BILL ANALYSIS �
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|Hearing Date:June 23, 2014 |Bill No:SJR |
| |29 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: SJR 29Author:Lieu
As Introduced: June 10, 2014Fiscal:No
SUBJECT: Natural gas vehicle fuel standards.
SUMMARY: Urges any official of the State of California involved with
the National Conference on Weights and Measures (NCWM) to strongly
support the natural gas vehicle fuel standards recommended by the
Natural Gas Steering Committee of the NCWM. Urges the United States
Department of Commerce, the NCWM, and the National Institute of
Standards and Technology (NIST) to work with the natural gas industry
to develop natural gas vehicle fuel standards that are user and
consumer friendly and recognize of the gasoline gallon equivalent
(GGE) and diesel gallon equivalent (DGE) units for dispensing natural
gas.
Existing Federal law:
1)The Constitution of the United States reserves to the states the
right to regulate commerce including the regulation of the weights
and measures system within their borders.
2)Establishes the NIST in the United States (US) Department of Commerce
whose mission is to promote US innovation and industrial
competitiveness by advancing measurement science, standards, and
technology in ways that enhance economic security and improve our
quality of life.
Existing California law:
3)Provides that the Division of Measurement Standards (DMS) within the
Department of Food and Agriculture (DFA) has general enforcement
supervision of the laws relating to weights and measures and
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measuring devices, and provides for the enforcement of those laws
and the inspection and testing of measuring devices in each county
by the county sealer. (Business and Professions Code (BPC) � 12001
et seq.)
4)Requires the director of DFA to establish requirements for commercial
weighing and measuring; and requires the adoption, by reference, of
the latest standards by the NCWM published in the NIST Handbook 44
(NIST HB 44). The NIST HB 44 (2014) provides that when compressed
natural gas is dispensed as an engine fuel, the delivered quantity
shall be indicated in "gasoline liter equivalent (GLE) units" or
"gasoline gallon equivalent (GGE) units." (BPC � 12107)
5)Provides that the definitions of basic units of weight and measure,
and the tables of weight and measure and weights and measures
equivalents, as published by the NIST are recognized and shall
govern weighing and measuring equipment and transactions in this
state. (BPC � 12313)
6)Defines, under the weights and measures provisions of California law,
that liquefied natural gas is a "petroleum product" and thus is an
"engine fuel" or "motor vehicle fuel" (BPC � 13401)
This Resolution Declares:
1)The following, regarding the National Conference on Weights and
Measures (NCWM).
a) The United States (US) Constitution reserves to the states the
right to regulate commerce and the weights and measures system
within their borders.
b) In 1905, and 1906 at the urging of the National Bureau on
Standards, a number of states met together to discuss the lack of
uniform standards for weights and measurement in the US that was
crippling economic growth. These meetings marked the birth of
the NCWM.
c) The NCWM has evolved into a not-for-profit corporation that
ensures national standards keep pace with evolving technology and
marketing practices.
1)The following, regarding the use of natural gas as a vehicle fuel:
a) Natural gas vehicles and infrastructure continues to develop in
the California, and more largely, in the US.
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b) Natural gas is the cleanest burning alternative transportation
fuel commercially available today; and natural gas vehicles emit
20 to 30 % less greenhouse gases than their diesel and gasoline
counterparts.
c) The utilization of natural gas as a motor vehicle fuel has seen
a massive increase over the past five years due to stable and
affordable pricing.
1)The following, regarding California efforts to promote the use of
natural gas vehicles:
a) California provides incentives to encourage the development and
deployment of natural gas vehicles and fueling stations in the
state.
b) In 1999, 2010, and 2013, the Legislature enacted laws designed
to encourage growth in purchases of natural gas vehicles by
authorizing decals that allow natural gas vehicles to use carpool
lanes.
c) New networks of natural gas vehicles and fueling stations are
being established around the country and within California.
1)The following, regarding the manner in which natural gas is sold for
vehicle fuel:
a) In 1994, the NCWM established the gasoline gallon equivalent
(GGE) as the official unit of sale for compressed natural gas
(CNG).
b) The GGE is a consumer friendly unit of measurement because it
represents the amount of CNG that has the same energy content as
a gallon of gasoline.
c) The GGE standard puts CNG in a unit that is familiar to
consumers and allows consumers to evaluate the cost between CNG
and traditional motor vehicle fuels.
d) Since 2011, an increasing number of long-haul trucking
companies have begun converting their fuel source to liquefied
natural gas (LNG).
e) By the end of 2014, there is expected to be a nationwide
network of LNG refueling stations.
