “fair share” of the moneys allocated to benefit low-income households target households with incomes at or below 200% of the federal poverty level.
   

Background

1. Cap-and-trade auction revenue. Since November 2012, ARB has conducted 15 cap-and-trade auctions, generating over $4 billion in proceeds to the state.

State law specifies that the auction revenues must be used to facilitate the achievement of GHG emissions reductions and outlines various categories of allowable expenditures. Statute further requires the Department of Finance, in consultation with ARB and any other relevant state agency, to develop a three-year investment plan for the auction proceeds, which are deposited in the GGRF.

SB 535 (de León, Chapter 830, Statutes of 2012) requires the Department of Finance, in the investment plan, to allocate at least 25% of available moneys in the GGRF to projects that provide benefits to disadvantaged communities, and at least 10% to projects located within disadvantaged communities.

Additionally, SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014) requires ARB to develop guidelines on maximizing benefits for disadvantaged communities by agencies administering GGRF funds, and guidance for administering agencies on GHG emissions 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, 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 is more akin to a regulatory fee. The plaintiffs filed an appeal with the 3rd District Court of Appeal in Sacramento in February of 2014, and that case is pending.

Budget allocations. SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014), a budget trailer bill, established a long-term cap-and-trade expenditure plan by continuously appropriating portions of the funds for designated programs or purposes. The legislation appropriates 25% for the state’s high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to the Transit and Intercity Rail Capital Program, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature.

The Governor’s 2016-17 proposed budget appropriates over $3 billion to a variety of programs and projects in the transportation, energy, natural resources, and waste diversion sectors.

1. CalEnviroScreen and disadvantaged communities. CalEnviroScreen was developed by OEHHA, at the request of CalEPA and pursuant to the GGRF Investment Plan and Communities Revitalization Act (SB 535, de León, Chapter 830, Statutes of 2012), to determine a list of disadvantaged communities in California that are the most vulnerable and pollution-burdened. The tool is used to help direct those GGRF investments targeted for disadvantaged communities, as well as to guide CalEPA in administering its Environmental Justice Small Grants Program and prioritizing resources for cleanup and abatement projects and outreach efforts by the Agency.

Using CalEnviroScreen, CalEPA determined a list of disadvantaged communities throughout California in October 2014. According to CalEPA, the current version incorporates 19 indicators, including those for exposures, environmental effects, sensitive populations, and socioeconomic factors.

Census tracts in the top 25th percentile of cumulative CalEnviroScreen scores have been designated disadvantaged communities for the purposes of SB 535 (de León).

The areas where the majority of disadvantaged communities were identified included the San Joaquin Valley, parts of Los Angeles and the Inland Empire, and large portions of the Coachella Valley and Mojave Desert, in addition to communities located near industrial areas and major roadways.

Update. OEHHA intends to update CalEnviroScreen this year to incorporate the most current information available. Other improvements are also expected to be part of this update. The proposed changes will be released in a draft version of the tool this summer.

1. ARB Guidance on GGRF. In 2014, ARB published interim guidance for meeting the requirements associated with GGRF appropriations, as well as maximizing benefits to disadvantaged communities, for agencies appropriated GGRF moneys. This guidance was finalized and released in late 2015.

In meeting the SB 535 requirement, the guidance states that agencies should first assess whether projects will be located within a disadvantaged community, as identified through CalEnviroScreen, and whether the project will provide direct benefits to that community, consistent with specific criteria in the guidance document for each program type. If investments meet this requirement, then the guidance specifies that the projects and administrative funds count towards both the 10% and 25% requirements for GGRF investments within, and providing benefits to, disadvantaged communities.

If the project is not within the disadvantaged community, the guidance directs agencies to evaluate whether the project provides direct, meaningful, and assured benefits in accordance with specified criteria for each project type. Projects within a half-mile of a disadvantaged community and that provide increased service or access to those communities, or projects that result in at least 25% of project work hours performed by residents of disadvantaged communities, may count towards the SB 535 mandate requiring a minimum of 25% of GGRF money benefit disadvantaged communities.

