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 establishes the Strategic Growth Council, which consists of the heads of various state agencies and certain other members, and requires the council to identify and review activities and funding programs that may be coordinated to improve air and water quality, improve natural resource protection, increase the availability of affordable housing, improve transportation, meet the goals of the California Global Warming Solutions Act of 2006, encourage sustainable land use planning, and revitalize urban and community centers in a sustainable manner.

This bill would create the Transformative Climate Communities Program, to be administered by the council. The bill would require the council to award competitive grants to specified eligible entities for the development and implementation of neighborhood-level transformative climate community plans that include greenhouse gas emissions reduction projects that provide local economic, environmental, and health benefits to disadvantaged communities, as defined. The bill would require the council to develop guidelines and selection criteria for the implementation of the program. The bill would require the California Environmental Protection Agency to provide assistance in performing outreach to disadvantaged communities and assessing the environmental justice benefits of project awards.

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 establishes the Strategic Growth Council, which consists of the heads of various state agencies and certain other members, and requires the council to identify and review activities and funding programs that may be coordinated to improve air and water quality, improve natural resource protection, increase the availability of affordable housing, improve transportation, meet the goals of the California Global Warming Solutions Act of 2006, encourage sustainable land use planning, and revitalize urban and community centers in a sustainable manner.

This bill would create the Transformative Climate Communities Program, to be administered by the council. The bill would require the council to award competitive grants to specified eligible entities for the development and implementation of neighborhood-level transformative climate community plans that include greenhouse gas emissions reduction projects that provide local economic, environmental, and health benefits to disadvantaged communities, as defined. The bill would require the council to develop guidelines and selection criteria for the implementation of the program. The bill would require the California Environmental Protection Agency to provide assistance in performing outreach to disadvantaged communities and assessing the environmental justice benefits of project awards.

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 establishes the Strategic Growth Council, which consists of the heads of various state agencies and certain other members, and requires the council to identify and review activities and funding programs that may be coordinated to improve air and water quality, improve natural resource protection, increase the availability of affordable housing, improve transportation, meet the goals of the California Global Warming Solutions Act of 2006, encourage sustainable land use planning, and revitalize urban and community centers in a sustainable manner.

This bill would create the Transformative Climate Communities Program, to be administered by the council. The bill would require the council to award competitive grants to specified eligible entities for the development and implementation of neighborhood-level transformative climate community plans that include greenhouse gas emissions reduction projects that provide local economic, environmental, and health benefits to disadvantaged communities, as defined. The bill would require the council to develop guidelines and selection criteria for the implementation of the program. The bill would require the California Environmental Protection Agency to provide assistance in performing outreach to disadvantaged communities and assessing the environmental justice benefits of project awards.

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 state board is required to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020. 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 establishes the Strategic Growth Council, which consists of the heads of various state agencies and certain other members, and requires the council to identify and review activities and funding programs that may be coordinated to improve air and water quality, improve natural resource protection, increase the availability of affordable housing, improve transportation, meet the goals of the California Global Warming Solutions Act of 2006, encourage sustainable land use planning, and revitalize urban and community centers in a sustainable manner.

This bill would create the Transformative Climate Communities Program, to be administered by the council. The bill would require the council, in coordination with the California Environmental Protection Agency Assistant Secretary for Environmental Justice and Tribal Affairs, council to award competitive grants to specified eligible entities for the development and implementation of neighborhood-level transformative climate community plans, and projects that implement plans, plans that contribute to the reduction of include greenhouse gas emissions of greenhouse gases and demonstrate potential climate, reduction projects that provide local economic, workforce, health, and environmental environmental, and health benefits in to disadvantaged communities that have a demonstrated need for climate, economic, workforce, health, and environmental benefits. communities, as defined. The bill would require the council, in coordination with the member agencies of the council, the State Air Resources Board, and other state entities, as needed, council to develop guidelines and selection criteria for the implementation of the program. The bill would require the California Environmental Protection Agency to provide assistance in performing outreach to disadvantaged communities and assessing the environmental justice benefits of project awards.

This bill would become operative only if AB 1613 of the 201516 Regular Session is enacted and becomes effective on or before January 1, 2017, and $205,000,000 funding for the program is appropriated from the Greenhouse Gas Reduction Fund is appropriated pursuant to Section 3 of that act.

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 state board is required to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020.

Existing law establishes the Strategic Growth Council, which consists of the heads of various state agencies and certain other members, and requires the council to identify and review activities and funding programs that may be coordinated to improve air and water quality, improve natural resource protection, increase the availability of affordable housing, improve transportation, meet the goals of the California Global Warming Solutions Act of 2006, encourage sustainable land use planning, and revitalize urban and community centers in a sustainable manner.

This bill would create the Transformative Climate Communities Program, to be administered by the council. The bill would require the council, in coordination with the California Environmental Protection Agency Assistant Secretary for Environmental Justice and Tribal Affairs, to award competitive grants to specified eligible entities for the development of transformative climate community plans, and projects that implement plans, that contribute to the reduction of emissions of greenhouse gases and demonstrate potential climate, economic, workforce, health, and environmental benefits in disadvantaged communities that have a demonstrated need for climate, economic, workforce, health, and environmental benefits. The bill would require the council, in coordination with the member agencies of the council, the State Air Resources Board, and other state entities, as needed, to develop guidelines and selection criteria for the implementation of the program.

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 state board is required to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020.

Existing law establishes the Strategic Growth Council Council, which consists of the heads of various state agencies and certain other members, and requires the council to identify and review activities and funding programs that may be coordinated to improve air and water quality, improve natural resource protection, increase the availability of affordable housing, improve transportation, meet the goals of the California Global Warming Solutions Act of 2006, encourage sustainable land use planning, and revitalize urban and community centers in a sustainable manner.

This bill would create the Transformative Climate Communities Program, to be administered by the council. The bill would require the council, in coordination with the California Environmental Protection Agency Assistant Secretary for Environmental Justice and Tribal Affairs, to award competitive grants to specified eligible entities for the development of transformative climate community plans, and projects that implement plans, that contribute to the reduction of emissions of greenhouse gases and demonstrate potential climate, economic, workforce, health, and environmental benefits in disadvantaged communities that have a demonstrated need for climate, economic, workforce, health, and environmental benefits. The bill would require the council, in coordination with the member agencies of the council, the State Air Resources Board, and other state entities, as needed, to develop guidelines and selection criteria for the implementation of the program.

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 from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund. The state board is required to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020.

Existing law establishes the Strategic Growth Council and requires the council to identify and review activities and funding programs that may be coordinated to improve air and water quality, improve natural resource protection, increase the availability of affordable housing, improve transportation, meet the goals of the California Global Warming Solutions Act of 2006, encourage sustainable land use planning, and revitalize urban and community centers in a sustainable manner.

This bill would create the Transformative Climate Communities Program, to be administered by the council. The bill would provide that, upon appropriation by the Legislature, up to $250,000,000 shall be available from the Greenhouse Gas Reduction Fund to the council to administer the program. The bill would require the council, in coordination with the California Environmental Protection Agency Assistant Secretary for Environmental Justice and Tribal Affairs, to award competitive grants to specified eligible entities for the development of transformative climate community plans, and projects that implement plans, that contribute to the reduction of emissions of greenhouse gases and demonstrate potential climate, economic, workforce, health, and environmental benefits in disadvantaged communities, as defined, communities that have a demonstrated need for climate, economic, workforce, health, and environmental benefits.

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 from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund.

Existing law establishes the Strategic Growth Council and requires the council to identify and review activities and funding programs that may be coordinated to improve air and water quality, improve natural resource protection, increase the availability of affordable housing, improve transportation, meet the goals of the California Global Warming Solutions Act of 2006, encourage sustainable land use planning, and revitalize urban and community centers in a sustainable manner.

