BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 350


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          Date of Hearing:  July 6, 2015





                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                Anthony Rendon, Chair


          SB  
          350 (De León) - As Introduced February 24, 2015


          


          SENATE VOTE:  24-14


          


          SUBJECT:  Clean Energy and Pollution Reduction Act of 2015.


          


          SUMMARY:  This bill expands three related clean-energy goals to  
          be achieved by 2030:  (1) reduce petroleum use in motor vehicles  
          by 50 percent; (2) double energy efficiency in existing  
          buildings; and (3) generate 50 percent of total retail sales of  
          electricity from specified renewable resources.  Specifically,  
          this bill:  










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           1) Requires the California Air Resources Board (CARB) to adopt  
             and implement motor vehicle emission standards to achieve a  
             reduction in petroleum use in motor vehicles by 50% by  
             January 1, 2030.



           2) Requires the California Energy Commission (CEC) to evaluate  
             the economic and environmental costs of transportation fuels  
             and further reduce petroleum use in the transportation sector  
             by 50% by January 1, 2030.

           3) Requires, triennially beginning on or before January 1,  
             2017, the CEC to adopt and update the CEC's program to  
             achieve greater energy savings in California's existing  
             residential and nonresidential buildings toward achieving a  
             doubling of the energy efficiency of buildings by January 1,  
             2030.



           4) Increases the current Renewable Energy Portfolio Standard  
             (RPS) from 33% by 2020 to 50% by 2030 with respect to the  
             amount of renewable energy that retail electricity sellers  
             and publicly owned utilities (POUs) must include in their  
             electricity portfolios and specifies compliance milestones.



           5) Amends existing law related to a municipal solid waste  
             facility located in Stanislaus County.



           6) Requires Community Choice Aggregators to participate in the  
             RPS program subject to the same terms and conditions  








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             applicable to electrical corporations. 



           7) Replaces "electrical corporation" with the phrase "retail  
             sellers" within the existing requirement for RPS plans to be  
             submitted to the CPUC.



           8) Makes revisions to the California Public Utilities  
             Commission's (CPUC) RPS penalty authority requiring the CPUC  
             to adopt a schedule of penalties for electrical corporations  
             and other retail sellers, specifies penalties for  
             noncompliance cannot be collected in rates for electrical  
             corporations, and specifies that penalties collected be  
             deposited in the Electric Program Investment Charge Fund.



           9) Specifies RPS compliance periods for retail sellers and POUs  
             of 40% by 2024, 45% by 2027, and 50% by 2030, and retains  
             existing 33% by 2020 requirement.



           10)Revises cost limitation statute to retain a provision that  
             the CPUC set the RPS cost limitation at a level that prevents  
             disproportionate rate impacts and strikes that the CPUC not  
             include indirect expenses, including imbalance energy  
             charges, sale of excess energy, decreased generation from  
             existing resources, transmission upgrades, or the costs  
             associated with relicensing utility-owned hydroelectric  
             facilities.



           11)Strikes a requirement that the CPUC provide a report no  
             later than January 1, 2016 that would assess whether  








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             electrical corporations can achieve a 33% RPS.



           12)Strikes a requirement that the CPUC can propose a revised  
             RPS cost limitation that takes effect no earlier than January  
             1, 2017.



           13)Revises an existing exemption from product content category  
             limits for an electrical corporation with 30,000 or fewer  
             customer accounts or had l,000 or fewer customer accounts and  
             was not connected to any transmission system or to the  
             California Independent System Operator (CAISO).  These  
             electrical corporations must comply with the CEC accounting  
             system.  The revision states the conditions must continue in  
             order to exercise this exemption.



           14)Revises current statute authorizing CARB to assess penalties  
             on POUs for noncompliance if the CEC makes a referral to the  
             CARB and instead authorizes the CEC to assess penalties and  
             to place funds collected from penalties into the Electric  
             Program Investment Charge fund.



           15)Specifies the CPUC and the CEC to further the meeting of the  
             state's clean energy and pollution reduction objectives and  
             shall:



             a)   Take into account the benefits of and promote the use of  
               distributed generation, particularly in disadvantaged  
               communities,
             b)   Allow for consideration of costs and benefits of grid  








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               integration,


             c)   Adopt rules, where feasible, for integrating renewable  
               energy that minimize system power and fossil fuel purchases  
               and increase the use of energy storage, demand response,  
               and other low-emission or zero-technologies to protect  
               system reliability, and


             d)   To the extent feasible, give priority to clean energy  
               and pollution reduction technologies that create employment  
               opportunities and increased investment in the state.



           1) Requires the CPUC to direct electrical corporations to  
             include a strategy for procuring a diverse portfolio of  
             resources that provide reliability electricity supplies using  
             zero carbon-emitting resources to the maximum extent  
             reasonable, and allows capacity and resource adequacy costs  
             of these resources to be allocated on a nonbypassable basis  
             to:


             a)   Bundled service customers of the electrical corporation,

             b)   Customers that purchase electricity through a direct  
               transaction with other providers, and

             c)   Customers of community choice aggregators.
          EXISTING LAW:  





          1)Provides CARB with primary responsibility for control of  
            mobile source air pollution, including adoption of rules for  








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            reducing vehicle emissions and the specification of vehicular  
            fuel composition.  (Health and Safety Code Section 39000, et  
            seq., and Section 39500, et seq.)

          2)Directs CARB to implement motor vehicle emission standards,  
            in-use performance standards, and motor vehicle fuel  
            specifications for the control of air contaminants and sources  
            of air pollution that CARB finds to be necessary, cost  
            effective, and technologically feasible, unless preempted by  
            federal law.  (Health and Safety Code Section 43013, et seq.)

          3)Directs the CEC to continually assess energy consumption  
            trends and to analyze the social, economic, and environmental  
            consequences of these trends; carry out, energy conservation  
            measures; and recommend to the Governor and the Legislature  
            new and expanded energy conservation measures. (Public  
            Resources Code Section 25200, et seq.)

          4)Requires the CEC to develop and implement a comprehensive  
            program to achieve greater energy savings in California's  
            existing residential and nonresidential building stock.   
            (Public Resources Code Section 25943, et seq.)  

