BILL ANALYSIS �
AB 1048
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Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 1048 (Gray) - As Introduced: February 22, 2013
SUBJECT : Fuel terminals: biodiesel composition
SUMMARY : Prohibits a fuel terminal from selling diesel fuel
combined with biodiesel unless the specific amount of biodiesel
that is blended with the diesel, either by percent or by actual
gallons, is disclosed on the fuel invoice or product transfer
document. Specifically, this bill :
1)Defines fuel terminal to mean a storage and distribution
facility not open to the public that is used primarily for
wholesale marketing of petroleum products and oxygenates with
a minimum storage capacity of 50,000 barrels; and,
2)Prohibits a fuel terminal from selling diesel fuel combined
with biodiesel unless the specific amount of biodiesel that is
blended with the diesel, either by percent or by actual
gallons, is disclosed on the fuel invoice or product transfer
document.
EXISTING LAW :
1)Requires the California Department of Food and Agriculture to
establish specifications for compression-ignition engine fuel,
kerosene, and fuel oil.
2)Prohibits sales of the regulated petroleum products listed
above unless labeled (however, diesel fuel blended with less
than 5% biodiesel is not required to be labeled and is sold as
"diesel").
3)Requires, pursuant to the California Air Resources Board's
(ARB) low carbon fuel standard regulation, the suppliers of
transportation fuels to meet an average declining standard of
carbon intensity that will provide a 10% reduction in
greenhouse gas emissions for all fuels used in California by
2020.
FISCAL EFFECT : Unknown
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COMMENTS : Biodiesel is a domestically produced, renewable fuel
that can be manufactured from vegetable oils, animal fats, or
recycled restaurant grease for use in diesel vehicles.
Biodiesel's physical properties are similar to those of
petroleum diesel, but it is a cleaner-burning alternative.
According to the Energy Information Administration of the U.S.
Department of Energy (EIA), "Blends of biodiesel and petroleum
diesel are designated with the letter "B," followed by the
volumetric percentage of biodiesel in the blend. B20, the blend
most often evaluated, contains 20% biodiesel and 80% petroleum
diesel while B100 is pure biodiesel. By several important
measures, biodiesel blends perform better than petroleum diesel,
but its relatively high production costs and the limited
availability of some of the raw materials used in its production
continue to limit its commercial application."
However, EIA indicates performance disadvantages of biodiesel
greater than B5 especially in cold weather conditions where the
fuel can clog fuel lines and filters in a vehicle's fuel system.
Also, biodiesel at higher concentrations may be incompatible
with the seals used in the fuel systems of older vehicles and
machinery, necessitating the replacement of those parts if
biodiesel blends are used. Another disadvantage cited of
biodiesel is that it tends to reduce fuel economy.
The oil companies cite the American Society for Testing and
Materials' (ASTM) determination that low-level biodiesel blends
of 5% or less (B5) are indistinguishable from conventional
diesel fuel in terms of performance properties. Accordingly,
oil company terminals that blend biodiesel with diesel at this
low level are not required to indicate how much of the B5 is
actually biodiesel as long as the amount is less than 5%. Such
blends do not need to be labeled and are sold as "diesel."
Further, biodiesel blends higher than 5% and up to 20% are
required to be labeled to indicate a percentage range.
This bill would prohibit a fuel terminal from selling diesel
fuel combined with biodiesel unless the specific amount of
biodiesel that is blended with the diesel, either by percent or
by actual gallons, is disclosed on the fuel invoice or product
transfer document. This would require diesel of less than B5
that is currently sold as "diesel" to be labeled with the
volumetric amount of biodiesel, if any, blended with the
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"parent" stock.
According to the author's office, there are some major problems
with not labeling diesel with less than 5% biodiesel blend (less
than B5). First, diesel wholesalers who wish to create their
own biodiesel blends for their customers, such as B10 or B20,
will have to test each and every fuel load to know how much
biodiesel has already been blended into their "parent" fuel
supply. This is an expensive and cumbersome process which
places undue burden on suppliers as they transition to comply
with the LCFS. Second, fuel distributors need to know whether
there is biodiesel in the product they purchase especially if
the fuel is used in cold weather. Third, consumers need to know
the amount of biodiesel blended into their fuel in order to
assure they are not affecting automotive warranties, terms of
use, or repair agreements with their equipment.
Subsequent to multiple meetings with the author and the bill's
sponsor, the oil companies represented by the Western States
Petroleum Association (WSPA) contend that they have no
information to establish the scope of the problem that this bill
seeks to solve. If a particular need can be established and
isolated to a particular terminal, it may be possible to develop
a solution that works for both the marketer and the terminal
operator. WSPA further indicates that "Not all terminals blend
biodiesel. Any marketer purchasing diesel from a terminal that
does not blend biodiesel can up-blend to meet customer
specifications with certainty that they are not adding biodiesel
into a fuel with a variable base concentration."
Lastly, WSPA indicates that this bill's requirement to disclose
the biodiesel concentration to the nearest tenth of 1%, or to
the nearest gallon is unenforceable as "there is no technically
feasible method to determine biodiesel concentrations to the
nearest tenth of 1%. The current test method (ASTM D7371) is
only reproducible at concentrations approaching 1% by volume.
Method accuracy decreases as biodiesel concentration increases.
For large volumes of blended fuel, measuring concentration to
the nearest gallon could require greater precision on a
percentage basis than the current method will allow."
REGISTERED SUPPORT / OPPOSITION :
Support
AB 1048
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California Independent Oil Marketers Association (sponsor)
Opposition
None on file
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093