This bill would create the Transformative Climate Communities Program, to be administered by the council. The bill would appropriate provide that, upon appropriation by the Legislature, up to $250,000,000 shall be available from the Greenhouse Gas Reduction Fund to the council to administer the program. The bill would require the council, in coordination with the California Environmental Protection Agency Assistant Secretary for Environmental Justice and Tribal Affairs, to award competitive grants to specified eligible entities for the development and implementation of transformative climate community plans plans, and projects that implement plans, that contribute to the reduction of emissions of greenhouse gases and demonstrate potential climate, economic, workforce, health, and environmental benefits in disadvantaged communities, as defined, that have a demonstrated need for climate, economic, workforce, health, and environmental benefits.

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 from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund.

Existing law establishes the Strategic Growth Council and requires the council to identify and review activities and funding programs that may be coordinated to improve air and water quality, improve natural resource protection, increase the availability of affordable housing, improve transportation, meet the goals of the California Global Warming Solutions Act of 2006, encourage sustainable land use planning, and revitalize urban and community centers in a sustainable manner.

This bill would create the Transformative Climate Communities Program, to be administered by the council. The bill would appropriate $250,000,000 from the Greenhouse Gas Reduction Fund to the council to administer the program. The bill would require the council, in coordination with the California Environmental Protection Agency Assistant Secretary for Environmental Justice and Tribal Affairs, to award competitive grants to specified eligible entities for the development and implementation of transformative climate community plans that contribute to the reduction of emissions of greenhouse gases and demonstrate potential climate, economic, workforce, health, and environmental benefits in disadvantaged communities, as defined. The bill would require the council to award at least 5 grants to execute existing, and at least 5 grants to undertake the development of, neighborhood-level transformative climate community plans that contribute to the reduction of emissions of greenhouse gases and address specified project areas. defined, that have a demonstrated need for climate, economic, workforce, health, and environmental benefits.

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 from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund.

Existing law establishes the Strategic Growth Council and requires the council to identify and review activities and funding programs that may be coordinated to improve air and water quality, improve natural resource protection, increase the availability of affordable housing, improve transportation, meet the goals of the California Global Warming Solutions Act of 2006, encourage sustainable land use planning, and revitalize urban and community centers in a sustainable manner.

This bill would create the Transformative Climate Communities Program, to be administered by the council. The bill would appropriate $250,000,000 from the Greenhouse Gas Reduction Fund to the council to administer the program. The bill would require the council, in coordination with the California Environmental Protection Agency Assistant Secretary for Environmental Justice and Tribal Affairs, to award competitive grants to specified eligible entities for transformative climate community plans in disadvantaged communities, as defined. The bill would require the council to award at least 5 grants to execute existing, and at least 5 grants to undertake the development of, neighborhood-level transformative climate community plans that contribute to the reduction of emissions of greenhouse gases and address specified project areas.

 THIRD READING  

Bill No: AB 2722

Author:

:

Vote:

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 6/29/16

AYES: Wieckowski, Hill, Jackson, Leno, Pavley

NOES: Gaines, Bates

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

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 51-26, 6/2/16 - See last page for vote

SUBJECT:

SOURCE: California Environmental Justice Alliance

Greenlining Institute

DIGEST: This bill creates the Transformative Climate Communities Program, administered by the Strategic Growth Council (SGC), to fund the development and implementation of neighborhood-level transformative climate community plans, that include gas emissions reduction projects, which achieve local economic, environmental and health benefits for disadvantaged communities.

Senate Floor Amendments of 8/19/16 add tribal governments as an eligible entity; specify plans provide benefits to disadvantaged communities; require the California Environmental Protection Agency to provide assistance in performing outreach; strike the economic benefits definition; require that projects maximize specified benefits; require SGC to fund technical assistance providers to assist in application development and project development and implementation; strike requirements surrounding public workshops for guideline development; and require SGC to consider economic displacement when adopting guidelines.

ANALYSIS:

Existing law:

1. Requires, under the California Global Warming Solutions Act of 2006 (also known as AB 32), the California Air Resources Board (ARB) to determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level, to be achieved by 2020, and to adopt GHG emissions reductions measures by regulation. ARB is authorized to include the use of market-based mechanisms to comply with these regulations. (Health and Safety Code §38500 et seq.)
2. Establishes the Greenhouse Gas Reduction Fund (GGRF) in the State Treasury, requires all moneys, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the fund. (Government Code §16428.8)
3. Prohibits the state from approving allocations for a measure or program using GGRF moneys except after determining that the use of those moneys furthers the regulatory purposes of AB 32, and requires moneys from the GGRF be used to facilitate the achievement of reductions of GHG emissions in California. (HSC §39712)
4. Appropriates, continuously, 60% of GGRF moneys to transit, affordable housing and sustainable communities, including 20% continuously appropriated to the SGC for the Affordable Housing and Sustainable Communities Program. (HSC §39719)
   

This bill:

1. Establishes the Transformational Climate Communities Program (Program) to fund the development and implementation of neighborhood-level transformative climate community plans that include multiple, GHG emissions reduction projects that provide local economic, environmental, and health benefits to disadvantaged communities, as specified.
2. States the intent of the Legislature that private resources can “more effectively be catalyzed to support innovative community and climate transformation in disadvantaged communities.”
3. Requires the SGC to award competitive grants to eligible entities, including, but not limited to, nonprofit organizations, community-based organizations, faith-based organizations, coalitions or associations of nonprofit organizations, community development finance institutions, community development corporations, local agencies, tribal governments, and joint powers authorities.
4. Require eligible entities to demonstrate multistakeholder partnerships with local agencies, community-based organizations, labor groups, workforce investment boards, and other stakeholders, as appropriate, and requires SGC to award grants for projects that demonstrate community engagement in all phases.
5. Authorizes SGC to award a grant over multiple years.
6. Specifies that, in order to be eligible for funding under the program, a plan, and a project that implements a plan, must demonstrate that it will achieve a reduction in GHG emissions, and requires projects maximize climate, public health, environmental, workforce, and economic benefits.
7. Authorizes SGC to give priority to plans and projects that cover areas that have a high proportion of census tracks identified as disadvantaged communities and that focus on communities that are most disadvantaged.
8. Requires the California Environmental Protection Agency to provide assistance in performing outreach to disadvantaged communities and assessing environmental justice benefits of project awards.
9. Requires SGC to fund technical assistance providers to assist in application development and project development and implementation.
10. Requires SGC to adopt guidelines and selection criteria, and to conduct outreach to disadvantaged communities on the draft guidelines, and consider comments from stakeholders when adopting those guidelines.

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 early 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. Governor’s Transformative Climate Communities budget proposal. The Governor’s 2016-17 budget proposal requests $100 million to establish the Program, administered by the SGC, to support local climate action implementation in the top five percent disadvantaged communities in California. According to the proposal, “Funding would support projects that integrate multiple, cross-cutting approaches to reduce GHGs, and that the program combines climate investments within a local area for catalytic impact—including investments in energy, transportation, active transportation, housing, urban, greening, land use, water and waste efficiency, and other areas—while also increasing job training, economic, health and environmental benefits.”

AB 1613 (Committee on Budget) includes various appropriations from the GGRF, including $140 million to be used for transformative climate communities and contingent on the passage of this bill.

Comments

1. Purpose of Bill. According to the author, “Assembly Bill 2722 establishes the Transformative Climate Communities Program administered by the Strategic Growth Council to ensure that California is making investments that reduce greenhouse gases and also demonstrate co-benefits for the economy, workforce, and the health of California’s most vulnerable communities. AB 2722 creates a one stop shop for cities, counties, and community-based organizations to fund multiple projects that reduce greenhouse gas emissions. Our state has been a strong leader in the fight against climate change and reducing pollution, and AB 2722 is a step to ensure that we leave no community behind.”
   
2. What types of investments will be supported through the program? AB 2722 does not prescribe the types of projects that are eligible for funding, or provide categorical guidance for plans and projects that may be funded under the Program. Instead, the bill specifies that the Program will fund “neighborhood-level transformative” plans that include “multiple, coordinated greenhouse gas emissions reduction projects.” The bill also requires that plans and projects awarded grants by SGC demonstrate an “integrated, innovative, crosscutting” approach and “provide multiple benefits to the community and demonstrate community engagement and leadership in all phases.”