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f) Because LNG only displaces diesel as a motor vehicle fuel, it
is sold on a diesel gallon equivalent (DGE).
1)The following, regarding the standards by which natural gas fuel is
calculated for sale to consumers:
a) The Clean Vehicle Education Foundation, in conjunction with the
natural gas vehicle industry, submitted a request to the NCWM in
2013 to adopt a standard definition of a DGE.
b) On March 19, 2014, the NCWM announced that its Natural Gas
Steering Committee recommended that natural gas be sold in terms
of gasoline and diesel gallon equivalents as opposed to units of
mass, either pounds or kilograms.
c) The National Institute of Standards and Technology (NIST)
publishes the standards adopted by the NCWM.
d) California is one of 44 states that automatically adopt the
standards published by the NIST.
e) The NCWM is scheduled to vote on the recommended natural gas
vehicle fuel standards at its annual meeting in July of 2014.
This Resolution Resolves:
1)That the Legislature strongly supports the natural gas vehicle fuel
standards recommended by the Natural Gas Steering Committee of the
NCWM.
2)That the Legislature urges any official of the State of California
involved with the NCWM to strongly support the natural gas vehicle
fuel standards recommended by the Natural Gas Steering Committee of
the NCWM.
3)That the Legislature urges the US Department of Commerce, the NCWM,
and the NIST to work with the natural gas industry to develop
natural gas vehicle fuel standards that are user and consumer
friendly and that include recognition of the GGE and DGE units for
dispensing natural gas.
4)That copies of this resolution be transmitted to the Governor, the
Secretary of Food and Agriculture, the US Secretary of Commerce, the
Director of the NIST, the Executive Director of the NCWM, and the
Author for appropriate distribution.
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FISCAL EFFECT: None. This measure is keyed "non-fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. This measure is sponsored by the Author who states:
"At their annual meeting in July the National Conference of
Weights and Measures will vote on the standard unit of measure
for natural gas used in transportation. The National Conference
on Weights and Measures is a professional nonprofit association
of state and local weights and measures officials, federal
agencies, manufacturers, retailers and consumers. The NCWM
develops national weights and measures standards.
"The Natural Gas Steering Committee of the National Conference
of Weights and Measures is recommending: 1) that retailers be
allowed to dispense Compressed Natural Gas (CNG) and Liquefied
Natural Gas (LNG) in diesel gallon equivalent or DGE units; and,
2) the retention of the existing standard (with some minor
changes) allowing CNG to be sold in gasoline gallon equivalents
or GGE units. The GGE standard has been in place since 1994.
"California's natural gas transportation industry and freight
and transport companies strongly support this recommendation.
"California and the United States must establish a vibrant
marketplace for transportation fuels or petroleum will continue
to dominate for decades. A vibrant fuels marketplace requires a
transparent, simple, and understandable system for consumers to
make educated and informed choices. Using gallon equivalents
for natural gas will help achieve this.
"California's representatives to the National Conference of
Weights and Measures should support the gallon equivalent
approach to selling natural gas used in transportation."
2. Background. Motor vehicle fuel is sold in California under the
oversight of standards regulated and enforced by the CFDA's
Division of Measurement Standards (DMS). In addition, all other
types of weighing and measuring devices in the state used for
commercial purposes are under the enforcement oversight of the DMS.
Enforcement of the state-wide standards is carried out in each
county by the county sealer.
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California law requires the adoption, by reference, of the latest
standards by the NCWM published in the NIST Handbook 44 (NIST HB
44). The NCWM is a not-for-profit corporation dedicated to
developing and regulating the US technical standards for weights
and measures. The current NIST HB 44 provides that when compressed
natural gas is dispensed as an engine fuel, the delivered quantity
shall be indicated in "gasoline liter equivalent (GLE) units" or
"gasoline gallon equivalent (GGE) units."
The GGE standard for compressed natural gas was established in
1994, by the NCWM as the official unit of sale for compressed
natural gas. The GGE is consumer friendly because it represents an
amount of CNG which has the same energy content as a gallon of
gasoline. Therefore, if your car will travel 20 miles on a gallon
of gasoline it will also travel 20 miles on a GGE of CNG. The
gallon equivalent standard puts natural gas into a unit which is
familiar to the consumer and allows for an easy cost comparison
between natural gas and traditional motor fuels.
