The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for 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 from a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature. Existing law requires the Department of Finance to annually submit a report to the appropriate committees of the Legislature on the status of the projects funded with moneys from the fund.

This bill would require the department to include additional information in its annual report to the Legislature, including, among other things, the greenhouse gas emissions reductions attributable to each project and the geographic location, industry sector, and number of employees of the business entities, as defined, receiving moneys from the fund. The bill would require state agencies expending moneys from the fund to condition the acceptance of those moneys on the recipient providing information necessary to meet the reporting requirements.

The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for 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 from a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature. Existing law requires the Department of Finance to annually submit a report to the appropriate committees of the Legislature on the status of the projects funded with moneys from the fund.

This bill would require the department to include additional information in its annual report to the Legislature, including, among other things, the greenhouse gas emissions reductions attributable to each project and the geographic location, industry sector, and number of employees of the business entities, as defined, receiving moneys from the fund. The bill would require state agencies expending moneys from the fund to condition the acceptance of those moneys on the recipient providing information necessary to meet the reporting requirements.

The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for 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 from a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature. Existing law requires state agencies to submit annually to the Secretary for Environmental Protection a specified report that includes, among other things, a list of measures that have been adopted and implemented by that state agency to meet greenhouse gas emission reduction targets, as defined, and a status report on the actual greenhouse gas emissions reduced as a result of those measures. Existing law requires the Department of Finance to annually submit a report to the appropriate committees of the Legislature on the status of the projects funded with moneys from the fund.

The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for 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 from a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature. Existing law requires state agencies to submit annually to the Secretary for Environmental Protection a specified report that includes, among other things, a list of measures that have been adopted and implemented by that state agency to meet greenhouse gas emission reduction targets, as defined, and a status report on the actual greenhouse gas emissions reduced as a result of those measures.

This bill would create additional requirements on state agencies and state entities submitting that report, including, among other things, identifying the types number of business entities entities, as defined, receiving moneys and the actions and outcomes of those actions taken to connect assist residents of disadvantaged communities, as defined, and other target populations populations, as specified, with the business, employment, and training opportunities offered through activities funded with moneys from the fund. fund and with any other state funding source that is related to climate change mitigation, climate change adaptation, and greenhouse gas emissions reductions.

The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for 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 from a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature. Existing law requires state agencies to submit annually to the Secretary for Environmental Protection a specified report that includes, among other things, a list of measures that have been adopted and implemented by that state agency to meet greenhouse gas emission reduction targets, as defined, and a status report on the actual greenhouse gas emissions reduced as a result of those measures.

This bill would create additional requirements on state agencies submitting that report, including, among other things, identifying the types of business entities receiving moneys and the actions taken to connect residents of disadvantaged communities, as defined, and other target populations with the business, employment, and training opportunities offered through activities funded with moneys from the fund.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 2653 (Eduardo Garcia) - Greenhouse Gas Reduction Fund: report

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

Bill Summary:

AB 2653 requires the annual report submitted by the Department of Finance (DOF) on projects funded through the Greenhouse Gas Reduction Fund (GGRF) to include specified additional information related to jobs and business.

Fiscal Impact:

• Year one staff costs of approximately $780,000 (GGRF) to ARB, and ongoing staff costs of approximately $620,000 (GGRF).
• Approximately $200,000 (GGRF) annually for information technology and other contracts.
• Unknown, potentially significant costs to the DOF and the administering agencies to track, compile, and provide requested information.

Background:

Greenhouse Gas Reduction Fund. 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.

ARB co-benefits assessment. ARB is currently in the process of executing a $750,000 contract (including fiscal years 2016-17 and 2017-18) with UC Berkeley to assess co-benefits on a broad scale (social, economic, and environmental). Guidance on quantification or data collection on employment/jobs creation is included as one of many co-benefits the assessment will review. ARB will implement the recommendations.