The Governor’s proposal includes investments in energy, transportation, active transportation, housing, urban, greening, land use, water and waste efficiency, and other areas, as possible projects that could be funded through the Program.

The sponsors of the bill have provided examples of the types of projects that might be funded through the Program. These include community-led planning in National City to develop a land use plan to build a vibrant, healthy community with affordable housing, equitable transit, safe pedestrian walkways, and increased clean energy. Other examples from the sponsors include an urban greening project in the San Fernando Valley to increase green infrastructure and active transportation, and an affordable housing development in South Los Angeles that includes community gardens, open space, and a community room and commercial space that serves the local community.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Unknown ongoing costs, between the high hundreds of thousands to low millions (GGRF) for the SGC to develop, administer, and oversee the financial assistance programs.
• Approximately $715,000 annually in years one and two for ARB, and approximately $550,000 ongoing (GGRF).
• Unknown, potentially significant, costs (GGRF) to CalEPA for consultation.

SUPPORT: (Verified 8/22/16)

California Environmental Justice Alliance (co-source)

Greenling Institute (co-source)

Audubon California

California Association of Local Conservation Corps

California Equity Leaders Network

California League of Conservation Voters

California Pan Ethnic Health Network

Coalition for Clean Air

Fresno Economic Opportunities Commission

Health Officers Association of California

Los Angeles Neighborhood Land Trust

Lutheran Office of Public Policy - California

National Audubon Society

PAN North America

Sierra Club California

TransForm

Union of Concerned Scientists

Valley Clean Air Now

OPPOSITION: (Verified 8/22/16)

None received

ARGUMENTS IN SUPPORT: Supporters state that the Program will foster an integrative collaborative approach to comprehensively address the burdens of disproportionately impacted communities that have suffered from decades of environmental pollution and neglect. They also state that the Program moves out of the project-specific silos that has characterized most GGRF spending thus far and instead, the bill promotes multi-stakeholder collaborations and leverages a range of funding sources, including private sector, to achieve large-scale impact in a holistic manner.

ASSEMBLY FLOOR: 51-26, 6/2/16

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

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Harper, Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk

NO VOTE RECORDED: Daly, Gordon, Hadley

Prepared by:

8/31/16 13:43:44

**** END ****

(Without Reference to File)

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2722

Author:(Burke, et al.)

As Amended Ver:August 31, 2016

Majority vote

Original Committee Reference: NAT. RES.

SUMMARY: Establishes the Transformative Climate Communities Program (Program) in the Strategic Growth Council (SGC) to fund the development and implementation of neighborhood-level transformative climate community plans (plans).

The Senate amendments:

1. Limit eligibility for the Program to disadvantaged communities.
2. Require SGC to award competitive grants to eligible entities through an application process, and define eligible entities as nonprofit organizations, community-based organizations, faith-based organizations, coalitions or associations of nonprofit organizations, community development finance institutions, community development corporations, local agencies, joint powers authorities, or tribal governments that demonstrate multistakeholder partnerships.
3. Remove direction to SGC to prioritize certain projects and require SGC to prioritize funding for disadvantaged communities.
4. Require the California Environmental Protection Agency (CalEPA) to provide assistance with outreach to eligible communities.
5. Require that projects maximize climate, public health, environmental, workforce, and economic benefits.
6. Require SGC to consider whether eligible plans and projects avoid economic displacement of low-income disadvantaged community residents and businesses when developing the guidelines.
7. Make related technical and clarifying changes.

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

1. Unknown ongoing costs, between the high hundreds of thousands to low millions (Greenhouse Gas Reduction Fund (GGRF)) for the SGC to develop, administer, and oversee the financial assistance programs.
2. Approximately $715,000 annually in years one and two for Air Resources Board (ARB), and approximately $550,000 ongoing (GGRF).
3. Unknown, potentially significant, costs (GGRF) to CalEPA for consultation.

COMMENTS: The Global Warming Solutions Act (AB 32 (Núñez), Chapter 488, Statutes of 2006) requires ARB to adopt a statewide greenhouse gas (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 deposited into the GGRF to be 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% is 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.

According to the author, this bill is intended to establish a new program to ensure that California is making "comprehensive, cross-cutting, and transformative climate investments that achieve multiple GHG, public health, and economic benefits in our state's most vulnerable communities" to help cities, local jurisdictions, and communities accelerate sustainability plans and help California meet its ambitious climate change goals.

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0005032

 THIRD READING  

Bill No: AB 2722

Author:

:

Vote:

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 6/29/16

AYES: Wieckowski, Hill, Jackson, Leno, Pavley

NOES: Gaines, Bates

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

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 51-26, 6/2/16 - See last page for vote

SUBJECT:

SOURCE: California Environmental Justice Alliance

Greenlining Institute

DIGEST: This bill creates the Transformative Climate Communities Program, administered by the Strategic Growth Council (SGC), to fund the development and implementation of neighborhood-level transformative climate community plans, that include gas emissions reduction projects, which achieve local economic, environmental and health benefits for disadvantaged communities.

Senate Floor Amendments of 8/19/16 add tribal governments as an eligible entity; specify plans provide benefits to disadvantaged communities; require the California Environmental Protection Agency to provide assistance in performing outreach; strike the economic benefits definition; require that projects maximize specified benefits; require SGC to fund technical assistance providers to assist in application development and project development and implementation; strike requirements surrounding public workshops for guideline development; and require SGC to consider economic displacement when adopting guidelines.

ANALYSIS:

Existing law:

1. Requires, under the California Global Warming Solutions Act of 2006 (also known as AB 32), the California Air Resources Board (ARB) to determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level, to be achieved by 2020, and to adopt GHG emissions reductions measures by regulation. ARB is authorized to include the use of market-based mechanisms to comply with these regulations. (Health and Safety Code §38500 et seq.)
2. Establishes the Greenhouse Gas Reduction Fund (GGRF) in the State Treasury, requires all moneys, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the fund. (Government Code §16428.8)
3. Prohibits the state from approving allocations for a measure or program using GGRF moneys except after determining that the use of those moneys furthers the regulatory purposes of AB 32, and requires moneys from the GGRF be used to facilitate the achievement of reductions of GHG emissions in California. (HSC §39712)
4. Appropriates, continuously, 60% of GGRF moneys to transit, affordable housing and sustainable communities, including 20% continuously appropriated to the SGC for the Affordable Housing and Sustainable Communities Program. (HSC §39719)
   

This bill:

1. Establishes the Transformational Climate Communities Program (Program) to fund the development and implementation of neighborhood-level transformative climate community plans that include multiple, GHG emissions reduction projects that provide local economic, environmental, and health benefits to disadvantaged communities, as specified.
2. States the intent of the Legislature that private resources can “more effectively be catalyzed to support innovative community and climate transformation in disadvantaged communities.”
3. Requires the SGC to award competitive grants to eligible entities, including, but not limited to, nonprofit organizations, community-based organizations, faith-based organizations, coalitions or associations of nonprofit organizations, community development finance institutions, community development corporations, local agencies, tribal governments, and joint powers authorities.
4. Require eligible entities to demonstrate multistakeholder partnerships with local agencies, community-based organizations, labor groups, workforce investment boards, and other stakeholders, as appropriate, and requires SGC to award grants for projects that demonstrate community engagement in all phases.
5. Authorizes SGC to award a grant over multiple years.
6. Specifies that, in order to be eligible for funding under the program, a plan, and a project that implements a plan, must demonstrate that it will achieve a reduction in GHG emissions, and requires projects maximize climate, public health, environmental, workforce, and economic benefits.
7. Requires the California Environmental Protection Agency to provide assistance in performing outreach to disadvantaged communities and assessing environmental justice benefits of project awards.
8. Requires SGC to fund technical assistance providers to assist in application development and project development and implementation.
9. Requires SGC to adopt guidelines and selection criteria, and to conduct outreach to disadvantaged communities on the draft guidelines, and consider comments from stakeholders when adopting those guidelines.
10. 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 if AB 1613 appropriates funding from the GGRF for the Program.
    

