BILL NUMBER: SB 696 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 13, 2009
INTRODUCED BY Senator Wright
FEBRUARY 27, 2009
An act relating to emission reduction credits.
An act to add Sections 40440.12 and 40440.13 to the Health and
Safety Code, relating to air quality, and declaring the urgency
thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 696, as amended, Wright. Air quality: regional
districts: CEQA exemptions: emission reduction
credits.
(1) The California Environmental Quality Act (CEQA) requires a
lead agency, as defined, to prepare, or cause to be prepared, and
certify the completion of, an environmental impact report (EIR) on a
project that it proposes to carry out or approve that may have a
significant effect on the environment or to adopt a negative
declaration if it finds that the project will not have that effect.
CEQA also requires a lead agency to prepare a mitigated negative
declaration for a project that may have a significant effect on the
environment if revisions in the project would avoid or mitigate that
effect and there is no substantial evidence that the project, as
revised, would have a significant effect on the environment. CEQA
exempts certain specified projects from its requirements.
Under existing law, every air pollution control district or air
quality management district in a federal nonattainment area for any
national ambient air quality standard is required to establish by
regulation, a system by which all reductions in emissions of air
contaminants that are to be used to offset certain future increases
in the emission of air contaminants are banked prior to use.
Pursuant to this requirement the South Coast Air Quality Management
District (district) promulgated various rules establishing offset
exemptions, providing Priority Reserve offset credits, and creating
or tracking credits used for offset exemption or Priority Reserve
projects. In Natural Resources Defense Council v. South Coast Air
Quality Management Distri ct (Super. Ct. Los Angeles
County, 2007, No. BS 110792), the superior court found the
promulgation of certain of these district rules to be in violation of
CEQA.
This bill would state that it is the intent of the
Legislature to enact legislation to ensure that there are sufficient
credits available for the South Coast Air Quality Management District
to issue permits for essential public services and new clean
efficient power plants exempt from the requirements of
CEQA the adoption and implementation of specified district rules,
and the creation or the use of specified credits pursuant to district
rules by a thermal powerplant when certain conditions are satisfied.
Because a lead agency would be required to determine whether the use
of the credits qualifies for an exemption, this bill would impose a
state-mandated local program .
(2) Existing law requires the State Energy Resources Conservation
and Development Commission (Energy Commission) to adopt, on a
biennial basis, an integrated energy policy report to include an
assessment and a forecast of the need for resource additions,
efficiency, and conservation that considers all aspects of energy
industries and markets.
This bill would require the Energy Commission to perform a needs
assessment for a thermal powerplant proposed to be located in the
district.
(3) This bill would state the findings and declarations of the
Legislature concerning the need for special legislation.
(4) 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.
This bill would provide that no reimbursement is required by this
act for a specified reason.
(5) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: majority 2/3 . Appropriation:
no. Fiscal committee: no yes .
State-mandated local program: no yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The Legislature finds and declares
all of the following:
(1) Because of the superior court decision in Natural Resources
Defense Council v. South Coast Air Quality Management District
(Super. Ct. Los Angeles County, 2007, No. BS 110792) holding the
South Coast Air Quality Management District (district) violated the
requirements of the California Environmental Quality Act (CEQA)
(Division 13 (commencing with Section 21000) of the Public Resources
Code) in the promulgation of certain district rules, the district is
unable to issue over a thousand pending permits that rely on the
district's internal offset bank to offset emissions.
(2) The superior court decision also required the district to set
aside several thousand permits that were previously issued in
reliance on the district's internal offset bank. These permits have
been subject to analysis performed pursuant to CEQA that the lead
agency has deemed appropriate.
(3) If prompt legislative action is not taken to correct this
situation, projects will be stopped from going forward or frozen in
place, representing significant losses to the economy, as well as
numerous well-paying jobs. The impact of approved projects not going
forward will dramatically impede any economic recovery in southern
California and contribute to another state deficit as a result of
lower tax revenues.
(4) Affected projects include equipment replacement to reduce air
emissions, plus projects for essential public services such as
hospitals, schools, landfills, sewage treatment plants, renewable
energy projects, and small sources, including small businesses that
are unable to locate or afford credits on the open market. With time,
many other similar projects will have to be placed on hold, or have
their application withdrawn.
(5) The superior court decision also prohibits the district from
issuing air credits from its Priority Reserve to thermal powerplants
that are needed to meet the current and future projected electricity
needs of the region and to prevent blackouts during peak demand
periods.
(6) Without corrective legislation, the district cannot improve
air quality by allowing the existing older and higher emitting and
less efficient powerplants to be replaced with new cleaner and more
efficient powerplants. Fifty percent of available total power in the
region is generated from powerplants that are 40 years or older.
