BILL NUMBER: SB 1139 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 9, 2012
INTRODUCED BY Senator Rubio
FEBRUARY 21, 2012
An act to amend Section 659 of the Civil Code, to amend Section
51010.5 of the Government Code, to add Section 38575
38572 to the Health and Safety Code, and to add
Section 3239 to the Public Resources Code, relating to greenhouse
gas.
LEGISLATIVE COUNSEL'S DIGEST
SB 1139, as amended, Rubio. Greenhouse gas: carbon capture and
storage.
(1) Existing law requires the Division of Oil, Gas, and Geothermal
Resources to regulate the construction and operation of wells. Under
existing federal law, the division has been delegated with the
responsibility of regulating class II wells under the federal
Underground Injection Control program.
This bill would specifically require the division to regulate
carbon dioxide enhanced oil recovery projects that seek to
demonstrate carbon sequestration for various laws providing for the
reduction of greenhouse gas emissions.
(2) The California Global Warming Solutions Act of 2006 requires
the State Air Resources Board to establish regulations to achieve
specified greenhouse gas emissions reduction goals. The act
authorizes the state board to include market-based compliance
mechanisms in achieving those reduction goals.
This bill would require the state board, by January 1, 2015, to
adopt a final methodology for carbon capture and storage projects
seeking to demonstrate sequestration under various laws providing for
the reduction of greenhouse gas emissions.
(3) The Elder California Pipeline Safety Act of 1981 vests the
State Fire Marshal with the exclusive safety regulatory and
enforcement authority over intrastate hazardous liquid pipelines and,
to the extent authorized by an agreement between the State Fire
Marshal and the United States Department of Transportation,
interstate hazardous liquid pipelines.
This bill would additionally vest exclusive safety regulatory and
enforcement authority over pipelines transporting a fluid consisting
of more than 90% carbon dioxide compressed to a supercritical state.
(4) Existing law defines land as a material of earth and includes
free or occupied space for an indefinite upward or downward distance
for the purpose of prescribing ownership of land.
This bill would specify that free space includes pore space that
can be possessed and used for the storage of greenhouse gas.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. This measure shall be known and may be cited as the
Carbon Capture and Storage Act of 2012.
SEC. 2. (a) The Legislature finds and declares all of the
following:
(1) California has established stringent short-term and long-term
greenhouse gas (GHG) reduction goals that are functionally similar to
the federal and international emission reduction goals. Executive
Order S-3-05 committed California to reduce the GHG emissions to year
2000 levels by 2010 and to year 1990 levels by 2020, and to 80
percent below the year 1990 levels by 2050, a level consistent with
the current scientific evidence regarding emission reductions needed
to stabilize the climate. The California Global Warming Solutions Act
of 2006 (Division 25.5 (commencing with Section 38500) of the Health
and Safety Code) separately obligates California to reduce GHG
emissions to the year 1990 levels by 2020.
(2) The scope plan adopted pursuant to the California Global
Warming Solutions Act of 2006 recognizes the critical role that
carbon capture and storage (CCS) can play in helping the state meet
its GHG reduction goals. Cap-and-trade programs worldwide, including
the Kyoto Protocol to the United Nations Framework Convention on
Climate Change (UN Doc. FCCC/CP/1997/7/Add.1, 37 ILM 22) and the
European Union Emissions Trading Scheme (Directive 2003/87/EC, as
amended), include CCS as a key means for compliance. The 2010 Cancun
Agreements under the Kyoto Protocol (UN Doc. FCCC/CP/2010/7/Add.1)
envision that CCS will be able to generate certified emissions
reductions (CERs) under the clean development mechanism (CDM). The
2011 Durban Platform under the Kyoto Protocol (UN Doc.
FCCC/CP/2011/L.10) provides modalities and procedures regarding
specifically how CCS projects may generate CERs under the CDM.
(3) The geologic storage of carbon dioxide is expected to provide
an effective means of storing carbon dioxide over geologic time
periods. The International Panel on Climate Change (IPCC), in its
2005 Special Report on Carbon Capture and Storage, states that
"o]bservations from engineered and natural analogues as well as
models suggest that the fraction retained in approximately selected
and managed geological reservoirs is very likely to exceed 99% over
100 years and is likely to exceed 99% over 1,000 years."