          5)Establishes the Electric Program Investment Charge Fund to  
            fund projects that benefit electricity ratepayers and lead to  
            technological advancement and breakthroughs to overcome the  
            barriers that prevent the achievement of the state's statutory  
            energy goals. (Public Utilities Code Section 25710, et seq.)

          6)Requires retail sellers of electricity - investor-owned  
            utilities (IOU), community choice aggregators, energy service  
            providers, and POUs - to increase purchases of renewable  
            energy such that at least 33 percent of retail sales are  
            procured from renewable energy resources by December 31, 2020.  
             This is known as the RPS.  The CPUC establishes the RPS for  
            retail sellers and ensures they progress in achieving it, and  
            levies penalties for failure.  The governing board of each POU  
            establishes its own RPS.  The CEC may issue a notice of  
            violation against a POU for failure to adequately progress in  








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            meeting RPS targets and refer the POU to the CARB, which may  
            assess penalties against it.  The RPS provides numerous cost  
            containment provisions and exceptions to compliance  
            obligations.  (Public Utilities Code Section 99.11, et seq.)

          7)Requires all renewable electricity products to meet the  
            requirements of a "loading order" that mandates minimum and  
            maximum quantities of three product categories (or "buckets"),  
            which includes renewable resources directly connected to a  
            California balancing authority or provided in real time  
            without substitution from another energy source, energy not  
            connected or delivered in real time yet still delivering  
            electricity, and unbundled renewable energy credits (RECs).   
            (Public Utilities Code Section 399.16.)

          FISCAL EFFECT: 





          According to Senate Appropriations:





          1)First year costs of $440,000 and $400,000 ongoing from various  
            special funds to the CARB to create a petroleum use baseline  
            and to implement necessary measures to reduce use.  



          2)Unknown cost pressures to current programs from various  
            special funds to achieve a 50% petroleum reduction.

          3)Annual costs of $7.24 million from the General Fund for the  
            CEC for ongoing updates of its energy efficiency plans for  
            existing buildings and to implement the plans.








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          4)Annual costs of $900,000 from the Energy Resources Program  
            Account for the CEC for new responsibilities ensuring  
            compliance with RPS standards by the POUs.



          5)Annual costs of $2.3 million for five years to the Public  
            Utilities Reimbursement Account for CPUC contract needs.



          6)Annual costs of $471,000 for two years and $157,000 in the  
            third year. the Public Utilities Reimbursement Account for  
            CPUC proceedings to adjust existing RPS and Long Term  
            Procurement Plan  programs.



          7)Ongoing staffing needs of $350,000 annually to the Public  
            Utilities Reimbursement Account for CPUC staffing needs for  
            ongoing enforcement of the higher RPS standards.



          8)Unknown ratepayer costs to the General Fund and various  
            special funds to the state as a ratepayer of electricity to  
            the extent that electricity prices may be affected by  
            increasing the RPS standard. 



          9)Unknown cost pressures to the Public Utilities Reimbursement  
            Account and the Energy Resources Program Account to the CPUC  
            and the CEC to review renewable integration needs and to  
            consider grid integration in proceedings implementing RPS  
            requirements.








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          COMMENTS:





           1)Author's Statement:   "SB 350 enacts policies that build on our  
            economic growth by strengthening incentives for energy  
            efficiency and clean energy technology. The Golden State  
            Standards: 

                 50% less petroleum use; 
                 50% of electricity coming from renewable sources;  
                 and 50% better efficiency in our buildings."

            "These standards send a strong signal to California's  
            businesses and leave no doubt in the direction we're heading  
            in."

            "These policies will drive innovation here, bring investment  
            here, bring jobs here, and bring revenue here."

           1)Codifies the Governor's Goals:   In the Governor's January 5,  
            2015 Inaugural Address, he stated the following with respect  
            to reducing carbon pollution and limiting the emissions of  
            heat-trapping gases to 431 million tons by 2020:


               "Toward that end, I propose three ambitious goals to be  
               accomplished within the next 15 years:












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                     Increase from one-third to 50 percent our  
                 electricity derived from renewable sources;
                     Reduce today's petroleum use in cars and trucks by  
                 up to 50 percent;


                     Double the efficiency of existing buildings and make  
                 heating fuels cleaner.





               I envision a wide range of initiatives: more distributed  
               power, expanded rooftop solar, micro-grids, an energy  
               imbalance market, battery storage, the full integration of  
               information technology and electrical distribution and  
               millions of electric and low-carbon vehicles. How we  
               achieve these goals and at what pace will take great  
               thought and imagination mixed with pragmatic caution. It  
               will require enormous innovation, research and investment.  
               And we will need active collaboration at every stage with  
               our scientists, engineers, entrepreneurs, businesses and  
               officials at all levels."





           1)History of RPS:  Established in 2002 under SB 1078 (Sher,  
            Chapter 516, Statutes of 2002), California's RPS was  
            accelerated in 2006 under SB 107 (Simitian, Chapter 464,  
            Statutes of 2006) by requiring that 20% of electricity retail  
            sales be served by renewable energy resources by 2010.   
            Finally, SB X1-2 (Simitian, Chapter 1, Stadtutes of 2011)  
            established a 33% by 2020 goal and was signed by Governor  
            Brown in 2011.









