BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1139|
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THIRD READING
Bill No: SB 1139
Author: Rubio (D)
Amended: 5/29/12
Vote: 21
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 6-0, 4/16/12
AYES: Simitian, Blakeslee, Hancock, Kehoe, Lowenthal,
Pavley
NO VOTE RECORDED: Strickland
SENATE NATURAL RESOURCES AND WATER COMM. : 8-1, 4/24/12
AYES: Pavley, La Malfa, Cannella, Fuller, Kehoe, Padilla,
Simitian, Wolk
NOES: Evans
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/24/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
SUBJECT : Greenhouse gas: carbon capture and storage
SOURCE : California Carbon Capture and Storage Coalition
DIGEST : This bill enacts the Carbon Capture and Storage
Act of 2012 which intends to clarify the Division of Oil,
Gas, and Geothermal Resources' (DOGGR) authority to
regulate carbon dioxide (CO2) injection for enhanced oil
recovery (EOR) projects, the State Fire Marshal's (SFM)
authority to regulate CO2 intrastate pipelines, and that
free space includes pore space that can be possessed and
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used for the storage of greenhouse gas (GHG). The
remaining provision of this bill applies to carbon capture
and storage (CCS) projects and CO2 EOR projects seeking to
create GHG emission compliance instruments or possible
offset credits that may be adopted pursuant to the
California Global Warming Solutions Act of 2006 (AB 32
(Nunez), Chapter 488, Statutes of 2006) (CGWSA) (Division
25.5 �commencing with Section 38500] of the Health and
Safety Code) by demonstrating simultaneous sequestration of
injected CO2.
ANALYSIS : This bill intends to clarify the DOGGR's
authority to regulate CO2 injection for EOR projects, the
State Fire Marshal's authority to regulate CO2 intrastate
pipelines, that free space includes pore space that can be
possessed and used for the storage of GHG, and that the
remaining provision of this bill applies to CCS projects
and CO2 EOR projects seeking to create GHG emission
compliance instruments or possible offset credits that may
be adopted pursuant to the CGWSA by demonstrating
simultaneous sequestration of injected CO2.
Existing law:
1. Defines land as material of the earth regardless of
composition, and includes free or occupied space for an
indefinite distance upwards and downwards. (Civil Code
Section 659)
2. Under the Elder California Pipeline Safety Act
establishes the SFM as the designee for carrying out the
federal Hazardous Liquid Pipeline Safety Act for
intrastate hazardous liquid pipelines. (Government Code
Section 51010 et seq.)
3. Under the CGWSA requires the Air Resources Board (ARB)
to determine the 1990 statewide level of GHG emissions
and achieve a limit that is equivalent to that by 2020
and sets several requirements, including the adoption of
mandatory GHG reporting regulations, to meet that
requirement. ARB may also adopt a market-based
compliance mechanism as part of regulations to meet the
GHG limit. (Health and Safety Code Section 38000 et
seq.)
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4. Requires the Public Utilities Commission (PUC) in
consultation with the California Energy Commission (CEC)
and ARB to: (a) establish the GHGs emission performance
standard (EPS); (b) specify various requirements and
considerations for the establishment of the EPS
including that CO2 captured from powerplant emissions
and permanently disposed is not counted as emissions;
(c) prohibit any load-serving entity, or local publicly
owned electric utility, from entering into a long-term
financial commitment, unless baseload generation
complies with the EPS. (Public Utilities Code Section
8341)
5. Under the federal Safe Drinking Water Act establishes
the Underground Injection Control Program for regulating
the construction, operation, permitting, and closure of
injection wells.