(7) Failure to correct this problem will mean the district cannot
help meet the mandates set forth in the California Global Warming
Solutions Act of 2006 (Division 25.5 (commencing with Section 38500)
of the Health and Safety Code) if it cannot issue permits to provide
necessary peaking power to support increased reliance on renewable
energy as will be required by state efforts to reduce greenhouse
gases.
(b) It is therefore necessary that legislation be enacted to allow
the district to resume issuing permits and to abrogate the superior
court decision in Natural Resources Defense Council v. South Coast
Air Quality Management District (Super. Ct. Los Angeles County, 2007,
No. BS 110792).
SEC. 2. Section 40440.12 is added to the
Health and Safety Code , to read:
40440.12. The California Environmental Quality Act (Division 13
(commencing with Section 21000) of the Public Resources Code) does
not apply to either of the following:
(a) (1) The adoption or implementation of rules by the south coast
district establishing offset exemptions, providing Priority Reserve
credits, or creating or tracking the credits used for offset
exemptions or Priority Reserve projects, if the discretionary
projects that use those exemptions or credits are subject to this
division or are exempt from this division pursuant to a categorical
or statutory exemption and all of the following are satisfied:
(A) South coast district rule requires the use of the best
available control technology, as defined in Section 40405, and air
quality modeling to ensure the source will not cause a violation, or
make significantly worse an existing violation, of any ambient air
quality standards as defined in district rule 1303, unless exempted
from modeling pursuant to district rule 1304, as amended June 14,
1996, for each new, relocated, or modified source with an emissions
increase of one pound per day or greater of any air contaminant.
(B) South coast district rule prohibits the construction of any
new, relocated, or modified permitted unit if the emissions of any
toxic air contaminant, as listed by the district board, exceed a
cumulative increase in maximum individual cancer risk at any receptor
location of greater than one in one million if the permitted unit is
constructed without best available control technology for toxic air
contaminants, or greater than 10 in one million if the permitted unit
is constructed with best available control technology for toxic air
contaminants or exceeds a chronic or acute noncancer health effect
hazard index of 1.0.
(C) The south coast district accounts for the use of offset
credits pursuant to this subdivision as part of the district's state
implementation plan submissions and demonstrates that the use of the
offset credits will not interfere with attainment or maintenance of
ambient air quality standards.
(D) South coast district rules 1304, 1309.1, and 1315, as
specified in this subdivision, have been submitted to the United
States Environmental Protection Agency, and have not been disapproved
by that agency.
(2) The exemption provided in this subdivision applies to offset
exemptions pursuant to south coast district rule 1304, as amended
June 14, 1996, Priority Reserve credits pursuant to south coast
district rule 1309.1, as amended May 3, 2002, and the adoption and
implementation of south coast district rule 1315, as adopted
September 6, 2006, and readopted August 3, 2007.
(3) Upon the satisfaction of conditions specified in subdivision
(1), the exemption provided in this paragraph applies to all action
taken pursuant to the south coast district rules specified in
paragraph (2) on and after September 6, 2006.
(b) The adoption of south coast district rule 1309.1 and the
creation or use of Priority Reserve credits pursuant to south coast
district rule 1309.1, as amended August 3, 2007, by a thermal
powerplant that is subject to this division or to Chapter 6
(commencing with Section 25500) of Division 15 of the Public
Resources Code if all of the following requirements are satisfied:
(1) South coast district rules include the requirements and
prohibitions specified in subparagraphs (A) and (B) of paragraph (1)
of subdivision (a).
(2) The thermal powerplant emissions comply with the requirements
for best available control technology, air quality modeling impacts,
toxic impacts, and emissions levels as specified in south coast
district rule 1309.1, as amended August 3, 2007.
(3) The thermal powerplant has entered into long-term contracts
with Southern California Edison Company, San Diego Gas and Electric
Company, or the State of California to provide electricity in
southern California, or is a powerplant owned by a local publicly
owned utility that is designed and constructed not to exceed that
utility's native demand load projections, or the use of the credit is
otherwise allowed by the south coast district board pursuant to
south coast district rule 1309.1.
(4) The south coast district accounts for the thermal powerplants'
use of Priority Reserve credits pursuant to this subdivision as part
of its state implementation plan submissions and demonstrates that
the use will not interfere with attainment or maintenance of ambient
air quality standards.
(5) South coast district rule 1309.1, as amended August 3, 2007,
and south coast district rule 1315, as adopted September 6, 2006, and
readopted August 3, 2007, have been submitted to the United States
Environmental Protection Agency and have not been disapproved by that
agency.
(6) The State Energy Resources Conservation and Development
Commission has conducted a needs assessment that has determined that
the thermal powerplant is necessary to meet future energy needs in
southern California or the south coast district, and has determined
it is necessary for the thermal powerplant to be located in the south
coast district.
