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CalEPA/ARB to Hold Cap-and-Trade Auction Proceed Investment Public Workshop

August 8, 2014
The California Environmental Protection Agency (CalEPA) and Air Resources Board (ARB) will hold  three public workshops this month to discuss three items: the investment of Cap-and-Trade auction proceeds in disadvantaged communities, the identification of disadvantaged communities and the criteria for determining benefits to disadvantaged communities in accordance with SB 535 (De León, Chapter 830, Statutes of 2012).
The FY 2014-15 Budget adopts the definition of and requirements for disadvantaged communities from SB 535. However, in response to concerns raised by legislators, the ARB has been directed to develop guidance on how to identify projects that benefit disadvantaged communities. This guidance will be developed after receiving input at a public workshop and consulting with CalEPA. The outcome will have a direct impact on Cap and Trade funds that cities will apply for. For example, 50 percent of the Affordable Housing and Sustainable Communities grant are set aside for disadvantaged communities. 
Under AB 32 (Nunez, Chapter 488, Statues of 2006), the California Global Warming Solutions Act of 2006, the state is required to reduce its greenhouse gas (GHG) emissions to 1990 levels by 2020. This equates to a 30 percent reduction. The Cap-and-Trade program falls under AB 32 and sets limitations on the amount of GHG emissions a company may produce. Companies that produce more than  the set GHG emissions cap can  purchase or trade emissions ‘credits’ with other businesses to produce emissions over the set limit. ARB has adopted a Scoping Plan and, together with other State and local agencies, has developed and implemented numerous regulations and programs, including the Cap-and-Trade Program to reduce emissions to meet AB 32 goals. 
Any expenditure of state proceeds from the Cap-and-Trade auctions must comply with legislative requirements. State law directs CalEPA to identify disadvantaged communities for investment of Cap-and-Trade auction proceeds. SB 535 requires that 25 percent of the 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 ARB to develop guidance for state agencies on approaches to maximize benefits to disadvantaged communities.
CalEPA selected CalEnviroScreen as the tool to identify disadvantaged communities. In April 2014, the Office of Environmental Health Hazard Assessment released CalEnviroScreen Draft Version 2.0 that ranks communities based on numerous indicators that reflect pollution burdens and population characteristics.

CalEPA and ARB are seeking input on:
  • The identification of disadvantaged communities for priority investments of Cap-and-Trade auction proceeds. Information about approaches to identifying disadvantaged communities will be available online by Aug. 15.
  • Interim guidance for State agencies to maximize benefits in disadvantaged communities including criteria to determine which projects benefit disadvantaged communities. ARB draft concepts will be available online by Aug. 15.
Written comments on both of these topics will be accepted from Aug. 20 to Sept. 9 via electronic submittal.
Workshops will be held at the following locations:
Oakland:  Aug. 20
6:00 – 8:00 p.m.
Elihu M. Harris, State Office Building
1515 Clay Street
Oakland, CA 94612
Fresno: Aug. 25
6:00 – 8:00 p.m.
Hugh Burns State Building, Room 1036
2550 Mariposa Mall
Fresno CA 93721
Los Angeles: Aug. 26
6:00 – 8:00 p.m.
Junipero Serra Building, Carmel Room
320 West Fourth Street
Los Angeles, CA 90013
Please direct questions for CalEPA on identification of disadvantaged communities, contact Malinda Dumisani at or (916) 445-9480. Please direct questions regarding the development of SB 535 guidance, contact Matthew Botill, manager, ARB, at (916) 324-2828.

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