Proposed Law:

This bill:

1. Requires the annual report submitted by DOF on projects funded through GGRF to include the following information:
   1. GHG reductions attributable to each project.
   2. The environmental and public health benefits attributable to the project.
   3. Actions and outcomes from actions taken to assist residents of disadvantaged communities, and other target populations, as specified, with the business, employment, and training opportunities offered through activities funded through the GGRF.
   4. Geographic locations, industry sector, and number of employees of the business entities, as defined, receiving GGRF moneys.
   5. The number of jobs created, including wage levels reported in ranges, as specified, by the business entities receiving GGRF moneys.
   6. The amount of other public and private moneys leveraged with GGRF moneys.
2. Requires that state agencies expending GGRF moneys condition the acceptance of those moneys on the recipient providing information necessary to meet the above reporting requirements.
3. Requires that data received in order to meet the above reporting requirements is available to the public.
4. Requires the Secretary of the California Environmental Protection Agency (CalEPA) to post a link to the report on specified Internet websites.
5. Specifies that target populations means communities and groups of individuals that experience high levels of unemployment or poverty, and authorizes the California Workforce Development Board and the Governor’s Office of Business and Economic Development identify those populations.

Staff Comments:

Purpose of Bill. According to the author, “Since the enactment of the California Global Warming Solutions Act of 2006, California has been committed to taking actions to reduce its own greenhouse gas emissions and serve as a catalyst for others to undertake their own emission reduction actions.

“One of the primary financing methods being used by the state, are the proceeds from the cap-and-trade auction revenues. The use of these funds is guided by the three-year Climate Change Investment Plan, which is designed to identify: near-term and long-term GHG emission reduction goals by sector; gaps in current state strategies; and, priority programmatic investments of moneys in the Greenhouse Gas Reduction Fund. Annually, the Department of Finance reports on programs funded with Greenhouse Gas Reduction Fund moneys.

“While the Investment Plan and annual updates include relevant information, California needs to establish routine, quantified, consistent, and public reporting of the actions and outcomes of the expenditures of these funds. Having access to this level of data can assist the legislature in making good decisions related to new funding, modifications to existing activities in order to fill gaps, review goals and objectives, and to ensure that all areas of the state and type/size of business are making this important economic transition to a lower carbon economy.”

ARB fiscal. According to ARB, ARB will be consolidating and analyzing data collected for the business entities subject to AB 2653 across the 45+ GGRF programs (including data quality checks), mapping and publishing the data, and reporting on employment/jobs outcomes and how they are related to benefits to disadvantaged communities.  The positions requested in ARB’s fiscal are meant to capture the additional workload.  In addition, the positions would be tasked with expanding the existing tracking and reporting requirements, and modifying the tracking system to integrate the new employment/jobs data with existing project tracking data.  

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: AB 2653

SUBJECT: Greenhouse Gas Reduction Fund: report.

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 (DOF), 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. 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)
5. Requires DOF to submit an annual report to the Legislature on the status of projects funded by GGRF moneys.
   

This bill requires the annual report submitted by DOF on projects funded through GGRF include the following information:

1. GHG reductions attributable to each project;
2. Actions and outcomes from actions taken to assist residents of disadvantaged communities, and other target populations, as specified, with the business, employment, and training opportunities offered through activities funded through the GGRF;
3. Geographic locations, industry sector, and number of employees of the business entities, as defined, receiving GGRF moneys;
4. The number of jobs created, including wage levels reported in ranges, as specified, by the business entities receiving GGRF moneys;
5. The amount of other public and private moneys leveraged with GGRF moneys.
6. Requires that state agencies expending GGRF moneys condition the acceptance of those moneys on the recipient providing information necessary to meet the above reporting requirements.
7. Requires the data received in order to meet the above reporting requirements be available to the public.
8. Requires the Secretary of the California Environmental Protection Agency (CalEPA) to post a link to the report on specified Internet websites.
9. Specifies that target populations means communities and groups of individuals that experience high levels of unemployment or poverty, and authorizes the California Workforce Development Board (WDB) and the Governor’s Office of Business and Economic Development (GO-Biz) identify those populations.

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 (DOF), 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 DOF, 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. GGRF goals and DOF annual report. AB 1532 (Pérez, Chapter 807, Statutes of 2012) requires GGRF investments achieve GHG emissions reductions and, where applicable and to the extent feasible, maximize economic, environmental, and public health benefits to the state; foster in-state job creation; complement efforts to improve air quality; direct investment toward the most disadvantaged communities and households in the state; and provide opportunities for businesses, public agencies, nonprofits, and other community institutions to participate in and benefit from GHG emission reduction efforts.