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 early 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. Governor’s Transformative Climate Communities budget proposal. The Governor’s 2016-17 budget proposal requests $100 million to establish the Program, administered by the SGC, to support local climate action implementation in the top five percent disadvantaged communities in California. According to the proposal, “Funding would support projects that integrate multiple, cross-cutting approaches to reduce GHGs, and that the program combines climate investments within a local area for catalytic impact—including investments in energy, transportation, active transportation, housing, urban, greening, land use, water and waste efficiency, and other areas—while also increasing job training, economic, health and environmental benefits.”

AB 1613 (Committee on Budget) includes various appropriations from the GGRF, including $175 million to be used for transformative climate communities and focused on disadvantaged communities in the state, and $5 million for outreach to disadvantaged communities. AB 1613 also specifies that these funds for transformative climate communities will only be appropriated if SB 32 (Pavley) is enacted and becomes operative.

The Assembly budget plan for fiscal year 2016-17 includes a $100 million appropriation from the GGRF for “local climate programs.”

Comments

1. Purpose of Bill. According to the author, “Assembly Bill 2722 establishes the Transformative Climate Communities Program administered by the Strategic Growth Council to ensure that California is making investments that reduce greenhouse gases and also demonstrate co-benefits for the economy, workforce, and the health of California’s most vulnerable communities. AB 2722 creates a one stop shop for cities, counties, and community-based organizations to fund multiple projects that reduce greenhouse gas emissions. Our state has been a strong leader in the fight against climate change and reducing pollution, and AB 2722 is a step to ensure that we leave no community behind.”
   
2. What types of investments will be supported through the program? AB 2722 does not prescribe the types of projects that are eligible for funding, or provide categorical guidance for plans and projects that may be funded under the Program. Instead, the bill specifies that the Program will fund “neighborhood-level transformative” plans that include “multiple, coordinated greenhouse gas emissions reduction projects.” The bill also requires that plans and projects awarded grants by SGC demonstrate an “integrated, innovative, crosscutting” approach and “provide multiple benefits to the community and demonstrate community engagement and leadership in all phases.”

The Governor’s proposal includes investments in energy, transportation, active transportation, housing, urban, greening, land use, water and waste efficiency, and other areas, as possible projects that could be funded through the Program.

The sponsors of the bill have provided examples of the types of projects that might be funded through the Program. These include community-led planning in National City to develop a land use plan to build a vibrant, healthy community with affordable housing, equitable transit, safe pedestrian walkways, and increased clean energy. Other examples from the sponsors include an urban greening project in the San Fernando Valley to increase green infrastructure and active transportation, and an affordable housing development in South Los Angeles that includes community gardens, open space, and a community room and commercial space that serves the local community.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Unknown ongoing costs, between the high hundreds of thousands to low millions (GGRF) for the SGC to develop, administer, and oversee the financial assistance programs.
• Approximately $715,000 annually in years one and two for ARB, and approximately $550,000 ongoing (GGRF).
• Unknown, potentially significant, costs (GGRF) to CalEPA for consultation.

SUPPORT: (Verified 8/22/16)

California Environmental Justice Alliance (co-source)

Greenling Institute (co-source)

Audubon California

California Association of Local Conservation Corps

California Equity Leaders Network

California League of Conservation Voters

California Pan Ethnic Health Network

Coalition for Clean Air

Fresno Economic Opportunities Commission

Health Officers Association of California

Los Angeles Neighborhood Land Trust

Lutheran Office of Public Policy - California

National Audubon Society

PAN North America

Sierra Club California

TransForm

Union of Concerned Scientists

Valley Clean Air Now

OPPOSITION: (Verified 8/22/16)

None received

ARGUMENTS IN SUPPORT: Supporters state that the Program will foster an integrative collaborative approach to comprehensively address the burdens of disproportionately impacted communities that have suffered from decades of environmental pollution and neglect. They also state that the Program moves out of the project-specific silos that has characterized most GGRF spending thus far and instead, the bill promotes multi-stakeholder collaborations and leverages a range of funding sources, including private sector, to achieve large-scale impact in a holistic manner.

ASSEMBLY FLOOR: 51-26, 6/2/16

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

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Harper, Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk

NO VOTE RECORDED: Daly, Gordon, Hadley

Prepared by:

8/23/16 16:37:28

**** END ****

 THIRD READING  

Bill No: AB 2722

Author:

:

Vote:

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 6/29/16

AYES: Wieckowski, Hill, Jackson, Leno, Pavley

NOES: Gaines, Bates

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

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 51-26, 6/2/16 - See last page for vote

SUBJECT:

SOURCE: California Environmental Justice Alliance

Greenlining Institute

DIGEST: This bill creates the Transformative Climate Communities Program, administered by the Strategic Growth Council (SGC), to award competitive grants for the development of transformative climate community plans, and projects that implement plans, which contribute to greenhouse gas emissions reductions and demonstrate other benefits, as specified, in disadvantaged communities.

ANALYSIS:

Existing law:

1. Requires, under the California Global Warming Solutions Act of 2006 (also known as AB 32), the California Air Resources Board (ARB) to determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level, to be achieved by 2020, and to adopt GHG emissions reductions measures by regulation. ARB is authorized to include the use of market-based mechanisms to comply with these regulations. (Health and Safety Code §38500 et seq.)
2. Establishes the Greenhouse Gas Reduction Fund (GGRF) in the State Treasury, requires all moneys, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the fund. (Government Code §16428.8)
3. Prohibits the state from approving allocations for a measure or program using GGRF moneys except after determining that the use of those moneys furthers the regulatory purposes of AB 32, and requires moneys from the GGRF be used to facilitate the achievement of reductions of GHG emissions in California. (HSC §39712)
4. Appropriates, continuously, 60% of GGRF moneys to transit, affordable housing and sustainable communities, including 20% continuously appropriated to the SGC for the Affordable Housing and Sustainable Communities Program. (HSC §39719)
   

This bill:

1. Establishes the Transformational Climate Communities Program (Program) to fund the development and implementation of neighborhood-level transformative climate community plans that include multiple, GHG emissions reduction projects that provide local economic, environmental, and health benefits that are directly connected to communities most impacted by pollution and vulnerable to climate change.
2. States the intent of the Legislature that private resources can “more effectively be catalyzed to support innovative community and climate transformation in disadvantaged communities.”
3. Requires the SGC, in coordination with the Assistant Secretary for Environmental Justice and Tribal Affairs at California Environmental Protection Agency (CalEPA), to award competitive grants to eligible entities, including nonprofit organizations, community-based organizations, faith-based organizations, coalitions or associations of nonprofit organizations, community development finance institutions, community development corporations, local agencies, and joint powers authorities.
4. Directs SGC to award grants for plans and projects that implement plans that contribute to the reduction of GHG emissions and demonstrate potential climate, economic, workforce, health, and environmental benefits located in communities that have a demonstrated need for climate, economic, workforce, health, and environmental benefits.
5. Authorizes SGC to award a grant over multiple years.
6. Specifies that, in order to be eligible for funding under the program, a plan, and a project that implements a plan, must demonstrate that it will achieve a reduction in GHG emissions.
7. Requires SGC, in awarding grants, to prioritize plans, and projects that implement plans that maximize, to the extent feasible, climate, public health, environmental, workforce, and economic benefits.
8. Defines “economic benefits” as high-quality, well-paid employment opportunities for residents, benefits for small businesses, and benefits for minority-, LGBT-, woman-, or disabled veteran-owned small businesses in the plan's region. Defines “LGBT” as lesbian, gay, bisexual, or transgender.
9. Requires SGC to “endeavor to identify” additional public and private sources of funding to sustain and expand the Program and a network of technical assistance providers to assist in plan development, implementation, and project financing.
10. Requires SGC to conduct at least three public workshops, consider any feedback, and post draft guidelines on their website before adopting the guidelines and selection criteria.
11. 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, as specified.
    

