WGLA Initiatives Nov 2006 Prop 87 Full Extract


Proposition 87			00.00 10/05

Full Extract

Submitted as: "The Clean Alternative Energy Act."

Type: Amendment to the California Constitution, Public Resources Code, and Revenue and Taxation Code
Subject: Special tax on California oil producers, to reduce oil and gasoline usage.
Submitters: James C. Harrison, Thomas A. Willis

Supporting Organization:
	Name:	Californians for Clean Energy P.O. Box 67205 Los Angeles, CA 90067
	Email:info at yeson87.com
	Web Site: www.yeson87.org
	Phone: 323.782.1045

Opposing Organization:
	Name:	Californians Against Higher Taxes 111 Anza Boulevard #406 Burlingame, CA 94010
	Email: info at NoOilTax.com
	Web Site: www.nooiltax.com
	Phone: 650.340.0470

Section 1 Title

This measure shall be known as the "Clean Alternative Energy Act."

Section 2 Findings and Declarations.

[Statement of the problem]

Section 3 Purpose and Intent

[What this tax will do to fix the problem.]

Section 4

Adds a new Article XXXVI to the California Constitution

Sec. 1 Establishes the Clean Alternative Energy Program
Sec. 2 The Clean Alternative Energy Program shall be administered by the California Energy Alternatives Program Authority. Funding for the Program comes from the California Energy Independence Fund Assessment. [The Authority is itself created by this Initiative, by extensive revision to Division 16 of the Public Resources Code. The Assessment is levied by this initiative's addition to the Revenue and Taxation Code starting at Section 42000. See both below.]
Sec. 3 The California Energy Alternatives Program Authority shall have the power, contrary to Article XVI, or any other article of this Constitution, or any other provision of law, to use the money produced by the California Energy Independence Fund Assessment to provide incentives of all types to any useful participant per the Clean Alternative Energy Act or to repay bonds, bond anticipation notes, and other obligations and indebtedness of the Authority and to repay any other costs associated with such bonds, that are used to fund such incentives. []
Sec. 4 (a) Money produced by the California Energy Independence Fund Assessment must be deposited in the California Energy Independence Fund, which the initiative creates as a special fund in the State Treasury, from which it may be continuously appropriated.
Sec. 4 (b) The California Energy Alternatives Program Authority shall be authorized to expend $4 billion from the California Energy Independence Fund for the purposes of the Clean Alternative Energy Act.
Sec. 4 (c) Income resulting from [the tax], income resulting from grants or loans made pursuant to the Clean Alternative Energy Act, and any royalties or license fee income resulting from the Clean Alternative Energy Act must be paid into the California Energy Independence Fund, from which it may be continuously appropriated.
Sec. 4 (d) The money in the California Energy Independence Fund may not be used for purposes other than the purposes authorized by the Clean Alternative Energy Act, and may not be loaned to any entity or borrowed by the Legislature, or any other state or local agency, for any purpose other than those authorized by the Clean Alternative Energy Act.
Sec. 4 (e) Contrary to the rest of the Constitution, money generated by the California Energy Independence Fund Assessment shall not be considered "revenues" or "taxes" in order to compute any State expenditure or appropriation limit that is enacted on or after June 6, 2006, and the expenditure or appropriation of such money will not be subject to any reduction or limitation imposed pursuant to any provision enacted after that date.

Section 5

Adds a new section 14 to Article XIIIB of the California Constitution

Sec. 14 (a) "Appropriations subject to limitation" of each entity of government shall not include appropriations of revenue from the California Energy Independence Fund. No adjustment in the appropriations limit of any entity of government shall be required pursuant to Section 3 as a result of revenue being deposited in or appropriated from the California Energy Independence Fund. []
Sec. 14 (b) Revenues generated by the California Energy Independence Fund Assessment shall not be considered General Fund revenues.