(7) (A) The thermal powerplant pays a mitigation fee for the
Priority Reserve offset credits obtained that shall be at a minimum
the amount set forth in south coast district rule 1309.1, as amended
August 3, 2007.
(B) The south coast district board may by amendment to that rule,
after a public hearing, increase the fees without affecting the
applicability of this paragraph.
(C) The south coast district shall, to the extent technically and
economically feasible, use the mitigation fees to mitigate emissions
of the relevant pollutants or its precursors in the area impacted by
emissions from the thermal powerplant, with a minimum of one-third to
be used for installation of renewable or alternative sources of
energy. Up to 10 percent may be used by the district for
administration of the mitigation program.
SEC. 3. Section 40440.13 is added to the
Health and Safety Code , to read:
40440.13. (a) The State Energy Resources Conservation and
Development Commission shall perform a needs assessment considering
the issue specified in paragraph (6) of subdivision (b) of Section
40440.12 for a thermal powerplant proposed to be located in the south
coast district, whether or not the thermal powerplant is subject to
Chapter 6 (commencing with Section 25500) of Division 15 of the
Public Resources Code.
(b) (1) For the purposes of this section, "thermal powerplant"
means any stationary or floating electrical generating facility using
any source of thermal energy and any facilities appurtenant to the
facility. Exploratory, development, and production wells, resource
transmission lines, and other related facilities used in connection
with a geothermal exploratory project or a geothermal field
development project are not appurtenant facilities for the purposes
of this section.
(2) "Thermal powerplant" does not include any exclusively wind,
hydroelectric, or solar photovoltaic electrical generating facility.
SEC. 4. The Legislature finds and declares that a
special law is necessary and that a general law cannot be made
applicable within the meaning of Section 16 of Article IV of the
California Constitution because of unique circumstances concerning
the South Coast Air Quality Management District.
SEC. 5. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because a local agency or school district has the
authority to levy service charges, fees, or assessments sufficient to
pay for the program or level of service mandated by this act, within
the meaning of Section 17556 of the Government Code.
SEC. 6. 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:
Due to the court decision in Natural Resources Defense Council v.
South Coast Air Quality Management District (Super. Ct. Los Angeles
County, 2007, No. BS 110792), the South Coast Air Quality Management
District is unable to issue over a thousand pending permits that are
either exempt from offset requirements or qualified to use offset
credits from the district's Priority Reserve and is required to set
aside thousands of permits already issued; therefore it is necessary
for this measure to take effect immediately to allow the district to
issue permits in an expeditious manner and to validate previously
issued permits called into question by the superior court's decision.
SECTION 1. The legislature finds and declares
all of the following:
(a) Under existing law, new or modified sources of air pollutants
within a federally designated nonattainment area that result in
emission increases over specified thresholds are required to provide
emission reduction credits from other sources so that, in aggregate,
there is no net increase in emissions.
(b) The air basins regulated by the South Coast Air Quality
Management District are designated nonattainment areas for PM2.5,
PM10, and ozone, the majority of which is due to mobile sources.
(c) Due to strict emission limits on stationary sources and the
inability to create material amounts of new emission reduction
credits without shutting down businesses and losing jobs, there is a
severe shortage of emission reduction credits for sources of PM2.5
and PM10 in the air basins regulated by the South Coast Air Quality
Management District.
(d) In the South Coast Air Quality Management District, certain
emission sources, including essential public services, rely on
emission credits contained in the district's internal accounts. The
district obtains credits for its internal bank from surplus emission
reductions not otherwise used for credits. Emission reduction credits
have to be real, surplus, enforceable, quantifiable, and permanent.
(e) The South Coast Air Quality Management District recently
amended Rule 1309.1 to make emission credits from its internal bank
available to new clean, efficient power plants. The South Coast Air
Quality Management District also enacted a new rule governing the
accounting and tracking of offsets.
(f) A recent court decision invalidated the South Coast Air
Quality Management District rule specifying how the district accounts
for and calculates the amount of emission reduction credits
available. As a result of that court decision permits that rely on
credits from the district internal bank cannot be issued.
(g) The South Coast Air Quality Management District regulates more
than 28,000 stationary sources, and administers more than 80,000
permits. The Legislature needs act to avoid business shutdowns and
job losses, and to ensure electric system reliability.
SEC. 2. It is the intent of the Legislature to
enact legislation to ensure that there are sufficient real, surplus,
enforceable, quantifiable, and permanent emission reduction credits
available so that essential public services, and new clean efficient
power plants needed to maintain system reliability and integrate
renewable resources can be permitted by the South Coast Air Quality
Management District.