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 early 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. Governor’s Transformative Climate Communities budget proposal. The Governor’s 2016-17 budget proposal requests $100 million to establish the Program, administered by the SGC, to support local climate action implementation in the top five percent disadvantaged communities in California. According to the proposal, “Funding would support projects that integrate multiple, cross-cutting approaches to reduce GHGs, and that the program combines climate investments within a local area for catalytic impact—including investments in energy, transportation, active transportation, housing, urban, greening, land use, water and waste efficiency, and other areas—while also increasing job training, economic, health and environmental benefits.”

The Senate and Assembly budget plans for fiscal year 2016-17 include a $400 million and $100 million appropriation from the GGRF for “local climate programs.”

Comments

1. Purpose of Bill. According to the author, “Assembly Bill 2722 establishes the Transformative Climate Communities Program administered by the Strategic Growth Council to ensure that California is making investments that reduce greenhouse gases and also demonstrate co-benefits for the economy, workforce, and the health of California’s most vulnerable communities. AB 2722 creates a one stop shop for cities, counties, and community-based organizations to fund multiple projects that reduce greenhouse gas emissions. Our state has been a strong leader in the fight against climate change and reducing pollution, and AB 2722 is a step to ensure that we leave no community behind.”
   
2. What types of investments will be supported through the program? AB 2722 does not prescribe the types of projects that are eligible for funding, or provide categorical guidance for plans and projects that may be funded under the Program. Instead, the bill specifies that the Program will fund “neighborhood-level transformative” plans that include “multiple, coordinated greenhouse gas emissions reduction projects.” The bill also requires that plans and projects awarded grants by SGC demonstrate an “integrated, innovative, crosscutting” approach and “provide multiple benefits to the community and demonstrate community engagement and leadership in all phases.”

The Governor’s proposal includes investments in energy, transportation, active transportation, housing, urban, greening, land use, water and waste efficiency, and other areas, as possible projects that could be funded through the Program.

The sponsors of the bill have provided examples of the types of projects that might be funded through the Program. These include community-led planning in National City to develop a land use plan to build a vibrant, healthy community with affordable housing, equitable transit, safe pedestrian walkways, and increased clean energy. Other examples from the sponsors include an urban greening project in the San Fernando Valley to increase green infrastructure and active transportation, and an affordable housing development in South Los Angeles that includes community gardens, open space, and a community room and commercial space that serves the local community.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Unknown ongoing costs, between the high hundreds of thousands to low millions (GGRF) for the SGC to develop, administer, and oversee the financial assistance programs.
• Approximately $715,000 annually in years one and two for ARB, and approximately $550,000 ongoing (GGRF).
• Unknown, potentially significant, costs (GGRF) to CalEPA for consultation.

SUPPORT: (Verified 8/15/16)

California Environmental Justice Alliance (co-source)

Greenling Institute (co-source)

Audubon California

California Association of Local Conservation Corps

California Equity Leaders Network

California League of Conservation Voters

California Pan Ethnic Health Network

Coalition for Clean Air

Fresno Economic Opportunities Commission

Health Officers Association of California

Los Angeles Neighborhood Land Trust

Lutheran Office of Public Policy - California

National Audubon Society

PAN North America

Sierra Club California

TransForm

Union of Concerned Scientists

Valley Clean Air Now

OPPOSITION: (Verified 8/15/16)

None received

ARGUMENTS IN SUPPORT: Supporters state that the Program will foster an integrative collaborative approach to comprehensively address the burdens of disproportionately impacted communities that have suffered from decades of environmental pollution and neglect. They also state that the Program moves out of the project-specific silos that has characterized most GGRF spending thus far and instead, the bill promotes multi-stakeholder collaborations and leverages a range of funding sources, including private sector, to achieve large-scale impact in a holistic manner.

ASSEMBLY FLOOR: 51-26, 6/2/16

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

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Harper, Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk

NO VOTE RECORDED: Daly, Gordon, Hadley

Prepared by:

8/16/16 17:50:30

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 2722 (Burke) - Transformative Climate Communities Program

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

The following information is revised to reflect amendments

adopted by the committee on August 11, 2016

Bill Summary:

AB 2722 establishes the Transformational Climate Communities Program (Program) within the Strategic Growth Council (Council) to fund the development and implementation of neighborhood-level transformative climate community plans.

Fiscal Impact:

• Unknown ongoing costs, between the high hundreds of thousands to low millions (Greenhouse Gas Reduction Fund) for the Council to develop, administer, and oversee the financial assistance programs.
• Approximately $715,000 annually in years one and two for the Air Resources Board (ARB), and approximately $550,000 ongoing (Greenhouse Gas Reduction Fund).
• Unknown, potentially significant, costs (Greenhouse Gas Reduction Fund) to the California Environmental Protection Agency (CalEPA) for consultation.

Committee Amendments:

Make enactment of the bill contingent upon enactment of AB 2613.

Staff Comments: The amendments ensure that the bill is not enacted unless funds are appropriated through Budget Trailer Bill language.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 2722 (Burke) - Transformative Climate Communities Program

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

Bill Summary:

AB 2722 establishes the Transformational Climate Communities Program (Program) within the Strategic Growth Council (Council) to fund the development and implementation of neighborhood-level transformative climate community plans.

Fiscal Impact:

• Unknown ongoing costs, potentially between the high hundreds of thousands to low millions (Greenhouse Gas Reduction Fund) for the Council to develop, administer, and oversee the financial assistance programs.
• Approximately $715,000 annually in years one and two for the Air Resources Board (ARB), and approximately $550,000 ongoing (Greenhouse Gas Reduction Fund).
• Unknown, potentially significant, costs (Greenhouse Gas Reduction Fund) to the California Environmental Protection Agency (CalEPA) for consultation.

Background:

The California Global Warming Solutions Act of 2006 (referred to as AB 32) 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. Under this authority, the ARB initiated the cap-and-trade program. All monies, except for fines and penalties, collected pursuant to the cap-and-trade program are deposited in the Greenhouse Gas Reduction Fund (GGRF). Existing law requires that the GGRF only be used to facilitate the achievement of reductions of GHG emissions consistent with AB 32 (HSC §39710 et seq.).

To this end, the Department of Finance, in consultation with the ARB and any other relevant state agencies, is required to develop a three-year investment plan for the moneys deposited in the GGRF. The investment plan must allocate a minimum of 25% of the funds to projects that benefit disadvantaged communities and to allocate 10% of the funds to projects located within disadvantaged communities. Additionally, the ARB, in consultation with CalEPA, is required to develop funding guidelines for administering agencies receiving allocations of GGRF funds that include a component for how agencies should maximize benefits to disadvantaged communities.

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 early 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.

Governor’s Transformative Climate Communities budget proposal. The Governor’s 2016-17 budget proposal requests $100 million to establish the Transformational Climate Communities Program, administered by the Council, to support local climate action implementation in the top five percent disadvantaged communities in California. According to the proposal, “Funding would support projects that integrate multiple, cross-cutting approaches to reduce GHGs, and that the program combines climate investments within a local area for catalytic impact—including investments in energy, transportation, active transportation, housing, urban, greening, land use, water and waste efficiency, and other areas—while also increasing job training, economic, health and environmental benefits.”

The Senate and Assembly budget plans included a $400 million and $100 million appropriation from the GGRF for “local climate programs.”