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           2)RPS Product Compliance Categories (a.k.a. "Buckets):   The RPS  
            requires electricity from renewable resources be procured by  
            retail electricity sellers.  The RPS includes three renewable  
            product categories that allow flexibility in meeting the RPS  
            requirements:

              a)   Product Compliance Category 1:   Products must be  
               interconnected with a California balancing authority, have  
               a first point of interconnection with distribution  
               facilities used to serve end users within a balancing  
               authority area, or are scheduled from the eligible  
               renewable energy resource into a California balancing  
               authority without substituting electricity from another  
               source.  Alternatively, the product can have an agreement  
               to dynamically transfer electricity to a California  
               balancing authority.

              b)   Product Compliance Category 2  :  A product that is a  
               firmed and shaped eligible renewable energy resource  
               providing incremental electricity and scheduled into a  
               California balancing authority.

              c)   Product Compliance Category 3:   Products, including  
               "unbundled" RECs that do not qualify under Categories 1 or  
               2.  An unbundled REC refers to the renewable energy  
               attribute sold separately from the electricity generated by  
               the renewable energy facility. Unbundled RECs can be bought  
               and sold.  Buyers are typically parties who are short on  
               meeting their renewable energy goals or who would like to  
               demonstrate a commitment to clean energy.  Note that  
               purchases of unbundled RECs do not include delivery of the  
               electricity from the renewable resource.  Statute also  
               specifies that Category 3 products cannot be counted as  
               excess procurement under the provision that allows banking  
               of excess procurement for future compliance years.
            Entities required to meet the RPS are limited in the amount of  
            Category 2 and 3 procurement. This ensures that the RPS is  
            driving procurement of actual delivered renewable generation.  
            The proportions required for procurement under the current RPS  








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            for Category 1 increases over time until it reaches 75% of  
            procurement beginning in January 2017.  Category 3 drops to no  
            more than 10% beginning in January 2017.





            The RPS also requires that the REC can be counted only once  
            and that the REC is registered so that ownership can be  
            tracked for compliance purposes.  REC certificates are created  
            for each whole megawatt-hour generated.  These certificates  
            can be bought and sold. 


           1)RPS: Distributed Energy Resources:   For the most part, the  
            utility RPS procurement process has resulted in utility  
            procurement of large scale renewable projects.  This may be  
            because of the economies of scale in negotiating contracts  
            with the utilities (smaller projects may not have the revenue  
            potential to offset the costs of contract development).  The  
            CPUC recognized the RPS presented barriers to smaller  
            renewable projects and authorized a program called the  
            "Renewable Auction Mechanism" to facilitate an increase in  
            projects sized below 20 megawatts (MWs).  In addition, the  
            Legislature enacted a small generator feed in tariff for  
            projects sized below 3 MWs.  Many of these smaller projects  
            are located in the Central Valley (Kern County) and sell power  
            to retail sellers of electricity throughout the state. 

            Other programs, such as the California Solar Initiative, the  
            Self-Generation Incentive Program, the Feed in Tariff for  
            Small Renewable Generators, and the Combined Heat and Power  
            Tariff have focused on increasing the use of distributed  
            power, expanding the market for rooftop solar, microgrids, and  
            battery storage located at or near a customer's site.











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            On-site renewable generation typically means that the  
            generation is delivered and consumed at the site.  In Decision  
            07-01-018, the CPUC determined that facilities that serve  
            onsite load (e.g., facilities receiving incentives from the  
            California Solar Initiative or Self-Generation Incentive  
            Program) own their RECs.   In other words, the facility owner  
            owns the RECs, and they are not transferred to the utility.   
            That means that a facility owner can either make green claims  
            (e.g., "our company is powered by solar") if it retains the  
            RECs, or the owner can sell the RECs so another entity can  
            make green claims. Statute specifies the REC can only be owned  
            by one entity which means that when the facility owner sells  
            the REC they can no longer claim to be using renewable energy.





            Currently, rooftop solar can meet Product Compliance Category  
            1 if it meets the criteria laid out in statute.  But when the  
            REC is unbundled from the rooftop solar generation, it is  
            treated as Product Compliance Category 3.  Thus, much rooftop  
            solar is not counted toward the RPS.





            Financing companies that own rooftop solar, through either a  
            lease or power-purchase agreement with a customer, typically  
            transfer the ownership of the renewable attribute to the  
            financing company (as a result of this transfer the customer  
            no longer owns the REC and cannot legitimately claim to be  
            using renewable energy). 













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            A number of the financing companies argue the unbundled REC  
            should be eligible under Product Category 1.  Utilities  
            recognize on-site renewable generation is occurring within  
            their service areas and also suggest the product should be  
            considered as Product Category 1.





            The United States Constitution includes a provision known as  
            the "Commerce Clause" and confers authority to the United  
            States Congress to enact laws regulating interstate commerce.  
            This, by implication, limits state authority over interstate  
            commerce.  Electricity generation is subject to interstate  
            commerce laws.





            If on-site renewables located in California were included as  
            eligible under Product Category 1, it raises concerns over  
            whether this would invite litigation under the Commerce  
            Clause.  If on-site renewables were allowed as Product  
            Category 1 without a location requirement to address concerns  
            about the Commerce Clause, then arguably on-site renewable  
            generation located elsewhere in the mainland United States  
            could be eligible to count toward California's RPS goals.





            At the same time, on-site renewable generation is clearly  
            renewable generation.  Californians broadly support on-site  
            renewable generation, and the amount of on-site generation  
            continues to increase throughout California.









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             To address this, the author may wish to consider an amendment  
            to allow the CPUC to create a program designed specifically  
            for on-site renewable generation procurement for new  
            distributed renewable energy resources within their service  
            areas.  Such a program should include metering and  
            registration requirements and registration of the REC.





            399.13 (f)(3) The commission may authorize a procurement  
            entity to procure ____ percent of retail sales of on-site  
            generation within the area served by the procurement entity to  
            serve local electricity needs.  On-site renewable generation  
            shall meet the definition of renewable generation specified in  
            section 399.12(e) and meet the certification requirements  
            specified in section 399.12.  Estimation of energy production  
            from on-site generation is not sufficient to meet the  
            requirements of this section.





            399.30(c)(4)  A locally owned public utility may authorize a  
            procurement entity to procure ____ percent of retail sales of  
                                                on-site generation within the area served by the procurement  
            entity to serve local electricity needs. On-site renewable  
            generation shall meet the definition of renewable generation  
            specified in section 399.12(e) and meet the certification  
            requirements specified in section 399.12.  Estimation of  
            energy production from on-site generation is not sufficient to  
            meet the requirements of this section.