1. GGRF benefits report. AB 1532 (Pérez, Chapter 807, Statutes of 2012) requires the Department of Finance (DOF) to submit an annual report to the Legislature on the status and outcomes of projects funded from the GGRF. The 2016 Annual Report describes the status of funded programs and lists the projects funded and also provides estimates of the GHG reductions expected from project investments and statistics on benefits to disadvantaged communities, demand for funding, and leveraging of funds. Specifically, the report states that for implemented projects funded through GGRF, 51% of investments provided benefits to disadvantaged communities, with 39% of GGRF investments directed within disadvantaged communities.

According to the Annual Report, “CALFIRE’s urban forestry program is planting trees in disadvantaged communities throughout the State, providing community shading and reducing energy demand while improving active transportation and recreational opportunities for these residents. Caltrans’ Low Carbon Transit Operations Program is supporting new and expanded services and facilities that improve mobility for disadvantaged communities and low-income residents in these communities. The Department of Community Services and Development’s (CSD) Low-Income Weatherization Program is helping low-income residents in disadvantaged communities reduce their energy use and energy costs. The current appropriations will easily meet and exceed the SB 535 disadvantaged community targets without including High Speed Rail. However, the High Speed Rail Project is expected to greatly benefit disadvantaged communities throughout the State by creating thousands of direct construction-related jobs as well as indirect jobs and related economic development benefits in communities of the Central Valley, which has some of the highest unemployment rates in the country.”

Comments

1. Purpose of Bill. According to the author, “Low-income communities and communities of color are and will continue to be disproportionately impacted by the effects of our changing climate. As we think about how to structure our state’s climate programs – as we discuss percentages and parameters – this is a reality we cannot ignore and must strive to remedy. AB 1550 builds on the successes of our climate equity efforts to date by ensuring a greater investment in California’s environmentally and socioeconomically disadvantaged populations. The bill requires that at least 25% of cap-and-trade funds be spent on projects located directly within disadvantaged communities, as identified by the state’s environmental health screening tool, to ensure that the level of investment in DACs equals their share of the population. The bill also requires an additional 20% of funds to benefit low-income households.

“While CalEnviroScreen is a valuable tool for capturing cumulative impacts in communities, it is widely recognized that there are poor and working-class households that lie outside of DACs – but that struggle to make ends meet and spend a large portion of their incomes on necessitates – such as energy, water, housing, and transportation. If we wish to foster a shared, statewide commitment to tackling pressing environmental issues, we must take advantage of opportunities to reduce greenhouse gas emissions and build sustainable communities while lifting poor and working Californians out of poverty.

“A greater investment in California’s environmentally and socioeconomically disadvantaged populations has the potential to yield significant climate, public health, and cost benefits while helping bridge the ‘green divide’.”

1. Amending SB 535. AB 1550 amends requirements put in place through SB 535 (de León, Chapter 830, Statutes of 2012) for spending cap-and-trade auction proceeds in disadvantaged communities and adds additional requirements for minimum spending for low-income households. Specifically, SB 535 requires a minimum of 25% of GGRF moneys benefit disadvantaged communities and 10% be spent within those communities. AB 1550 eliminates the distinction created in SB 535, where appropriating funds to “benefit” a disadvantaged community do not necessarily have to be spent within the disadvantaged community, and instead requires a minimum of 25% GGRF moneys be spent to benefit disadvantaged communities within those communities. Additionally, AB 1550 requires a minimum of 20% of GGRF moneys be directed to benefit “low-income households,” as defined, and does not allow investments toward disadvantaged communities to count toward the minimum percentage required to benefit low-income households, or the reverse.
2. Benefiting low-income households. The bill requires a minimum of 20% of GGRF be spent to benefit “low-income households.” AB 1550 defines these households as those at or below 80% of the statewide median income, or as households designated as low-income based on area-wide median incomes, based on figures from the Department of Housing and Community Development (DHCD). The area-wide “low-income” income thresholds better account for high cost of living and rent burdens in various regions across the state.

Some of the current programs funded through GGRF, like weatherization programs and car retirement and replacement programs, may be counted as benefiting a household. However, it is difficult to ascribe benefits specifically to individual households for a number of other GGRF programs, including transportation projects that provide enhanced or improved public transit (i.e., the Low Carbon Transit Operations program or the Transit and Intercity Rail Capital program, which both receive continuous GGRF appropriation) and, urban forestry and greening projects. In this way, the 20% requirement for benefiting low-income households may be 1) difficult to measure, 2) limit access of low-income households to a variety of other GGRF programs with more community-wide impacts, and 3) create implementation challenges, since funding for the subset of programs directly benefiting households may not be sufficient to meet the bill’s 20% requirement.