Proposed Law:

This bill:

1. Establishes the Program to fund the development and implementation of neighborhood-level transformative climate community plans that include multiple GHG emissions reduction projects that provide local economic, environmental, and health benefits that are directly connected to communities most impacted by pollution and vulnerable to climate change.
2. Requires the Council, in coordination with the Assistant Secretary for Environmental Justice and Tribal Affairs at CalEPA, to award competitive grants to eligible entities, as specified.
3. Directs the Council to award grants for plans and projects that implement plans that contribute to the reduction of GHG emissions and demonstrate potential climate, economic, workforce, health, and environmental benefits located in communities that have a demonstrated need for climate, economic, workforce, health, and environmental benefits.
4. Authorizes the Council to award a grant over multiple years.
5. Requires the Council to weigh economic, environmental, and health benefits equally with climate benefits.
6. States that, in order to be eligible for funding under the program, a plan, and a project that implements a plan, must demonstrate that it will achieve a reduction in GHG emissions.
7. Requires the Council, in awarding grants, to prioritize plans, and projects that implement plans, that maximize, to the extent feasible, climate, public health, environmental, workforce, and economic benefits.
8. Requires the Council, in coordination with the member agencies, the ARB and other state entities, to develop guidelines and selection criteria for the implementation of the Program.
9. Requires the Council to conduct at least three public workshops, consider any feedback, and post draft guidelines on their website before adopting the guidelines and selection criteria.
10. Defines “economic benefits” as high-quality, well-paid employment opportunities for residents, benefits for small businesses, and benefits for minority-, LGBT-, woman-, or disabled veteran-owned small businesses in the plan's region. Defines “LGBT” as lesbian, gay, bisexual, or transgender.
11. Requires the Council to “endeavor to identify” additional public and private sources of funding to sustain and expand the Program and a network of technical assistance providers to assist in plan development, implementation, and project financing.

Staff Comments:

1. Purpose of Bill. According to the author, “Assembly Bill 2722 establishes the Transformative Climate Communities Program administered by the Strategic Growth Council to ensure that California is making investments that reduce greenhouse gases and also demonstrate co-benefits for the economy, workforce, and the health of California’s most vulnerable communities. AB 2722 creates a one stop shop for cities, counties, and community-based organizations to fund multiple projects that reduce greenhouse gas emissions. Our state has been a strong leader in the fight against climate change and reducing pollution, and AB 2722 is a step to ensure that we leave no community behind.”
   

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: AB 2722

SUBJECT: Transformative Climate Communities Program.

ANALYSIS:

Existing law:

1. Under the California Global Warming Solutions Act of 2006 (also known as AB 32), requires the California Air Resources Board (ARB) to determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level, to be achieved by 2020, and to adopt GHG emissions reductions measures by regulation. ARB is authorized to include the use of market-based mechanisms to comply with these regulations. (Health and Safety Code §38500 et seq.)
2. Establishes the Greenhouse Gas Reduction Fund (GGRF) in the State Treasury, requires all moneys, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the fund. (Government Code §16428.8)
3. Prohibits the state from approving allocations for a measure or program using GGRF moneys except after determining that the use of those moneys furthers the regulatory purposes of AB 32, and requires moneys from the GGRF be used to facilitate the achievement of reductions of GHG emissions in California. (HSC §39712)
4. Continuously appropriates 60% of GGRF moneys to transit, affordable housing and sustainable communities, including 20% continuously appropriated to the Strategic Growth Council (SGC) for the Affordable Housing and Sustainable Communities Program. (HSC §39719)
   

This bill:

1. Establishes the Transformational Climate Communities Program (Program) to fund the development and implementation of neighborhood-level transformative climate community plans that include multiple, GHG emissions reduction projects that provide local economic, environmental, and health benefits that are directly connected to communities most impacted by pollution and vulnerable to climate change.
2. States the intent of the Legislature that private resources can “more effectively be catalyzed to support innovative community and climate transformation in disadvantaged communities.”
3. Requires the SGC, in coordination with the Assistant Secretary for Environmental Justice and Tribal Affairs at California Environmental Protection Agency (CalEPA), to award competitive grants to eligible entities, as specified.
4. Directs SGC to award grants for plans and projects that implement plans that contribute to the reduction of GHG emissions and demonstrate potential climate, economic, workforce, health, and environmental benefits located in communities that have a demonstrated need for climate, economic, workforce, health, and environmental benefits.
5. Authorizes SGC to award a grant over multiple years.
6. Requires SGC to weigh economic, environmental, and health benefits equally with climate benefits.
7. Defines “economic benefits” as high-quality, well-paid employment opportunities for residents, benefits for small businesses, and benefits for minority-, LGBT-, woman-, or disabled veteran-owned small businesses in the plan's region. Defines “LGBT” as lesbian, gay, bisexual, or transgender.
8. Requires SGC to “endeavor to identify” additional public and private sources of funding to sustain and expand the Program and a network of technical assistance providers to assist in plan development, implementation, and project financing.
   

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 early 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. Governor’s Transformative Climate Communities budget proposal. The Governor’s 2016-17 budget proposal requests $100 million to establish the Transformational Climate Communities Program, administered by the SGC, to support local climate action implementation in the top five percent disadvantaged communities in California. According to the proposal, “Funding would support projects that integrate multiple, cross-cutting approaches to reduce GHGs, and that the program combines climate investments within a local area for catalytic impact—including investments in energy, transportation, active transportation, housing, urban, greening, land use, water and waste efficiency, and other areas—while also increasing job training, economic, health and environmental benefits.”

The Senate and Assembly budget plans included a $400 million and $100 million appropriation from the GGRF for “local climate programs.”

Comments

1. Purpose of Bill. According to the author, “Assembly Bill 2722 establishes the Transformative Climate Communities Program administered by the Strategic Growth Council to ensure that California is making investments that reduce greenhouse gases and also demonstrate co-benefits for the economy, workforce, and the health of California’s most vulnerable communities. AB 2722 creates a one stop shop for cities, counties, and community-based organizations to fund multiple projects that reduce greenhouse gas emissions. Our state has been a strong leader in the fight against climate change and reducing pollution, and AB 2722 is a step to ensure that we leave no community behind.”
   
2. What types of projects will be supported through the program? AB 2722 does not prescribe the types of projects that are eligible for funding, or provide categorical guidance for plans and projects that may be funded under the Program. Instead, the bill specifies that the Program will fund “neighborhood-level transformative” plans that include “multiple, coordinated greenhouse gas emissions reduction projects.” The bill also requires that plans and projects awarded grants by SGC demonstrate an “integrated, innovative, crosscutting” approach and “provide multiple benefits to the community and demonstrate community engagement and leadership in all phases.”

The Governor’s proposal included investments in energy, transportation, active transportation, housing, urban, greening, land use, water and waste efficiency, and other areas, as possible projects that could be funded through the Program.

The sponsors of the bill have provided examples of the types of projects that might be funded through the Program. These include community-led planning in National City to develop a land use plan to build a vibrant, healthy community with affordable housing, equitable transit, safe pedestrian walkways, and increased clean energy. Other examples from the sponsors include an urban greening project in the San Fernando Valley to increase green infrastructure and active transportation, and an affordable housing development in South Los Angeles that includes community gardens, open space, and a community room and commercial space that serves the local community.

1. Plans and projects. AB 2722 requires SGC award grants for transformative climate community plans, and projects that implement those plans. The bill authorizes SGC to make grant awards for plan development contingent on implementation of one or more projects identified in the plan.

Although plans are critical for successful projects that reduce GHGs, plans without corresponding projects do not result in GHG emissions reductions.

As achieving GHG emissions reductions is required for investments from the GGRF (which is not specified in the bill, but is the most likely source of funding for the Program), an amendment is needed to require SGC make grant awards for plan development contingent on implementation of one or more projects identified by the plan.

1. Weighing benefits equally. This bill includes a requirement that SGC weigh economic, environmental, and health benefits equally with climate benefits resulting from GHG emissions reductions. It is not clear how this provision will be implemented. Will any level of public health or economic benefits (e.g., bike lanes for active transportation or some threshold of job creation) be weighted equivalently with GHG emissions reduction, no matter how significant those reductions?

Instead of requiring SGC give equal weight to benefits that are disparate and difficult to compare across the board, amendments are needed to 1) require projects demonstrate GHG emissions reductions to be eligible for funding under the program, and 2) require SGC, in awarding grants, prioritize projects that maximize, to the extent feasible, climate, public health, environmental, workforce, and economic benefits.

1. Guidelines. Although AB 2722 sets up the basic framework and goals for the Transformative Climate Communities Program, there are a variety of program specifications that SGC will need to establish.

Amendments are needed to require SGC to develop guidelines, consistent with the statutory requirements for adopting guidelines for the Affordable Housing and Sustainable Communities Program (implemented by SGC and funded through GGRF), through a transparent and public process that includes outreach to affected communities and consideration of input from stakeholders.