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           2)RPS:  Transportation Electrification and Potential Renewable  
            Energy Curtailment:   One of the methods which can assist with  
            achieving a reduction in petroleum fuel use is transportation  
            electrification.  It is, however, possible that decreased  
            petroleum use (and the associated emissions) will be  
            transferred to some extent into the electric generation system  
            even though California's electric generation system is  
            relative clean and moving toward an even cleaner generation  
            profile.  In addition, accurately estimating future  
            electricity demand that results from transportation  
            electrification may be difficult until the market for electric  
            transportation is better established.  Flexibility in the RPS  
            statute to address these issues is warranted.  



            The author may wish to consider amendments to address  
            transportation electrification to assist with achieving  
            success in this area and provide sufficient flexibility in RPS  
            compliance to address unexpected changes in electricity  
            demand.  Specifically,





              Section X is added to the Health and Safety Code, to read:   


            X.  The state board shall identify and adopt appropriate  
            policies to remove regulatory disincentives facing retail  
            sellers from facilitating the achievement of greenhouse gas  
            emission reductions in other sectors through increased  
            investments in transportation electrification.  Those policies  
            shall include, but not be limited to, an allocation of  








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            greenhouse gas emissions allowances to retail sellers to  
            account for increased greenhouse gas emissions in the electric  
            sector from transportation electrification. 


            Add Section 237.5 to the Public Utilities Code as follows:


            237.5.   "Transportation electrification" means the use of  
            grid electricity to power all or part of vehicles, vessels,  
            trains, ships, boats and other equipment that are mobile  
            sources of air pollution and greenhouse gases.


             Amend Section 399.15 of the Public Utilities Code as follows:


            399.15 (b)(5)(C) Unanticipated curtailment of eligible  
            renewable energy resources  necessary to address the needs of a  
            balancing authority.  that does not result in an increase in  
            greenhouse gas emissions.  


             (D) Unanticipated increase in retail sales due to  
            transportation electrification.  In making a finding that this  
            condition prevents timely compliance, the commission shall  
            consider all of the following:


            (i) Whether transportation electrification significantly  
            exceeded forecasts in that retail seller's service territory,  
            based on the best and most recently available information  
            filed with the state board, energy commission or other state  
            agency. 


            (ii) Whether the retail seller has taken reasonable measures  
            to procure sufficient resources to account for unanticipated  
            increases in retail sales due to transportation  








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            electrification.


             Amend Public Utilities Code Section 701.1 as follows:


            701.1.  (a) The Legislature finds and declares that, in  
            addition to other ratepayer protection objectives, a principal  
            goal of electric and natural gas utilities' resource planning  
            and investment shall be to minimize the cost to society of the  
            reliable energy services that are provided by natural gas and  
            electricity, and to improve the environment and to encourage  
            the diversity of energy sources through improvements in energy  
            efficiency and development of renewable energy resources, such  
            as wind, solar, biomass, and geothermal energy  , and widespread  
            transportation electrification.  
            (b) The Legislature further finds and declares that, in  
            addition to any appropriate investments in energy production,  
            electrical and natural gas utilities should seek to exploit  
            all practicable and cost-effective conservation and  
            improvements in the efficiency of energy use and distribution  
            that offer equivalent or better system reliability, and which  
            are not being exploited by any other entity.
             (c) Nothing in this section expands the authority of the  
            commission beyond existing law.
             
           3)RPS:  Enforcement Provisions affecting Publicly Owned  
            Utilities:   SB 350 modifies the enforcement provisions in the  
            existing RPS statute to allow the CEC to assess enforcement  
            penalties on POUs, rather than the CARB.  POUs are already  
            subject to CARB requirements with respect to emissions.  The  
            change in enforcement greatly expands the scope of the CEC's  
            authority over POUs.

             The author may wish to consider amending the bill to return  
            the language to its current enforcement regime:


             399.30. (n)  (1)    Upon a determination by the Energy Commission  








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            that a local publicly owned electric utility has failed to  
            comply with this article, the Energy Commission  shall refer  
            the failure to comply with this article to the State Air  
            Resources Board, which may impose penalties to enforce this  
            article consistent with Part 6 (commencing with Section 38580)  
            of Division 25.5 of the Health and Safety Code.  Any penalties  
            imposed shall be comparable to those adopted by the commission  
            for noncompliance by retail sellers.   shall refer the failure  
            to comply with this article to the State Air Resources Board,  
            which may impose penalties to enforce this article consistent  
            with Part 6 (commencing with Section 38580) of Division 25.5  
            of the Health and Safety Code.  Any penalties imposed shall be  
            comparable to those adopted by the commission for  
            noncompliance by retail sellers.   impose penalties comparable  
            to those adopted by the commission for noncompliance by retail  
            sellers.  Any penalties collected under this article shall be  
            deposited into the Electric Program Investment Charge Fund and  
            used for the purposes described in Chapter 8.1 (commencing  
            with Section 25710) of Division 15 of the Public Resources  
            Code.   
             (2) If Division 25.5 (commencing with Section 38500) of the  
            Health and Safety Code is suspended or repealed, the State Air  
            Resources Board may take action to enforce this article on  
            local publicly owned electric utilities consistent with  
            Section 41513 of the Health and Safety Code, and impose  
            penalties on a local publicly owned electric utility  
            consistent with Article 3 (commencing with Section 42400) of  
            Chapter 4 of Part 4 of, and Chapter 1.5 (commencing with  
            Section 43025) of Part 5 of, Division 26 of the Health and  
            Safety Code.  
             (3) For the purpose of this subdivision, this section is an  
            emissions reduction measure pursuant to Section 38580 of the  
            Health and Safety Code.  
             (4) If the State Air Resources Board has imposed a penalty  
            upon a local publicly owned electric utility for the utility's  
            failure to comply with this article, the State Air Resources  
            Board shall not impose an additional penalty for the same  
            infraction, or the same failure to comply, with any renewables  
            procurement requirement imposed upon the utility pursuant to  








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            the California Global Warming Solutions Act of 2006 (Division  
            25.5 (commencing with Section 38500) of the Health and Safety  
            Code).  
            Any penalties collected by the State Air Resources Board  
            pursuant to this article shall be deposited in the Air  
            Pollution Control Fund and, upon appropriation by the  
            Legislature, shall be expended for reducing emissions of air  
            pollution or greenhouse gases within the same geographic area  
            as the local publicly owned electric utility.
             (o) The commission has no authority or jurisdiction to enforce  
            any of the requirements of this article on a local publicly  
            owned electric utility.  