To address this issue, amendments are needed to require 20% of GGRF moneys be directed to “low-income households” or “low-income communities,” and to define a “low-income community” as a census tract with a median household income at or below 80% of the statewide median income or with a median household income at or below the threshold designated as low-income by the Department of Housing and Community Development.

1. Smaller pot. As the cap for the state’s cap-and-trade program is reduced, so are allowances that are offered for sale. As it is the sale of these allowances at auctions that generate cap-and-trade proceeds, this revenue source will continue to shrink. Additionally, only 2% of the state allowances sold at the auction in May, and resulted in the state receiving only $10 million in proceeds where up to $500 million was projected.

A larger fraction of moneys for disadvantaged communities and low-income households, as prescribed in AB 1550, of a shrinking pot of GGRF moneys may result in a significantly reduced fraction of money from GGRF for emissions reduction projects in the rest of the state.

1. More constraints on funding. As larger amounts of GGRF are set aside to benefit various groups, flexibility for allocating those funds is reduced. For example, a project that does not rank as high may be funded over a project ranked more highly in order to satisfy a requirement that a certain percentage of funds be spent to benefit a particular group. In situations where a tradeoff is required, policy goals of providing benefits to vulnerable populations may outweigh other policy goals for the GGRF, including funding only the most highly ranked project. However, the more these constraints are added to the fund, the more frequently these policy tradeoffs will arise.

As the bill already specifically targets low-income households with a significant fraction of the GGRF, the committee may wish to consider removing the requirement in the bill that a “fair share” of GGRF moneys target households with incomes at or below 200% of the federal poverty level “to the maximum extent feasible.”

1. How will this change the way GGRF moneys are appropriated? It is not clear how agencies will implement an increased requirement for spending within disadvantaged communities, and an additional mandate for spending to benefit low-income households.

According to the annual DOF report on GGRF benefits and funded projects to date, about 39% of GGRF has been spent within disadvantaged communities—14% over the AB 1550 requirement. Assuming that the majority of those disadvantaged communities would also qualify as low-income under the bill, that 14% of GGRF investment over the 25% mandate could potentially count toward the 20% requirement for low-income households or communities, leaving only 6% more directed toward low-income households to meet the new requirements under AB 1550. Under this scenario, there may not be significant change in the way current GGRF investments are made. However, as the author would like to capture a distinct population from disadvantaged communities by requiring a minimum investment for “low-income households,” agencies may work to implement the intent of the legislation by specifically directing expenditures to low-income communities that are not also disadvantaged communities. Therefore, it is not clear to what extent low-income populations that are not identified as disadvantaged communities according to CalEnviroScreen, will benefit from the additional set-aside in AB 1550.

1. Targeting disadvantaged communities. SB 535 requires disadvantaged communities for GGRF investment opportunities be identified based on geographic, socioeconomic, public health, and environmental hazard criteria. The resulting tools uses socioeconomic and environmental pollution indicators throughout the state to evaluate those vulnerable populations experiencing cumulative pollution burdens and specifically targets them for GGRF investment. The analysis is complex, relying on 19 different indicators for an aggregate score to identify disadvantaged communities for targeted GGRF investment.

AB 1550 does not alter the methodology behind how disadvantaged communities are identified, but further expands investments to those communities as well as requiring 20% of GGRF moneys be directed toward low-income households. In contrast to CalEnviroScreen, this criterion is a relatively simple method for targeting vulnerable populations.

In this way, the bill seems to establish an inconsistent policy for identifying vulnerable or distressed populations for GGRF investments—on one hand relying on a complex analysis to assess aggregate socioeconomic factors and environmental burdens, and on the other hand, simply directing moneys to communities or households based on a single economic metric.

This also raises questions surrounding the original policy goals of SB 535 in requiring CalEPA identify disadvantaged communities based on a variety of criteria. Does singling out an additional population for investment based on a single measure fit within the original policy goals of SB 535?

