BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1176 (Perea) - Vehicular air pollution.
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|Version: July 7, 2015 |Policy Vote: T. & H. 10 - 0, |
| | E.Q. 7 - 0 |
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|Urgency: Yes |Mandate: No |
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|Hearing Date: August 24, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1176 would create the Advanced Low-Carbon Diesel
Fuels Access Program which will provide capital assistance for
projects that expand advanced low-carbon diesel fueling
infrastructure in communities that are disproportionately
impacted by environmental health hazards and where the greatest
air quality impacts can be identified.
Fiscal
Impact:
Ongoing annual costs of $225,000 to the Greenhouse Gas
Reduction Fund (GGRF, special) for program development, grant
administration, and review of contract extensions.
Ongoing annual costs of up to $350,000 to the GGRF (special)
for the ARB to provide project review and GGRF expenditure
oversight.
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Background: GGRF: The California Global Warming Solutions Act of 2006
(referred to as AB 32, HSC §38500 et seq.) requires the
California Air Resources Board (ARB) to determine the 1990
statewide greenhouse gas (GHG) emissions level, to approve a
statewide GHG emissions limit equivalent to that level that will
be achieved by 2020, and to adopt GHG emissions reductions
measures by regulation. ARB is authorized to include the use of
market-based mechanisms to comply with the regulations. 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 deposited in the Greenhouse Gas
Reduction Fund (GGRF) (Government Code §16428.8).
Existing law requires that the GGRF only be used to facilitate
the achievement of reductions of GHG emissions consistent with
AB 32 (HSC §39710 et seq.). To this end, the Department of
Finance, in consultation with the ARB and any other relevant
state agencies, is required to develop, as specified, a
three-year investment plan for the moneys deposited in the GGRF.
The investment plan must allocate a minimum of 25% of the funds
to projects that benefit disadvantaged communities and to
allocate 10% of the funds to projects located within
disadvantaged communities. Additionally, the ARB, in
consultation with CalEPA, is required to develop funding
guidelines for administering agencies receiving allocations of
GGRF funds that include a component for how agencies should
maximize benefits to disadvantaged communities.
LCFS: The Low Carbon Fuel Standard (LCFS) was adopted by the ARB
in 2009 in response to an executive order by Governor
Schwarzenegger for with the goal of reducing GHG emissions from
the transportation sector by 16 million metric tons by 2020. The
LCFS requires producers of petroleum based fuels to reduce the
carbon intensity (CI) of transportation fuels by 10% by 2020.
The CI is based on emissions from the production, delivery, and
use of the fuel.
CalEnviroScreen: CalEnviroScreen was developed by the Office of
Environmental Health Hazard Assessment on behalf of the
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California Environmental Protection Agency for the purpose of
identifying communities that are disproportionately burned by
multiple sources of pollution. CalEnviroScreen is used to
designate disadvantaged communities that must benefit from a
minimum of 25% of the expenditures of GGRF.
Proposed Law:
This bill would create the Advanced Low-Carbon Diesel Fuels
Access Program which will provide capital assistance for
projects that expand advanced low-carbon diesel fueling
infrastructure in communities that are disproportionately
impacted by environmental health hazards and where the greatest
air quality impacts can be identified.
The program would give priority to projects that meet all of the
following:
Located in or near disadvantaged communities as identified by
CalEnviroScreen.
Demonstrates the potential for cobenefits, including reducing
emissions of criteria pollutants or toxic air contaminants.
Quantifies and measures cost-effectiveness and impacts on
disadvantaged and low-income populations.
Ability to leverage additional public or private funding.
Has the ability to obtain immediate benefits.
Includes marketing and education outreach strategies designed
to increase the cost effectiveness of the program's goals.
The program would be administered by the CEC in consultation
with the ARB and be funded by the GGRF. The CEC would be
required to develop guidelines for the program by March 1, 2016.
This bill would also the CEC to extend a contract, grant, loan,
or award issued under the Alternative and Renewable Fuel and
Vehicle Technology Program (ARFVTP) for two years if the moneys
are reprioritized by the CEC to apply towards a project that
benefits disadvantaged communities.
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Staff
Comments: To implement this bill, the CEC would need 1 position
to develop guidelines for the grant program the implement and
manage the grants at an annual cost of $170,000. Staff notes
that these costs are considerably lower than typical estimates
to develop and implement grant programs. The lower cost can be
partially a result of the CEC having previously administered
grants for similar projects, particularly under the ARFVTP.
These guidelines could be used as the basis for the new program
envisioned under this bill. Still, the CEC's costs may be viewed
as a minimum.
Staff notes that the bill requires the guidelines to be
developed by March 1, 2016. Presuming this bill goes into effect
in October of this year as an urgency measure, the CEC would
have five months to develop the guidelines, which presumably
would be considered regulations and therefore subject to the
Administrative Procedures Act (APA). The development of
regulations takes at least one year, typically two. Even
emergency regulations typically take one year at the CEC. Thus
is unclear whether the CEC could meet the timelines established
in the bill. Typically adopting a regulation on short-frame
results in additional administrative costs that do not appear to
be considered in the CEC's estimate for this bill.
The CEC also anticipates approximately $50,000 in additional
workload annually to consider requests to extend contracts under
the ARFVTP.
The ARB also notes that it would have costs associated with this
bill. Specifically, the ARB notes workload associated with
coordinating with the CEC for the administration of the new
grant program, ensure compliance with the Low Carbon Fuel
Standard, the Alternative Diesel Fuel Regulation, developing
quantification methodologies, reporting on program and project
status, and evaluating disadvantaged community benefits. For
these responsibilities the ARB estimates it would need two
positions at an annual ongoing cost of $350,000 assuming the
grant program will not be allocated more than $20 million in
GGRF funding. Staff notes that ARB's estimated workload may be
duplicative of work that would be performed by the CEC as the
administering agency of the grant program.
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Staff notes that there are multiple programs under CEC and ARB
that fund infrastructure related to clean cars. By creating a
new program, the state may be spending more on administration of
multiple programs relative to the amount of financial assistance
issued.
One of the programs that previously offered assistance to
low-carbon diesel was the ARFVTP. However, the 2015-16
investment plan update does not include additional funding for
diesel substitute infrastructure because private investment is
supporting large-scale biodiesel blending. Staff notes that if
there is sufficient private investment in low-carbon diesel so
that it is no longer an eligible project under the ARFVTP, will
use of GGRF for this purpose be a cost-effective way of reducing
GHG emissions?
Staff notes that expenditures of GGRF must reduce GHG emissions.
However, the list of eligible equipment under the bill includes
some items that may not lead to a reduction of GHG emissions- in
particular, signage and point-of-sale systems. Additionally,
staff notes that the GHG emission reductions associated with
expanded fueling infrastructure will be dependent on how much
fuel is dispensed. Thus the emission reductions for these
projects are somewhat uncertain and will not likely be realized
in the short-term.
This bill directs the CEC to fund projects that are in
communities that are "disproportionately impacted by
environmental hazards," which is defined. However, the bill also
directs the CEC to use disadvantaged communities identified by
CalEnviroScreen pursuant to SB 535. Staff recommends that if the
CEC is to use the SB 535 definition of disadvantaged
communities, the phrase "disproportionately impacted by
environmental health hazards" can be deleted from the bill to
avoid confusion.
Staff notes that there are multiple bills being considered by
both houses of the Legislature that propose projects that would
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be eligible to receive GGRF funds. It is unclear how these bills
will interact with each other. Staff notes that a discussion on
the spending of GGRF is anticipated in August as part of a
budget discussion.
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