BILL ANALYSIS                                                                                                                                                                                                    

                                                                    SB 1074

                                                                    Page  1

          Date of Hearing:  June 29, 2016


                                  Mike Gatto, Chair

          1074 (Hueso) - As Amended June 20, 2016

          SENATE VOTE:  29-9

          SUBJECT:  Energy:  Federal Trust Fund:  geothermal projects

          SUMMARY:  Appropriates $13 million to the California Energy  
          Commission (CEC) from the American Recovery and Reinvestment Act  
          of 2009 (ARRA) in the Federal Trust Fund, and allocates $2.5  
          million, for the 2016-17 fiscal year and annually thereafter, to  
          be expended towards specified projects, including geothermal  
          brine treatment projects.  Specifically, this bill: 

          1)Appropriates $13 million, for the 2016-17 fiscal year, to the  
            CEC from the ARRA in the Federal Trust Fund for specified  

          2)Allocates $2.5 million of the $13 million appropriated to the  
            CEC for the 2016-17 fiscal year, from the ARRA in the Federal  
            Trust Fund, to be expended towards specified projects.

          3)Allocates $2.5 million annually for the 2017-18 fiscal year  
            and each fiscal year thereafter, until all moneys in the  


                                                                    SB 1074

                                                                    Page  2

            Federal Trust Fund derived from the ARRA has been encumbered  
            or expend to be continuously appropriated to the CEC for  
            specified purposes. 

          4)Authorizes projects to recover lithium, metals, agricultural  
            products, and other beneficial minerals from highly  
            mineralized geothermal brines at an existing geothermal  
            facility that is in a disadvantaged community and provides  
            local employment opportunities to receive specified funds. 

          5)Requires the CEC to issue a competitive solicitation for  
            specified projects no later than February 1, 2017. 

          EXISTING LAW:   

          1)Authorizes specified federal funds available to the CEC to be  
            used to augment funding for any specified programs or measures  
            unless prohibited by the ARRA. (Public Resources Code Section  

          2)Establishes the Geothermal Resource Development Account to  
            promote the development of new or existing geothermal  
            resources and technologies.  (Public Resources Code Section  
            3820 et seq.)

          3)Requires revenues from the Geothermal Resource Development  
            Account, disbursed to specified counties of origin and grants  
            or specified loans made to local jurisdictions or private  
            entities to be expended by recipients for the following  

             a)   Undertaking research and development projects relating  


                                                                    SB 1074

                                                                    Page  3

               to geothermal resource assessment and exploration, and  
               direct-use and electric generation technology.

             b)   Local and regional planning and policy development and  
               implementation necessary for compliance with programs  
               required by local, state, or federal laws and regulations.

             c)   Identification of feasible measures that will mitigate  
               the adverse impacts of the development of geothermal  
               resources and the adoption of ordinances, regulations, and  
               guidelines to implement those measures.

             d)   Collecting baseline data and conducting environmental  

             e)   Preparation or revision of geothermal resource elements,  
               or geothermal components of energy elements, for inclusion  
               in the local general plan, zoning and other ordinances, and  
               related planning and environmental documents.

             f)   Administrative costs incurred by the local jurisdiction  
               that are attributable to the development or production of  
               geothermal resources.

             g)   Monitoring and inspecting geothermal facilities and  
               related activities to assure compliance with applicable  
               laws, regulations, and ordinances.

             h)   Identifying, researching, and implementing feasible  
               measures that will mitigate the adverse impacts of that  
               development or production.


                                                                    SB 1074

                                                                    Page  4

             i)   Planning, constructing, providing, operating, and  
               maintaining those public services and facilities that are  
               necessitated by and result from the development or  

             j)   Undertaking projects demonstrating the technical and  
               economic feasibility of geothermal direct heat and  
               electrical generation applications.

             aa)  Undertaking projects for the enhancement, restoration,  
               or preservation of natural resources, including, but not  
               limited to, water development, water quality improvement,  
               fisheries enhancement, and park and recreation facilities  
               and areas.  (Public Resources Code Section 3823)

          FISCAL EFFECT:  Unknown.


