BILL ANALYSIS
AB 2037
Page 1
Date of Hearing: April 19, 2010
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2037 (V. Manuel Perez) - As Amended: April 13, 2010
SUBJECT : Electricity: air pollution.
SUMMARY : Prohibits an electrical utility from entering into a
long-term financial commitment with a new (constructed after
January 1, 2011) power plant if it does not meet specified air
pollution standards.
EXISTING LAW :
1)Prohibits the approval of utility long-term financial
commitments (contracts or ownership) unless the power plant
meets a greenhouse gases (GHG) emission performance standard
2)Requires the California Energy Commission (CEC), in
consultation with PUC and the Air Resources Board (ARB), to
establish a GHG emission performance standard for all baseload
power plants.
3)Requires ARB to adopt and enforce state ambient air standards
for the control and reduction of air pollution, and to enforce
federal ambient air standards for reduction of air pollution.
4)Requires air districts to adopt and implement local and
regional programs to reduce air pollution and to achieve state
and federal ambient air standards. These responsibilities
include the adoption and enforcement of requirements for new
and modified power plants to ensure that emissions from such
facilities are mitigated and are in compliance with federal
and state law and regulations. Air district standards may
include requiring power plants to install "best available
control technology" (BACT) to control emissions and to obtain
emission reduction credits, or "offsets," to mitigate
emissions.
THIS BILL :
1)Requires that newly constructed operating electrical
generation facilities, within or outside of California, that
enter into a long-term financial commitment with a California
AB 2037
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utility, must be constructed to meet BACT requirements.
2)Requires that offsets to mitigate air pollution from an
operating electrical generation facility, within or outside of
California, that has entered into a long-term financial
commitment with a California utility, must be obtained for air
pollutants within a shared pollution area in California.
Offsets for air pollution that is above the federal ambient
limit do not have to be acquired if the emissions are fully
mitigated by other measures.
3)Requires the PUC, CEC, ARB and air districts, in conjunction
with federal agencies and other governments, to encourage
recognition of all achievable offsets within a "shared air
pollution area" as defined.
FISCAL EFFECT : Unknown
COMMENTS :
The addition of new power plants within the interconnected
electrical grid, but outside California, can contribute to air
pollution in California air basins. This phenomenon is more
significant when power plants do not comply with California's
air pollution standards. The electric grid is interconnected
between California and Baja California to facilitate the
availability of electricity between the two areas. There is
concern that if California's electrical demand grows, more power
plants may be built in Mexico in response. Power plants built
in Mexico are not required to meet BACT requirements, and are
not required to offset new their emissions. At least two new
power plants have been built near Mexicali in recent years and
deliver some of their electricity across the border to
California utilities. Imperial County, immediately north of
these plants, is classified as a moderate non-attainment area
and is the recipient of transported pollution from these plants.
If California electric utilities are limited to incorporating
electric generating facilities that are subject to BACT
requirements, air pollution within shared pollution areas may be
alleviated. According to the author, unless emissions within a
"shared pollution area" are fully mitigated by other measures,
offsets to mitigate air pollution from an operating electrical
generation facility, within or outside of California that has
entered into a long-term financial commitment with a California
AB 2037
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utility, must be obtained for air pollutants within a shared
pollution area in California. Offsets for a shared pollution
area are finite, and will be depleted according to emissions
that are generated in a shared pollution area regardless of
their location.
Air pollution is harmful to human health which may have
significant impacts on California's economy. A recent RAND
study estimated that the failure of some California local air
management districts to meet federal and state air quality
standards resulted in over $193 million in hospital-based
medical care from 2005 to 2007 due to air-quality related
problems such as asthma and pneumonia. The majority of the
medical cases included in the study were paid for by either
Medicaid or Medicare. The study indicates that these cost
estimates to the state may be conservative, since they only
included medical cases in which a patient suffering from air
quality related symptoms was treated in an emergency room and
then admitted within an area not in compliance with state and
federal air quality standards at that point in time, and did not
include medical cases in which a patient was released after
treatment in an ER, went to see a doctor for a single doctor's
appointment, or stayed at home from work as a result of
respiratory symptoms. This bill attempts to identify any and
all sources of potential causes of non-compliance of GHG
emission and air quality standards which may reduce the number
of air pollution related medical cases.
The North America Free Trade Agreement (NAFTA) allows free trade
area between the U.S., Canada, and Mexico to facilitate trade
and the cross-border movement of resources and services and to
increase investment opportunities in the territories of the
parties. NAFTA provisions address energy regulatory measures by
stating that each party shall seek to ensure that in the
application of any energy regulatory measure, energy regulatory
bodies within its territory avoid disruption of contractual
relationships to the maximum extent practicable, and provide for
orderly and equitable implementation appropriate to such
measures." While this passage suggests that California, and
U.S., policy should not "disrupt" energy exchange within the
NAFTA members, it does provide a "practicable" clause. In this
case, the failure of California to meet federal and state
ambient air quality standards and the ARB's jurisdiction in this
regard may allow California to implement restrictions in order
to meet its state and federal requirements.
AB 2037
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REGISTERED SUPPORT / OPPOSITION :
Support
American Lung Association
Breathe California
California Air Pollution Control Officers Association (CAPCOA)
California Rural Legal Assistance Foundation
County of Imperial (Co-Sponsors)
Comite Civico (Co-Sponsors)
Economic Research Institute - Imperial Valley / CEESEM
Imperial Irrigation District
Imperial Valley Clean Air Initiative
The Institute for Socio-Economic Justice and Progressive
Community Development, Inc.
San Joaquin Valley Latino Environmental Advancement Project
Seeley Citizens United
The Sierra Club
South Coast Air Quality Management District
Union of Concerned Scientists
Opposition
None on file
Analysis Prepared by : Jessica Westbrook / NAT. RES. / (916)
319-2092