Section 6

Amends Section 26004 of the Public Resources Code

26004 (a) There is in the state government the California Energy Alternatives Program Authority. The authority constitutes a public instrumentality and the exercise by the authority of powers conferred by this division and Article XXXVI of the California Constitution is the performance of an essential public function. [This was formerly called the California Alternative Energy and Advanced Transportation Financing Authority; this Act adds Article XXXVI as a governing authority, after adding that article to the Constitution; see above.]
26004 (b) The authority shall consist of 9 members, as follows: [used to be 5 members]
26004 (b) (1) The Secretary of the California Environmental Protection Agency. [Used to be the Director of Finance.]
26004 (b) (2) No change [The Chairperson of the State Energy Resources Conservation and Development Commission.]
26004 (b) (3) The Treasurer. [Used to be the President of the Public Utilities Commission.]
26004 (b) (4) A Californian who has expertise in economics, energy markets, and energy efficiency technologies, appointed by the Governor. [Used to be the Controller.]
26004 (b) (5) A Californian who has expertise, and who has demonstrated leadership, in public health, appointed by the Governor. [Used to be the Treasurer.]
26004 (b) (6) A Californian who has expertise in finance, start-ups, and venture capital, preferably with experience in enterprises comparable in scale and purpose to those that would be eligible for funding pursuant to the Clean Alternative Energy Act, appointed by the Controller.
26004 (b) (7) A renewable energy or energy efficiency expert from a California university that awards doctoral degrees in the sciences who is either a member of the National Academy of Sciences, the National Academy of Engineering, or a Nobel Prize laureate, appointed by the Speaker of the Assembly.
26004 (b) (8) The dean or a tenured faculty member of a major, nationally-recognized California business school that awards post-graduate degrees who has significant experience in as many as possible of new technology ventures, entrepreneurship, consumer marketing, consumer adoption of new trends, and enterprises comparable in scale and purpose to those that would be eligible for funding pursuant to the Clean Alternative Energy Act, appointed by the Senate Rules Committee.
26004 (b) (9) A Californian who has expertise, and who has demonstrated leadership, in consumer advocacy, preferably with substantial experience in consumer marketing and business, appointed by the Attorney General.
26004 (c) The members listed in paragraphs 1-3 above may each designate a deputy, who is employed under the member's authority and, contrary to Section 7.5 of the Government Code, each such designee may act in place of the member on the board. [The old text allowed delegation of attendance, but not of action, which is expressly forbidden by 7.5.]
26004 (d) The Treasurer shall convene the first meeting of the Authority within 60 days of the effective date of the Act. At the first meeting, members must elect a chairperson for a two-year term. No chairperson shall serve more than two consecutive two-year terms. [Old text allowed the Treasurer to convene the first meeting at no fixed time, and there was no requirement to elect a chairperson, or any limit upon terms.]
26004 (e) Members of the authority and any entity controlled by a member shall not be eligible "to apply for" any incentive awarded by the Authority or any contract made by the authority.
26004 (f) Members of the authority per paragraphs (b) (4 - 9) above shall serve four-year terms and be eligible to serve a maximum of two terms.
26004 (g) The fact that a member is also part of the faculty or administration of the University of California, shall not in itself be considered a conflict of interest. The fact that a member may be an employee of an entity that may receive money from the Authority shall not in itself be considered a conflict of interest.

Section 7

Amends Section 26005 of the Public Resources Code

26005 All members of the Authority shall serve without compensation, except for the members appointed per paragraphs 26004 (b) (4 - 9) who must receive a per diem, for each day actually spent in the discharge of the member's duties. All members of the authority must be entitled to reasonable and necessary travel and other expenses incurred in the performance of the member's duties. [Used to be service without per diem or expense reimbursement.]

Section 8

Amends Section 26006 of the Public Resources Code

26006 The provisions of this division shall be administered by the authority which must have and is hereby vested with all powers reasonably necessary to carry out the powers and responsibilities expressly granted or imposed upon it under this division and under Article XXXVI of the California Constitution. [Coverage under Article XXXVI is added. XXXVI is added to the Constitution by this initiative.]

Section 9

Amends Section 26008 of the Public Resources Code

26008 (a) The Authority must appoint a Chief Executive Officer with substantial business experience in the private sector at a senior management level, preferably with experience in new technology, to serve the authority. The Chief Executive Officer's primary responsibilities shall be to hire, direct, and manage the authority's staff; to develop the authority's two-year and ten-year plans per Section 26045 [added by this initiative]; to develop and recommend standards and procedures governing the authority's consideration and award of incentives; to develop recommendations for the award of incentives; to develop and recommend procedures and standards to monitor recipients of incentives; and to execute and manage contracts on behalf of the authority. [Previously allowed the Authority to appoint a CEO and other persons. The CEO could enter into contracts on behalf of the Authority. All of the list of responsibilities is added.]
26008 (b) The authority shall determine its total number of authorized employees.
26008 (b) (1) Specifically contrary to various Government Code Sections, the authority shall decide the compensation of the Chief Executive Officer and other staff of the authority. [The Sections are 19816, 19825, 19826, 19829, and 19832, which would treat the CEO as a government employee, liable to the state salary structure.]
26008 (b) (2) When deciding the compensation of the Chief Executive Officer and other staff of the authority per (1), the authority must be guided by the principles contained in Government Code Sections 19826 and 19829, consistent with the authority's responsibility to recruit and retain highly qualified and effective employees. [The sections noted talk about conformance to expected salary ranges.]

Section 10

Amends Section 26010 of the Public Resources Code

26010 (a) No change. [With the approval of the Attorney General, the authority may employ the legal counsel necessary or advisable to enable it to carry out its duties, including the employment of bond counsel in connection with the issuance and sale of bonds.]
26010 (b) The Treasurer shall be the treasurer of the authority. [Was the Director of Finance.]

Section 11

Amends Section 26020 of the Public Resources Code

26020 The authority may incur indebtedness and issue and renew negotiable bonds, notes, debentures, or other securities of any kind or class to carry out its corporate purposes. All indebtedness, however evidenced, shall be payable solely from revenues of the authority and the proceeds of its negotiable bonds, notes, debentures, or other securities. [Used to have a limit of $1 billion of "total debt withstanding", and that term was defined.]

Section 12

Deletes Section 26021 of the Public Resources Code

26021 Deleted [This required permission from the Legislature for the Authority to issued bonds in excess of the $1 billion limit of 26020. But 26020 is revised to remove that limit.]

