BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                        SB 970|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |

                                   THIRD READING 

          Bill No:  SB 970
          Author:   Leyva (D) 
          Amended:  5/10/16  
          Vote:     21 

           AYES:  Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley


           SUBJECT:   Greenhouse Gas Reduction Fund:  grant program:   
                     recyclable materials

          SOURCE:    Inland Empire Utilities Agency

          DIGEST:  This bill requires the Department of Resources  
          Recycling and Recovery (CalRecycle), in awarding a grant for  
          organics composting or anaerobic digestion via the Organics  
          Grant Program (OGP), to consider specified factors, such as the  
          amount of greenhouse gas emissions reductions that may result  
          from the project.


          Existing law:  

          1)Enacts the Integrated Waste Management Act of 1989 (Public  
            Resources Code (PRC) §40000 et seq.) which:

             a)   Establishes a statewide diversion goal of 75% by 2020.  

             b)   Requires local agencies to divert, through source  
               reduction, recycling, and composting, 50% of solid waste  
               disposed by their jurisdictions.  


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             c)   Requires a commercial waste generator, including  
               multi-family dwellings, to arrange for recycling services  
               and requires local governments to implement commercial  
               solid waste recycling programs designed to divert solid  
               waste from businesses.

             d)   Requires generators of specified amounts of organic  
               waste to arrange for recycling services for that material. 

          2)Establishes the Greenhouse Gas Reduction Fund (GGRF) in the  
            State Treasury, requires all moneys, except for fines and  
            penalties, collected pursuant to a market-based mechanism be  
            deposited in the fund and requires the Department of Finance,  
            in consultation with ARB and any other relevant state agency,  
            to develop, as specified, a three-year investment plan for the  
            moneys deposited in the GGRF.  (Government Code §16428.8).

          3)Prohibits the state from approving allocations for a measure  
            or program using GGRF moneys except after determining that the  
            use of those moneys furthers the regulatory purposes of AB 32,  
            and requires moneys from the GGRF be used to facilitate the  
            achievement of reductions of GHG emissions in California.   
            (Health and Safety Code §39712). 

          4)Requires the CalRecycle to administer a grant program to  
            provide financial assistance to reduce GHG emissions by  
            promoting in-state development and infrastructure to process  
            organics and other recyclable materials into new value-added  
            products, using funding from GGRF.  Specifies that the funding  
            may be used for projects including organics composting,  
            anaerobic digestion, or recyclable material manufacturing  
            infrastructure projects or other related activities that  
            reduce GHG emissions.  (PRC §42999).

          This bill requires CalRecycle, in awarding a grant for organics  
          composting or anaerobic digestion via the Organics Grant Program  
          (OGP), to consider the following:

          1)The amount of GHG emissions reductions that may result; 


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          2)The amount of organic material that may be diverted from  

          3)If, and how, the project may benefit disadvantaged  

          4)Project readiness and permitting required; and, 

          5)Air and water quality benefits.


          1)Statewide waste diversion goals.  

          CalRecycle is tasked with diverting at least 75% of solid waste  
            statewide by 2020.  Currently, an estimated 31 million tons of  
            waste are disposed of in California's landfills annually, of  
            which 37% is compostable organic materials, 20% is inert and  
            other construction and demolition debris, and 17% is paper and  
            paperboard, 10% plastics, 3% metal, with the remaining 12%  
            consisting of various materials such as glass and other waste.  

          In addition, CalRecycle is charged with implementing Strategic  
            Directive 6.1, which calls for reducing organic waste disposal  
            by 50% by 2020.  According to CalRecycle, significant gains in  
            organic waste diversion (through recycling technologies or  
            organic waste, including composting and anaerobic digestion)  
            are necessary to meet the 75% goal and to implement Strategic  
            Directive 6.1.

          2)Recycling organic waste.  

          For purposes of recycling, "organic waste" is defined as food  
            waste, green waste, landscape and pruning waste, nonhazardous  
            wood waste, and food-soiled paper waste that is mixed in with  
            food waste.  Organic material represents over one-third of the  
            solid waste sent to landfills even though a large percentage  
            can be recycled or composted - Approximately 6 million tons of  
            food scraps are thrown away each year.  

          Recycling technologies for organic waste include anaerobic  


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            digestion, composting, and other types of processing that  
            generate renewable fuels, energy, soil amendments, and mulch.   
            Anaerobic digestion, which produces biogas that can be  
            processed into biomethane fuel, is particularly suited to  
            handle food waste.  

          3)Waste reduction and GHGs.  

          According to the California Air Resources Board (ARB), a total  
            reduction of 80 million metric tons (MMT), or 16% compared to  
            business as usual, is necessary to reduce statewide GHG  
            emissions to 1990 levels by 2020.  ARB intends to achieve  
            approximately 78% of the reductions through direct  
            regulations.  ARB proposes to achieve the balance of  
            reductions necessary to meet the 2020 limit (approximately 18  
            MMT) through its cap-and-trade program.  