(4) California will be unlikely to achieve its GHG
emission reduction goals without the deployment of CCS.
The deployment of CCS can materially help California to achieve
its long term GHG emission reduction goals. The International
Energy Agency's 2011 World Energy Outlook describes CCS as a "key
abatement option" that accounts for 18 percent of emission savings in
a key modeled scenario. The International Energy Agency further
reports that CCS investment must be made "now" if emission reductions
are to be achieved economically. The August 2010 report of the
President's Interagency Task Force on CCS describes the technology as
one that can "greatly reduce" GHG emissions while playing an
"important role in achieving national and global" GHG reduction
goals. In its December 2010 report, the California Carbon Capture and
Storage Review Panel states that "t]here is a public benefit from
long-term geologic storage of carbon dioxide] as a strategy for
reducing GHG emissions to the atmosphere as required by California
laws and policies."
(5) Despite the existence of comprehensive federal CCS
regulations, impediments to the deployment of CCS technology in
California remain, including specific gaps in California laws and
regulation. Many of these gaps are identified and discussed by the
California Carbon Capture and Storage Review Panel's December 2010
report. These gaps include clarifying ownership of the pore space and
clarifying regulatory responsibility for permitting CCS projects.
(6) By exercising a leadership role in CCS technology, California
will position its economy, technology centers, financial
institutions, and businesses to benefit from efforts to reduce
emissions of GHGs through CCS.
(7) California has ample geologic storage capacity for carbon
dioxide. In a 2005 report, the United States Department of Energy
determined that the state has a "huge potential for geological
sequestration capacity." The study found
estimated that the saline formations have a storage capacity of
146 to 840 gigatons of carbon dioxide. Moreover, those formations
also have large numbers of oil and gas fields and significant
potential for carbon dioxide enhanced oil recovery (CO2-EOR). The
CO2-EOR technology is a proven mature technology that
results in the sequestration of can be used to
sequester carbon dioxide given adequate regulatory
oversight .
(8) In another 2005 study, the United States Department of Energy
documented the potential energy production and GHG storage potential
of CO2-EOR technology for California. That study reached several
conclusions, including California has a large "stranded oil" resource
base that will be left in the ground following the use of today's
oil recovery practices, much of California's large "stranded oil"
resource base is amenable to CO2-EOR, application of miscible and
immiscible CO2-EOR would enable a significant portion of the
California's "stranded oil" to be recovered, and the successful
introduction and wide scale use of CO2-EOR in California would
stimulate the economy, provide new higher paying jobs, and lead to
higher tax revenues for the state.
(9) Carbon dioxide capture is subject to comprehensive
federal regulations. The United States Environmental
Protection Agency (USEPA) regulates air emissions of GHGs through
several regulatory programs, including the Prevention of Significant
Deterioration (PSD) and Title V permitting programs under the federal
Clean Air Act (42 U.S.C. Sec. 7401 et seq.). The USEPA's PSD and
Title V Permitting Guidance for Greenhouse Gases states that permit
writers must consider CCS technology to be "available" as part of the
five-step Best Available Control Technology assessment process.
Subpart PP (commencing with Section 98.420) of, subpart RR
(commencing with Section 98.440) of, and subpart UU (commencing with
Section 98.470) of, Part 98 of Title 40 of the Code of Federal
Regulations prescribing GHG reporting rules separately require
companies engaged in the injection of carbon dioxide, geological
sequestration of carbon dioxide, or other CCS-related
operations to report their atmospheric emission of GHGs. These
regulations apply in California.
(10) Carbon dioxide transport is subject to comprehensive federal
regulation by all modes, including pipeline, road, or ground. These
regulations apply in California.
(11) The pipeline transport of carbon dioxide is a proven mature
technology. In its 2005 special report of CCS, the IPCC states that
the "p]ipeline transport of carbon dioxide] operates as a mature
market technology (in the United States], over 2,500 kilometers] of
pipelines transport more than 40 metric
million metric tons of carbon dioxide] per year)." Federal
government data demonstrate that carbon dioxide pipelines
are safe have been operated safely . Meanwhile,
the trucking industry has safely transported significant quantities
of carbon dioxide for decades for a variety of commercial end users,
including the carbonated beverage industry.
