BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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                                 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


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           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 8/24/12 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 
             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 

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             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 
             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.  

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             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.

          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.


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          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 
          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 

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          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, 
             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 

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             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 
          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   

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          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
          Glendale Water and Power
          Pasadena Water and Power
          Regional Council of Rural Counties
          Sacramento Municipal Utility District 
          SCS Energy

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          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

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