SOURCE:

Author

SUPPORT:

Alameda County Board of Supervisors

Amigos de los Rios

Asian Pacific Environmental Network

Asian Pacific Policy and Planning Council

California Association of Local Conservation Corps

California Bicycle Coalition

California Black Health Network

California Black Health Network

California Center for Public Health Advocacy

California Environmental Justice Alliance

California Environmental Justice Alliance

California Housing Partnership Corporation

California League of Conservation Voters

California ReLeaf

California Urban Forests Council

California Vanpool Authority

California Voices for Progress

Canopy

Catholic Charities

Catholic Charities, Diocese of Stockton

Center for Community Action and Environmental Justice

Center on Race, Poverty and the Environment

Central California Asthma Collaborative

Central Coast Alliance United for a Sustainable Economy

Central Coast Energy Services

City Project

Coalition for Clean Air

Communities for a Better Environment

Community Action to Fight Asthma

Community Health for Asian Americans

Defenders of Wildlife

Energy Solidarity Cooperative

Environment California

Environmental Defense Fund

Environmental Health Coalition

Fallbrook Land Conservancy

Filipino/American Coalition for Environmental Solidarity

Fresno Economic Opportunities Commission

Fresno Interdenominational Refugee Ministries

Friends Committee on Legislation of California

Grayson Neighborhood Council

Green Education, Inc.

Green for All

Greenlining Institute

Greenspace-The Cambria Land Trust

GRID Alternatives

Growing Together

Huntington Beach Tree Society, Inc.

Liberty Hill Foundation

Little Tokyo Service Center

Los Angeles Conservation Corps

Los Angeles Neighborhood Land Trust

Move LA

National Parks Conservation Association

Pacific Asian Consortium in Employment (PACE)

Pacoima Beautiful

People Organizing to Demand Environmental and Economic Rights

Physicians for Social Responsibility – Los Angeles

Placer Land Trust

Propel Fuels

Public Advocates

Regional Asthma Management and Prevention

Rising Sun Energy Center

Rural County Representatives of California

Sacramento Tree Foundation

Safe Routes to School National Partnership

Santa Clara Valley Open Space Authority

Save the Bay

SCOPE

Sierra Business Council

Sierra Climate Adaptation and Mitigation Partnership (Sierra CAMP)

Sierra Club California

Sierra Foothill Conservancy

Solar-Oversight

Stone Soup Fresno

Strategic Actions for a Just Economy

Strategic Concepts in Organizing and Policy Education

The Nature Conservancy

TransForm

Tree Davis

Tree San Diego

Truckee Donner Land Trust

Trust for Public Land

TRUST South LA

Union of Concerned Scientists

Urban Releaf

Valley Clean Air Now

Watershed Conservation Authority

OPPOSITION:

California Chamber of Commerce

California Taxpayers Association

Metropolitan Transportation Commission

ARGUMENTS IN SUPPORT:

Supporters state that, since CalEnviroScreen classifies a quarter of the state’s population as living in disadvantaged communities, at least a quarter of GGRF proceeds should be invested directly within the boundaries of disadvantaged communities, which generally provides more assistance than simply “benefiting” these communities. They further add that this is a simple equity adjustment to the existing formula that reflects the need to invest in these communities hit first and worst by the adverse impacts of climate change. Additionally, they state that some of the best GHG reduction strategies are those that benefit low-income households whether they lie inside or outside CalEnviroScreen-designated disadvantaged communities. They further note that low-income Californians often lack adequate and affordable transportation and housing choices, access to green spaces, and spend a significant percentage of their budget on necessities including fuel and energy, and for those reasons, AB 1550 directs additional investments to low-income households, communities and populations, as well.

ARGUMENTS IN OPPOSITION:

The Metropolitan Transportation Commission (MTC) states that, as written, AB 1550 would expand the state’s reliance upon a flawed definition of disadvantaged communities that excludes many communities characterized by poor socio-economic conditions, and state that the CalEnviroScreen should not be relied upon exclusively to target cap-and-trade funds to disadvantaged communities. They argue that CalEnviroScreen has the perverse public health effect of encouraging growth and development in locations where residents have greater exposure to environmental harm. MTC states that they are opposed to the bill unless AB 1550 is amended to broaden the definition of disadvantaged communities so that it includes communities with concentrations of people living with poor socio-economic conditions—regardless of their exposure to environmental hazards. California Chamber of Commerce and California Taxpayers Association are opposed as they argue that ARB lacks the authority to raise revenue through auction of allowances.