          1)Author's Statement:  "It is in the state's interest to fund  
            select projects for mineral extraction from geothermal brines.  
             Such activity can make geothermal energy production more cost  
            effective, and near-zero carbon-free electricity, such as  
            geothermal energy production, is needed to reduce greenhouse  
            gas emissions [?]  The geothermal brine produced by Salton Sea  
            geothermal resources is highly mineralized and corrosive.   
            Extraction of these minerals from the brine is one of the most  
            significant cost of geothermal development in the Salton Sea.  
            The state has the potential to help commercialize domestic  
            mineral mining from geothermal brine, which will produce  
            lithium and manganese dioxide necessary for electric battery  
            manufacturing, thereby transforming an economic cost into an  
            economic benefit."


                                                                    SB 1074

                                                                    Page  5

          2)Background:  In February 2009, the United States Congress  
            passed the ARRA which contained extensive funding for science,  
            engineering, research, and infrastructure development.  States  
            were given discretionary funding through the ARRA to  
            development and fund projects to promote economic growth.   
            Through the ARRA, the CEC administered over $314 million in  
            energy efficiency and renewable energy programs.  When the  
            ARRA ended in 2013, there remained over $30 million throughout  
            various programs.  As part of its evaluation of the remaining  
            programs established through ARRA funds, the CEC determined  
            that certain programs were underperforming and is seeking to  
            reevaluate how the remaining funds should be utilized.  

          3)California's Geothermal Industry:  Geothermal energy is a form  
            of renewable energy that is generated by drilling into  
            underground hot water reservoirs, such as geysers and hot  
            springs, releasing the hot water as steam to the surface in  
            order to produce electricity. Unlike solar and wind energy,  
            which are considered intermittent renewables because they are  
            dependent upon the weather to generate energy, geothermal  
            power plants are considered base load facilities because they  
            are able to operate 24 hours per day, 7 days per week,  
            regardless of weather conditions. 

            In 2015, geothermal energy produced 11,994 gigawatt-hours  
            (GWh) of electricity in California.  Combined with another 700  
            GWh of geothermal power imported from outside the state, and  
            geothermal energy accounted for 6.14% of the states' total  
            system power.  In addition, there are 44 operating geothermal  
            power plants in California with an installed capacity of 2,716  
            megawatts, including the world's largest geothermal field, the  
            Geysers, contains 22 power plants that draw steam from more  
            than 350 wells. An estimate by the United States Geological  
            Survey suggests that California's geothermal resources could  
            provide 800 to 4,600 MWs, with an additional 3,000 to 25,000  


                                                                    SB 1074

                                                                    Page  6

            MWs of geothermal resources yet to be discovered but likely to  

            This bill appropriates $13 million to the CEC from the ARRA in  
            the Federal Trust Fund, and allocates $2.5 million, for the  
            2016-17 fiscal year and annually thereafter, to be expended  
            towards specified projects, including geothermal brine  
            treatment projects.  

          4)Arguments in Support:  According to EnergySource LLC, "SB 1074  
            would direct $2.5 million in unused federal ARRA funds as  
            grants to further develop technology to capture valuable  
            minerals from the geothermal process.  Advancement of this  
            technology will help develop a domestic source of lithium to  
            meet California's growing demand for electric vehicles;  
            currently the majority of lithium used in California  
            manufacturing comes from overseas.  Further, advancement in  
            mineral extraction technology in California will result in  
            significant economic activity and job creation in  
            disadvantaged communities such as those around the Salton  



          EnergySource LLC

          Imperial County


                                                                    SB 1074

                                                                    Page  7


          None on file.

          Analysis Prepared by:Edmond Cheung / U. & C. / (916)