AB 1532 also 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 the status of funded programs and lists funded projects 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. The report also includes greenhouse gas reductions for awarded projects by sector. DOF has provided additional information, along with the report, that includes more specific project information, including location, GHG emission reductions, general environmental and economic cobenefits, as well as the number of projects and funds within and providing benefits to disadvantaged communities.

Comments

1. Purpose of Bill. According to the author, “Since the enactment of the California Global Warming Solutions Act of 2006, California has been committed to taking actions to reduce its own greenhouse gas emissions and serve as a catalyst for others to undertake their own emission reduction actions.

“One of the primary financing methods being used by the state, are the proceeds from the cap-and-trade auction revenues. The use of these funds is guided by the three-year Climate Change Investment Plan, which is designed to identify: near-term and long-term GHG emission reduction goals by sector; gaps in current state strategies; and, priority programmatic investments of moneys in the Greenhouse Gas Reduction Fund. Annually, the Department of Finance reports on programs funded with Greenhouse Gas Reduction Fund moneys.

“While the Investment Plan and annual updates include relevant information, California needs to establish routine, quantified, consistent, and public reporting of the actions and outcomes of the expenditures of these funds. Having access to this level of data can assist the legislature in making good decisions related to new funding, modifications to existing activities in order to fill gaps, review goals and objectives, and to ensure that all areas of the state and type/size of business are making this important economic transition to a lower carbon economy.”

1. Environmental benefits. Economic benefits are an important cobenefit from GGRF investments in all areas of the state, but especially in disadvantaged communities and areas with high poverty and unemployment. However, as disadvantaged communities experience disproportionately high pollution burdens, environmental and public health benefits from GGRF projects, including improved air quality and water quality, and greener, walkable communities, can also work to improve health outcomes and quality of life in these communities and across the state.

The bill should be amended to require the report include, in addition to GHG emissions reductions, other environmental and public health benefits, as applicable, for projects funded through GGRF.

1. Target populations. The bill requires the annual GGRF benefits report include outcomes from actions taken to provide economic benefits to disadvantaged communities and “target populations.” The bill authorizes, but does not require, the WDB and GO-Biz to identify target populations.

In order to ensure these target populations are identified to fulfill reporting requirements in the bill, an amendment is needed to require WDB and GO-Biz to identify target populations.

1. Outcomes for business opportunities in disadvantaged communities. AB 2653 requires the report to include actions, and outcomes from those actions, for business opportunities offered through activities funded through GGRF in disadvantaged communities or target populations, as specified.

AB 2653 also requires the report include specific information regarding the number of jobs created, including wage levels of those jobs for all businesses receiving money from GGRF. As this requirement for job creation and wage level information applies to all recipient businesses, including those in disadvantaged communities, it is not clear what additional “outcomes” would be required in the report with regard to “business opportunities” in disadvantaged communities and target populations. To avoid confusion and redundancies for agencies gathering information required for the report, the author may wish to clarify this provision.

SOURCE:

Author

SUPPORT:

None received

OPPOSITION:

None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2653

Author:(Eduardo Garcia, et al.)

As Amended Ver:

Majority vote

SUMMARY: Requires the Department of Finance (DOF) to include in its annual report to committees of the Legislature information relating to the economic impacts of Greenhouse Gas Reduction Fund (GGRF) expenditures. Specifically, this bill:

1. Requires DOF to include, at a minimum, the following:
   1. The greenhouse gas (GHG) emissions reductions attributable to each project;
   2. Actions and outcomes from those actions taken to assist residents of disadvantaged communities and other target populations;
   3. The geographic location, industry sector, and number of employees of the business entities receiving moneys from the GGRF;
   4. The number of jobs created, including wage levels; and,
   5. The amount of other public or private moneys leveraged with investments from the GGRF.
2. Requires the Secretary for Environmental Protection to identify the other target populations referenced in the bill.
3. Defines "business entity" as any firm operating in the state as a nonprofit, sole proprietorship, general partnership, limited partnership, limited liability partnership, limited liability company, or corporation.