Section 13

Amends Section 26022 of the Public Resources Code

26022 (a) The authority is authorized to issue its negotiable bonds, notes, debentures, or other securities (hereinafter collectively called "bonds") for any of its purposes. The bonds may be authorized to finance any combination of projects for any number of participating parties and to finance expenditures authorized by the Clean Alternative Energy Act as set forth in Chapter 4 starting with Section 26043. [Added by this initiative.] Prior to the sale of bonds, the authority may issue negotiable bond anticipation notes and may renew the notes. The bond anticipation notes may be paid from the proceeds of sale of the bonds. A note or renewal of the note shall mature at a time not exceeding two years from the date of issue of the original note. [The reference to Section 26043 is added.]
26022 (b) Except as otherwise stated by the authority and subject to (e) below, every issue of its bonds, notes, or other obligations shall be general obligations of the authority, subject only to certain other usual agreements. The bonds, notes, or other obligations are for all purposes negotiable instruments, subject only to the provisions of the bonds, notes, or other obligations for registration. [The reference to (e) is added.]
26022 (c) Bonds may be issued as serial bonds or as term bonds, or the authority, in its discretion, may issue bonds of both types. The bonds must be authorized by resolution of the Authority and must bear the date(s) of issue, maturity date(s) (not exceeding 50 years from their issue dates), interest rate(s), time(s) payable, denominations, form (coupon or registered), the registration privileges, the manner of execution, place(s) where payable in lawful money of the United States of America, and redemption terms, as the resolution may provide. Bonds issued for purposes of the Clean Alternative Energy Act must have a maturity of not more than 25 years. The bonds or notes must be sold by the Treasurer within 60 days of the authority's resolution, unless that period is extended by the Authority. The bond sales may be public or private, and for the price or prices and on the terms and conditions, as the authority shall determine. Pending preparation of the actual bonds, the Treasurer may issue interim documents which may be exchanged for the bonds. The bonds and notes may be sold at a discount. [The reference to bonds issued for the Clean Alternative Energy Act is added. A maximum discount rate of 6% is removed.]
26022 (d) Any resolution authorizing any bonds may contain provisions which shall be a part of the contract with the holders of the bonds, as follows:
26022 (d) ( 1 - 12) Almost entirely unchanged. [The exception is in (1), where the money deposited in the California Energy Independence Fund is specifically listed as a means to secure the issuance of bonds]
26022 (e) [added] Contrary to all other provision of this division, the authority may pledge all the money deposited in the Debt Service Account of the California Energy Independence Fund to the payment of the principal or interest on any bonds or other obligations of the authority used to finance the Clean Alternative Energy Act or other costs of issuing or carrying such bonds. The authority must notify the Board of Equalization of the amounts which must be deposited each month, or during each fiscal year, in the Debt Service Account to provide for all the payments and costs, and any coverage factors which are required by the bond documents. The lien of the pledge of the amounts in the Debt Service Account will vest automatically upon the execution and delivery of the resolution or other agreement without requirement of any filing or notice. If the deposit in the Debt Service Account exceeds the amounts necessary to pay current obligations, the authority shall apply such excess funds to the early retirement of bonds to the maximum extent fiscally prudent. []
26022 (f) Neither the members of the authority nor any person executing the bonds or notes shall be liable personally on the bonds or notes or be subject to any personal liability or accountability by reason of the issuance thereof. [Letter designation changed from e to f, to make room for new e.]
26022 (g) The authority shall have power out of any funds available for these purposes to purchase its bonds or notes. The authority may hold, pledge, cancel, or resell those bonds, subject to and in accordance with agreements with bondholders. [Changed f to g]

Section 14

Amends Section 26024 of the Public Resources Code

26024 Almost entirely unchanged. [This Section mentions bonds which are backed by the authority and NOT by the State of California. References to sections 26022 (revised by this initiative) and 26049 (added) are inserted to provide exceptions to a paragraph which says "issuance of bonds under the provisions of this division shall not directly or indirectly or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation whatever therefore or to make any appropriation for their payment."]

Section 15

Amends Section 26029.4 of the Public Resources Code

26029.4 Subject to Section 26029.6, the authority may be terminated at any time by the Legislature no sooner than January 1, 2027 or after the assets of the authority have been fully expended, whichever is later. When the authority is dissolved, the title to all properties it owns vests in and becomes the property of the State of California. Regardless of the foregoing, so long as any bonds secured by the assessment imposed by Division 2, Part 21 starting with Section 42000 of the Revenue and Taxation Code are still owed, neither the Legislature nor the people may reduce or eliminate the assessment, and this pledge may be included as part of the definition of the bonds. [This used to read just "at any time", period; with the change it reads as above, "any time ... no sooner than January 1, 2027". The language forbidding a change of assessment while any obligations are still owed is entirely new. Section 42000 of the Revenue and Taxation Code is added by this Initiative.]