(12) Carbon dioxide injection and storage is subject to
comprehensive extensive federal regulations. In
December 2010, the USEPA finalized its class VI regulations (76 Fed.
Reg. 56982) under the Underground Injection Control program (UIC),
and since that time the USEPA has issued several detailed
implementation guidance documents . Those regulations do
not impact ongoing apply to CO2-EOR
operations but provide a mechanism by which CO2-EOR owners
or operators that elect to conduct concurrent oil production and
sequestration operations may do so under the UIC class II well
program, which governs CO2-EOR operations unless
carbon dioxide is being injected for the primary purpose of long-term
storage into an oil and gas reservoir and there is an increase risk
to underground sources of drinking water compared to class II
operations . The UIC class VI well program regulations apply in
California and are implemented by the USEPA. The UIC class II well
program regulations apply in California and USEPA has delegated its
implementation responsibilities to the Division of Oil, Gas, and
Geothermal Resources of the Department of Conservation.
(13) The goals of creating a regulatory framework that ensures the
safe deployment of CCS technology in a manner consistent with the
state's goals for GHG reduction can best be accomplished by
clarifying the ownership of the pore space and the regulatory
responsibility of permitting CCS projects.
(b) It is the intent of the Legislature to create a clear and
comprehensive permitting regime for CCS projects in California.
(c) In enacting this act, the Legislature does not intend to
require the deployment of CCS technology but only to provide a clear
and certain regulatory structure for CCS projects.
(d) In enacting this act, the Legislature intends to clarify the
Division of Oil, Gas, and Geothermal Resources' authority to regulate
carbon dioxide injection for enhanced oil recovery projects, the
State Fire Marshal's authority to regulate carbon dioxide intrastate
pipelines, that free space includes pore space that can be possessed
and used for the storage of greenhouse gas, and that the remaining
provision of this measure applies to CSS projects and carbon dioxide
enhanced oil recovery projects seeking to create greenhouse gas
emission compliance instruments or possible offset credits that may
be adopted pursuant to the California Global Warming Solutions Act of
2006 (Division 25.5 (commencing with Section 38500) of the Health
and Safety Code) by demonstrating simultaneous sequestration of
injected carbon dioxide. The Legislature does not intend to limit or
supersede the division's authority as it relates to existing or
future carbon dioxide enhanced oil recovery projects that do not seek
to create greenhouse gas or offset credits that may be adopted
pursuant to the California Global Warming Solutions Act of 2006.
SEC. 3. Section 659 of the Civil Code is amended to read:
659. (a) Land is the material of the earth, whatever may be the
ingredients of which it is composed, whether soil, rock, or other
substance, and includes free or occupied space for an indefinite
distance upwards as well as downwards, subject to limitations upon
the use of airspace imposed, and rights in the use of airspace
granted, by law.
(b) (1) The free space specified in subdivision (a) includes pore
space that can be possessed and used for the storage of greenhouse
gas in the state.
(2) This subdivision does not change or alter the law as it
relates to the rights belonging to, and the dominance of, the mineral
estate, and does not change or alter the incidents of ownership or
other rights of the owners of the mineral estate, including the right
to mine, drill, complete, or abandon a well, the right to inject
substances to facilitate production, the right to implement enhanced
recovery for the purposes of recovery of oil, gas, or other minerals,
or the dominance of the mineral estate.
SEC. 4. Section 51010.5 of the Government Code is amended to read:
51010.5. As used in this chapter, the following definitions
apply:
(a) "Pipeline" includes every intrastate pipeline used for the
transportation of hazardous liquid substances, carbon dioxide, or
highly volatile liquid substances, including a common carrier
pipeline, and all piping containing those substances located within a
refined products bulk loading facility that is owned by a common
carrier and is served by a pipeline of that common carrier, and the
common carrier owns and serves by pipeline at least five of these
facilities in the state. "Pipeline" does not include the following:
(1) An interstate pipeline subject to Part 195 of Title 49 of the
Code of Federal Regulations.
(2) A pipeline for the transportation of a hazardous liquid
substance in a gaseous state.