           4)Energy Efficiency:   SB 350 adopts the Governor's goal  
            regarding doubling the efficiency of existing buildings.  A  
            variety of evaluation reports commissioned by the CPUC over  
            the past several years have evaluated programs designed to  
            improve energy efficiency in existing buildings. They have  
            found that energy estimation tools overstate energy use  
            estimates, that health and safety problems result from poor  
            workmanship and faulty installation of insulation and heating  
            and air conditioning systems, and overstated savings claims.   
            These reports illustrate that more work is needed to ensure  
            that energy efficiency goals are actually achieved and that  
            ratepayer funds spent on these programs are justified.   
            Addressing workmanship and overstated claims will help to  
            encourage greater customer confidence in energy efficiency  
            products and services.



            In addition, the current language in the bill is ambiguous  
            about whether a doubling of energy efficiency is to be  
            achieved in each building or overall.  Some building owners  
            have already invested in reducing energy consumption so it may  
            not be possible to double the energy efficiency of an  
            individual building.  If the goal were clarified such that the  
            doubling of energy efficiency is an overall goal, it would  








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            allow flexibility in program design to target those buildings  
            where energy efficiency can be cost-effectively achieved.  In  
            addition, there are various interpretations of the meaning of  
            energy efficiency which can lead to confusion about the  
            objective. A definition of energy efficiency would provide  
            greater clarity to the purpose of this statute.





             The author may wish to consider the following amendments:





             25943. (a)  (3) As used in this section, energy efficiency means  
            delivering equal or more services with less energy input from  
            an energy source.  





            25943. (a)  (4) The commission shall adopt, implement, and  
            enforce a policy to hold sellers of energy efficiency  
            improvements financially responsible for sales claims of  
            energy savings from energy efficiency improvements that are  
            not met.  

            25943. (a)  (5). The commission shall adopt, implement, and  
            enforce a responsible contractor policy for use across all  
            ratepayer-funded energy efficiency programs that involve  
            installation and/or maintenance by building contractors to  
            ensure that retrofits meet high-quality performance standards  
            and reduce energy savings lost or foregone due to poor-quality  
            workmanship. 
             








                                                                     SB 350


                                                                    Page  22







            25943. (f)(2) (2) On or before January 1, 2017, and at least  
            once every three years thereafter, the commission shall adopt  
            an update to the program in furtherance of achieving  a   an  
            overall  doubling of the energy efficiency of buildings by  
            January 1, 2030.





           5)Petroleum fuel reduction:   SB 350 establishes CARB authority  
            to reduce petroleum use in the transportation sector by 50% by  
            2030.  The petroleum use reduction goal articulated by the  
            Governor was: "Reduce today's petroleum use in cars and trucks  
            by up to 50 percent."  The Governor's goal state that his  
            petroleum use reduction is  up to 50%  and SB 350 states that  
            CARB is to adopt and implement motor vehicle emission  
            standards, in-use performance standards, and motor vehicle  
            fuel specifications for the control of air contaminants and  
            sources of air pollution which the state board has found to be  
            necessary, cost effective, and technologically feasible, to  
            carry out the purposes of this division and in furtherance of  
            achieving a reduction in petroleum use in motor vehicles  by 50  
            percent  by January 1, 2030,  unless preempted by federal law.



            As written, SB 350 does not specify the means by which CARB  
            will pursue reducing petroleum fuel use. It provides the CARB  
            with broad authority to enact rules to implement the  
            requirement.





             The author may wish to consider an amendment to provide an  








                                                                     SB 350


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            opportunity for Legislative oversight on the CARB's strategy  
            and implementation plan toward achieving the petroleum  
            reduction goal.


            No later than January 1, 2017, the state board, after one or  
            more public workshops, shall prepare a strategy and  
            implementation plan to achieve a reduction in petroleum use in  
            motor vehicles by 50% by January 1, 2030, and provide a copy  
            of the strategy and plan to the appropriate policy committees  
            of the Senate and Assembly.  Beginning January 1, 2020, and  
            every three years thereafter the state board shall provide an  
            update to the strategy and plan which reflects any changes  
            made to the strategy and plan.


             The RPS is an electricity procurement requirement and as such,  
            the transportation electrification issues are related to  
            integration of renewables into the electric generation  
            resource mix in a manner that ensures a safe, reliable, and  
            affordable electricity system. However, with respect to  
            petroleum fuel reductions, there are also opportunities  
            available to provide petroleum reduction through natural gas  
            vehicles, particularly heavy duty vehicles or fuel cell  
            vehicles.  These other forms of transportation fuels should  
            also be considered, particularly with respect to the use of  
            heavy duty vehicles used to move freight from port areas.   
            Heavy duty freight movement tends to focus in areas occupied  
            by low-income and disadvantaged communities - resulting in  
            concentration of pollution from petroleum-fueled heavy duty  
            vehicles.

            Fuel cell vehicles, which are just now coming to market, have  
            shorter refueling times and (currently) equal or better  
            driving range than their all-electric counterpart.  Recent  
            innovations to provide ride sharing services and shared  
            vehicle programs are also potential ways to reduce petroleum  
            use.









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                                                                    Page  24





             Ensuring that the all options for reducing petroleum use are  
            considered, the author may wish to consider an amendment to  
            include that the CPUC prioritize natural gas, fuel cell  
            technologies, or other innovations, as well as transportation  
            electrification.
             