Section 16

Amends Section 26033 of the Public Resources Code

26033 All money received per this division must be considered trust funds to be held and applied solely as provided in this division. Any bank or trust company to which the money is deposited will act as trustee and hold and apply the money, subject to the terms and agreements governing the bonds. The proceeds from the assessment of Part 21 (commencing with Section 42000) of Division 2 of the Revenue and Taxation Code, the income secured by the assessment, and any income generated by the Clean Alternative Energy Act will be deposited in the California Energy Independence Fund, and will be used solely for the purposes of the Clean Alternative Energy Act. Notwithstanding any other provision of law, proceeds of bonds issued pursuant to this division, including those deposited in the Clean Energy Independence Fund, may be held by a trustee outside the State Treasury system as provided by this chapter. [The language starting with the mention of Section 42000 is added by this initiative.]

Section 17

Adds Chapter 4 to Division 16 of the Public Resources Code, starting with Section 26043

26043 Implements the Clean Alternative Energy Act.
26044 The Chapter's purpose is to govern the expenditure of all revenues deposited in the California Energy Independence Fund.
26045 In addition to its other powers and duties, the authority must perform the following functions:
26045 (a) Within nine months of the effective date of the Act, and every two years thereafter, adopt or modify two-year and ten-year strategic plans to guide the authority's funding decisions in order to meet the goals of this Act within ten years of the adoption of the authority's initial strategic plans.
26045 (b) Adopt procedures and standards to govern the authority's consideration and award of incentives. The incentives approved by the authority are not to be considered contracts subject to the Public Contract Code.
26045 (c) Award incentives through a competitive selection process designed to achieve the objectives of this Act within ten years of the date of adoption of the authority's initial strategic plans. For loans and loan guarantees the authority must use all prudent means to maximize the impact of the loans and loan guarantees by recycling funds or remarketing loans or loan guarantees.
26045 (d) Expend $4 billion within ten years of adoption of the authority's initial strategic plans. Expenditures are to come either from the proceeds of bonds or other obligations of the authority or from the California Energy Independence Fund Assessment. This amount must not include the costs of repaying indebtedness associated with the Clean Alternative Energy Act. The authority must expend any additional amounts remaining in the California Energy Independence Fund in furtherance of the purposes of this Act.
26045 (e) Adopt procedures and standards to monitor recipients of incentives.
26045 (f) Adopt objective standards to measure the authority's success in meeting the goals of this Act.
26045 (g) Ensure that an annual independent financial audit is done, and that public reports are issued.
26045 (h) Contrary to Section 11005 of the Government Code, accept additional revenue and real and personal property to supplement the authority's funding. Contrary to Section 26049 [added, below], donors may earmark gifts for a particular purpose authorized by this Act. [11005 requires approval of gifts by the Director of Finance]
26045 (i) For each account established by 26049 (b) [added, below], if needed, appoint one advisory review committee of no more than nine members to assist the authority in its review of applications for funding. Members of review committees shall be entitled to receive a per diem, plus reasonable and necessary travel and other expenses. Members of the advisory review committees and any entity controlled by a member shall not be eligible to apply for any incentive awarded by the authority or any contract made by the authority.
26045 (j) Apply for federal matching funds where possible.
26045 (k) Adopt regulations consistent with the Administrative Procedure Act [see the Government Code, starting with section 11340] as necessary to implement this Act. To expedite the program mandated by this Act, however, the authority may adopt interim regulations without complying with the procedures set forth in the Administrative Procedure Act. The interim regulations must remain in effect for 270 days unless earlier superseded by regulations adopted pursuant to the Administrative Procedure Act.
26046 Action of the authority is to be done by majority vote of a quorum of the authority, except as allowed by 26050 (f) [urgent matters, by vote of any 7 members] and 26056 (c) [a two-thirds vote in a special instance] below.
26047 Government Code Section 1090 shall not apply to any incentive awarded by the authority unless both of the following conditions are met:
26047 (a) The member has a financial interest in an incentive or contract.
26047 (b) The member fails to recuse himself. [1090 says "... employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members."
26048 [Various definitions are provided.]
26049 (a) Creates the Debt Service Account of the California Energy Independence Assessment Fund. This account has first claim on the money generated by the California Energy Independence Fund Assessment, each month, for an amount the authority considers necessary to pay the debt service and other costs for bonds and other obligations. This money may be continuously appropriated to the authority without regard to fiscal year.
26049 (b) After funds have been deposited in the Debt Service Account each month per (a), all additional money deposited in the California Energy Independence Fund for that month, except as otherwise provided by this Act, must be allocated as follows:
26049 (b) (1) 57.50% to the Gasoline and Diesel Use Reduction Account, which the initiative creates.
26049 (b) (2) 26.75% to the Research and Innovation Acceleration Account, which the initiative creates.
26049 (b) (3) 9.75% to the Commercialization Acceleration Account, which the initiative creates.
26049 (b) (4) 2.50% to the Vocational Training Account, which the initiative creates.
26049 (b) (5) 3.50% to the Public Education and Administration Account, which the initiative creates.