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ASSEMBLY THIRD READING

ATR Bill Id:AB 1550

Author:(Gomez)

As Amended Ver:May 31, 2016

Majority vote

SUMMARY: Requires that 25% of the Greenhouse Gas Reduction Fund (GGRF) be spent on projects located within disadvantaged communities, and requires that an additional 25% be spent on projects that benefit low-income households. Specifically, this bill:

1. Revises the requirement that 25% of the GGRF be expended to benefit disadvantaged communities to require that the funding be allocated for projects located within the boundaries of, and benefiting individuals in, disadvantaged communities.
2. Requires that an additional 20% of the GGRF be allocated for projects that benefit low-income households.
3. Requires that, to the extent feasible, a "fair share" of the moneys allocated to benefit low-income households target households with incomes at or below 200% of the federal poverty level.

FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill has the following state costs:

1. Increased GGRF expenditures in disadvantaged and low-income communities. The Governor's budget proposes appropriating $3.1 billion GGRF funds this year.
2. Increased annual ongoing costs of approximately $600,000 (GGRF) for the California Air Resources Board (ARB) to modify existing guidelines and tracking systems, provide guidance to state agencies, and conduct outreach.

COMMENTS: According to the author, the best greenhouse gas (GHG) reduction strategies are those that benefit low-income households, whether they lie inside or outside CalEnviroScreen-designated disadvantaged communities. Low-income Californians often lack adequate transportation choices, spend a significant percentage of their budgets on necessities like energy, and are least able to relocate or afford energy-saving appliances, vehicles, and household improvements to adapt to our changing climate. This bill is intended to ensure that the state takes advantage of every opportunity to lift poor and working Californians out of poverty, while reducing GHG emissions.

The California Global Warming Solutions Act of 2006 (AB 32 (Núñez), Chapter 488, Statutes of 2006) 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 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% are to 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. An expenditure plan for the 40% was not included in the 2015-16 Budget Act, with the exception of $227 million appropriated to continue funding for specified existing programs. The remaining 2015-16 revenues, along with 2016-17 revenues, totaling $3.1 billion are available for appropriation this year.

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 (DACs), 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.

This bill modifies SB 535 by requiring the entire 25% allocated to benefit DACs is used to fund projects located within the communities and establishes a new allocation category to target low-income households located outside DACs such as rural communities in northern and southeastern California as well as urban districts in places like the Bay Area and San Diego regions. Under this proposal, 50% (rather than 75% under current law) of all funds would be available for communities and households other than low-income and those not located in DACs.

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0003333

Date of Hearing: May 11, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1550

Author:(Gomez) – As Amended Ver:April 11, 2016

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

SUMMARY:

This bill requires 25% of the AB 32 cap-and-trade revenues (Greenhouse Gas Reduction Fund) to be spent on projects located within and benefiting disadvantaged communities. This bill requires an additional unspecified percentage of the Greenhouse Gas Reduction Funds (GGRF) to be spent on projects that benefit low-income households. Additionally, this bill:

1. Defines low-income households as households with incomes at or below 80% of the statewide median income or with median incomes at or below the threshold designated by the Department of Housing and Community Development (HCD), as specified.
2. Requires a fair share of GGRF to be targeted to households with incomes at or below 200% of the federal poverty level, to the extent feasible.
3. Requires funds benefitting disadvantaged communities and funds benefitting low-income households to be counted separately for the purposes of meeting the targets.

FISCAL EFFECT:

1. Increased GGRF expenditures in disadvantaged and low-income communities. The Governor's budget proposes appropriating $3.1 billion GGRF funds this year.
   
2. Increased annual ongoing costs of approximately $600,000 (GGRF) for the California Air Resources Board (ARB) to modify existing guidelines and tracking systems, provide guidance to state agencies, and conduct outreach.