            Add section 740.1.5 to the Public Utilities Code as follows:
             740.1.5   (a) Transportation electrification, natural gas  
            vehicles, fuel cell vehicles, and transportation innovations  
            are needed to reduce petroleum use, to meet air quality  
            standards, improve public health and to achieve greenhouse gas  
            emission reduction goals.
            (b) Widespread transportation electrification is needed to  
            achieve the goals included in Section 44258 of the Health and  
            Safety Code (the Charge Ahead California Initiative).
            (c) Reducing emissions of greenhouse gases to 40 percent below  
            1990 levels by 2030, and to 80 percent below 1990 levels by  
            2050 will require widespread transportation electrification.
            (d) Widespread transportation electrification requires  
            electrical corporations to increase access to the use of  
            electricity as a transportation fuel.
            (e) Deploying electric vehicles should assist in integrating  
            generation from eligible renewable energy resources and reduce  
            fuel costs for vehicle drivers who charge in a manner  
            consistent with electric grid conditions.  
            (f) Deploying electric vehicle charging infrastructure should  
            facilitate increased sales of electric vehicles by making  
            charging easily accessible and should provide the opportunity  
            to access electricity as a fuel that is cleaner than gasoline  
            or other fossil fuels.
            (g) Deploying natural gas and fuel cell fueling infrastructure  
            should facilitate increased sales of natural gas or fuel cell  
            vehicles by making refueling easily accessible and should  
            provide the opportunity to access fuels that are cleaner than  
            gasoline.
            (h) It is the policy of this state and the intent of the  
            Legislature to encourage transportation electrification, heavy  
            duty natural gas vehicles, fuel cell vehicles, and  
            transportation innovation as a means to achieve ambient air  








                                                                     SB 350


                                                                    Page  25





            quality standards and the state's climate goals.  (i) Light,  
            medium and heavy duty vehicle electrification results in  
            approximately 70% less greenhouse gases emitted, over 85% less  
            ozone forming air pollutants emitted and 100% less petroleum  
            used according the State Alternative Fuels Plan analysis by  
            the Energy Commission and the Air Resources Board.  These  
            reductions will get larger as renewable generation increases.   

            (j) Agencies designing and implementing regulations,  
            guidelines, plans and funding programs to reduce greenhouse  
            gas emissions should take these findings into account.

            6)CPUC and CEC authority to address clean energy and pollution  
            reduction:   SB 350 provides direction to both the CPUC and CEC  
            with respect to the goals and providing economic and  
            environmental benefits, particularly to disadvantaged  
            communities.  It also provides guidance that the CPUC and CEC  
            take into account other tools that provide a means to address  
            increasing the use of clean energy and reducing pollution,  
            such as on-site renewable generation, demand response, energy  
            efficiency, and energy storage.  



            The author may wish to consider amendments to clarify the  
            roles of the CPUC and CEC in working toward the goals in SB  
            350.





             Add section 400 to the Public Utilities Code as follows:

             Article  17. Clean Energy and Pollution Reduction
            400.  The commission and the California Energy Commission  
            shall do all of the following in furtherance of meeting the  
            state's clean energy and pollution reduction objectives:
            (a) Take into account the use of distributed generation to the  








                                                                     SB 350


                                                                    Page  26





            extent that it provides economic and environmental benefits in  
            disadvantaged communities as identified pursuant to Section  
            39711 of the Health and Safety Code.
            (b) Take into account opportunities to decrease costs and  
            increase benefits, including pollution reduction, of grid  
            integration using technologies with zero on-site greenhouse  
            gas emissions in proceedings associated with meeting the  
            objectives.
            (c) Where feasible, authorize procurement of resources to  
            provide grid reliability services that minimize reliance on  
            system power and fossil fuel resources and, where feasible,  
            cost-effective, and consistent with other state policy  
            objectives, increase the use of large and small scale energy  
            storage with a variety of technologies, targeted energy  
            efficiency, demand response, eligible renewable energy  
            resources, and other or  other technologies with zero on-site  
            greenhouse gas emissions to protect system reliability.
            (d) Review technology incentive, research, development, and  
            deployment, and market facilitation programs overseen by the  
            commission and the California Energy Commission and make  
            recommendations to advance state clean energy and pollution  
            reduction objectives, and that provide benefits to  
            disadvantaged communities as identified pursuant to Section  
            39711 of the Health and Safety Code.
            (e) To the extent feasible, give first priority to the  
            manufacture and deployment of clean energy and pollution  
            reduction technologies that create employment opportunities,  
            including high wage, highly skilled employment opportunities,  
            and increased investment in the state. 
            


          7)Oversight and Accountability:   One of the issues not currently  
            addressed in SB 350 is Legislative oversight.  In 2015, a  
            number of disturbing revelations have been made about the CPUC  
            that have resulted in investigations that are underway by the  
            State Attorney General and the U.S. Attorney General.   
            Ensuring that the multiple state agencies involved in  
            achieving these goals are working effectively, in an open and  








                                                                     SB 350


                                                                    Page  27





            transparent manner, toward reducing greenhouse gas emissions  
            and increasing the use of clean generation is vital to  
            California's citizens with respect to climate and economy.



             The author may wish to consider amendment to:  establish a  
            publicly available tracking system to track progress toward  
            the goals and an annual joint progress report to the  
            Legislature.





             Add section 400 to the Public Utilities Code as follows:


             


            400(f). Establish a publicly available tracking system to  
            provide up to date information on progress toward meeting the  
            clean energy and pollution reduction goals of the Clean Energy  
            and Pollution Reduction Act of 2015.





             In addition, much has been said about whether clean  
            technologies and climate change programs are reaching  
            Disadvantaged Communities when many of the products and  
            services are beyond the means of those who live in these  
                                                                       communities.  For example, most workplace charging is targeted  
            for parking lots and airports rather than providing workplace  
            charging for people employed at service industries such as  
            fast-serve restaurants and shopping areas.  A better  
            understanding of the needs of the disadvantaged communities  








                                                                     SB 350


                                                                    Page  28





            and low-income communities may provide programs that are more  
            useful and successful. 


             


            The author may wish to consider an amendment to create an  
            Advisory Group to provide feedback to the CARB, CEC, and CPUC  
            on proposed programs and whether the proposed program would be  
            effective and useful in disadvantaged communities.


              
            400(f) Establish an Advisory Group made up of representatives  
            from Disadvantaged Communities.  The role of the Advisory  
            Group is to review and provide advice on programs proposed to  
            achieve clean energy and pollution reduction and whether those  
            proposed programs will be effective and useful in  
            disadvantaged communities.