26049 (c) Money allocated to the accounts of (b) above that is not spent in any fiscal year must remain in the same account for the next fiscal year, except as provided in 26058 (which allows for allocation elsewhere after 10 years]. Once all expenditures authorized by this Act have been made from the accounts (b) above, "all proceeds from the California Energy Independence Fund Assessment must be deposited in the Debt Service Account established by subdivision (a) until all obligations secured or payable from such account have been paid or payment has been provided for."
26049 (d) Money deposited to the accounts created in (b) must be used to supplement, and not to supplant, existing state funding. To maximize the use of available funds, the authority must coordinate its expenditure of funds in the California Energy Independence Fund with other state agencies.
26050 Based on the gasoline and diesel use reduction standards described in 26056 [added by this initiative], the authority may use the funds in the Gasoline and Diesel Use Reduction Account for the following categories of expenditures:
26050 (a) Market-based incentives for the purchase of clean alternative fuel vehicles sold in California. For buydowns to state and local government agency fleets, the authority must give preference to school bus, emergency services vehicle, waste disposal truck, and mass transit bus fleets. "Demonstration projects are discouraged." [A buydown is "a payment to cover up to 100 percent of the difference in the purchase price between a clean alternative fuel vehicle and a comparable dedicated gasoline or diesel vehicle."]
26050 (b) Production incentives for clean alternative fuel production in California, excluding the production of electricity, except clean fuel cell based electricity production.
26050 (c) Incentives for the construction of publicly accessible clean alternative fuel refueling stations, including refueling stations that sell ethanol blends consisting of at least eighty-five percent (85%) ethanol ("E-85") sufficient in number to match the existing supply of E-85 vehicles in California based on the ratio of diesel vehicles to diesel fuel stations, and electric vehicle chargers using similar criteria.
26050 (d) Incentives for the installation of publicly accessible clean alternative fuel infrastructure.
26050 (e) Grants and loans to private enterprises for research involving clean alternative fuels and clean alternative fuel vehicles in California.
26050 (f) Other expenditures which the authority determines, by a vote of seven or more, are urgent or extraordinary opportunities that will advance the goal of reducing the use of petroleum transportation fuels in California from 2005 levels by 10 billion gallons over ten years.
26051 Based on the research standards set forth in Section 26057 [added by this initiative, below], the authority must use the funds in the Research and Innovation Acceleration Account to make grants to California universities to improve the economic viability and accelerate the commercialization of renewable energy technologies and energy efficiency technologies.
26052 Based on the commercialization acceleration standards set forth in Section 26058 [added by this initiative, below], the authority must use the funds in the Commercialization Acceleration Account to provide incentives to fund one-time or start-up costs that will accelerate the production and distribution of commercially viable products and technologies to the market and that, preferably, will promote California-based job creation, employment, and economic development.
26053 Based on the vocational training standards in Section 26059 [added by this initiative, below], the authority must use the funds in the Vocational Training Account to:
26053 (a) Make grants through the Office of the Chancellor of Community Colleges to California community colleges for staff development and facilities to train students to work with renewable energy technologies, energy efficiency technologies, and clean alternative fuels.
26053 (b) Make grants through the Office of the Chancellor of Community Colleges to California community colleges for tuition assistance for low-income students and former fossil fuel energy workers and certified vehicle mechanics to obtain training to work with renewable energy technologies and energy efficiency technologies.
26054 Based on the public education and administration standards in Section 26060 [added by this initiative, below], the authority must use the funds in the Public Education and Administration Account to:
26054 (a) Educate the California public regarding the importance of energy efficiency technologies, renewable energy technologies, and full fuel-cycle petroleum reduction.
26054 (b) Administer the authority.
26054 (c) Monitor the implementation of the California Energy Independence Fund Assessment and, in the case of price gouging, inform the Board of Equalization to allow investigation. [price-gouging is not defined]
26055 The authority must establish the following standards:
26055 (a) Intellectual Property Rights. All research grants made pursuant to this Act must be subject to intellectual property agreements that "balance the opportunity of the State of California to benefit from the patents, royalties, and licenses that result from the research with the need to assure that such research is not unreasonably hindered by those intellectual property agreements."
26055 (b) Oversight of Awards. The authority must establish standards for the oversight of all incentives to ensure compliance with all applicable terms and requirements. The standards must include periodic reporting, including financial and performance audits, by all recipients of incentives, excluding individuals who receive buydowns, and must permit the authority to discontinue funding or to take other action to ensure the purposes of this Act are being met.
26056 Standards for Gasoline and Diesel Use Reduction Account Expenditures [are the following:]
26056 (a) The goal of expenditures made per Section 26050 shall be to reduce, by 2017, the rate of petroleum consumption in California by 25% (a reduction of roughly 4 billion gallons), and to cause permanent and long-term reductions in petroleum consumption in California. The total reduction goal shall be ten billion gallons of petroleum transportation fuels over ten years. Before making any expenditure per 26050, the authority must adopt a strategic plan as required by 26045 (a) [added by this initiative, above], as follows:
26056 (a) (1) Within nine months of the effective date of this Act, the authority must adopt an Integrated Resource Plan for petroleum reduction in California. The Integrated Resource Plan must be based on the best estimates of the potential for unsubsidized market acceptance of technologies, products, or services within ten years of the date of the adoption of the initial Integrated Resource Plan.
26056 (a) (2) The Integrated Resource Plan must allocate funds to programs with the highest return opportunities, using the financing powers provided to the authority by this division. It must maximize the petroleum use reduction while considering the greenhouse gas reduction benefits of clean alternative fuels and clean alternative fuel vehicles. It must also evaluate the expenditure of funds for clean alternative fuel vehicles and must consider allocating funds necessary to balance the deployment of clean alternative fuel vehicles with accessibility to clean alternative fuels.
26056 (a) (3) The Integrated Resource Plan shall be developed at scheduled public hearings led by the Chief Executive Officer of the authority. The Plan will be updated every two years and amended to ensure that it remains consistent with California Air Resources Board regulations and consistent with the priorities and goals of this Act.
26056 (a) (4) The Integrated Resource Plan must contain an assessment of those expenditures that are likely to meet or exceed the goal of reducing petroleum consumption by ten billion gallons over ten years. All expenditures must be consistent with meeting or exceeding this goal. Expenditures must also be consistent with, and prioritized according to their potential to meet or exceed, the emissions targets and goals set forth in published Executive Order S-3-05 and the emissions targets and goals set forth in the Motor Vehicle [Title 13] area of the California Code of Regulations, specifically Sections 1900, 1961 and 1961.1, in effect as of December 1, 2005. [These cover exhaust emission standards.] lf these are replaced by more stringent requirements prior to dissolution of the authority, the more stringent requirements must be used.
26056 (a) (5) All expenditures made by the authority under this section must be consistent with the strategy outlined in the Integrated Resource Plan.
26056 (b) All expenditures on clean alternative fuel infrastructure and electric vehicle chargers must be restricted to those that support clean alternative fuel vehicles that are available for sale and are producible in substantial volumes.
26056 (c) Expenditures for buydowns must be limited to 25% of the total amount deposited in the Gasoline and Diesel Use Reduction Account, unless the authority determines, by a two-thirds vote, that additional expenditures are warranted in order to most cost-effectively achieve the goals of this Act.
26056 (d) All expenditures made per 26050 must be based upon a competitive selection process, per 26045 (b). The authority must, at a minimum:
26056 (d) (1) Ensure that the expenditure does not replace existing state funding for the reduction of petroleum consumption in California.
26056 (d) (2) Evaluate the quality of the proposal in the area of funding, including the availability of private matching funds, and the potential for achieving significant results. Proposals with significant business validation and leverage from private equity funding or subordinate debt funding from private sources will be prioritized and given preference to establish the market viability of the proposals.
26056 (d) (3) Evaluate the unit cost of petroleum reduction suggested by the proposal and the potential of the proposal to achieve unsubsidized market competitiveness and pervasive acceptance, adjusted for the risk and time value of money.
26056 (d) (4) Evaluate the probability that the proposal will result in a sustained, unsubsidized market-competitive technology or technologies that can achieve substantial consumer or business acceptance beyond the subsidy or incentive period.
26056 (d) (5) Ensure that the expenditure is consistent with the two-year and ten-year strategic plan adopted by the authority..
26057 Standards for Research and Innovation Acceleration Account Expenditures
26057 (a) The authority must make expenditures per 26051 consistent with the goal of improving the economic viability, and accelerating the commercialization, of renewable energy technologies and energy efficiency technologies. Prior to making any expenditures per 26051, the authority must adopt a strategic plan as required by 26045 (a).
26057 (b) All expenditures made pursuant per 26051 must be based upon a competitive selection process, established per 26045 (b). The authority must, at a minimum:
26057 (b) (1) Ensure that the expenditure is for research in renewable energy technologies or energy efficiency technologies.
26057 (b) (2) Ensure that the expenditure does not replace existing state funding for research in renewable energy technologies or energy efficiency technologies and that the authority coordinates its expenditures with other state agencies to maximize the effectiveness of the expenditures and to avoid duplication of effort.
26057 (b) (3) Evaluate the quality of the research proposal, the potential for achieving significant results, and the time frame for achieving that goal.
26057 (b) (4) Give funding priority to research proposals that utilize more abundant renewable energy resources and that offer the greatest potential for technological breakthroughs. Priority must additionally be given to research proposals that offer the greatest potential to meet or exceed the goals set forth in: (a) Executive Order S-3-05; (b) Title 13 of the California Code of Regulations, Sections 1900, 1961 and 19611, in effect as of December 1, 2005; or (c) the California Renewables Portfolio Standard Program, as defined starting with Section 399.11 of the Public Utilities Code, in effect as of December 1, 2005. [This sets a target of 20 percent renewable energy for the State of California.]
26057 (b) (5) Ensure that all funds to support buildings and permanent facilities per 26051 are committed during the first two years of the program, and that such expenditures do not exceed $100 million. Workers employed on the construction or modification of the facility must be paid the prevailing wage.
