BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1900| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1900 Author: Gatto (D), et al. Amended: 8/31/12 in Senate Vote: 21 SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 11-0, 6/25/12 AYES: Padilla, Fuller, Berryhill, Corbett, De León, DeSaulnier, Emmerson, Kehoe, Pavley, Rubio, Wright NO VOTE RECORDED: Simitian, Strickland SENATE ENVIRONMENTAL QUALITY COMMITTEE : 7-0, 7/2/12 AYES: Simitian, Strickland, Blakeslee, Hancock, Kehoe, Lowenthal, Pavley SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/16/12 AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price, Steinberg SENATE ENVIRONMENTAL QUALITY COMMITTEE : 6-0, 8/28/12 (pursuant to Senate Rule 29.10) AYES: Simitian, Strickland, Blakeslee, Hancock, Kehoe, Lowenthal NO VOTE RECORDED: Pavley ASSEMBLY FLOOR : 72-1, 5/31/12 - See last page for vote SUBJECT : Renewable energy resources: biomethane SOURCE : Author CONTINUED AB 1900 Page 2 DIGEST : This bill requires the Office of Environmental Health Hazard Assessment (OEHHA) to determine the maximum concentration of constituents (COCs) of concern in landfill gas and requires the Public Utilities Commission (PUC) to develop testing protocols for the those COCs. This bill also requires PUC to adopt nondiscriminatory pipeline access rules and requires the State Energy Resources Conservation and Development Commission (Energy Commission) to identify impediments, to biomethane electricity procurement, and prohibits a gas producer from knowingly selling, transporting, or supplying gas from a hazardous waste landfill. Senate Floor Amendments of 8/31/12 add language that states this bill shall become operative only if this bill and AB 2196 (Chesbro) are both enacted and become effective on or before January 1, 2013. Senate Floor Amendments of 8/24/12 extend the date by which PUC must adopt regulations, remove contingent enactment language and avoid chaptering out conflicts. Senate Floor Amendments of 8/22/12 expand the scope of the overhaul of landfill biogas health, safety and monitoring standards currently in this bill to include biogas from various sources, to be accomplished in a specified time frame with input from the California Environmental Protection Agency (CalEPA), and make other conforming and clarifying changes. ANALYSIS : Existing law (Health and Safety Code Section 25420 et seq.) sets requirements for vinyl chloride in landfill gas to be sold, transported and supplied and specifies testing and monitoring requirements for carcinogens and reproductive toxins in landfill gas sold to gas corporation. Under the Renewable Portfolio Standard (RPS) (Public Utilities Code Section 399.11 et seq.), electricity generated from landfill gas may count toward RPS requirements. Existing law: 1. Requires the PUC to specify the maximum amount of vinyl AB 1900 Page 3 chloride that may be found in landfill gas. 2. Prohibits a gas producer from knowingly selling, supplying, or transporting to a gas corporation, and a gas corporation from knowingly purchasing, landfill gas containing vinyl chloride in a concentration exceeding the maximum amount determined by the PUC. 3. Requires a person who produces, sells, supplies, or releases landfill gas for sale offsite to a gas corporation to sample and test, bimonthly, the gas at the point of distribution for chemicals known to the state to cause cancer or reproductive toxicity. 4. Requires the OEHHA to evaluate the environmental and health risks posed by various hazardous substances. The Warren-Alquist State Energy Resources Conservation and Development Act establishes the Energy Commission and requires it to prepare an integrated energy policy report on or before November 1, 2003, and every two years thereafter. The Act requires the report to contain an overview of major energy trends and issues facing the state, including, but not limited to, supply, demand, pricing, reliability, efficiency, and impacts on public health and safety, the economy, resources, and the environment. This bill: 1. Requires OEHHA, in consultation with the Air Resources Board (ARB), Department of Toxic Substance Control (DTSC), Department of Resources Recycling and Recovery (DRRR) and CalEPA (a) to compile a list of COCs found in biogas at concentrations significantly higher than natural gas and that could pose a health risk; (b) OEHHA to determine health protective levels for the list of COCs and consider potential health impacts and risks to utility workers and gas end users; (c) ARB to identify realistic exposure scenarios, and health risks associated with the exposure scenarios for the identified COCs, in consultation with OEHHA; and (d) ARB, in consultation with DTSC, DRRR, and CalEPA to determine concentrations of COCs, and use the health AB 1900 Page 4 protective levels and exposure scenarios identified, and to determine monitoring, testing, reporting and recordkeeping requirements separately for each source of biogas and that the above determinations be