(3) A pipeline for the transportation of crude oil that operates
by gravity or at a stress level of 20 percent or less of the
specified minimum yield strength of the pipe.
(4) Transportation of petroleum in onshore gathering lines located
in rural areas.
(5) A pipeline for the transportation of a hazardous liquid
substance offshore located upstream from the outlet flange of each
facility on the Outer Continental Shelf where hydrocarbons are
produced or where produced hydrocarbons are first separated,
dehydrated, or otherwise processed, whichever facility is farther
downstream.
(6) Transportation of a hazardous liquid by a flow line.
(7) A pipeline for the transportation of a hazardous liquid
substance through an onshore production, refining, or manufacturing
facility, including a storage or inplant piping system associated
with that facility.
(8) Transportation of a hazardous liquid substance by vessel,
aircraft, tank truck, tank car, or other vehicle or terminal
facilities used exclusively to transfer hazardous liquids between
those modes of transportation.
(b) "Flow line" means a pipeline that transports hazardous liquid
substances from the well head to a treating facility or production
storage facility.
(c) "Hydrostatic testing" means the application of internal
pressure above the normal or maximum operating pressure to a segment
of pipeline, under no-flow conditions for a fixed period of time,
utilizing a liquid test medium.
(d) "Local agency" means a city, county, or fire protection
district.
(e) "Rural area" means a location that lies outside the limits of
any incorporated or unincorporated city or city and county, or other
residential or commercial area, such as a subdivision, a business, a
shopping center, or a community development.
(f) "Gathering line" means a pipeline eight inches or less in
nominal diameter that transports petroleum from a production
facility.
(g) "Production facility" means piping or equipment used in the
production, extraction, recovery, lifting, stabilization, separation,
or treatment of petroleum or associated storage or measurement. (To
be a production facility under this definition, piping or equipment
must be used in the process of extracting petroleum from the ground
and transporting it by pipeline.)
(h) "Public drinking water well" means a wellhead that provides
drinking water to a public water system as defined in Section 116275
of the Health and Safety Code, that is regulated by the State
Department of Health Services and that is subject to Section 116455
of the Health and Safety Code.
(i) "GIS mapping system" means a geographical information system
that will collect, store, retrieve, analyze, and display
environmental geographical data in a database that is accessible to
the public.
(j) "Motor vehicle fuel" includes gasoline, natural gasoline,
blends of gasoline and alcohol, or gasoline and oxygenates, and any
inflammable liquid, by whatever name the liquid may be known or sold,
which is used or is usable for propelling motor vehicles operated by
the explosion type engine. It does not include kerosene, liquefied
petroleum gas, or natural gas in liquid or gaseous form.
(k) "Oxygenate" means an organic compound containing oxygen that
has been approved by the United States Environmental Protection
Agency as a gasoline additive to meet the requirements for an
"oxygenated fuel" pursuant to Section 7545 of Title 42 of the United
States Code.
(l) "Carbon dioxide" means a fluid consisting of more than 90
percent carbon dioxide molecules compressed to a
supercritical state .
SEC. 5. Section 38575 38572 is added
to the Health and Safety Code, to read:
38575. 38572. (a) On or before
January 1, 2015, the state board shall adopt a final
quantification methodology for carbon capture and storage
projects seeking to demonstrate geologic sequestration
under the greenhouse gas emission performance standard
pursuant to Chapter 3 (commencing with Section 8340) of Division 4.1
of the Public Utilities Code or the regulations implementing a
cap-and-trade program pursuant to this division, or create greenhouse
gas emission compliance instruments or offset credit pursuant to
this division .
(b) The methodology adopted pursuant to subdivision (a) shall be
suitable for used for the quantification of
emissions as part of compliance obligations under any of the
following:
(1) The regulations for the mandatory reporting of greenhouse gas
emissions (Article 2 (commencing with Section 95100) of Subchapter 10
of Chapter 1 of Division 3 of Title 17 of the California Code of
Regulations).
(2) The demonstration of sequestration under the greenhouse gas
emission performance standard established pursuant to Chapter 3
(commencing with Section 8340) of Division 4.1 of the Public
Utilities Code.