In the past two to three years, an increasing number of long-haul
trucking companies have begun transitioning to liquefied natural
gas (LNG) trucks. To accommodate this transition, Cummins-
Westport has begun producing a 12 liter heavy duty LNG engine, and
Clean Energy, Blu LNG and Shell are building nationwide LNG
refueling infrastructure.
Because LNG only displaces diesel, it is sold by the diesel gallon
equivalent (DGE). In 2013, the Clean Vehicles Education Foundation
(CVEF), in conjunction with the NGV industry, submitted a request
to NCWM to adopt a standard definition of a DGE. It was thought
that this approach would be embraced by NCWM since they established
the gallon equivalent concept twenty years earlier.
On January 19, 2014 the NCWM announced a recommendation to not only
deny the DGE proposal but also to repeal the GGE standard and force
the metric system on consumers purchasing natural gas motor fuel.
This proposal has shocked the compressed natural gas industry.
Under this proposal, consumers would have to buy natural gas at the
pump by the kilogram, which, proponents argue, would be
discriminatory because gasoline and diesel are not sold in metric
units. Additionally, it is also unnecessary, according to
proponents, because natural gas is currently sold in gallon
equivalents, a standard which has been embraced by consumers and
industry stakeholders.
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The compressed natural gas industry is rallying to fight this
proposal because if implemented they believe it would create a
formidable barrier to NGV adoption by creating chaos and confusion
in fuel sales. Furthermore, it would create a catastrophic cost to
natural gas station operators as most dispensers, at a cost of
$70,000 a piece, would have to be replaced.
Selling natural gas vehicle fuel in a format in which consumers can
easily understand and identify with, enables consumers to make
informed choices in their purchases of not only fuel but in
vehicles as well. Selling natural gas vehicle fuel in gasoline
gallon equivalent units, or in diesel gallon equivalent units
enables consumers to easily make comparisons between the types of
fuel sold and the types of vehicles in the market. To change to a
standard in which consumers cannot easily make comparisons, will
undoubtedly discourage consumers from purchasing natural gas
vehicles, and therefore, diminish the purchase natural gas vehicle
fuel by consumers.
3.Benefits of Natural Gas in Transportation. There are tremendous
benefits to increasing the use of natural gas in transportation.
These include reducing smog-forming and greenhouse gas emissions,
providing significant cost savings to individual vehicle owners,
trucking fleets, and businesses, improving energy security, and
decreasing our dependence on foreign oil.
Natural gas has potential to be an increasing part of the
transportation market for all classes of vehicles on the road.
Today we are seeing the most rapid growth in the heavy-duty truck
sector. In 2013 natural gas trucks were approximately 1% of new
heavy duty truck sales in the United States. Analysts project
natural gas trucks will be as much as 50% of trucks sales by 2025.
To supply these vehicles the industry has already built more than
1,000 public natural gas refueling stations across the country. In
California there are more than 150 public stations and we believe
more than 400 private natural gas refueling stations.
Natural gas provides significant cost savings as a transportation fuel
today but many consumers are still unaware of the financial
benefits. Fuel retailers need to be able to promote and sell this
fuel in units that customers can understand. Providing retailers
with the authority to sell CNG or LNG in DGE units at their
discretion will enable them to advertise the economic benefits of
the natural gas options they provide. This will also empower
consumers by enabling them to make a quick and simple evaluation of
the cost of fuels available to them and then make an informed
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choice.
4.Arguments in Support. California Natural Gas Vehicle Coalition
(CNGVC) representing the natural gas vehicle industry including
major automobile manufacturers, utilities, heavy-duty engine
manufacturers, fueling station providers, equipment manufacturers,
and fleet users of natural gas vehicles, strongly supports this
resolution. CNGVC states: "We strongly believe that establishing a
national diesel gallon equivalent (DGE) standard that allows
retailers to sell LNG in DGE units will significantly help the
development and deployment of a growing domestic NGV industry. We
also support maintaining the existing Gasoline Gallon Equivalent
(GGE) which was established in 1994."
CNGVC contends that there must be a strong and valid marketplace for
transportation fuels such as natural gas or petroleum will continue
to dominate for decades. The market place demands a transparent,
simple, and understandable system for consumers to make educated and
informed choices about vehicle and fuel purchases. Establishing a
national standard for selling natural gas in gallon equivalent units
will help create such a marketplace that benefits consumers,
retailers, and the economy as whole, according to CNGVC.
SUPPORT AND OPPOSITION:
Support:
California Natural Gas Vehicle Coalition
Opposition:
None received as of June 20, 2014
Consultant:G. V. Ayers