COMMENTS:

1. Purpose. According to the author, the best greenhouse gas reduction strategies are those that benefit low-income households, whether they lie inside or outside CalEnviroScreen-designated disadvantaged communities. Low-income Californians often lack adequate transportation choices, spend a significant percentage of their budgets on necessities like energy, and are least able to relocate or afford energy-saving appliances, vehicles, and household improvements to adapt to our changing climate.

This bill ensures the state takes advantage of every opportunity to lift poor and working Californians out of poverty, while reducing greenhouse gas emissions.

1. 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 allocated cap-and-trade revenues for the 2014-15 fiscal year and established 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% are to 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.

An expenditure plan for the 40% was not included in the 2015-16 Budget Act, with the exception of $227 million appropriated to continue funding for specified existing programs. The remaining 2015-16 revenues, along with 2016-17 revenues, totaling $3.1 billion are available for appropriation this year.

1. Disadvantaged and Low-income 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 (DACs), 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.

This bill modifies SB 535 by requiring the entire 25% allocated to benefit DACs is used to fund projects located within the communities.

Additionally, this bill establishes a new allocation category to target low-income households located outside DACs such as rural communities in northern and southeastern California as well as urban districts in places like the Bay Area and San Diego regions.

This bill currently provides an unspecified percentage of cap-and-trade revenues for projects that directly benefit low-income households. In order to add fairness and balance, Environmental Justice advocates and others propose specifying 25% for low-income households. Under this proposal, 50% (rather than 75% under current law) of all funds would still be available for communities and households other than low-income and those not located in DACs. The author continues to work with stakeholders and others to determine the appropriate percentage for this category.

The author may also wish to clarify that the percentage of funds allocated for low-income households may also be used to benefit communities or populations comprised predominantly of low-income residents.

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

Date of Hearing: April 4, 2016

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Das Williams, Chair

ABPCA Bill Id:AB 1550 (

Author:Gomez) – As Amended Ver:March 28, 2016

SUBJECT: Greenhouse gases: investment plan: disadvantaged communities

SUMMARY: Requires that 25% of the Greenhouse Gas Reduction Fund (GGRF) be spent on projects located within disadvantaged communities, and requires that an additional 25% be spent on projects that benefit low-income households.

EXISTING LAW:

1. Requires the Air Resources Board (ARB), pursuant to California Global Warming Solutions Act of 2006 [AB 32 (Nunez), 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. AB 32 authorizes ARB to permit the use of market-based compliance mechanisms to comply with GHG reduction regulations, once specified conditions are met.
   
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 to set procedures for the investment of GHG allowance auction revenues. Authorizes a range of GHG reduction investments and establishes several policy objectives, including:
   
   1. Maximize economic, environmental, and public health benefits;
      
   2. Foster job creation;
      
   3. Complement efforts to improve air quality;
      
   4. Direct investment toward the most disadvantaged communities and households in the state;
      
   5. Provide opportunities for businesses, public agencies, nonprofits, and other community institutions to participate in and benefit from statewide efforts to reduce GHG emissions; and,
      
   6. Lessen the impacts and effects of climate change on the state's communities, economy, and environment.
      
4. Requires the investment plan to allocate (1) a minimum of 25% of the available moneys in the GGRF to projects that provide benefits to identified disadvantaged communities, and (2) a minimum of 10% of the available moneys in the GGRF to projects located within identified disadvantaged communities.
   

THIS BILL:

1. Revises the requirement that 25% of the GGRF be expended to benefit disadvantaged communities to require that the funding be allocated for projects located within the boundaries of, and benefiting individuals in, disadvantaged communities.
2. Requires that an additional 25% of the GGRF be allocated for projects that benefit low-income households.
3. Defines "low-income household" as those with household incomes at or below 80% of the statewide median income.
4. Requires that, to the extent feasible, a "fair share" of the moneys allocated to benefit low-income households target households with incomes at or below 200% of the federal poverty level.

