BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 642 (Calderon) - Renewable energy: biomass: algae.
Amended: June 28, 2012 Policy Vote: NR&W 5-3
Urgency: No Mandate: No
Hearing Date: August 16, 2012
Consultant: Brendan McCarthy
SUSPENSE FILE.
Bill Summary: AB 642 would authorize the Secretary of the
Natural Resources Agency to establish a program to provide
financial support for the development of commercial algae
production in the area around the Salton Sea.
Fiscal Impact: The bill would authorize, but does not require,
the Secretary of the Natural Resources Agency to establish an
Algae Production Program. If the Secretary elects to establish
such a program, the following fiscal impacts are likely to
occur:
One-time costs to the Natural Resources Agency and other
state agencies totaling about $300,000 to complete a report
on the program (Environmental License Plate Fund or other
unknown fund source).
One-time costs to the Natural Resources Agency of about
$300,000 to adopt regulations governing the program
(Environmental License Plate Fund or other unknown fund
source).
Unknown ongoing costs to make grants to research
institutions and commercial algae producers, likely in the
millions per year (unknown fund source).
Unknown administrative costs to oversee grant making and
payment of royalties to the state, likely in the range of
$150,000 for every $1 million to $3 million in grants made
(unknown fund source).
Unknown royalty revenues to the state from successful
commercial algae production projects (General Fund).
AB 642 (Calderon)
Page 1
Background: Because the Salton Sea is a terminal water body,
with no outlet and very high evaporation rates, the salinity
level in the Sea is continually increasing. In addition, water
transfers out of the Imperial Valley, coupled with more water
efficient farming practices, are reducing the flow of water into
the Salton Sea. Additionally, high levels of nutrients in
agricultural runoff and partially treated sewage discharges mean
that the Salton Sea has very high nutrient levels. In
combination, these factors are leading to a saltier Sea with a
receding shoreline and extensive algal blooms. These factors are
degrading both water quality and air quality in and around the
Salton Sea.
Under the Quantification Settlement Agreement of 2003, the
Legislature directed the Secretary of Resources to develop a
plan for the restoration of the Salton Sea. The plan, which was
submitted to the Legislature in 2007, recommended a $9 billion
Preferred Alternative restoration plan. Since that time, the
Legislature has not taken action on the restoration of the
Salton Sea.
Proposed Law: AB 642 would authorize, but does not require, the
Secretary of the Natural Resources Agency to establish a program
to provide grants to research institutions and commercial
enterprises that would lead to the development of commercial
production of algae in the areas surrounding the Salton Sea. The
intent of the program is to improve air quality, improve water
quality, present new options for the restoration of the Salton
Sea, and demonstrate the scalability of agricultural algae
production.
If the Secretary elects to establish the program, the bill would
require the Secretary to complete a report to the Legislature by
July 1, 2013 that addresses a series of specified issues
relating to the program and the benefits of commercial algae
production in the area.
If the Secretary elects to establish the program, the bill would
require the Secretary to adopt regulations to govern the grant
program by July 1, 2014. The bill specifies certain criteria to
be covered by the regulation, including a requirement for
royalty payments to the state from commercially viable projects.
AB 642 (Calderon)
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The bill specifies that any royalties received by the state
shall be deposited in a new special fund and dedicated for
Salton Sea restoration activities.
Related Legislation:
SB 1018 (Committee on Budget, Statutes of 2012) the
resources budget trailer bill, creates a January 1, 2013
sunset date for the existing Salton Sea Restoration Council.
AB 939 (V.M. Perez) would assign most of the responsibility
for restoring the Salton Sea from the state to the Salton
Sea Authority, a local joint powers authority. (However, the
state would likely retain financial responsibility for the
restoration.) That bill will be heard in this committee.