BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1657


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          Date of Hearing:  May 11, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          1657 (O'Donnell) - As Amended April 7, 2016


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          |Policy       |Natural Resources              |Vote:|9 - 0        |
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          |             |Transportation                 |     |15 - 0       |
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          Urgency:  Yes State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill establishes the Zero- and Near-Zero-Emission  
          Intermodal Terminals Program (Intermodal Terminals Program) and  
          the Port Building and Lighting Efficiency Program (Port  
          Efficiency Program) to fund projects to reduce emissions and  
          increase energy efficiency from freight movement and public port  
          operations.  Specifically, this bill:










                                                                    AB 1657


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          1)Creates the Intermodal Terminals Program, to be administered  
            by the California Air Resources Board (ARB) and funded by the  
            Greenhouse Gas Reduction Fund (GGRF), to pay for equipment  
            upgrades and investments at port terminals to help transition  
            the state's freight system to zero-emission and  
            near-zero-emission operations.


          2)Creates the Port Efficiency Program, to be administered by the  
            California Energy Commission (CEC), to fund energy upgrades  
            and investments at public ports that reduce electrical load  
            and increase on-site renewable generation using GGRF monies  
            appropriated by the Legislature.


          3)Prohibits vessel upgrades from being considered for funding  
            for both the Intermodal Terminals and the Port Efficiency  
            Programs.


          FISCAL EFFECT:


          1)Cost pressures, likely in the hundreds of millions of dollars  
            (GGRF) to fund the two incentive programs.


          2)Assuming $100 million in annual funding, increased ongoing  
            costs $2.2 million and 14.5 positions (GGRF) for the ARB to  
            establish and implement the new incentive program.


          3)Assuming $50 million in annual funding, increased ongoing  
            costs of $1.1 to $1.5 million and 8 positions for CEC to  
            establish and implement the new incentive program.


          COMMENTS:









                                                                    AB 1657


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          1)Purpose.  According to the author, California ports need to  
            reduce emissions while also improving energy efficiency and  
            promoting economic growth.  This bill is intended to provide a  
            framework to help publicly finance port infrastructure  
            improvements using GGRF monies generated by the state's cap  
            and trade program. 



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

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


            The 2014-15 Budget Act 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.  








                                                                    AB 1657


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            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.  


          3)Previous Legislation.  AB 678 (O'Donnell) requires ARB, in  
            conjunction with the CEC, to develop the Energy Efficient  
            Ports Program to fund energy efficiency projects that help  
            reduce emissions of GHG and air pollutants at public ports.   
            AB 678 was approved by this Committee but was later held on  
            suspense in the Senate Appropriations Committee.





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