completed by May 15, 2013, and updated at least every five years. This bill specifies that the actions taken by the CalEPA agencies are not regulations and not subject to the Administrative Procedures Act. 2. Requires PUC to do the following: (a) adopt standards for the concentrations of COCs that may be found in biomethane to ensure the protection of human health and pipeline facility safety; (b) adopt the monitoring testing and reporting and recordkeeping requirements identified by ARB; and (c) adopt the above standards and requirements by December 15, 2013, to be updated every five years, or earlier if new information becomes available. This bill requires PUC to require gas corporation tariffs to condition access to common carrier pipelines on the applicable customer meeting specified standards and requirements. 3. Prohibits a person from injecting biogas into a common carrier pipeline unless it satisfies specified standards and prohibit a person from selling, transporting, supplying or purchasing, and a gas corporation from purchasing, biogas collected from a hazardous waste landfill gas through a common carrier pipeline. 4. Defines terms including "biogas," "biomethane," "common carrier pipeline," and "dedicated pipeline." 5. Requires the Energy Commission to hold public hearings to identify impediments that limit procurement from biomethane in California, including, but not limited to, impediments to interconnection. 6. Requires the Energy Commission to offer solutions to those impediments as part of the above-mentioned report. 7. Requires the PUC to adopt policies and programs that promote the in-state production and distribution of biomethane. AB 1900 Page 5 8. States this bill shall become operative only if this bill and AB 2196 (Chesbro) are both enacted and become effective on or before January 1, 2013. Background Biomethane in California . Biomethane is a renewable fuel that is produced at several types of facilities, including dairy farms and landfills. The gas can be collected and then transported to a generation facility where it can be used to make electricity. Transportation of biofuels via truck or rail is not economically feasible. Transport via pipeline is the preferred method. This energy release allows biogas to be used as a fuel. The methane can also be used onsite, such as at dairies, in anaerobic digesters where it is typically used in a combustion engine to convert the energy in the gas into electricity and heat. As a result of state law, California's major gas corporations, Sempra Utilities and Pacific Gas and Electric (investor-owned utilities or IOUs), operate common carrier pipelines but will not allow biomethane from landfills to be injected into the pipelines they operate. Landfill gas may have constituents present that could adversely impact human health. Some constituents (e.g. lead, arsenic, cadmium) could cause cancer or birth defects. Since the delivery of the gas to a household appliance could inadvertently provide close exposure to these constituents, IOUs do not allow landfill or dairy gas into their pipelines. IOUs are also concerned about potential damage to the pipelines themselves, depending upon what is in the gas - moisture, for example, could cause corrosion. The California Energy Commission (CEC) estimates that 358 megawatts (MW) is potentially available from new landfill gas development. Of these landfills, some are small and are therefore unlikely to be developed for gas by 2020. Many are not near a gas transmission line. According to the Assembly Natural Resources Committee, of 10 landfills operated by Waste Management, four are sufficiently close to a suitable pipeline with a sufficient volume of gas to be considered for development for landfill gas. Waste AB 1900 Page 6 Management estimates around 150 MW of in-state gas that could be developed in California for delivery to a generation facility. There is also the potential to produce electricity at a landfill if it were equipped with a small generation facility (such as a fuel cell). As electricity generators these facilities would count toward a utility's requirements under the RPS. Owners and developers of landfill gas facilities can also bid into the utility RPS solicitations, the Reverse Auction solicitations, and the Feed in Tariff. Some landfills currently have fuel cells or combustion turbines and use the electricity generated on site. IOU procurement . California's three largest electric utilities all have contracts in their renewable portfolios which use biomethane gas onsite at dairies and landfills to generate electricity. San Diego Gas and Electric has 13 landfill gas projects totaling almost 40 MW and a few small dairy digester gas projects. Southern California Edison advises that it has 14 landfill and dairy contracts with a total capacity of 139 MW. Pacific Gas and Electric reports eight dairy contracts for 10 MW and 13 landfill gas contracts with a total capacity of 62 MW. The statewide total is 48 contracts for a total