1. Author amendment. The author would like to amend the bill to include joint powers authorities as an eligible entity under the Program.

SOURCE:

California Environmental Justice Alliance

Greenlining Institute

SUPPORT:

Audubon California

California Association of Local Conservation Corps

California Equity Leaders Network

California League of Conservation Voters

California Pan Ethnic Health Network

Coalition for Clean Air

Fresno Economic Opportunities Commission

Health Officers Association of California

Los Angeles Neighborhood Land Trust

Lutheran Office of Public Policy - California

National Audubon Society

PAN North America

Sierra Club California

The Greenling Institute

TransForm

Union of Concerned Scientists

Valley Clean Air Now

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: Supporters state that the Program will foster an integrative collaborative approach to comprehensively address the burdens of disproportionately impacted communities that have suffered from decades of environmental pollution and neglect. They also state that the Program moves out of the project-specific silos that has characterized most GGRF spending thus far and instead, the bill promotes multi-stakeholder collaborations and leverages a range of funding sources, including private sector, to achieve large-scale impact in a holistic manner.

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2722

Author:(Burke)

As Amended Ver:May 31, 2016

Majority vote

SUMMARY: Establishes the Transformative Climate Communities Program (Program) in the Strategic Growth Council (SGC) to fund the development and implementation of neighborhood-level transformative climate community plans (plans). Specifically, this bill:

1. Establishes the Program to fund the development and implementation of neighborhood-level transformative climate community plans that include multiple, coordinated greenhouse gas (GHG) emissions reduction projects that provide local economic, environmental, and health benefits that are directly connected to communities most impacted by pollution and vulnerable to climate change. States the intent of the Legislature that private resources can "more effectively be catalyzed to support innovative community and climate transformation in disadvantaged communities."
2. Requires SGC, in coordination with the Assistant Secretary for Environmental Justice and Tribal Affairs at California Environmental Protection Agency (CalEPA), to award competitive grants to eligible entities, as specified.
3. Directs SGC to award grants for plans and projects that implement plans that contribute to the reduction of GHG emissions and demonstrate potential climate, economic, workforce, health, and environmental benefits located in communities that have a demonstrated need for climate, economic, workforce, health, and environmental benefits.
4. Authorizes SGC to award a grant over multiple years.
5. Requires SGC to weigh economic, environmental, and health benefits equally with climate benefits. Defines "economic benefits" as high-quality, well-paid employment opportunities for residents, benefits for small businesses, and benefits for minority-, LGBT-, woman-, or disabled veteran-owned small businesses in the plan's region. Defines "LGBT" as lesbian, gay, bisexual, or transgender.
6. Requires SGC to "endeavor to identify" additional public and private sources of funding to sustain and expand the Program and a network of technical assistance providers to assist in plan development, implementation, and project financing.

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

1. Cost pressures of up to $250 million (Greenhouse Gas Reduction Fund (GGRF)) to fund the Program.
2. Increased costs of $5 million for SGC to develop and implement the program. This figure is based on the Governor's proposed budget which provides $100 million for an Administration proposed Transformative Climate Communities Program (GGRF)
3. Increased costs to the Air Resources Board (ARB) of less than $150,000 (GGRF) if eligible projects fit within existing GGRF project categories. If eligible projects are outside current existing GGRF project categories, ARB estimates increased initial costs of approximately $670,000 for two years, and ongoing annual costs of $520,000 (GGRF) to develop quantification methodologies, disadvantaged community criteria, reporting criteria, and expenditure records
4. Minor, absorbable costs for CalEPA.

COMMENTS: The Global Warming Solutions Act (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.

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.

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.

According to the author, this bill is intended to establish a new program to ensure that California is making "comprehensive, cross-cutting, and transformative climate investments that achieve multiple GHG, public health, and economic benefits in our state's most vulnerable communities" to help cities, local jurisdictions, and communities accelerate sustainability plans and help California meet its ambitious climate change goals.

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0003320

Date of Hearing: May 18, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2722

Author:(Burke) – As Amended Ver:April 20, 2016

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

SUMMARY:

The bill creates the Transformative Climate Communities Program (Program), to be administered by the Strategic Growth Council (SGC) and funded by AB 32 cap-and-trade revenues. Specifically, this bill:

1. Allocates up to $250 million from of Greenhouse Gas Revenue Funds (GGRF), upon appropriation by the Legislature, to SGC to administer the program.
2. Requires SGC, in coordination with the Assistant Secretary for Environmental Justice and Tribal Affairs at California Environmental Protection Agency (CalEPA), to award competitive grants to eligible entities, including:
3. Nonprofit organizations;
4. Community-based organizations;
5. Faith-based organizations;
6. Coalitions or associations of nonprofit organizations;
7. Community development finance institutions;
8. Community development corporations; and,
9. Local agencies.
10. Requires grants to be awarded for the development and implementation of transformative climate community plans that contribute to greenhouse gas (GHG) emission reductions and demonstrate potential climate, economic, workforce, health, and environmental benefits in disadvantaged communities, as specified. Grants may be awarded over multiple years.
11. Requires SGC and all funded entities to identify additional public and private funds and coordinate a network of technical assistance providers, as specified.

FISCAL EFFECT:

1. Cost pressures of up to $250 million (GGRF) to fund the Program.
2. Increased costs of $5 million for SGC to develop and implement the program. This figure is based on the Governor's proposed budget which provides $100 million for an Administration proposed Transformative Climate Communities Program (GGRF)
3. Increased costs to the Air Resources Board (ARB) of less than $150,000 (GGRF) if eligible projects fit within existing GGRF project categories. If eligible projects are outside current existing GGRF project categories, ARB estimates increased initial costs of approximately $670,000 for two years, and ongoing annual costs of $520,000 (GGRF) to develop quantification methodologies, disadvantaged community criteria, reporting criteria, and expenditure records
4. Minor, absorbable costs for CalEPA.

COMMENTS:

1. Purpose. According to the author, this bill establishes a new program to ensure California is making comprehensive, cross-cutting, and transformative climate investments to achieve multiple GHG, public health, and economic benefits in our state's most vulnerable communities. This bill will help cities, local jurisdictions, and communities accelerate sustainability plans to meet the state's climate change goals.
2. Background. The California Global Warming Solutions Act of 2006 (AB 32). 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.

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.

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.

The 2016-17 proposed budget includes $100 million to create a new Transformative Climate Communities Program, but did not include much detail on the specifics of the program. This bill is intended to expand upon this proposal.

1. Disadvantaged Communities and Environmental Justice. 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.

According to the Office of Environmental Health Hazard Assessment (OEHHA), approximately 8 million Californians (21%) live in zip codes that are considered "highly impacted" by environmental, public health, and socioeconomic stressors. Nearly half of all Californians live within six miles of a facility that is a significant GHG emitter and they are disproportionately people of color.

In February of 2014, CalEPA issued an Environmental Justice Program Update, which included four main areas for future actions: 1)Increase efforts to eliminate discrimination on the basis of race, national origin, ethnic group identification, religion, age, sex, sexual orientation, color, genetic information, or disability in any program or activity conducted or funded by the state; 2)Develop guidance to promote a sound legal framework for CalEPA to advance environmental justice goals and objectives; 3)Lead an agency-wide working group dedicated to increase compliance with environmental laws in communities with relatively higher environmental burdens; and, 4)Add additional indicators to CalEnviroScreen to identify disadvantaged communities for the purpose of GGRF expenditures.

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 2722 (

Author:Burke) – As Amended Ver:April 12, 2016

SUBJECT: Transformative Climate Communities Program

SUMMARY: Establishes the Transformative Climate Communities Program (Program) in the Strategic Growth Council (SGC) to fund the development and implementation of neighborhood-level transformative climate community plans (plans).

