BILL ANALYSIS SB 429 Page 1 Date of Hearing: June 24, 2004 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Hannah-Beth Jackson, Chair SB 429 (Torlakson) - As Amended: June 22, 2004 SENATE VOTE : Not relevant SUBJECT : Energy resources: petroleum infrastructure projects SUMMARY : This bill requires the Governor to appoint a statewide petroleum infrastructure facilitator (facilitator) to the State Energy Resources and Conservation Commission (CEC) to investigate and intervene in rulemaking, permitting, and other proceedings by state agencies that affect petroleum infrastructure projects in the state and to suggest best practices and procedures for permit streamlining, requires the State Air Resources Board (ARB) to undertake a number of permit streamlining measures, and requires the California Energy Commission Commissioners to investigate permit streamlining activities relating to petroleum infrastructure facilities and report to the Governor and Legislature by December 31, 2005. EXISTING LAW : 1)Requires the CEC to biennially report to the Governor and Legislature regarding the state's petroleum supply and pricing. 2)Establishes the Air Pollution Permit Streamlining Act (commencing with Health and Safety Code Section 42320), which requires every air district to establish by regulation, a program to provide for the expedited review of permits. 3)Requires individual air districts with a population of 500,000 or more to implement additional measures to assist applicants with expedited permitting. 4)Under the California Environmental Quality Act (CEQA), requires an environmental impact report to be completed and certified within one year, and requires a negative declaration to be completed and adopted within 180 days. 5)Under the Permit Streamlining Act, sets deadlines for public agencies to determine the completeness of a development SB 429 Page 2 application, for a lead agency to approve or disapprove a project (e.g., 180 days from the date the lead agency certifies an environmental impact report, 60 days from the date the lead agency adopts a negative declaration or determines that the project is exempt from CEQA) and for a responsible agency to approve or disapprove a development project. THIS BILL : 1)Requires the Governor to appoint a facilitator in the CEC to investigate and intervene in rulemaking, permitting, and other proceedings by state agencies that affect petroleum infrastructure projects in the state and to suggest best practices and procedures for permit streamlining. a) Requires, not more than 90 days after the facilitator is appointed, any state agencies involved in rulemaking, permitting, and other proceedings that affect petroleum infrastructure projects to do all of the following: i) Identify and list all permits required by the agency for petroleum infrastructure projects and related facilities in the state. ii) Describe all current procedures utilized in practice for streamlining and expediting permitting for petroleum infrastructure projects. iii) Identify and list all laws, rules, regulations, policies, guidelines, and permit conditions that inhibit or restrain petroleum infrastructure prospects. b) Requires the facilitator to do the following, not more than 120 days after receiving information from state agencies: i) Compile and, upon request, make available to persons proposing to modify, construct, or operate petroleum infrastructure projects, all available guidance documents and other information on permitting petroleum projects. ii) Upon request of applicants, provide permitting assistance to persons proposing to modify, construct, or SB 429 Page 3 operate petroleum infrastructure projects, including, but not limited to, assistance in working with local governments in ensuring that local permits, land use authorizations, and other approvals made at the local level are undertaken in the most expeditious manner feasible without compromising public participation or environmental protection. iii) Upon request of applicants, intervene and participate as a party in rulemaking, permitting, and other proceedings by a state agency that affect petroleum infrastructure projects, to streamline the process, to preserve existing petroleum infrastructure efficiencies and capacity, and to increase petroleum infrastructure efficiencies and capacity. 2)Provides the Governor may authorize and direct the chair of the CEC to designate individual members of the CEC to investigate and intervene in agency rulemaking, permitting and other proceedings affecting petroleum infrastructure projects in the state and to suggest best practices and procedures for permit streamlining. 3)Requires the facilitator to work with the Legislature to introduce and enact legislation as expeditiously as possible to streamline and expedite permitting for petroleum infrastructure projects in the state. 