oe a oe) Assembly et agrees pemaicosseees Set tche cae tot 215208, ee : wnouenice sero 82108 fifornia Legislature — Get'torermen erect ornee SLC ENOVEES neTnENEN, A210 2729 PROSPECT PARR DRIVE, SUE 190 as Ravicno Conbovn ch 2870 (ono 8 10 se.ect commrrces FAX (O16) 464-1015 NEY (HAI. FOSTER CARE sem iit REMGOGUEN IAAIFORA TRADE AN NESTE satan Coy ste. sects Soh DesTRCT cee foweuesenees {Goat ENenceNey PrePanconess rors SCIENCE. TECHNOLOGY, ENGINEERING "AND MATH EDUCATION ALFRED E_ALOUIST SEISMIC SAFETY ‘COMMISSION September 9, 2014 Mary Nichols Chair, California Air Resources Board 1001 I Street Sacramento, CA 95814 RE: Eeonomy & Cap-and-Trade fuel cost expansion Dear Chair Nichols: First, I want to thank you for your courtesy last July 28", as you boarded a bus in Mexico, in taking my call to discuss the disclosure and regulatory aspects of the Cap and Trade related rules adopted earlier this spring. In our conversation, [ alluded to my amendment of AB 985 on July 3" as part of an effort to examine how the Cap and Trade program was being implemented. It had been my hope that AB 69 (Perea), which I supported along with my AB 985, would serve to spur conversations during August about how the program was being implemented. ‘The focused conversation these two bills could have spurred is very much within the spirit of how our society has always managed change. During the challenging era in which he governed, Frances Perkins, FDR's elose confidant, said the President, confronting a difficult problem, was willing to improvise, ofien stating “One thing is sure. We have to do something. We have to do the best we know how at any ‘moment... Ifit doesn't turn out right, we can modify it as we go along.” Now, however, with August and the time for legislative conversations passed, as recently as last night while visiting constituents in Carmichael at their home, | find people deeply concemed for the slow pace of the economic recovery, and fearful of what will happen if the economy stumbles under the looming Cap and Trade transportation fuels change, Accordingly, I wish to restate the call for a careful re-examination of the timing of bringing transportation fuels under the program. I believe Californians want institutions of government which, as events unfold, are open io “madifying” past decisions as the passage of time sheds new light upon them, > Pine on Rocyced PaperLetter f0 CARB Chair Nichols re: Economy & Cap-and-Trade fuel cost expansion September 9, 2014 L know my constituents are worried about the impact of the AB 32 Cap-and-Trade program. I have heard first-person accounts from my own district of areas that have yet to be touched by the economic recovery. These constituents fee! the continued economic weakness is deeply concerning ~ definitely not robust —and the increased consumer costs for fuels will impact disposable income and other forms of spending, thus weakening the economy and hurting already vulnerable Californians. Beginning January 1, 2015, greenhouse gas (GHG) emissions from transportation fuels are going to be subject to the California Air Resources Board (CARB) cap-and-trade program. There appears to be wide acceptance that this will cause an immediate jump in prices at the pump. There are various estimates for how much the price spike will be, but an increase of about fifteen cents per gallon is likely and a much larger jump is possible. Even a small increase in fuel prices hurts low income Californians, Areas I represent in Sacramento County still struggle with not enough jobs, a reality my repeated job fairs have made painfully evident. AB 32 set environmental goals for the State, limiting GHG emissions to 1990 levels by 2020. CARB is responsible for implementing a program that achieves this goal and designed Cap-and-Trade for that purpose. Currently, CARB gives away some carbon credits to entities covered by the Cap-and-Trade program and then sells additional credits, generating revenue for the State. Meeting the GHG emissions goal of AB 32 does not require the Cap-and-Trade system to take money from fuel consumers and give it to the State. CARB is not planning to give any carbon credits to drivers in California, instead selling all the eredits which will give the State billions of dollars in revenue that can only be used for GHG reduction, Cap-and-'Trade achieves the emissions goal by virtue of the “cap” alone — all the carbon credits can be allocated for free, allowing low emitters to benefit by selling their eredits to others and not drawing extra dollars out of the economy unnecessarily. { voted No on the Budget Trailer Bill with the Cap-and-Trade continuing appropriations as AB 32 was not intended to be a funding mechanism for massive, new State efforts at GHG reduction. Our absolutely most vital task as a State is to continue to promote steady economic growth. Given this paramount need to grow our state economy, I request that you exercise your administrative authority to delay expanding the Cap-and-Trade program to cover transportation fuels or at least modify the program so that it does not unnecessarily increase fuel costs in order to generate revenue for the State. Turge you to reconsider the design of the cap-and-trade program so that California avoids unnecessarily increasing fuel costs and putting the brakes on our economic recovery. Thank you for your consideration of this issue. Please do not hesitate to contact me if you have any questions. Sincerely, Assemblyman, 8" District cc: Members of California Air Resources Board Jennifer Gress, Legislative Director, California Air Resources Board