EXISTING LAW:

1. Requires the Air Resources Board (ARB), pursuant to California Global Warming Solutions Act of 2006 [AB 32 (Núñez), Chapter 488, Statutes of 2006], to adopt a statewide greenhouse gas GHG emissions limit equivalent to 1990 levels by 2020 and adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions.
2. Authorizes ARB to permit the use of market-based compliance mechanisms to comply with GHG reduction regulations, once specified conditions are met.
   
3. Establishes the Greenhouse Gas Reduction Fund (GGRF) as the repository for 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).
4. Establishes the GGRF Investment Plan and Communities Revitalization Act [AB 1532 (John A. Pérez), Chapter 807, Statutes of 2012] to set procedures for the investment of GHG allowance auction revenues. AB 1532 authorizes a range of GHG reduction investments and establishes several additional policy objectives.
   
5. Requires the GGRF Investment Plan to allocate: 1) a minimum of 25% of the available moneys in the fund to projects that provide benefits to identified disadvantaged communities; and, 2) a minimum of 10% of the available moneys in the fund to projects located within identified disadvantaged communities [SB 535 (de León), Chapter 830, Statutes of 2012].
   

THIS BILL:

1. Establishes the Program to fund the development and implementation of neighborhood-level transformative climate community plans that include multiple, coordinated GHG emissions reduction projects that provide local economic, environmental, and health benefits that are directly connected to communities most impacted by pollution and vulnerable to climate change. States the intent of the Legislature that private resources can "more effectively be catalyzed to support innovative community and climate transformation in disadvantaged communities."
2. Requires SGC, in coordination with the Assistant Secretary for Environmental Justice and Tribal Affairs at California Environmental Protection Agency (CalEPA), to award competitive grants to eligible entities, including:
   1. Nonprofit organizations;
   2. Community-based organizations;
   3. Faith-based organizations;
   4. Coalitions or associations of nonprofit organizations;
   5. Community development finance institutions;
   6. Community development corporations; and,
   7. Local agencies.
3. Directs SGC to award grants for plans that contribute to the reduction of GHG emissions and demonstrate potential climate, economic, workforce, health, and environmental benefits located in disadvantaged communities that have a demonstrated need for climate, economic, workforce, health, and environmental benefits.
4. Requires SGC to award grants for both plan development and plan implementation. Specifies that a plan or plan development demonstrate, or engage in planning to achieve, an integrated, innovative, cross-cutting project with multiple benefitst provided directly in a disadvantaged community and demonstrate community engagement and leadership in all phases.
5. Authorizes SGC to award a grant over multiple years.
6. Requires SGC to weigh economic, environmental, and health benefits equally with climate benefits. Defines "economic benefits" as high-quality, well-paid employment opportunities for residents, benefits for small businesses, and benefits for minority-, LGBT-, woman-, or disabled veteran-owned small businesses in the plan's region. Defines "LGBT" as lesbian, gay, bisexual, or transgender.
7. Requires SGC to endeavor to identify additional public and private sources of funding to sustain and expand the Program and a network of technical assistance providers to assist in plan development, implementation, and project financing.
8. Appropriates $250 million from the GGRF to fund the Program.

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. Environmental justice. According to the Office of Environmental Health Hazard Assessment (OEHHA), approximately 8 million Californians (21%) live in zip codes that are considered "highly impacted" by environmental, public health, and socioeconomic stressors. Nearly half of all Californians live within six miles of a facility that is a significant greenhouse gas emitter (46%), and they are disproportionately people of color (62%). Throughout California, people of color face a 50% higher risk of cancer from ambient concentrations of air pollutants listed under the Clean Air Act. These impacts are felt by all Californians. ARB estimates that air pollution exposure accounts for 19,000 premature deaths, 280,000 cases of asthma, and 1.9 million lost work days every year.

In 2000, legislation [SB 89 (Escutia), Chapter 728] required CalEPA to convene the Environmental Justice Working Group and develop an agency-wide environmental justice strategy. In 2001, follow up legislation [SB 828 (Alarcon), Chapter 765] established a

timeline for these requirements and required CalEPA to update its report to the Legislature every three years. In October of 2004, CalEPA released its Environmental Justice Action Plan, but did not complete the required updates for a decade.

SB 535 (de León), Chapter 850, Statutes of 2012 requires the Cap and Trade Proceeds Investment Plan to direct a minimum of 25% of the available moneys in the fund to projects that provide benefits to identified disadvantaged communities; and, a minimum of 10% of the available moneys in the fund to projects located within identified disadvantaged communities. SB 535 also required CalEPA to identify disadvantaged communities (i.e., environmental justice communities). In order to accurately identify environmental justice communities, OEHHA, on behalf of CalEPA, created the California Communities Environmental Health Screening Tool (CalEnviroScreen). CalEnviroScreen is a screening methodology that can be used to help identify California communities that are disproportionately burdened by multiple sources of pollution.

In February of 2014, CalEPA issued an Environmental Justice Program Update, which included four main areas for future actions: 1) increase efforts to eliminate discrimination on the basis of race, national origin, ethnic group identification, religion, age, sex, sexual orientation, color, genetic information, or disability in any program or activity conducted or funded by the state; 2) develop guidance to promote a sound legal framework for CalEPA to advance environmental justice goals and objectives; 3) lead an agency-wide working group dedicated to increase compliance with environmental laws in communities with relatively higher environmental burdens; and, 4) add additional indicators to CalEnviroScreen.

1. Author's statement:

Assembly Bill 2722 establishes a much-needed, new program to ensure that California is making comprehensive, cross-cutting, and transformative climate investments that achieve multiple GHG, public health, and economic benefits in our state's most vulnerable communities. This program will help cities, local jurisdictions, and communities accelerate sustainability plans and help California meet its ambitious climate change goals.

1. The benefit scale. This bill requires SGC to "weigh economic, environmental, and health benefits equally with climate benefits resulting from GHG emissions reductions." The sponsors of this bill state that this is intended to ensure that SGC directs funding to projects that have significant co-benefits. However, it is unclear how SGC would be able to develop a methodology that would determine and compare the "weight" of the various benefits. Additionally, it seems unlikely that any potential applicants would be able to develop proposals that would meet this standard. Should this bill move forward, the author may wish to work with stakeholders and SGC to refine this provision to preserve the focus on co-benefits while enabling SGC and potential applicants to comply with the bill's requirements.
2. Suggested amendments:
   1. This bill authorizes funding for plans and plan implementation. As drafted, Section 75241 (b) (1) applies to plan development, while (2) applies to plan development and implementation, which is duplicative and has the potential to create confusion. The committee may wish to amend the bill to combine these provisions and make related technical and clarifying amendments.
   2. This bill makes plan development eligible for grant funding without requiring that the plan be implemented. Plan development alone will not reduce GHG emissions. Existing law prohibits the state from approving allocations for a measure or program using moneys appropriated from the GGRF unless there is a determination that the use of the funding furthers the regulatory purposes of AB 32. In order to ensure that SGC can allocate funds appropriately and that grant funds result in GHG emissions reductions and related co-benefits, the committee may wish to amend the bill to authorize SGC to link grants for plan development to the implementation of projects.
   3. This bill appropriates $250 million from the GGRF for the bill's purposes. In order to preserve the integrity of the Budget process and ensure adequate legislative oversight of GGRF expenditures, the committee may wish to amend the bill to specify that an amount up to $250 million is available, upon appropriation by the Legislature.

REGISTERED SUPPORT / OPPOSITION:

Support

Asian Pacific Environmental Network

Audobon California

California Association of Local Conservation Corps

California Environmental Justice Alliance (co-sponsor)

California League of Conservation Voters

Center for Community Action and Environmental Justice

Center on Race, Poverty, and the Environment

Central Coast Alliance United for a Sustainable Economy

Communities for a Better Environment

Environmental Health Coalition

Fresno Economic Opportunities Commission

Greenlining Institute (co-sponsor)

Leadership Council for Justice and Accountability

Los Angeles Neighborhood Land Trust

Pacoima Beautiful

People Organizing to Demand Environmental and Economic Rights

Physicians for Social Responsibility, Los Angeles

Strategic Concepts in Organizing and Policy Education

Valley Clean Air Now

Opposition

CalChamber
CalTax

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