FISCAL EFFECT: Unknown

COMMENTS:

1. Existing GGRF funding and programs. The 2014-15 Budget Act allocated GGRF revenues for the 2014-15 fiscal year and established a long-term plan for the allocation of GGRF revenues beginning in fiscal year 2015-16. Thirty-five percent of GGRF is continuously appropriated for investments in transit, affordable housing, and sustainable communities. Twenty-five percent is continuously appropriated to continue the construction of the high-speed rail project. The remaining 40% is subject to annual appropriation by the Legislature for investments in programs that include low-carbon transportation, energy efficiency and renewable energy, and natural resources and waste diversion. An expenditure plan for the 40% was not included in the 2015-16 Budget Act, with the exception of $227 million appropriated to continue funding for specified existing programs. The remaining 2015-16 revenues, along with 2016-17 revenues, are available for appropriation this year.
   
   The 2016 Annual Report of Cap and Trade Auction Proceeds includes an analysis of funds spent within and benefiting disadvantaged communities, excluding high speed rail spending. According to the report, 39% of expenditures were for projects located within disadvantaged communities and 51% of the overall funding benefited disadvantaged communities.

Listed below are the major GGRF program areas, administering agency, and funding to date:

• 1. Transportation and Sustainable Communities
     1. High Speed Rail, High Speed Rail Authority (Authority), $750 million
     2. Transit and Intercity Rail Capital Program, Transportation Agency, $225 million
     3. Low Carbon Transit Operations Program, Department of Transportation (Caltrans), $125 million
     4. Affordable Housing and Sustainable Communities Program, Strategic Growth Council (SGC), $530 million
     5. Low Carbon Transportation, ARB, $325 million
  2. Clean Energy and Energy Efficiency
     1. Low-Income Weatherization Program, Community Services and Development (CSD), $154 million
     2. Energy Efficiency in Public Buildings, California Energy Commission (CEC), $20 million
     3. Agricultural Energy and Operational Efficiency, Department of Food and Agriculture (CDFA), $75 million
     4. Water-Energy Efficiency, Department of Water Resources (DWR), $75 million
  3. Natural Resources and Waste Diversion
     1. Wetlands and Watershed Restoration, Department of Fish and Wildlife (DFW), $27 million
     2. Urban Forestry, Forest Health Restoration, and Reforestation, Department of Forestry and Fire Protection (CalFIRE), $42 million
     3. Waste Diversion, Department of Resources Recycling and Recovery (CalRecycle), $31 million

The Governor's 2016-17 Budget proposes just under $3.1 billion in expenditures:

• 1. Continuous Appropriations
     1. High Speed Rail, Authority, $500 million
     2. Low Carbon Transit Operations, State Transit Assistance, $100 million
     3. Transit and Intercity Rail Capital Program, Transportation Agency, $200 million
     4. Affordable Housing and Sustainable Communities Program, SGC, $400 million
  2. Fifty Percent Reduction in Petroleum Use
     1. Transit and Intercity Rail Capital Program, Transportation Agency, $400 million
     2. Low Carbon Road Program, Caltrans, $100 million
     3. Low Carbon Transportation and Fuels, ARB, $500 million
     4. Biofuel Facility Investments, CEC, $25 million
  3. Local Climate Action
     1. Transformative Climate Communities, SGC, $100 million
  4. Short-Lived Climate Pollutants
     1. Black Carbon Woodsmoke and Refrigerants, ARB, $60 million
     2. Waste Diversion, CalRecycle, $100 million
     3. Climate Smart Agriculture – Healthy Soils and Dairy Digesters, CDFA, $55 million
  5. Safeguarding California/Water Action Plan
     1. Water and Energy Efficiency, CDFA and DWR, $30 million
     2. Drought Executive Order, CEC, $60 million
     3. Wetlands and Watershed Restoration/CalEcoRestore, DFW, $60 million
  6. Safeguarding California/Carbon Sequestration
     1. Healthy Forests and Urban Forestry, CalFIRE, $180 million
     2. Urban Greening, Natural Resources Agency, $20 million
  7. Energy Efficiency/Renewable Energy
     1. Energy Efficiency for Public Buildings, Department of General Services, $30 million
     2. California Lending for Energy and Environmental Needs Center, I Bank, $20 million
     3. Energy Corps, Conservation Corps, $15 million
     4. Energy Efficiency Upgrades/Weatherization, Department of Community Services and Development, $75 million
     5. Renewable Energy and Energy Efficiency Projects, University of California, California State University, $60 million

1. Author statement:

Numerous findings suggest that low-income communities and communities of color are and will continue to be disproportionately impacted by the effects of climate change. Since CalEnviroScreen classifies a quarter of the state’s population as living in DACs, at least a quarter of cap-and-trade funds should be invested directly within the boundaries of DACs, which generally provides more assistance than simply “benefiting” these communities.

