On Monday, August 25, 2014, the California Air Resources Board (CARB) and the California Environmental Protection Agency (CalEPA) held a public workshop in Fresno, CA seeking public input on the investment of Cap-and-Trade auction proceeds.  SB 535 requires that 25 percent of auction proceeds be invested in projects that benefit disadvantaged communities and at least 10 percent be invested in projects located within those communities.  State law also directs CalEPA to identify disadvantaged communities and CARB to develop guidance for state agencies on approaches to maximize benefits to disadvantaged communities.

The purpose of the workshop was gather public input on CalEPA's proposed efforts to identify disadvantaged communities for priority investments of auction proceeds using the CalEnviroScreen, as well as to elicit input on CARB's proposed interim guidance for state agencies on developing criteria to determine which projects benefit disadvantaged communities. 

The draft Interim Guidance for the state and local agencies charged with the expenditure of the auction proceeds is designed to provide educate the agencies on how to meet the statutory requirements of AB 32 and SB 535 and how to determine whether proposed projects that achieve the goals of AB 32 would also benefit disadvantaged communities.  

SB 535 (De León, Chapter 830, Statutes of 2012) directs State and local agencies to make investments in so-called disadvantaged communities. That investment comes from the proceeds of the quarterly auctions held by the CARB under the Cap-and-Trade program.  Currently, about $200 million is available for investment by state agencies in these disadvantaged communities.

 

Industry concerns center on the fact that each agency receiving auction proceeds for investment is responsible for administering its own programs.  The decisions about how to design programs, select projects for funding, and implement projects rests with each state agency. 

CLFP attended the workshop in order to reiterate positions previously articulated at CARB Board hearing and workshops regarding the disbursement of auction funds pursuant to SB 535 requirements.  CLFP positions include the following:

1. Tracking Funds – CLFP has consistently urged that CARB track auction funds through the development and imposition of stringent reporting requirements, accompanied by severe penalties, for misuse of auction funds by activist groups or local or regional agencies seeking funding for projects.  Additionally, CLFP has requested that all recipients be required to publicly post all reports on a regular basis.
   
   
2. Industry Advisory Groups (IAG) – CLFP has urged that CARB establish Industry Advisory Groups to review projects and proposals and make recommendations to the state agency on funding priorities.  The AIGs would be composed of industries, businesses, and community groups located and/or operating in areas identified as a disadvantaged community.  An IAG will have familiarity with the community targeted for investments and projects and would be able to make recommendations to the state agency responsible as to the impact and benefit on the local community on the any proposed project.
   
   
3. SB 535 Qualification – Once CalEPA has identified the disadvantaged communities eligible for SB 535 funding, CLFP has proposed that any facility or business, including facilities and companies subject to the AB 32 Cap-and-Trade regulation, located in an officially identified disadvantaged community should qualify for funding for projects subject to SB 535 requirements.  Moreover, CLFP has urged that any such industrial facility proposing an SB 535 compliant project should be given funding priority by the controlling state agency.  This is because most projects undertaken by industrial facilities are likely to seek efficiency upgrades that will result in measurable emissions reductions that will directly benefit the community. 

It is CARB's goal to make the auction funds available as soon as possible.  Therefore, staff expects to present the Interim Guidelines to the CARB Board at the next Board hearing scheduled for September 18 in Sacramento.  

However, efforts will continue on the development of the Guidelines throughout the rest of 2014.  CARB staff expects the final version of the Guidelines to be adopted spring 2015.

CLFP will continue to push for provisions in the guidelines that will aid industry in gaining access to available funding and to press CARB to strengthen accountability requirements.