            8)Support and Opposition:



             Supporters state that SB 350 would:
            
             a)   Help execute Governor Browns inaugural address goals,  
               and work in parallel with the administration's ongoing  
               objective of advancing localized renewable resources,
             b)   Advance a clean energy economy,
             c)   California's current fossil fuel economy is built on  
               "shifting sands" and California needs a more sustainable  
               and stable energy foundation,
             d)   Californians have already started to experience the  
               punishing effects of climate change with the current  
               drought,
             e)   Encourages large scale solar projects, and provides an  
               important hedge against the volatility of conventional  








                                                                     SB 350


                                                                    Page  29





               power sources,
             f)   Would create a substantial amount of jobs, especially in  
               the construction sector, 
             g)   Continues California's leadership in the fight to  
               address and adapt to climate change, 
             h)   The scale of climate change justifies the ambitious  
               nature of SB 350,
             i)   Climate change is inherently linked to public health, is  
               the biggest threat to public health,
             j)   Has been strategically designed to meet its ambitious  
               goals in a realistic and efficient way,
             aa)  Enhancing coordination among departments and agencies  
               could have cost, reliability and clean energy benefits, and
             bb)  Appropriately counts distributed solar generation  
               systems as a renewable resource

            Opponents state that:  
                               
             a)   This bill reduces the availability of vital  
               transportation files, 
             b)   The renewable energy standards are not feasible for  
               businesses or consumers,
             c)   Biofuels and electric cars are not available on a  
               consumer scale, and appeal to a very specific and exclusive  
               demographic of Californians,

             d)   California already has an overly aggressive climate  
               policy with AB 32,  

             e)   Disadvantaged communities will suffer the most from  
               rising transportation costs,

             f)   SB 350 harms job creation by burdening nearly every  
               business in California,

             g)   California already has some of the highest taxes in the  
               nation, and this bill will drive taxes even higher,

             h)   Further disadvantages California businesses, especially  








                                                                     SB 350


                                                                    Page  30





               when competing with other states,

             i)   Most economists believe that a well-designed cap and  
               trade bill is the best way to reduce carbon emissions, 

             j)   Sector-specific approach to regulation is too costly, 

             aa)  Energy manufacturers already pay nearly 70% above the  
               national average to operate in California,

             bb)  Higher renewable energy targets will threaten  
               affordability and reliability, 

             cc)  SB 350 gives non-elected Air Resources Board too much  
               power, and 

             dd)  Any regulation that extends beyond the year 2020 should  
               allow for flexibility, which 

          SB 350 does not.  



           1)Related Legislation:  

            AB 197 (Eduardo Garcia):  This bill would revise electricity  
            procurement requirements under the RPS.   

            AB 645 (Williams):  This bill would increase the RPS from 33%  
            to 50%.   

            AB 793 (Quirk):  This bill requires that weatherization  
            programs for low-income customers, administered by electrical  
            and gas corporations, include home energy management  
            technology and education programs on how to use advanced  
            meters

            AB 1013 (Quirk):  This bill would make various changes in  
            statutes related to the CEC building energy efficiency  








                                                                     SB 350


                                                                    Page  31





            standards.   

            AB 1094 (Williams): This bill requires the CEC, in  
            collaboration with the CPUC, to set greenhouse gas reduction  
            targets for plug-in equipment based on analysis of plug-in  
            equipment energy consumption.   

            AB 1144 (Rendon):  This bill provides that unbundled renewable  
            energy credits produced by newly established wastewater  
            treatment facilities may be used to meet the first category of  
            the RPS content requirements.   
            
            AB 1150 (Levine):  This bill expands the existing Energy  
            Efficiency Partnership Program between the University of  
            California and IOUs to include POUs that are willing to  
            participate in the program.   
                                          
            AB 1330 (Bloom):  This bill establishes an annual energy  
            efficiency resource standard.   

            AB 590 (Dahle):  This bill creates the Biomass State Cost  
            Share Account within the Greenhouse Gas Reduction Fund (GGRF)  
            and requires an unspecified amount to be transferred annually  
            from the GGRF to the Account, to be available for purposes, as  
            specified.   
              
            AB 802 (Williams):  This bill requires the CPUC to authorize  
            electrical corporations to administer a program for improving  
            existing building energy efficiency. 

            AB 1132 (Ting):  This bill requires the CPUC to submit an  
            annual report on distributed generation to the Legislature and  
            to include an evaluation of the current use of green workforce  
            training programs related to distributed generation.  

            SB 286 (Hertzberg):  This bill authorizes 8,000 gigawatt-hours  
            of direct electricity transactions between electricity  
            providers and non-residential customers of electrical  
            corporations to be made available over a specified period. All  








                                                                     SB 350


                                                                    Page  32





            electricity provided must meet the definition of renewables  
            within the RPS.   

            SB 502 (Leno):  This bill authorizes the San Francisco Bay  
            Area Rapid Transit District to purchase electricity generated  
            by an eligible renewable energy resource eligible under  
            California's RPS Program.   

            SB 765 (Wolk):  This bill creates an Energy Efficiency Market  
            Transformation Administrator, requires the CPUC to contract  
            with the administrator, and allocates funds from ratepayers to  
            fund Administrator activities.   

            SB 793 (Wolk):  This bill permits a participating customer to  
            subscribe to a Green Tariff Shared Renewable Program and  
            receive a reasonably estimated bill credit and bill charge, as  
            determined by the commission, for a period of up to 20 years.   


            SR 37 (De León):  This bill directs members of the  
            Legislature, the Governor and executive branch, Congress, and  
            the President to consider the Papal encyclical on climate  
            change in relevant legislative action.  



           2)Prior Legislation:
             


            SB 2 x 1 (Simitian) 2011:  Revised the RPS to 20% by 2020.   
            Chaptered by Secretary of State - Chapter 1, Statutes of 2011.





            SB 107 (Simitian) 2006:  Accelerated the 20% RPS to 2010.   
            Chaptered by Secretary of State -  Chapter 464, Statutes of  








                                                                     SB 350


                                                                    Page  33





            2006.





            SB 1079 (Sher) 2002:  Established the 20% by 2017 RPS.   
            Chaptered by Secretary of State - Chapter 516, Statutes of  
            2002.