4)Provides that the facilitator shall consult with all of the following: a) The Chair of the CEC; b) The Chair of the ARB; c) The Secretary for Environmental Protection; d) The Secretary of the Resources Agency; e) The Director of the Governor's Office of Planning and Research; f) Representatives from the United States Environmental Protection Agency, the U.S. Department of Energy, the U.S. Department of the Interior, and other affected federal SB 429 Page 4 agencies, as appropriate; and, g) Representatives of local and regional agencies, including air pollution districts and air quality management districts. 5)Sunsets the facilitator's position January 1, 2010. 6)Requires the ARB to, on or before February 1, 2005, consult with the California Air Pollution Control Officers Association, the California Environmental Protection Agency, the Resources Agency, the CEC, the U.S. Environmental Protection Agency, other states, private and publicly regulated entities, and other interested parties regarding successful methods and best practices for streamlining air quality permits and other permits that may be required for petroleum infrastructure projects. 7)Requires the ARB, on or before June 30, 2005, to identify streamlining practices, including, but not limited to, successful practices implemented by air districts and may adopt a complete list of permit streamlining techniques, including, but not limited to all of the following: a) Provisions for same-day permit issuance for qualified petroleum infrastructure projects; b) Streamlined procedures for hiring and relying on certified permit application reviewers for petroleum infrastructure projects; c) Requiring that the air districts determine whether an application for a petroleum infrastructure is complete, not more than 15 days after receiving the application; and, d) Review, avoidance, and deletion of involuntary limitations on the throughput of any components of the state petroleum infrastructure. 8)Provides that the ARB may require the air districts to adopt, not later than May 1, 2005, and implement not later than July 1, 2005, the permit provisions and procedures identified by the ARB. 9)Provides the ARB may continuously identify permit streamlining SB 429 Page 5 practices to preserve the efficiencies and capacity of existing petroleum infrastructure and to increase the efficiencies and capacity of petroleum infrastructure in the state, and may require the air districts to adopt and implement all other best practices identified by the ARB on an expeditious basis. 10)Provides the ARB may waive the requirements for a district to implement a best practice if the air district can demonstrate both of the following: a) That its existing district program performs at least as effectively as a streamlining practice, as specified; and, b) That the air district program has, in actual practice, resulted in simplifying and expediting permitting for petroleum infrastructure projects. 11)Requires the ARB to revise its best practices list after holding a public meeting, and the air districts shall adopt the revised practices at least annually. 12)Sunsets the ARB provisions on January 1, 2010. 13)Defines "petroleum infrastructure projects" as marine terminals, port facilities, product storage facilities, pipelines, land terminals, refinery projects, and related kinds of facilities identified by the CEC as being necessary to assure a consistent and reliable supply of cleaner burning gasoline, ultra low sulfur diesel fuel, and other petroleum products to California consumers. 14)Requires the CEC, on or before February 1, 2005, to initiate consultations regarding successful methods and best practices for streamlining permits, leases and other government authorizations and entitlements that may be required by petroleum infrastructure projects, with the following: a) The facilitator; b) The California Environmental Protection Agency; c) The Resources Agency; d) The U.S. Environmental Protection Agency; and, SB 429 Page 6 e) Other states, air districts, public and privately regulated entities, California ports, and other interested persons. 15)Requires the above consultations to include a complete report of agencies' and the regulated entities' experiences with facility siting conducted by the CEC, similar process in other states, and similar processes in this state. 16)Requires, on or before June 30, 2004, the CEC to identify permit streamlining practices, including successful practices by the ARB, and shall publish for comment a complete list of permit streamlining techniques for petroleum infrastructure projects including all of the following: a) Developing and implementing partially or fully consolidated permit programs for petroleum infrastructure projects; b) Adopting criteria for the types of permitting actions for petroleum infrastructure projects eligible for streamlining and for a simplified permitting process; c) Adopting streamlined lists and criteria for application completeness determinations for petroleum infrastructure projects; d) Adopting mandatory deadlines for actions on permits for petroleum infrastructure projects; e) Avoiding and eliminating limitations on the throughput of components of the California petroleum infrastructure; and, f) Relying on actual emissions performance standards that allow the maximum flexibility in utilizing existing efficiencies and capacity and increasing efficiencies and capacity of the California petroleum infrastructure. 