6. Establishes the DOGGR within Department of Conservation
and grants its Supervisor broad authority over
activities related to the recovery of oil and gas
including the injection of air, gas, water, or other
fluids into productive strata. (Public Resources Code
Section 3106)
This bill enacts the Carbon Capture and Storage Act of
2012. It requires the ARB to develop a quantification
methodology for CCS projects which can be used for
compliance obligations under AB 32 (Nunez, 2006) or the
cap-and-trade program by January 1, 2016. The ARB must
consult with the PUC and the CEC on the development of the
methodology and its incorporation into the EPS. The
methodology must include methods for EOR projects seeking
to demonstrate simultaneous sequestration of injected CO2
subject to specified conditions.
This bill, upon the adoption by the ARB of a final
methodology for CCS projects seeking to demonstrate
geologic sequestration of GHGs, specifically requires the
DOGGR to regulate CO2 EOR projects that seek to demonstrate
carbon sequestration under various laws providing for the
reduction of GHG emissions.
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This bill also defines ownership of the underground pore
space which may be used for the GHG storage and specifies
that pipelines used for the transportation of CO2 is within
the jurisdiction of the SFM.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee analysis:
Onetime costs of $1.1 million annually from the Air
Pollution Control Fund (special fund) in 2012-13 and
2013-14 for the development of a quantification
methodology and incorporation into the Cap and Trade
regulations.
Ongoing costs of $1.3 million annually from the Air
Pollution Control Fund (special fund) beginning in
2014-15 for ARB's technical evaluation, approval, and
monitoring of CCS projects.
Unknown, but at least in the hundreds of thousands of
dollars, from the Oil, Gas, and Geothermal
Administrative Fund (special fund) for DOGGR to provide
monitoring and oversight of CCS projects.
SUPPORT : (Verified 5/29/12)
California Carbon Capture and Storage Coalition (source)
American Council of Engineering Companies
California Chamber of Commerce
California Independent Petroleum Association
California Manufacturers and Technology Association
California Small Business Alliance
California State Council of Laborers
California State Pipe Trades Council
Environmental Defense Fund (Support in concept)
Fullerton Chamber of Commerce
National Federation of Independent Business
Natural Resources Defense Council (Support if amended)
South Bay Latino Chamber of Commerce
Southwest California Legislative Council
Western States Petroleum Association
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OPPOSITION : (Verified 5/29/12)
Sierra Club California
ARGUMENTS IN SUPPORT : According to the author "SB 1139
seeks to accomplish the following: recognize the role that
carbon capture and storage (CCS) can play in enabling
California to meet its greenhouse gas reduction goals;
acknowledge that CCS can enhance California's local oil
production with resulting job creation and economic growth;
create a regulatory framework for the planning,
construction, operation and decommissioning of a CCS
project; ensure that adequate health and safety
requirements are met; and that the risk of unacceptable
leakage from the injection and storage zone for CCS is
minimized." The author further notes,"Currently, there are
gaps in the regulatory process for the permitting of CCS
projects within the state which has caused great
uncertainty regarding the permitting of these projects.
Also, the current regulatory framework for California's
climate change management program creates a disincentive
for capturing and permanently sequestering carbon
emissions."
According to supporters, this bill by establishing
regulations for CCS "will enable several projects to move
forward that have been stalled due �to] existing regulatory
uncertainties that were identified by the �CEC] and �PUC].
Removing the gaps in the permitting process sends the
confidence signal necessary to spur investment in CCS."
The California Carbon Capture and Storage Coalition notes
that CO2 EOR have been utilized in more than 100 projects
around the country for 30 years and contends that United
States Environmental Protection Agency "has developed
comprehensive regulation for CCS that ensure the protection
of water resources and air quality."
ARGUMENTS IN OPPOSITION : According to Sierra Club
California, CO2 EOR "injects carbon dioxide into the ground
as a means of retrieving oil. The carbon sequestered in
the ground in the process of retrieving oil would, under
this bill, be counted toward California's established goals
for reducing GHG emissions. However, the GHGs released by
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the oil recovered in this process are not taken into
account. There are, according to this bill, significant
oil reserves in California that would be suitable for such
a method, and the amount of fossil fuels made available for
consumption could be a significant source of GHG
emissions."
DLW:kc 5/30/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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