EXISTING LAW:

1. Requires the Air Resources Board (ARB), pursuant to California Global Warming Solutions Act of 2006 [AB 32 (Núñez), Chapter 488, Statutes of 2006], to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions. 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. Requires each state agency to annually prepare and submit to the Secretary of the California Environmental Protection Agency (CalEPA) a report that includes:
   1. A list of those measures that have been adopted and implemented by the state agency to meet GHG emission reduction targets and a status report of the actual GHG emissions reduced as a result of the measures;
   2. A list a timetable for adoption of any additional measures needed to meet GHG emissions reduction targets;
   3. An estimate of the department's own GHG emissions and an explanation of any increase or decrease compared to the previous year's emissions.
3. Requires CalEPA, on or before January 1 of each year, to compile and organize the information submitted by state agencies into a clear, standardized format and provide the information on its website as a "state agency GHG emission reduction report card" (report card).
4. Requires DOF to annually report to the appropriate committees of the Legislature the status of projects funded by the GGRF and their outcomes. Requires that the report include a description of how the administering agencies have fulfilled the funding requirements for disadvantaged communities.

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

1. Unknown increased costs for all state agencies receiving GGRF, potentially in the hundreds of thousands of dollars (GGRF). There are approximately 47 state agency programs receiving GGRF.
2. Unknown increased costs, potentially in the million dollar range, for CalEPA to reconfigure its website to accommodate the new data.
3. Increased ongoing costs for ARB, as the GGRF administrator, of between $145,000 and $865,000 (GGRF) depending on how the requirement is interpreted. The upper range assumes data will be reported for each business entity receiving GGRF; the lower range assumes reporting on aggregate business data.

COMMENTS: According to the author, as California continues its important work to reduce GHG emissions, state agencies have demonstrated great creativity in developing programs that provide co-benefits that help businesses and communities choose more sustainable actions. This bill is intended to ensure that co-benefits are tracked as the state transforms to a lower carbon economy.

ARB and DOF are required to submit various reports to the Legislature relating to the state's cap-and-trade program and GGRF expenditures. The primary report is ARB's Scoping Plan, which lays out ARB's plan to reduce greenhouse gas GHG emissions to 1990 levels by 2020. The Scoping Plan was first adopted in 2008 and must be updated every five years. ARB is also tasked with developing a short-lived climate pollution reduction strategy. ARB also prepares an annual report of climate investments using cap-and-trade funds. DOF is required to develop a three-year investment plan for cap-and-trade funding. DOF is required to annually report to the Legislature on the status of projects funded by the GGRF and their outcomes. The Act requires that, where applicable and to the extent feasible, GGRF allocations be used for co-benefits, including: economic, environmental, and public health benefits; job creation; complement efforts to improve air quality; direct investments toward disadvantaged communities; provide opportunities for businesses, public agencies, nonprofits, and other community institutions to participate in and benefit from GHG emissions reductions efforts; and, lessen impacts of climate change on the state's communities, economy, and environment. However, there is no clear reporting mechanism to inform the Legislature and the public about the economic and job benefits have resulted from programs funded by the GGRF. This bill would require DOF to include information about the economic benefits associated with GGRF programs in its existing report to the Legislature.

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 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 $3.1billion, 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, and that 25% of available revenues fund projects that benefit those communities. In October 2014, CalEPA released its list of disadvantaged communities for the purpose of SB 535. CalEPA relied on CalEnviroScreen to identify the areas disproportionately burdened by and vulnerable to multiple sources of pollution. CalEnviroScreen is a tool that assesses all census tracts in California to identify the areas disproportionally affected and vulnerable to multiple sources of pollution. Areas (census tracts) identified as disadvantaged for SB 535's purposes by CalEnviroScreen include: the majority of the San Joaquin Valley; much of Los Angeles and the Inland Empire; pockets of other communities near ports, freeways, and major industrial facilities such as refineries and power plants; and large swaths of the Coachella Valley, Imperial Valley and Mojave Desert.