26057 (b) (6) Ensure that the expenditure is consistent with the two-year and ten-year strategic plan adopted by the authority.
26058 Standards for Commercialization Acceleration Account Expenditures
26058 (a) The authority must make expenditures per 26052 with the goal of accelerating the commercialization of economically viable, innovative renewable energy technologies, energy efficiency technologies, clean alternative fuels, and clean alternative fuel vehicles in California within 10 years of the effective date of this Act, by providing funding for the one-time or start-up costs that will accelerate the production and distribution of commercially viable products and technologies to the market. Prior to making any expenditures per 26052, the authority must adopt a strategic plan per 26045 (a).
26058 (b) All expenditures made per 26052 must be based upon a competitive selection process, established per 26045 (b). The authority must, at a minimum:
26058 (b) (1) Ensure that the expenditure will advance the goal of commercializing economically viable renewable energy technologies, energy efficiency technologies, clean alternative fuels, or clean alternative fuel vehicles in California.
26058 (b) (2) Evaluate the potential that the expenditure will achieve significant results, bringing the above to the market in California, within a reasonable time frame from the date of the expenditure.
26058 (b) (3) Establish that it is reasonably likely that a significant share of the finished technology or product will be available to California or that a significant share of all components used in the finished technology or product will be manufactured in California.
26058 (b) (4) Evaluate the cost of energy developed or saved by the proposal relative to its ability to advance the objectives of the Commercialization Acceleration Account.
26058 (b) (5) Evaluate the probability that the proposal will result in a sustained, unsubsidized market-competitive technology or technologies that can achieve substantial consumer or business acceptance.
26058 (b) (6) Ensure that the expenditure is consistent with the two-year and ten-year strategic plan adopted by the authority.
26058 (c) To receive money from the Commercialization Acceleration Account the recipient must provide matching funds equal to at least 50% of the expenditure, except that in the case of loans and loan guarantees, the recipient may provide equity or subordinated debt equal to at least 25% of the loan or loan guarantee. "This constraint will not be applicable to the distribution for a clean alternative fuel equal to approximately the first fifteen percent (15%) of the distribution of the gasoline distribution system." []
26058 (d) Any funds that remain in the account after ten years must be divided equally between the Gasoline and Diesel Use Reduction Account and the Research and Innovation Acceleration Account.
26059 Standards for Vocational Training Account Expenditures.
26059 (a) The authority must make expenditures per 26053 to train students to work with renewable energy technologies or energy efficiency technologies, clean alternative fuels, and clean alternative fuel vehicles. Prior to making any expenditures pursuant to 26053, the authority must adopt a strategic plan per 26045 (a).
26059 (b) All expenditures made per 26053 must be based upon a competitive selection process, established per 26045 (b). The authority must, at a minimum:
26059 (b) (1) Ensure that the expenditure is for training in renewable energy technologies, energy efficiency technologies, clean alternative fuels, or clean alternative fuel vehicles.
26059 (b) (2) Ensure that the expenditure does not supplant existing state funding for training in these areas.
26059 (b) (3) Evaluate the quality of the program, the potential for achieving significant results, including consideration of how the expenditure will aid or result in training workers in these areas, and the time frame for achieving that goal.
26059 (b) (4) Ensure that the expenditure is consistent with the two-year and ten-year strategic plan adopted by the authority.
26060 Standards for Public Education and Administration Account Expenditures
26060 (a) The authority must make expenditures per 26054 to educate the public regarding the importance of energy efficiency technologies, renewable energy technologies, and full life-cycle petroleum reduction, to report on the progress of the program, and to administer the authority.
26060 (b) At least 28.5% of the funds in the Public Education and Administration Account shall be expended for the purpose of public education regarding funded technologies.
26061 (a) In addition to its current required annual report [per existing 26017], the authority must issue an annual report to the Governor, the Legislature, and the public describing its activities, its accomplishments, and future program directions. Each annual report must include the following: the number and dollar amounts of incentives; the recipients of incentives for the prior year; the authority's administrative expenses; a summary of research findings, and an assessment of the relationship between the authority's award of incentives and the authority's strategic plan.
26061 (b) The authority must annually commission an independent financial audit of its activities from a certified public accountant which must be provided to the State Controller, who must review the audit and annually issue a public report of that review.
26061 (c) There shall be a Citizens' Financial Accountability Oversight Committee chaired by the State Controller. This committee must review the annual financial audit and the State Controller's report and evaluation of that audit. The State Controller, the State Treasurer, the President Pro Tem of the Senate, the Speaker of the Assembly, and the chairperson of the authority must each appoint a public member of the committee. The committee must provide recommendations regarding the authority's financial practices and performance. The State Controller must provide staff support to the committee. The committee must hold a public meeting, with appropriate notice, and a formal public comment period. The committee must evaluate public comments and include appropriate summaries in its annual report.

