California Senate Bill SB1572 Latest Draft

 BILL NUMBER: SB 1572AMENDED BILL TEXT AMENDED IN ASSEMBLY AUGUST 31, 2012 AMENDED IN ASSEMBLY AUGUST 24, 2012 AMENDED IN ASSEMBLY AUGUST 22, 2012 AMENDED IN ASSEMBLY JUNE 25, 2012 AMENDED IN SENATE MAY 29, 2012 AMENDED IN SENATE MAY 1, 2012 INTRODUCED BY Senator Pavley FEBRUARY 24, 2012 An act to add Sections 16428.81  , 16428.82, and 16428.83   and 16428.82 to the Government Code, relating to greenhouse gases, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST SB 1572, as amended, Pavley. California Global Warming Solutions Act of 2006: AB 32 Investment Fund. The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act requires the state board to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020, and to adopt rules and regulations in an open public process to achieve the maximum, technologically feasible, and cost-effective greenhouse gas emission reductions. The act authorizes the state board to include use of market-based compliance mechanisms. The state board has adopted by regulation a program pursuant to the act to cap greenhouse gas emissions and provide for market-based compliance mechanisms, including the auction of allowances (cap-and-trade program). 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 and to be available upon appropriation by the Legislature. Existing law requires a state agency, prior to expending any money appropriated to it by the Legislature from the fund, to prepare a record consisting of a description of proposed expenditures and of how they will further the regulatory purposes of the California Global Warming Solutions Act of 2006, how they will achieve specified greenhouse gas emissions reductions, how the agency considered other objectives of that act, and how the agency will document expenditure results. This bill  , with certain exceptions,  would appropriate  a specified portion of  moneys collected by the state board and derived from the auction or sale of allowances in the  2012-13  2012-13  fiscal year from the Greenhouse Gas Reduction Fund to the state board. Under the bill, a specified portion of the money appropriated to the state board would be available to fund prescribed projects that meet certain goals relating to greenhouse gas emissions reductions.  This bill would require any funds allocated to fund or finance eligible projects, as specified, or awarded, as specified, to be committed by December 31, 2013.  This bill would  authorize   require  the state board  , the Strategic Growth Council,  and the  Treasurer   California Pollution Control Financing Authority  to adopt  regulations, and authorize those entities to adopt  emergency regulations  ,  for the purposes of funding eligible projects, as prescribed. The bill would require the  Treasurer   California Pollution Control Financing Authority  and the Strategic Growth Council to prepare and submit to the Legislature, until January 1, 2017, annual reports on funded projects and activities. The bill would require the state board to publish information on projects on its Internet Web site. This bill would create the Higher Education Greenhouse Gas Emissions Reduction Account within the Greenhouse Gas Reduction Fund. This bill would provide that any revenue collected by the state board from the sale of an allowance to the University of California or the California State University is required to be deposited into this account. This bill would  continuously  appropriate the moneys  collected in the 2012-13 fiscal year and deposited  in this account  , without regard to fiscal years,  to the state board  and provide that the moneys collected after the 2012-13 fiscal year in the account are available, upon appropriation by the Legislature,  for purposes that are determined, based on the best available evidence, to reduce greenhouse gas emissions, as specified, and would prescribe additional criteria for the expenditure of moneys in the account. This bill would require the state board to submit to the Legislature a 5-year investment plan detailing the projects and activities to be funded. This bill would require, no later than December 31, 2013, and each December 31 thereafter, the University of California and the California State University  each  to submit to the state board and the Legislature a specified report.  This bill would create the Water Suppliers Greenhouse Gas Emissions Reduction Account within the Greenhouse Gas Reduction Fund. This bill would provide that any revenue collected by the state board from the sale of an allowance to a water supplier, as defined, is required to be deposited into this account. This bill would continuously appropriate the moneys in this account, without regard to fiscal years, to the state board for the purposes of reducing greenhouse gas emissions associated with water suppliers, and would prescribe additional criteria for the expenditure of moneys in the account. This bill would require, no later than November 1, 2013, and each November 1 thereafter, a water supplier that received funds from the account to submit to the state board and the Legislature a specified report.  Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares the following: (a) In accordance with its discretionary authority to adopt market-based compliance mechanisms pursuant to Part 5 (commencing with Section 38570) of Division 25.5 of the Health and Safety Code, the State Air Resources Board adopted on December 22, 2011, a final regulation order establishing the cap-and-trade program, which took effect on January 1, 2012. (b) California's cap-and-trade program is authorized by the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code). (c) To mitigate the risk of market manipulation and windfall profits and to ensure the market price of a greenhouse gas emissions allowance is transparent and publicly discoverable, the State Air Resources Board will auction a limited number of allowances to qualifying market participants beginning on November 14, 2012, though the majority of allowances will be  freely  allocated  at no cost  to covered entities. (d) Proceeds from the auction of allowances must be spent to further purposes of the California Global Warming Solutions Act of 2006, including the reduction of statewide greenhouse gas emissions to 1990 levels by 2020, and the maintenance of those levels beyond 2020. (e) In order to further the purposes of the California Global Warming Solutions Act of 2006, it is necessary and appropriate to immediately allocate a portion of auction proceeds anticipated to be generated in the 2012-13 fiscal year, excluding proceeds from allowances consigned to auction by electrical distribution utilities, to fund projects that reduce greenhouse gas emissions and that also achieve the following purposes to the extent feasible: (1) Maintain and create jobs for industries with covered entities by reducing leakage risk through cost-effective investments in greenhouse gas emissions reductions measures. (2) Rapidly achieve greenhouse gas emissions reductions at a reasonable cost. (3) Ensure investments in emissions reductions benefit disadvantaged communities to the maximum extent feasible. (4) Provide near-term relief of budgetary pressure facing universities, state, regional, and local government, and other public agencies. (5) Provide opportunities for small businesses, local governments, nonprofit entities, state-certified local conservation corps, state conservancies, and other community institutions to participate in and benefit from statewide and regional efforts to reduce greenhouse gas emissions. (f) It is necessary and appropriate to prioritize near-term investments from auction proceeds in emissions reductions at covered entities that will generate most of the initial proceeds, in order to ensure a low-cost transition to a clean-energy economy for the benefit of their customers. (g) A wider range of investments should be eligible longer term, including increased investment in fuels-related emissions reductions as the coverage of the cap-and-trade program expands, transformational technology innovation, uncapped sectors such as natural resources and sustainable agriculture where some of the most cost-effective emissions reductions are possible, and other areas of investment with broad public benefits that private markets may not otherwise adequately fund. SEC. 2. Section 16428.81 is added to the Government Code, to read: 16428.81. (a) For purposes of this section: (1) "Covered entities" means an entity subject to  allowance surrender requirements   a compliance obligation in 2013  under any cap-and-trade program adopted by the state board as of December 31, 2012, excluding electrical  corporations that receive all of their allowances for free   distribution utilities  , and including, but not limited to, food processors, manufacturers of glass, cement, and other industrial products, oil and gas production facilities and refineries, and thermal energy suppliers. (2) "State board" means the State Air Resources Board. (b) (1) Notwithstanding subdivision (c) of Section 16428.8,  80 percent of the  moneys collected in the 2012-13 fiscal year and deposited into the Greenhouse Gas Reduction Fund that are not allocated or otherwise used by the Director of Finance to make commensurate reductions to General Fund expenditure authority, as authorized by Section 15.11 of the Budget Act of 2012, are hereby appropriated from the Greenhouse Gas Reduction Fund to the state board to be expended in accordance with this section. In accordance with  Section 16304 of the  Government Code  Section 16304  , funds not encumbered within three years shall revert back to the Greenhouse Gas Reduction Fund. (2) Funds expended pursuant to this section shall meet the requirements of subdivision (a) of Section 16428.9 and shall benefit disadvantaged communities to the maximum extent feasible. The definition of a disadvantaged community shall be determined by the California Environmental Protection Agency. (c) The funds appropriated to the state board pursuant to subdivision (b) shall be allocated as follows: (1)  Sixty   Seventy-five    percent to  the state board to  fund eligible projects  at covered entities  in a timely manner  that would maximize the use of private capital and innovative technology and accommodate unique cost and project financing attributes of the particular industry of a covered entity  . The state board may allocate any of these moneys to the  Treasurer   California Pollution Control Financing Authority  for use in accordance with his or her   its  authority under the California Pollution Control Financing Authority Act to  fund   finance  eligible projects  at covered entities , if the state board determines that the allocation  maximizes the use of private capital and innovative technology and  accommodates unique  cost and project   cost, technology,  financing  , or other  attributes of  the particular covered entities' industry   eligible project