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0003355

Date of Hearing: May 11, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2653

Author:(Eduardo Garcia) – As Amended Ver:April 27, 2016

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

SUMMARY:

This bill requires each state agency that receives AB 32 cap-and-trade revenues (Greenhouse Gas Reduction Funds) to include the following additional elements in their existing report to the California Environmental Protection Agency (CalEPA):

• 1. The number of business entities receiving financial assistance or entering into contracts paid using Greenhouse Gas Reduction Funds (GGRF).
  2. The amount of other public or private moneys leveraged when business entities received the GGRF assistance.
  3. The geographic location, industry sector, and number of employees of the business entity.
  4. The number of jobs created by the business entities, including wage levels.
  5. Actions and outcomes taken to assist residents of disadvantaged communities and other target populations, as identified by the CalEPA Secretary, with the businesses, employment, and training opportunities through the activities funded by the GGRF or other funds as specified.

This bill allows the CalEPA Secretary to include this information in its state agency GHG emission reduction report card (report card) and applies to awards made by agencies after February 1, 2017.

FISCAL EFFECT:

1. Unknown increased costs for all state agencies receiving GGRF, potentially in the hundreds of thousands of dollars (GGRF). There are approximately 47 state agency programs receiving GGRF.
2. Unknown increased costs, potentially in the million dollar range, for CalEPA to reconfigure its website to accommodate the new data.
3. Increased ongoing costs for ARB, as the GGRF administrator, of between $145,000 and $865,000 (GGRF) depending on how the requirement is interpreted. The upper range assumes data will be reported for each business entity receiving GGRF; the lower range assumes reporting on aggregate business data.

COMMENTS:

1. Purpose. According to the author, as California continues its important work to reduce GHG emissions, state agencies have demonstrated great creativity in developing programs that provide co-benefits that help businesses and communities choose more sustainable actions. This bill will ensure co-benefits are tracked as the state transforms to a lower carbon economy.
2. Report Card. CalEPA is required to annually compile and organize the information submitted by state agencies into a clear, standardized format and provide the information on its website as a "state agency GHG emission reduction report card" (report card).

This bill allows CalEPA to include the newly required data in its annual report card.

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 $3.1billion, are available for appropriation this year.

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

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

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

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

Date of Hearing: April 18, 2016

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Das Williams, Chair

ABPCA Bill Id:AB 2653 (

Author:Eduardo Garcia) – As Introduced Ver:February 19, 2016

SUBJECT: Greenhouse Gas Reduction Fund: report

SUMMARY: Requires each state agency that expends moneys from the Greenhouse Gas Reduction Fund (GGRF) to include specified economic information in their annual reports to the California Environmental Protection (CalEPA) relating to greenhouse gas (GHG) emissions reductions.

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 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 (Act) to set procedures for the investment of GHG allowance auction revenues. Authorizes a range of GHG reduction investments and establishes several policy objectives:
   
   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. Specifies that moneys appropriated from the GGRF through investments that may include funding to reduce GHG emissions through:
   
   1. Energy efficiency, clean and renewable energy generation, distributed renewable energy generation, transmission and storage, and other related actions;
      
   2. The development of state-of-the-art systems to move goods and freight, advanced technology vehicles and vehicle infrastructure, advanced biofuels, and low-carbon and efficient public transportation;
      
   3. Strategic planning and development of sustainable infrastructure projects;
      
   4. Investments in programs implemented by local and regional agencies, local and regional collaboratives, and nonprofit organizations coordinating with local governments; and,
      
   5. Funding research, development, and deployment of innovative technologies, measures, and practices related to programs and projects funded pursuant to the Act.
      
5. 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.
   
6. Requires each state agency to annually prepare and submit to the Secretary of the California Environmental Protection Agency (CalEPA) a report that includes:
   
   1. A list of those measures that have been adopted and implemented by the state agency to meet GHG emission reduction targets and a status report of the actual GHG emissions reduced as a result of the measures;
      
   2. A list a timetable for adoption of any additional measures needed to meet GHG emissions reduction targets;
      
   3. An estimate of the department's own GHG emissions and an explanation of any increase or decrease compared to the previous year's emissions.
      
7. Requires CalEPA, on or before January 1 of each year, to compile and organize the information submitted by state agencies into a clear, standardized format and provide the information on its website as a "state agency GHG emission reduction report card" (report card).
   