capacity of 252 MW. 2011 bioenergy action plan . A 2006 executive order set a target of generating 20% of the state's renewable energy from biopower (biomass to electricity) by 2010 and maintaining this ratio through 2020. To achieve those targets, the CEC developed an action plan in 2006 and updated that plan last year with the "2011 Bioenergy Action Plan." That plan summarized the barriers to deployment of biomethane as: California utilities do not have uniform biomethane quality standards and the standards in place may not be appropriate for biomethane, most standards were designed for natural gas injection; Current utility tariffs require project developers to pay for the costs of the interconnection which is a large cost barrier; The commercially available conversion technologies, AB 1900 Page 7 such as anaerobic digestion, are generally limited to high moisture (non-woody) feedstocks; New technologies are in development, but have high capital costs and other economic, regulatory, and development barriers; and Statute currently prohibits the injection of landfill gas, despite allowing landfill gas from out-of-state to be scheduled into California; other states allow landfill gas to be injected into their systems that deliver gas into the California system. Comments According to the author's office, current statute sets strict standards for the use of landfill gas in natural gas pipelines in California and current regulations adopted by the IOUs and later by the PUC ban landfill gas from entering into common carrier pipelines completely. The author's office notes that restrictions against landfill gas rose out of fear in the 1980's that landfill gas contained harmful amounts of vinyl chloride, a chemical known to cause cancer, but recently the Gas Technologies Institute has since shown that vinyl chloride is not present in harmful levels, if at all, in landfill gas. The author's office adds that these statutes and regulations have stifled the growth of the biomethane industry in California and other biomethane producers, such as waste-water treatment facilities and dairy farms, and have intimated that regulations surrounding biomethane have made it impossible to compete with other state-subsidized renewables, such as solar, in an attempt to develop a diverse renewables portfolio for the state. According to the author's office, this bill breaks down barriers to transporting biomethane in-state by requiring the PUC to develop new gas safety standards for nonhazardous landfill gas and prohibiting IOUs from implementing anti-competitive barriers to non-hazardous landfill gas once it has met safety specifications and standards. Related legislation . AB 2196 (Chesbro) clarifies the definition of an eligible renewable electrical generation facility to include a facility that generates electricity AB 1900 Page 8 utilizing biomethane delivered through a common carrier pipeline if the source and delivery of the fuel can be verified by the CEC. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee: $139,000 in 2012-13 and 2013-14 from the Public Utilities Reimbursement Account to OEHHA for a health and safety study of landfill gas. $100,000 in 2012-13 and 2013-14 from the Energy Resources Programs Account (General Fund) to the CEC for hearings to identify impediments to interconnections and to develop solutions. $150,000 in 2012-13 and 2013-14 from the Public Utilities Reimbursement Account to the PUC to set standards for landfill gas, adopt testing protocols and policies that promote in-state production and distribution of biomethane, $120,000 annually thereafter to monitor standards, protocols and, as necessary, pilot projects. SUPPORT : (Verified 8/29/12) Biofuels Energy Bloom Energy California Association of Sanitation Agencies California Municipal Utilities Association California State Association of Electrical Workers California State Council of Laborers California State Pipe Trades Council Californians Against Waste CALSTART Cambrian Energy City of San Diego Coalition for Renewable Natural Gas Cornerstone Environmental Group County of Nevada County Sanitation Districts of Los Angeles County First Southwest Company AB 1900 Page 9 Glendale Water and Power Pasadena Water and Power Regional Council of Rural Counties Sacramento Municipal Utility District SCS Energy Sonoma County Water Agency South Coast Air Quality Management District Union of Concerned Scientists Waste Management ASSEMBLY FLOOR : 72-1, 5/31/12 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Campos, Carter, Chesbro, Conway, Cook, Davis, Dickinson, Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma, Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, Olsen, Pan, Perea, V. Manuel Pérez, Portantino, Silva, Skinner, Smyth, Solorio, Swanson, Torres, Wagner, Wieckowski, Williams, Yamada, John A. Pérez NOES: Hagman NO VOTE RECORDED: Charles Calderon, Cedillo, Fletcher, Mansoor, Mendoza, Norby, Valadao RM:k 8/31/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****