applicants  . (A) For purposes of this paragraph,  an  eligible  projects are those projects that are   project is a project that is  determined by the state board to reduce greenhouse gas emissions  at covered entities that the state board determines meet   associated with the operations of a covered entity as reported to the state board pursuant to the mandatory greenhouse gas emissions reporting regulation, that maximizes the use of private capital, is related to compliance with and consistent with the goals of the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code) and is not required by any other law, regulation, or court order, and satisfies one or more of  the following  criteria:   criteria, and any other criteria that may be established by the state board:   (i) The project will reduce greenhouse gas emissions associated with the operations of a covered entity under any cap-and-trade program as reported to the state board pursuant to the mandatory greenhouse gas emissions reporting regulation with a compliance obligation commencing in the 2013 program year.   (ii) The covered entity's   (i)    Reduces the compliance costs of a covered entity whose  projected greenhouse gas emissions in 2013 will exceed any free allocation of emission allowances in 2013 by at least 10 percent.  (iii) The project is related to compliance with the California Global Warming Solutions Act of 2006 (Division 2.5 (commencing with Section 38500) of the Health and Safety Code) and is not required by any other law, regulation, or court order.   (ii) Assists with the adoption of innovative greenhouse gas emissions reduction technology.   (iii) Cost-effectively reduces greenhouse gas emissions through efficiency or other measures.   (iv) The project applicant agrees   (B)     Each eligible project shall be subject  to reporting and audit requirements.  (B)   (   C)  The value of the benefits that may be received in a fiscal year pursuant to this paragraph for eligible projects at a covered entity shall not exceed the actual costs incurred by the covered entity from purchasing  auctioned  allowances.  (C)   (   D)  Types of eligible projects may include, but are not limited to, switching to the production or use of low-carbon fuels,  on-site   onsite  efficiency measures, clean energy generation, increasing the use of recycled content, energy storage, and waste heat recovery.  (D)   (   E)  The  Treasurer   California Pollution Control Financing Authority  and the state board may consult with the Governor's Office of Business and Economic Development for the purposes of administering this paragraph.  (E) In addition to any other authority the California Pollution Control Financing Authority may have, the authority may provide a rebate to the applicant in the amount of the sales and use tax paid on the qualifying equipment within 30 days of receipt of a determination by the state board that the requirements of subparagraph (A) have been met and receipt of proof of purchase of qualifying property associated with the eligible project.  (F) If the state board finds that moneys provided pursuant to this paragraph were used for purposes other than those described in subparagraph (A), the project applicant shall be required to repay any moneys received with interest.  (G) The state board and the Treasurer may adopt emergency regulations for the purposes of implementing this paragraph. The adoption of emergency regulations shall be deemed necessary for the immediate preservation of the public peace, health, safety, or general welfare for the purposes of Section 11346.1.   (H)   (G)  Total project cost associated with any eligible project is eligible for funding.  (I)   (H)  Any activities undertaken as part of any funded eligible project shall complement and shall not interfere with efforts to achieve and maintain federal and state ambient air quality standards and reduce toxic air contaminant emissions. (2)  Ten   Twenty-five  percent to the Strategic Growth Council to be awarded, on a competitive basis, to metropolitan planning organizations or councils of governments, in accordance with subparagraph (A), and to local climate innovation projects, in accordance with subparagraph (B). (A) Metropolitan planning organizations or  ,  in regions not within a metropolitan planning organization,  the council   councils  of governments, are eligible for funding to develop and implement regional or local plans to reduce greenhouse gas emissions through investments in transportation infrastructure and operations and changes in land use. (i) Project funding determinations shall be made at the regional level in accordance with statewide criteria developed by the Strategic Growth Council and the state board that prioritize investments in projects that cost-effectively reduce greenhouse gas emissions, integrate transportation infrastructure and land use strategies, and achieve additional greenhouse gas emissions reductions and community benefits through integration with local energy, water, public health, or resource conservation strategies. (ii) In regions with sustainable community strategies or an alternative planning strategy for which the state board has accepted a metropolitan planning organization's determination that the sustainable communities strategy or the alternative planning strategy would, if implemented, achieve the greenhouse gas emissions reduction targets pursuant to subparagraph (H) of paragraph (2) of subdivision (b) of Section 65080, projects shall