           3)Double Referred:   This bill is double referred to the Assembly  
            Committee on Natural Resources.  
             


          REGISTERED SUPPORT / OPPOSITION:




          Support

          350 Bay Area
          350 Sacramento
          American Academy of Pediatrics-California
          American Cancer Society Action Network, California
          American Lung Association, California
          Asian Pacific Environmental Network 
          Asthma Coalition of Los Angeles County 
          Audubon California
          Azul
          Baz Allergy, Asthma and Sinus Center
          Berkshire Hathaway Energy
          Blattner Energy
          Bonnie J. Adarlo Lung Cancer Foundation








                                                                     SB 350


                                                                    Page  34





          Breathe CA
          BYD Motors, Inc. 
          California Bicycle Coalition
          California Black Health Network
          California Conference of Directors of Environmental Health
          California Environmental Justice Alliance and CEJA Action
          California Energy Efficiency Industry Council 
          California Hydropower reform Coalition 
          California League of Conservation Voters 
          California Municipal Utilities Association (if amended)
          California Nurses Association 
          California Pan Ethnic Health Network
          California Public Health Association - North
          California Solar Energy Industries Association (if amended)
          California State Association of Electrical Workers 
          California State Pipe Trades Council
          California Thoracic Society
          California Wind Energy Association 
          Californians Against Waste
          California Voices for Progress
          CALSTART
          Catholic Charities, Diocese of Stockton
          Center for Biological Diversity
          Center for Climate Change and Health; Public Health Institute
          Center on Race, Poverty and the Environment
          Center for Community Action and Environmental Justice
          Central Coast Alliance United for a Sustainable Economy
          Central California Asthma Collaborative
          ChargePoint, Inc.
          Circulate San Diego
          Clean Energy
          Clean Power Campaign 
          Clean Water Action
          Cleveland National Forest Foundation
          Climate Action Campaign
          Climate Resolve
          Coalition of California Utility Employees 
          Coalition for Clean Air
          Coastal Environment Rights Foundation








                                                                     SB 350


                                                                    Page  35





          Communities for a Better Environment
          County of Los Angeles Public Health 
          Covanta (if Amended)
          Dignity Health
          Doctors for Climate Health
          Endangered Habitats League
          Environment California
          Environmental Action Committee of West Marin
          Environmental Defense Fund 
          Environmental Health Coalition
          First Solar
          Friends Committee on Legislation of California 
          Friends of the River
          Health Care Without Harm
          Large-Scale Solar Association (LSA)
          Leadership Counsel for Justice and Accountability
          League of Women Voters of California
          Lutheran Office of Public Policy, California
          McCarthy Building Companies, Inc.
          Medical Advocates for Healthy Air
          Moms Clean Air Force
          National Nurses United
          National Parks Conservation Association 
          Natural Resource Defense Council 
          NextGen Climate
          NEXTracker, Inc.
          Office of Ratepayer Advocates 
          Pacoima Beautiful
          People Organizing to Demand Environmental and Economic Rights
          Physicians for Social Responsibility - Los Angeles
          Planning and Conservation League
          Public Health Institute
          Recurrent Energy
          Regional Asthma Management and Prevention 
          Sacramento Municipal Utility District (if Amended) 
          San Diego County Water Authority (if Amended)
          San Francisco Asthma Task Force
          San Francisco Bay Area Chapter, Physicians for Social  
          Responsibility








                                                                     SB 350


                                                                    Page  36





          Santa Clara County Medical Society
          School Energy Coalition 
          Sequoia Riverlands Trust
          Sierra Business Council
          Sierra Club
          Signal Energy, LLC
          Sonoma County Asthma Coalition
          Southwest Wetlands Interpretive Association
          SunEdison
          SunPower Corporation
          The Utility Reform Network 
          TransForm 
          Tree People
          Trust for Public Lands
          Union of Concerned Scientists
          Western State Sheet Metal Workers
          Wireless Advanced Vehicle Electrification



          Opposition


          


          Agricultural Council of California
          Associated Builders and Contractors of California
          Associated General Contractors
          Building Owners and Managers Association
          California Association of Nurseries and Garden Centers
          California Cotton Ginners Association
          California Cotton Growers Association
          California Dairies, Inc.
          California Farm Bureau Federation
          California Fresh Fruit Association
          California Manufacturers & Technology Association 
          California Metals Coalition
          California Retailers Association








                                                                     SB 350


                                                                    Page  37





          Garden Grove Chamber of Commerce
          California Construction Trucking Association
          California Independent Oil Marketers Association
          California Independent Petroleum Association
          California League of Food Processors 
          California Manufacturer and Technology Association
          California Small Business Alliance
          California Small Business Association
          CalTax
          Coalition of Energy Users
          Family Business Association
          Far West Equipment Dealers Association
          Fullerton Association of Concerned Taxpayers
          Howard Jarvis Taxpayers Association
          Independent Oil Producers Agency
          Industrial Association of Contra Costa County
          Industrial Environmental Association
          International Warehouse Logistics Association
          Kern Citizens for Energy
          Kern Citizens for Sustainable Government
          Kern County Board of Supervisors
          Kern County Taxpayers Association
          Long Beach Area Chamber of Commerce
          NAIOP - Commercial Real Estate Development Association
          National Association of Royalty Owners
          National Association of Royalty Owners - California
          National Federation of Independent Business/California
          National Tank Truck Carriers
          Placer County Taxpayers Association
          Regional Hispanic Chambers of Commerce
          San Diego Tax Fighters
          Santa Barbara County Taxpayers Association
          Santa Barbara Technology and Industry Association
          Simi Valley Chamber of Commerce
          Southwest California Legislative Council
          Small Business Action Committee
          Torrance Area Chamber of Commerce
          Valley Industry & Commerce Association
          West Coast Lumber and Building Material Association








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                                                                    Page  38





          Western Agricultural Processors Association
          Western Aerosol Information Bureau
          Western Growers Association
          Western Plant Health Association
          Western States Petroleum Association 
          Wilmington Chamber of Commerce


          Analysis Prepared by:Sue Kateley / U. & C. / (916)  
          319-2083