(3)
(2) The demonstration of sequestration for the purposes
of the regulations any regulation
implementing the a market-based
compliance mechanisms mechanism
pursuant to this division part .
(4) A
(3) Any compliance offset protocol
for use in the regulations implementing
the any market-based mechanisms
mechanism pursuant to this division
part .
(c) The methodology adopted pursuant to subdivision (a) shall be
suitable for use for the demonstration of sequestration under the
greenhouse gas emission performance standard established pursuant to
Chapter 3 (commencing with Section 8340) of Division 4.1 of the
Public Utilities Code.
(d) The state board shall consult with the Public Utilities
Commission and the State Energy Resources Conservation and
Development Commission on the development of the quantification
methodology, and, to the maximum extent possible, coordinate the
incorporation of the methodology into the emissions performance
standard certification processes of those commissions.
(c)
(e) The quantification
methodology shall include a methodology for assessing
emission reductions for carbon dioxide enhanced oil
recovery projects seeking to demonstrate simultaneous
sequestration pursuant to the greenhouse gas emission
performance standard or regulations implementing the market-based
compliance mechanisms, or to create greenhouse gas emission
compliance instruments or offset credits pursuant to this division by
demonstrating simultaneous sequestration of injected
carbon dioxide. The methodology shall address multiple modes of
carbon dioxide transportation, including pipeline, rail, and road
transportation.
(f) The methodology may, utilizing, to the extent possible,
existing requirements under federal and state law, include any
surface and subsurface characterization, monitoring, operational
requirements, reporting, accounting, and verification requirements,
and conditions to be administered by the state board or other
agencies to ensure the accurate quantification of emissions.
(d)
(g) In adopting the methodology, the state
board shall, to the maximum extent feasible, harmonize the adopted
methodology with greenhouse gas storage or sequestration
quantification methodologies used by other state, federal, or
international greenhouse gas emission reduction programs if it
does not compromise the ability of the methodology to verify
sequestration or accurately quantify emissions .
(h) This section does not modify, limit, or supersede the
operation of other laws applicable to carbon dioxide capture,
transportation, or underground injection, or their application by the
State Energy Resources Conservation and Development Commission, the
Public Utilities Commission, the Division of Oil, Gas, and Geothermal
Resources, or the California Environmental Protection Agency.
SEC. 6. Section 3239 is added to the Public Resources Code, to
read:
3239. (a) The Division of Oil, Gas, and
Geothermal Resources shall , under its regulatory authority to
permit class II injection wells in the state pursuant to the
authority delegated to the division pursuant to Section 1425 of the
federal Safe Drinking Water Act (42 U.S.C. Sec. 311h-4), and pursuant
to Section 38572 of the Health and Safety Code, regulate
a the injection of carbon dioxide
at an enhanced oil recovery project , including an
enhanced oil recovery project seeking to demonstrate
simultaneous geologic sequestration of greenhouse gas pursuant
to the greenhouse gas emission performance standard under
the greenhouse gas emission performance standard pursuant to
Chapter 3 (commencing with Section 8340) of Division 4.1 of
the Public Utilities Code , under the mandatory reporting of
greenhouse gas emissions pursuant to Article 2 (commencing
with Section 95100) of Subchapter 10 of Chapter 1 of Division 3 of
Title 7 of the California Code of Regulations, or the
regulations for any regulation implementing a
cap-and-trade program or other market-based compliance mechanism
that may be adopted pursuant to the California Global Warming
Solutions Act of 2006 (Division 25.5 (commencing with Section 38500)
of the Health and Safety Code), or create greenhouse gas
emission compliance instruments or offset credit pursuant to the
California Global Warming Solutions Act of 2006 pursuant to this
division and under its regulatory authority to permit class II
injection wells in the state pursuant to the authority delegated to
the Division of Oil, Gas, and Geothermal Resources pursuant to
Section 1425 of the federal Safe Drinking Water Act (42 U.S.C. Sec.
311h-4). Code).
(b) This section does not modify, limit, or supersede any other
law applicable to carbon dioxide capture, transportation, or
underground injection, or its application by the State Energy
Resources Conservation and Development Commission, the Public
Utilities Commission, the division, or the California Environmental
Protection Agency.