implement the adopted strategy within existing urbanized areas. (iii) In regions that do not have strategies that meet the requirements of clause (ii), projects shall meet criteria developed by the Strategic Growth Council, in collaboration with the state board, to ensure that projects provide measurable and verifiable greenhouse gas emissions reductions. (iv) Funds allocated by the Strategic Growth Council  pursuant to this subparagraph  may be used for any of the following: (I) Integrated land use and transportation infrastructure development, design, construction, or planning, including, but not limited to, complete street retrofits, street scape improvements, multiuse traits, electric vehicle charging infrastructure, natural gas refueling infrastructure, and transit infrastructure implemented with complementary land use changes, including passenger or commuter rail, transit-oriented affordable housing, and other infrastructure that provides access to a diverse mix of housing types, jobs, schools, and recreational, commercial, retail, and other services of the neighborhood level, as well as other integrated infrastructure and land use strategies that demonstrate greenhouse gas emission reductions. (II) Transportation efficiency measures that provide greenhouse gas emissions reduction benefits, including, but not limited to, expansion and greenhouse gas reduction of transit services, road and bridge maintenance with safety retrofits, roadway operations, and demand management strategies. (III) Performance measurement systems to evaluate greenhouse gas emissions reductions from integrated projects and program administrative costs. (v) Within each region, projects shall be selected based on the net greenhouse gas emissions reductions per dollar invested. (B) A city, county, or city and county, state conservancy, regional climate authority, special district, air district, joint powers authority, regional collaborative, nonprofits coordinating and communicating with local governments, or state-certified local conservation corps is eligible for funding to develop, plan, design, implement, or construct approved local climate innovation projects that  do   demonstrate  all of the following: (i)  Result   The project will result    in replicable models. (ii)  Quantifiably reduce   Quantifiable    greenhouse gas emissions reductions  from projects, including, but not limited to, clean energy generation, energy efficiency, urban and community greening, stormwater reductions, urban river restoration, water efficiency, agricultural and open-   space protection, and natural community conservation plan development and implementation  . (iii)  Have   The project will have  clear, accurate, transparent reporting procedures in place  , including, but not limited to, clean energy generation, energy efficiency, urban and community greening, stormwater reductions, urban river restoration, water efficiency, agricultural and open space protection, and natural community conservation plan development and implementation  . (d) (1) To ensure that funds are expended efficiently and transparently, all of the following shall occur: (A) The  Treasurer   California Pollution Control Financing Authority  , for the purposes of any allocation made pursuant to paragraph (1) of subdivision (c), and the Strategic Growth Council, for the purposes of paragraph (2) of subdivision (c), shall prepare and submit to the Legislature an annual report that includes, but is not limited to, a detailed list of projects and activities for which funds were expended or obligated. For each project or activity, the detailed list shall include at least the following information: (i) The name of the project or activity. (ii) A description of the project or activity. (iii) An evaluation of the completion status. (B) The state board shall publish on its Internet Web site information on projects funded pursuant to this section, including the status, costs, benefits, location, and other information relating to a project in a manner that is easily accessible and comprehensible to the public,  in order to understand   to ensure that the public understands  the effects the funded projects are having on California's environment and economy. (2) Any recipient of funds pursuant to this section shall provide the state agency from which the recipient received the funds any information necessary for that state agency to comply with the requirements of paragraph (1). (3) (A) The report to be submitted pursuant to subparagraph (A) of paragraph (1) shall be submitted in compliance with Section 9795. (B) The requirement for submitting a report imposed pursuant to subparagraph (A) of paragraph (1) is inoperative on January 1, 2017, pursuant to Section 10231.5.  (e) (1) The state board, the California Pollution Control Financing Authority, and the Strategic Growth Council shall adopt regulations, and may adopt emergency regulations, for the purposes of implementing this section. The adoption of emergency regulations shall be deemed necessary for the immediate preservation of the public peace, health, safety, or general welfare for the purposes of Section 11346.1.   (2) Any funds allocated to fund or finance eligible projects, pursuant to paragraph (1) of subdivision (c), or awarded, pursuant to paragraph (2) of subdivision (c), shall be committed to specific projects by December 31, 2013.   (e)   (f)  In addition to subdivision (c) of Section 16428.9, the provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application. SEC. 3. Section 16248.82 is added to the Government Code, to read: 16248.82. (a) For purposes of this section, "state board" shall mean the State Air Resources Board. (b) The Higher Education Greenhouse Gas Emissions Reduction Account is hereby created within the Greenhouse Gas Reduction Fund. Notwithstanding Section 16428.8, any moneys that may be collected by the state board from the sale of an allowance to the University of California or the California State University as part of any market-based compliance mechanism that may be adopted by the state board shall be deposited into this account. (c)  Notwithstanding Section 13340, the   The    moneys  collected in the 2012-13 fiscal year and deposited  in the Higher Education Greenhouse Gas Emissions Reduction Account are  continuously   hereby  appropriated  , without regard to fiscal years,  to the state board  and the moneys collected after the 2012-13 fiscal year in the account are available, upon appropriation by the Legislature,  to be expended as follows: (1) The requirements of subdivision (a) of Section 16428.9 shall be met prior to expending any funds. (2) Funds may be expended only for purposes that are determined, based on the best available evidence, to reduce greenhouse gas emissions associated with public segments of the state's postsecondary education system that are covered entities for purposes of any cap-and-trade program. These projects and activities may include, but are not limited to, the following: (A) Projects or activities that reduce electricity and natural gas consumption at facilities controlled by the University of California or the California State University, including energy efficiency, distributed generation, waste heat recovery, and energy storage. (B) Procurement of energy sources that reduce natural gas usage at university facilities. (C) Procurement of carbon-neutral electricity that displaces conventional electricity generation at university facilities. (3) Funds may be expended for administrative costs to directly support any of the activities funded by this section. Administrative costs shall not exceed 2.7 percent of the total moneys deposited in the Higher Education Greenhouse Gas Emissions Reduction Account each fiscal year. (4) Expenditure of funds shall be contingent upon an additional investment by the University of California or the California State University in greenhouse gas abatement projects and activities, equal in value to 20 percent of the funds it receives pursuant to this section, either direct or in kind. (d) The state board shall submit to the Legislature a five-year investment plan detailing the projects and activities to be funded with an anticipated allocation. (e) (1) No later than December 31, 2013, and each December 31 thereafter, the University of California and the California State University shall  each  submit to the state board and to the Legislature a report describing the  respective  disposition of funds received  pursuant to this section by each  in that calendar year and the planned expenditures for funding that may be received pursuant to this section in the coming calendar year. (2) (A) The requirement for submitting a report imposed pursuant to paragraph (1) is inoperative on December 31, 2017, pursuant to Section 10231.5. (B) A report to be submitted pursuant to paragraph (1) shall be submitted in accordance with Section 9795.  SEC. 4.   Section 16428.83 is added to the Government Code, to read: 16428.83. (a) For the purposes of this section, the following terms have the following meanings: (1) "State board" means the State Air Resources Board. (2) "Water supplier" means any publicly owned supplier or contractor for water, including, but not limited to, the Metropolitan Water District of Southern California and, for purposes of managing the State Water Project, the Department of Water Resources, that distributes or sells water for ultimate resale to customers and that is a regulated entity pursuant to Section 38570 of the Health and Safety Code. (b) The Water Suppliers Greenhouse Gas Emissions Reduction Account is hereby created within the Greenhouse Gas Reduction Fund. Notwithstanding Section 16428.8, any revenue that may be collected by the state board from the sale of an allowance to a water supplier as part of any market-based compliance mechanism that may be adopted by the state board shall be deposited into this account. (c) Notwithstanding Section 13340 of the Government Code, the moneys in the Water Suppliers Greenhouse Gas Emissions Reduction Account are continuously appropriated, without regard to fiscal years, to the state board, to be expended as follows: (1) The requirements of subdivision (a) of Section 16428.9 shall be met prior to the expenditure of any funds. (2) Funds may be expended only for the purpose of reducing greenhouse gas emissions associated with water suppliers. (3) Expenditure of funds shall be contingent upon an additional investment by a water supplier that receives funds pursuant to this section in greenhouse gas abatement projects and activities, equal in value to 25 percent of the funds it receives, either direct or in kind. (d) No later than November 1, 2013, and each November 1 thereafter, each water supplier that has received funds pursuant to this section shall submit to the state board and the Legislature a report describing the disposition of funds received during that calendar year and the status of projects funded by this section.