THIS BILL:

1. Requires that each state agency that receives allocations from the GGRF to include in their report to CalEPA for purposes of the report card to include the following:
   1. The number of business entities receiving financial assistance or entering into contracts paid using GGRF;
   2. The amount of other public or private moneys leveraged when business entities received the GGRF assistance;
   3. The location, industry sector, gross revenue, and number of employees of the business entities;
   4. The number of jobs created, including wage levels and education and training requirements set, by the business entities; and,
   5. Actions taken to connect residents of disadvantaged communities and other target populations with the businesses, employment, and training opportunities offered through the activities funded by the GGRF.

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), $850 million
     2. Transit and Intercity Rail Capital Program, Transportation Agency, $265 million
     3. Low Carbon Transit Operations Program, Department of Transportation (Caltrans), $145 million
     4. Affordable Housing and Sustainable Communities Program, Strategic Growth Council (SGC), $610 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. Climate Smart Agriculture, Department of Food and Agriculture (CDFA), $75 million
     4. Water-Energy Efficiency, Department of Water Resources (DWR), $70 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 (CAL FIRE), $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, CAL FIRE, $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, CSD, $75 million
     5. Renewable Energy and Energy Efficiency Projects, University of California, California State University, $60 million

1. Jobs and Economic Development Efforts. There are a number of entities throughout state government designed to increase workforce and economic development efforts, with a particular emphasis on emerging technology, green jobs, and the green economy.
   
   1. GO-Biz: GO-Biz serves as California’s single point of contact for economic development and job creation efforts. GO-Biz markets the business and investment opportunities available in California by working in partnership with local, regional, federal, and other state public and private institutions to encourage business development and investment in the state.
      

The iHub Program within GO-Biz designates ‘iHubs’ (i.e., areas in the state) to stimulate partnerships, economic development, and job creation by leveraging assets to provide an innovation platform for startup businesses, economic development organizations, business groups, and venture capitalists. These assets include research parks, technology incubators, universities, and federal laboratories.

• 1. Commission for Economic Development: The commission, consisting of the Lieutenant Governor as Chairperson, three members appointed by each the Senate Committee on Rules and the Assembly Speaker, and 10 members appointed by the Governor, was established to provide bipartisan legislative, executive branch and private sector support and guidance for the best possible overall economic development of the state.
     
  2. California Workforce Investment Board: CWIB is charged with developing a unified, strategic planning process to coordinate various education, training, and employment programs into an integrated workforce development system that supports economic development. CWIB has adopted “sector strategies” as the statewide framework for workforce development and works with partners, including other state agencies, to support the emergence of effective statewide and regionally driven sector initiatives.
     
  3. Green Collar Jobs Council: GCJC was created to address the workforce needs that accompany California’s growing green economy under the purview of CWIB. GCJC makes recommendations and creates strategies for comprehensive and effective workforce training opportunities to help prepare California’s current and future workforce to meet the skills demand from businesses supporting the energy efficiency and clean energy sectors. GCJC is also tasked with developing, collecting, analyzing, and distributing statewide and regional labor market data on California’s new and emerging green industries workforce needs, trends, and job growth and identifying funding resources and making recommendations on how to expand and leverage these funds. CWIB is required to report annually to the Legislature on the status of GCJC activities, grants awarded, and its development and implementation of a green workforce strategic initiative.
     
     The GCJC issued a Proposed Jobs and Workforce Development Program Elements for Carbon Reduction Investments in California in January 2014, which proposed “a common approach to workforce development and job creation for California’s multiple public investments in carbon reduction initiatives under the umbrella of AB 32.”

1. Author's statement:

As California continues in its important work to reduce GHG emissions, state agencies have demonstrated great creativity in developing programs that provide co-benefits that help businesses and communities choose more sustainable actions. This bill ensures tracking the co-benefit[s] and sheds light on the state's economic transformation to a lower carbon economy.

1. Previous legislation.

SB 189 (Hueso) of 2015 would have established the Clean Energy and Low-Carbon Economic and Jobs Growth Blue Ribbon Committee to advise state agencies on the most effective ways to maximize California's economic benefits and jobs growth through actions and investments in a low-carbon economy. This bill was held in the Assembly Appropriations Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

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