          Landfill gas is generated by the anaerobic decomposition of  
            organic materials such as food, paper, wood, and green  
            material.  50% of landfill gas is methane, a GHG with a much  
            shorter life (also known as a short-lived climate pollutant),  
            but much higher global warming potential than carbon dioxide  
            (methane is approximately 25 times more efficient at trapping  
            heat than carbon dioxide over a 100-year time span).   
            Depending on the types of solid waste, the chemical makeup of  
            landfill biogas can vary greatly from the biogas produced from  
            dairy farms, municipal solid waste, and wastewater treatment  
            facilities.  While most modern landfills have systems in place  
            to capture methane, significant amounts continue to escape  
            into the atmosphere.  According to ARB's GHG inventory,  
            approximately 7 million tons of carbon dioxide equivalent are  
            released annually by landfills.  That number is expected to  
            increase to 8.5 million tons of carbon dioxide equivalent by  

          Composting and other organics processing technologies, including  
            anaerobic digestion, reduce GHGs by avoiding the emissions  
            that would be generated by the material's decomposition in a  
            landfill.  For example, in the case of anaerobic digestion,  
            the process produces methane from the organic waste in a  
            controlled environment for use as a renewable fuel, and  
            results in climate benefits by both reducing GHGs from  


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            landfills, and displacing fossil fuels.  Recycling organic  
            waste provides significant GHG reductions over landfilling.  

          4)Organics Grant Program (OGP).  

          OGP includes a competitive grant program created for the purpose  
            of lowering overall GHG emissions by expanding existing  
            capacity or establishing new facilities in the state to reduce  
            the amount of California-generated green materials, food  
            materials, or alternative daily cover being sent to landfills.  
             Eligible projects include construction, renovation or  
            expansion of facilities in California that compost,  
            anaerobically digest, or use other related digestion or  
            fermentation processes to turn green or food materials into  
            value-added projects.  The projects must result in permanent,  
            annual, and measurable: i) reductions in GHG emissions from  
            the handling and landfilling of California-generated green and  
            food materials; and, ii) increases in quantity (tons) of  
            California-generated green materials, food materials, or  
            alternative daily cover diverted from landfills and composted,  
            digested or diverted to other fermentation processes.  

          5)Cap-and-trade auction revenue.  

          Since November 2012, ARB has conducted 14 cap-and-trade  
            auctions, generating over $4 billion in proceeds to the state.  

            State law specifies that the auction revenues must be used to  
            facilitate the achievement of GHG emissions reductions and  
            outlines various categories of allowable expenditures.   
            Statute further requires the Department of Finance, in  
            consultation with ARB and any other relevant state agency, to  
            develop a three-year investment plan for the auction proceeds,  
            which are deposited in the GGRF.  

            Disadvantaged communities.  

            SB 535 (de León, Chapter 830, Statutes of 2012) requires the  
            Department of Finance, in the investment plan, to allocate at  
            least 25% of available moneys in the GGRF to projects that  
            provide benefits to disadvantaged communities, and at least  


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            10% to projects located within disadvantaged communities.  

            To meet the SB 535 mandate, the Office of Environmental Health  
            Hazard Assessment, under CalEPA's guidance, developed a tool  
            (termed CalEnviroScreen) to assess and rank census tracts  
            across the state that are disproportionately affected by  
            multiple types of pollution and areas with vulnerable  
            populations. CalEPA has designated 25% of census tracts in  
            California as disadvantaged communities for the purpose of  
            investing cap-and-trade proceeds.  

            Additionally, SB 862 (Committee on Budget and Fiscal Review,  
            Chapter 36, Statutes of 2014) requires ARB to develop  
            guidelines on maximizing benefits for disadvantaged  
            communities by agencies administering GGRF funds. 

            Legal consideration of cap-and-trade auction revenues.  

            The 2012-13 Budget analysis of cap-and-trade auction revenue  
            by the Legislative Analyst's Office noted that, based on an  
            opinion from the Office of Legislative Counsel, the auction  
            revenues should be considered mitigation fee revenues, and  
            their use requires that a clear nexus exist between an  
            activity for which a mitigation fee is used and the adverse  
            effects related to the activity on which that fee is levied.   
            Therefore, in order for their use to be valid as mitigation  
            fees, revenues from the cap-and-trade auction must be used to  
            mitigate GHG emissions or the harms caused by GHG emissions. 

            In 2012, the California Chamber of Commerce filed a lawsuit  
            against the ARB claiming that cap-and-trade auction revenues  
            constitute illegal tax revenue.  In November 2013, the  
            superior court ruling declined to hold the auction a tax,  
            concluding that it is more akin to a regulatory fee.  In  
            February of 2014, the plaintiffs filed an appeal with the 3rd  
            District Court of Appeal in Sacramento. That case is currently  

          Purpose of Bill.  


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          According to the author, "California must achieve deep  
          reductions in short-lived climate pollutants by 2030 in order to  
          meet future greenhouse gas emission targets and air quality  
          goals.  Short lived climate pollutants (SLCP), also known as  
          "Super Pollutants," have a much greater warming effect than CO2.  
           This means that reducing SLCPs such as methane will have a  
          significant impact on reducing our greenhouse gas emissions.   
          Cutting methane emissions from solid waste disposal is a key  
          state strategy to slow global warming and reduce the impacts of  
          climate change."
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          SUPPORT:   (Verified5/18/16)

          Inland Empire Utilities Agency (source)

          OPPOSITION:   (Verified5/18/16)

          None received

          Prepared by:Joanne Roy / E.Q. / (916) 651-4108
          5/18/16 16:27:51

                                   ****  END  ****


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