17)Requires the CEC, on or before December 31, 2005, to submit a report to the Governor and Legislature describing the results of the consultation along with detailed recommendations for establishing new, streamlined processes for permitting petroleum infrastructure projects in California. SB 429 Page 7 18)Provides the Governor, or one or more officials designated by the Governor, may identify existing or proposed rules, regulations, plans, policies, guidelines, permit conditions, or other requirements affecting petroleum infrastructure facilities and refer them to the CEC. 19)Requires the Chair of the CEC to designate a single CEC Commissioner to review requirements and issue findings affecting petroleum infrastructure facilities. FISCAL EFFECT : Unknown. COMMENTS : 1)Background According to the author's office, a hearing of the Senate Select Committee on Bay Area Infrastructure was conducted in December 2003 to examine the reasons behind the rapid rise in motor vehicle fuel in California. At that hearing, several witnesses testified that limited gasoline production in California contributes to price increases and that California's supply of transportation fuel is not keeping pace with growing demand. Because of this, California faces potentially serious transportation fuel imbalances over the next several years, which require immediate, statewide attention. This bill will expedite processing of permits for gasoline production at oil refineries in California. 2)Supply and Demand This bill addresses the increasing need for additional transportation fuel in California in the next several years and provides a number of opportunities to expedite the permitting of petroleum infrastructure facilities to accomplish that. However, the bill does not address any alternatives to increasing capacity and efficiencies of petroleum infrastructure. In a recent report by both the CEC and the ARB on reducing California's petroleum fuel dependence, "Reducing Petroleum Dependence" (August, 2003), the report recommended that California adopt a policy to reduce gasoline and diesel fuel demand to 15% below 2003 demand levels by 2020, and to maintain SB 429 Page 8 that level thereafter. A number of options are suggested in the report for meeting the goal, including using more fuel efficient replacement tires, improving private vehicle maintenance, doubling the fuel efficiency of light duty vehicles, using natural-gal derived fuels as blending agents in diesel fuel, and implementing fuel cell-powered vehicles. 3)Air Pollution Permit Streamlining Act Existing law establishes the Air Pollution Permit Streamlining Act that requires every air district to establish, by regulation, a program to provide for the expedited review of permits in California. The regulations are required to include the following: a) A precertification program for equipment that is mass-produced (to allow permit applicants who purchase that equipment to receive permits in an expedited fashion); b) A consolidated permitting process for any source that requires more than one permit; c) An expedited permit review schedule, based upon the types and amounts of pollution emitted from sources; d) A training and certification program for private sector personnel, in order to establish a pool of professionals who can certify businesses as being in compliance with district rules and regulations; e) The development of a standardized permit application forms that are written in clear and understandable language and provide applicants with adequate information to complete and return the forms; and, f) An expedited appeals process. In addition, air districts with over 500,000 people must implement additional permit streamlining measures including applicant meetings to expedite the permit process and flexibility measures for permit streamlining. This bill requires the ARB to take a number of measures to address permit streamlining at both the state and air district level in addition to the facilitator's responsibilities of SB 429 Page 9 looking at the overall issue of permit streamlining. The Committee may wish to consider whether this language is necessary, given that the air districts already have permit streamlining measures in place. 4)CEC Investigation of the State's Petroleum Infrastructure On May 19th, the CEC opened a proceeding to investigate the state's petroleum infrastructure, specifically looking at increasing demand of petroleum products and decreasing supply of petroleum in California along with what strategic improvements can be made to the petroleum infrastructure in California. The proceeding was preceded with several months of informal meetings with state, regional and local agency representatives regarding the petroleum infrastructure. The first formal meeting will be Monday, June 28, 2004. The Committee may wish to consider whether this bill will produce duplication of efforts for CEC staff that are already working on investigating the state's petroleum infrastructure. 