Section 18

Adds Part 21 to Division 2 of the Revenue and Taxation Code

42000 Provides a title for the Part: the "California Energy Independence Fund Assessment Law."
42001 Provides definitions.
42002 Effective January 1, 2007, considering the exceptions listed in 42007, there is hereby imposed a California Energy Independence Fund Assessment upon the privilege of "severing" oil from the earth or water in this state for sale, transport, consumption, storage, profit, or use. The assessment will be paid by all producers. [Producer is defined as “any person who takes oil from the earth or water in this state in any manner; any person who owns, controls, manages, or leases any oil well in the earth or water of this state; any person who produces or extracts in any manner any oil by taking it from the earth or water in this state; ... and any person who owns an interest, including a royalty interest, in oil or its value, whether the oil is produced by the person owning the interest or by another on his or her behalf by lease, contract, or other arrangement". (42001(h)) ] The fee must be applied as follows to all portions of the gross value of each barrel of oil severed:
42002 (a) 1.5% of the gross value of oil from $10 to $25 per barrel;
42002 (b) 3.0% of the gross value of oil from $25.01 to $40 per barrel;
42002 (c) 4.5% of the gross value of oil from $40.01 to $60 per barrel; and
42002 (d) 6.0% of the gross value of oil from $60.01 per barrel and above.
42003 Except as otherwise provided in this Part, the assessment must be upon the entire production in this state, regardless of the place of sale or to whom sold or by whom used, or the fact that the delivery may be made to points outside the state.
42004 (a) Producers or purchasers of oil, or both, are authorized and required to withhold from any payment due interested parties the proportionate amount of the assessment due.
42004 (b) The assessment imposed by this Part is the primary liability of the producer and is a liability of the first purchaser and each subsequent purchaser. Failure of the producer to pay the assessment does not relieve the first purchaser or a subsequent purchaser from liability for the assessment. A purchaser of oil produced in this state must satisfy himself that the assessment on that oil has been or will be paid by the person liable for the assessment.
42004 (c) The assessment imposed by this Part must not be passed on to consumers through higher prices for oil, gasoline, or diesel fuel. At the request of the authority, the board must investigate whether a producer, first purchaser, or subsequent purchaser has attempted to gouge consumers by using the assessment as a pretext to materially raise the price of oil, gasoline, or diesel fuel.
42005 The assessment imposed by this Part is in addition to any ad valorem taxes imposed by the state, or any of its political subdivisions, or any local business license taxes. No equipment, material, or property shall be exempt from payment of ad valorem tax by reason of the payment of the gross tax.
42006 Two or more producers that are corporations and are commonly owned or controlled directly or indirectly shall be considered as a single producer for purposes of application of the assessment.
42007 The California Energy Independence Fund Assessment imposed does not apply to:
42007 (a) Oil owned or produced by any political subdivision of the state.
42007 (b) Oil produced by a stripper well in any month in which the average value of oil is less than $50 per barrel. If in any month the average value of oil is $50.01 or more per barrel, a stripper well shall be subject to a fee in the amount of three percent (3%)of the gross value of oil above $50.01. [Stripper well means "a well that has been certified ... as an oil well incapable of producing an average of more than ten barrels of oil per day during the entire taxable month. Once a well has been certified as a stripper well, such stripper well shall remain certified as a stripper well until the well produces an average of more than 10 barrels of oil per day during an entire taxable month."]
42008 The assessment imposed by this Part shall be due and payable to the board on a monthly basis. The board may prescribe the manner in which all payments are made to the state under this Part, and the board may prescribe the forms and reporting requirements as necessary to implement the assessment. The board may employ auditors, investigators, engineers, and other persons to engage in all activities necessary for the implementation of this Part. In all proceedings under this Part, the board may act on behalf of the people of the State of California.
42009 The board must enforce the provisions of this Part and may prescribe, adopt, and enforce rules and regulations, including, but not limited to, the payment of interest and the imposition of penalties.
42010 (a) All assessments, interest, penalties, and other amounts collected pursuant to this Part must be deposited in the California Energy Independence Fund. Before allocating funds per 26049 (a) or (b) of the Public Resources Code [added by this initiative, see above], the authority must reimburse the board for expenses incurred in the administration and collection of the assessment imposed by this Part. The board must transfer money received from these sources to the California Energy Independence Fund at least once per calendar month.
42010 (b) This Part shall become inoperative after the authority has spent $4 billion and after all indebtedness associated with the Clean Alternative Energy Act has been paid or payment has been provided for, unless a later enacted statute, that becomes operative on or before the date this Part becomes inoperative, deletes or extends the date on which it becomes inoperative. Notwithstanding the foregoing, so long as any bonds or other obligations secured by the assessment created by this Part remain outstanding, neither the Legislature nor the people may reduce or eliminate the assessment, and this pledge may be included in the proceedings of any such bonds as a covenant with the holders of such bonds.

Section 19

Any challenge to the validity of this Act must be filed within six months of its effective date.

Section 20 Amendment

This Act may be amended to carry out its purpose and intent by statutes approved by a two-thirds vote of each house of the Legislature and signed by the Governor.

Section 21 Severability

If any provision of this Act or the application thereof to any person or circumstances is held invalid that invalidity shall not affect other provisions or applications of this Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

Section 22 Conflicting Initiatives

If this measure, and another initiative measure or measures that impose an assessment, royalty, tax, or fee on the extraction of oil or that involve petroleum reduction, appear on the same statewide election ballot, the provisions of the other measure or measures will be considered to be in conflict with this measure. In the event that this measure receives a greater number of affirmative votes, the provisions of this measure shall prevail in their entirety, and the provisions of the other measure shall be null and void.

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