BILL NUMBER: SBX2 64 CHAPTERED 10/01/01 CHAPTER 4 FILED WITH SECRETARY OF STATE OCTOBER 1, 2001 APPROVED BY GOVERNOR SEPTEMBER 28, 2001 PASSED THE SENATE SEPTEMBER 14, 2001 PASSED THE ASSEMBLY SEPTEMBER 14, 2001 AMENDED IN ASSEMBLY SEPTEMBER 6, 2001 INTRODUCED BY Senator Costa (Coauthors: Assembly Members Ashburn, Briggs, and Reyes) MAY 17, 2001 An act to amend Section 1103 of the Food and Agricultural Code, relating to energy, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST SB 64, Costa. Energy: qualified agricultural biomass: incentive grants. (1) Under the existing Agricultural Biomass-to-Energy Incentive Grant Program, an air pollution control district or an air quality management district, may apply to the California Technology, Trade, and Commerce Agency for a grant to provide incentives to facilities that convert qualified agricultural biomass to energy. Existing law defines a facility as any California site that, among other things, as of July 1, 2000, converted, and continues to convert, qualified agricultural biomass, as defined, to energy, and the conversion results in lower oxides of nitrogen (NOx) emissions than would otherwise be produced if burned in the open field during the ozone season, and, if the site produces electricity for sale to a public utility, the site does not qualify for specified fixed energy prices. This bill would include within that definition any California site that operated prior to July 1, 2000, converting qualified agricultural biomass to energy, was closed for a period of time but maintained all applicable air quality permits during that closure, and that is ready to reopen on or before June 30, 2001. The bill would provide that if the site produces electricity for sale, it does not qualify for fixed energy prices established prior to June 30, 2000. By requiring air districts to make additional determinations regarding the eligibility of facilities under the program, this bill would impose a state-mandated local program. (2) Chapter 7 of the 2001-02 First Extraordinary Session appropriates funds to the State Energy Resources Conservation and Development Commission to be expended for certain energy projects, including $40,000,000 to encourage the purchase of certain high efficiency electrical agricultural equipment, and incentives for overall electricity conservation efforts. This bill would require the commission to transfer, of that $40,000,000, $3,500,000 to the California Technology, Trade, and Commerce Agency pursuant to an interagency agreement within 30 days of the effective date of the bill for the purpose of supplementing the funding and furthering the intent of the Agricultural Biomass-to-Energy Incentive Grant Program, thereby constituting an appropriation. (3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement, including the creation of a State Mandates Claims Fund to pay the costs of mandates that do not exceed $1,000,000 statewide and other procedures for claims whose statewide costs exceed $1,000,000. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions. (4) This bill would declare that it is to take effect immediately as a an urgency statute. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1103 of the Food and Agricultural Code is amended to read: 1103. For the purposes of this part, the following definitions apply: (a) "Agency" means the Trade and Commerce Agency. (b) "Air district" means an air pollution control district or an air quality management district established or continued in existence pursuant to Part 3 (commencing with Section 40000) of the Health and Safety Code. (c) "Facility" means any California site that meets both of the following criteria: (1) As of July 1, 2000, converted and continues to convert qualified agricultural biomass to energy, or that operated prior to July 1, 2000, converting qualified agricultural biomass to energy, was closed for a period of time but maintained all applicable air quality permits during that closure, and is ready to reopen on or before June 30, 2001, and, in both cases, the conversion results in lower oxides of nitrogen (NOx) emissions than would otherwise be produced if burned in the open field during the ozone season, as determined by the air district in which the site operates. (2) Does not produce electricity for sale to a public utility pursuant to a contract with that public utility, or, if the site does produce electricity for sale to a public utility pursuant to a contract with that public utility, the site does not qualify for fixed energy prices established prior to June 30, 2000, under the terms of that contract at the time the application for the grant is made. (d) "Grant" means an award of funds by the agency to an air district that shall, in turn, grant incentive payments to a facility after deducting the air district's administrative fee as provided in Section 1104. (e) "Incentive payment" means a payment by an air district to facilities for qualified agricultural biomass to be received and converted into energy after July 1, 2000. This payment shall be in the amount of ten dollars ($10) for each ton of qualified agricultural biomass received for conversion to energy. (f) "Qualified agricultural biomass" means agricultural residues that historically have been open field burned in the jurisdiction of the air district from which the agricultural residues are derived, as determined by the air district, excluding urban and forest wood products, that include either of the following: (1) Field and seed crop residues, including, but not limited to, straws from rice and wheat. (2) Fruit and nut crop residues, including, but not limited to, orchard and vineyard pruning and removals. SEC. 2. Notwithstanding the allocation of funds set forth in subparagraph (A) of paragraph (5) of subdivision (b) of Section 5 of Chapter 7 of the First Extraordinary Session, as amended by Chapter 111 of the Statutes of 2001, the State Energy Resources Conservation and Development Commission shall transfer three million five hundred thousand dollars ($3,500,000) of the total funds allocated pursuant to that subparagraph to the California Technology, Trade, and Commerce Agency pursuant to an interagency agreement within 30 days of the effective date of the act adding this section for the sole and specific purpose of supplementing the funding and furthering the intent of the Agricultural Biomass-to-Energy Incentive Grant Program as established in Part 3 (commencing with Section 1101) of Division 1 of the Food and Agricultural Code. SEC. 3. Notwithstanding Section 17610 of the Government Code, if the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code. If the statewide cost of the claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement shall be made from the State Mandates Claims Fund. SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to make grants to encourage the development of additional facilities that convert agricultural biomass to energy under the Agricultural Biomass-to-Energy Incentive Grant Program as soon as possible, it is necessary for this act to take effect immediately.