Additionally, experience has shown that some of the best greenhouse gas reduction strategies are those that benefit low-income households, whether they lie inside or outside CalEnviroScreen-designated DACs. Low-income Californians often lack adequate transportation choices, spend a significant percentage of their budgets on necessities like energy, and are least able to relocate or afford energy-saving appliances, vehicles, and household improvements to adapt to our changing climate. It is critical that the state continue making a concerted effort to specifically target investments in DACs as well as take advantage of every opportunity to lift poor and working Californians out of poverty while reducing greenhouse gas emissions. Therefore, AB 1550 ensures that low-income households directly benefit from the state’s cap-and-trade program by requiring an additional 25 percent of climate funds to benefit these households through programs such as advanced clean vehicles, weatherization and energy efficiency, transit passes, and household clean energy generation.

A greater investment in California’s environmentally and socioeconomically disadvantaged populations has the potential to yield significant climate, public health, and cost benefits while helping bridge the ‘green divide’.

1. Suggested amendments.
   1. This bill would permanently allocate 25% of the GGRF for projects that benefit low-income communities. This provision has the potential to lessen the Legislature's ability oversee and adjust GGRF spending during each budget cycle. In order to ensure proper legislative oversight over GGRF expenditures, the committee may wish to amend the bill to make this percentage unspecified to allow the author, stakeholders, and the fiscal committees to determine the appropriate size of the set aside as the bill moves forward.
   2. This bill defines "low-income" as households with incomes at or below 80% of the statewide median income. Unfortunately, a statewide definition inadvertently excludes a large number of low-income Californians that live in high cost of living areas. In order to ensure that the threshold for low-income households accurately identifies low-income households throughout the state, the committee may wish to amend the bill to specify that the threshold for low-income may also be determined by the Department of Housing and Community Development's list of state income limits, adopted pursuant to Health and Safety Code section 50093.

REGISTERED SUPPORT / OPPOSITION:

Support

Amigos de los Rios
Asian Pacific Environmental Network
Asian Pacific Policy and Planning Council
California Association of Local Conservation Corps
California Bicycle Coalition
California Climate and Agriculture Network
California Environmental Justice Alliance
California Housing Partnership Corporation
California League of Conservation Voters
California ReLeaf
California Urban Forests Council
California Vanpool Authority
Canopy
Catholic Charities
Catholic Charities, Diocese of Stockton
Center for Community Action and Environmental Justice
Center on Race, Poverty, and the Environment
Central California Asthma Collaborative
Central Coast Alliance United for a Sustainable Economy
Coalition for Clean Air
Communities for a Better Environment
Community Health for Asian Americans
Energy Solidarity Cooperative
Environmental Health Coalition
Fallbrook Land Conservancy
Filipino/American Coalition for Environmental Solidarity
Frenso Economic Opportunities Commission
Fresno Interdenominational Refugee Ministries
Friends Committee on Legislation of California
Grayson Neighborhood Council
Greenlining Institute
Greenspace-The Cambria Land Trust
GRID Alternatives
Growing Together
Huntington Beach Tree Society, Inc.
Liberty Hill Foundation
Little Tokyo Service Center
Los Angeles Conservation Corps
Los Angeles Neighborhood Land Trust
Move LA
National Parks Conservation Association
Pacific Asian Consortium in Employment
Pacoima Beautiful
People Organizing for Demand Environmental and Economic Rights
Physicians for Social Responsibility-Los Angeles
Public Advocates
Regional Asthma Management and Prevention
Rural County Representatives of California
Sacramento Tree Foundation
Safe Routes to School National Partnership
Save the Bay
SCOPE
Sierra Club California
Solar-Oversight
Strategic Actions for a Just Economy
Strategic Concepts in Organizing and Policy Education
The Nature Conservancy
Tree Davis
Tree San Diego
Trust for Public Land
TRUST South LA
Union of Concerned Scientists
Urban Releaf
Valley Clean Air Now
Voices for Progress

Opposition

California Chamber of Commerce
CalTax

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092