5)Office of Permit Assistance In 1977, when the state enacted the Permit Streamlining Act, it also created an entity within the Governor's Office of Planning and Research known as the Office of Permit Assistance (OPA). That office, though not focused on the petroleum industry, was primarily charged with assisting applicants and state agencies permitting processes in California. Typically, OPA would meet very early on with project applicants to talk through the project, what permits were going to be needed, by which agencies, and what mitigation might also be needed. In 1994, OPA was transferred to the Technology, Trade and Commerce Agency (TTCA) where it sat until last year when the TTCA was abolished, along with OPA. While this bill requires a number of people to look at how to assist with permitting and streamlining permitting in California, the Committee may wish to consider whether it should also be looking at the type of work OPA did and whether it should be incorporated into this bill. 6)Duplication of Responsibilities in the Bill This bill requires the facilitator to consult with a wide variety of government agencies, private entities and others while addressing permit streamlining in California. However, SB 429 Page 10 the bill also has the CEC Commissioners meeting with many of the same people to also address permit streamlining for petroleum infrastructure. In addition, the bill has a third party, The Governor or a person designated by the Governor, to address permit streamlining. The Committee may wish to consider whether to delete the overlapping responsibilities in the bill by eliminating the roles of the CEC Commissioners and the Governor and/or his designee. 7)Who Gets to be the Facilitator ? This bill requires the Governor to appoint a statewide petroleum infrastructure facilitator (facilitator) within the CEC to intervene in rulemaking, permitting, and other proceedings by state agencies that affect petroleum infrastructure projects in the state and to suggest, actively push legislation on, and report to the Governor and Legislature on best practices and procedures for permit streamlining. The position sunsets under the bill January 1, 2010. However, the bill does not set out any standards for what experience the facilitator needs or should have, nor does the position have to be accountable to the CEC, the Governor or the Legislature. Finally, the appointment of the facilitator does not need Senate confirmation, which would be a typical balance on the part of the Legislature. The Committee may wish to consider whether this position should be better defined, (i.e., a staff person, CEC Commissioner, or designee of the Governor or define what type of qualifications the person should have) and whether the appointment should have Senate confirmation. 8)Timeline for Agency Response The bill requires state agencies involved in rulemaking, permitting, and other proceedings that affect petroleum infrastructure projects to provide the facilitator with information on permits, streamlining practices, and laws, rules, regulations policies and permit conditions that inhibit or restrain petroleum infrastructure prospects. However, there is no guidance in the bill as to how soon that information needs to be to the facilitator. The Committee may wish to add an appropriate timeline for state agencies to respond to the facilitator in the bill. SB 429 Page 11 9)Is the Facilitator an Intervenor ? Under the bill, the facilitator can intervene any rulemaking, permitting, or other proceeding by state agencies that affect petroleum infrastructure projects in the state. Generally, an intervenor, in a rulemaking proceeding by a state agency represents an interested party via comments and is compensated for their activities. In this case, the facilitator would represent the applicant in the rulemaking process and be able to comment on behalf of the applicant. The Committee may wish to consider whether this is an appropriate role of the facilitator and whether the facilitator should have the role of the participant on behalf of the applicant at all. 10)Does This Bill Apply to Offshore Oil ? As written, it is unclear whether or not this bill would apply to permitting and rulemaking of related offshore oil pipelines and facilities. Because of this, the Committee may wish to consider language to explicitly exempt any offshore oil facilities, pipelines, and related facilities from this bill. REGISTERED SUPPORT / OPPOSITION : Support Western States Petroleum Association Opposition American Lung Association California Environmental Rights Alliance California League of Conservation Voters California State Pipe Trades Council California State Association of Electrical Workers Coalition for Clean Air Coastal Commission Environment California Planning and Conservation League Sierra Club California South Coast Air District Western States Council of Sheet Metal Workers Analysis Prepared by : Kyra Emanuels Ross / NAT. RES. / (916) SB 429 Page 12 319-2092