BILL ANALYSIS
SB 757
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Alan S. Lowenthal, Chairman
2005-2006 Regular Session
BILL NO: SB 757
AUTHOR: Kehoe
AMENDED: April 13, 2005
FISCAL: Yes HEARING DATE: April 25, 2005
URGENCY: No CONSULTANT: Randy Pestor
SUBJECT : PETROLEUM DEMAND REDUCTION ACT
SUMMARY :
Existing law contains various requirements for the California
Energy Commission (CEC), California Air Resources Board (ARB),
California Environmental Protection Agency (CalEPA),
Department of Toxic Substances Control (DTSC), and the South
Coast Air Quality Management District (South Coast AQMD).
This bill enacts the Petroleum Demand Reduction Act that:
1) Sets a policy for state agencies to take every
cost-effective and technologically feasible action to
achieve a net-zero increase in onroad petroleum consumption
by 2010 and a significant reduction by 2020, and provides
that those state agencies should take the reduction goals
into account in adopting rules and regulations.
2) Authorizes the ARB, in cooperation with the South Coast
AQMD and other state and local agencies, to adopt
regulations requiring public and private fleet operators to
purchase and install alternative fuel vehicles and advanced
transportation technologies where technologically feasible
and cost-effective, taking into account lower petroleum
consumption, increased efficiency, and life cycle costs.
3) Authorizes CalEPA, in consultation with the ARB, DTSC, and
AQMDs, to develop and adopt model rules and regulations to
ensure that petroleum refining, storage, and waste
management and disposal sources install best available
technology (BACT) and pollution prevention measures
reflecting the best practices available to provide the
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maximum feasible and cost-effective reduction in air
pollution, water pollution, and toxic waste generation,
while protecting the public and community health, and
worker health and safety over a 10-year phased period not
to extend beyond January 1, 2016.
4) Authorizes the CEC to expand the scope of its oil industry
price and supply reporting, monitoring, and analysis to
include trends in world oil demand growth, including known
and proven oil reserves. The CEC must refer cases to the
Attorney General when there may be market abuse or unfair
competition.
5) Requires the Secretary of the Business, Transportation and
Housing Agency and the Secretary for Environmental
Protection to submit recommendations to the Governor and
the Legislature by July 1, 2006, regarding alternative
revenue sources to supplement or replace gasoline and
diesel fuel taxes that may be used to fund state
transportation infrastructure investments, taking into
consideration certain factors.
6) Requires the EPA Secretary, in consultation with the CEC
and ARB, to submit recommendations to the Governor and the
Legislature by January 1, 2007, on cost-effective and
technologically feasible measures needed to achieve a net
zero increase in onroad petroleum consumption by 2010, and
a significant reduction in onroad petroleum consumption by
2020.
7) Requires CalEPA, with assistance of the ARB, CEC, and South
Coast AQMD, to adopt recommendations, policies, and
programs by January 1, 2007, to increase diversity of the
state's transportation energy supplies consistent with the
goal of increasing the use of nonpetroleum fuels to 20% of
onroad fuel consumption by 2020, with certain conditions.
8) Requires the Secretary for Environmental Protection to take
action to influence Congress and the U.S. Department of
Transportation to double the combined fuel economy of cars
and light trucks by 2020. That action must include, but
not be limited to, performing analyses and participating in
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forums that the secretary deems useful.
9) Contains related legislative intent.
COMMENTS :
1) Purpose of Bill . According to the sponsor, "California
faces a future of increasing petroleum dependence, supply
disruptions, and transportation fuel price volatility. As
a consequence, the state has become a significant importer
of oil from foreign countries often plagued with military
and political instability. If this import trend continues,
the state's economy, oil supply and price fluctuations,
will be vulnerable to external disruptions and geopolitical
instability, making the reduction of petroleum consumption
a matter of energy independence."
SB 757 addresses improvement of oil refinery safety and
pollution prevention, alternatives to petroleum based
transportation fuels, and monitoring global petroleum
adequacy. The author believes that petroleum reduction in
the state strengthens national security; supports energy
independence; creates jobs and business opportunities;
reduces air, water, and soil pollution, while improving
public health and worker safety; and increases economic
competitiveness of alternative fuels and energy resources.
2) Current recommendations . AB 2076 (Shelley) Chapter 936,
Statutes of 2000, required the CEC and the ARB to develop
and adopt recommendations for the Governor and the
Legislature by January 31, 2002, on a California Strategy
to Reduce Petroleum Dependence. The CEC report, "Reducing
California's Petroleum Dependence" dated August 2003,
recommended that the state adopt a policy to reduce
gasoline and diesel fuel demand to 15% below 2003 demand
levels by 2020 and to maintain that level after that date.
The report included certain recommendations ( e.g. , more
fuel efficient tires, improving vehicle maintenance,
doubling light duty vehicle fuel efficiency, implementing
fuel cell-powered vehicles). The report also recommended a
goal of increasing use of non-petroleum fuels to 20% of
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onroad fuel consumption by 2020 and 30% by 2030.
SB 757 provides for a "net zero increase" ( i.e. , no increase
compared to 2006 consumption) and a significant reduction
by 2020. SB 757 also contains several other energy-related
requirements considered by the Energy, Utilities and
Communications Committee. The committee approved the bill
April 5, 2005 (7-3).
3) Clarification needed . SB 288 (Sher) Chapter 476, Statutes
of 2003, established the Protect California Air Act of 2003
to ensure installation of BACT under a new source review
program. SB 757 requires installation of best available
control technology and "pollution prevention measures that
reflect the best practices available, so as to provide the
maximum feasible and cost-effective reduction in air
pollution, water pollution, and toxic waste generation,"
while considering certain factors, over a 10-year phase-in
period not to extend beyond January 1, 2016.
This provision should be clarified to ensure that the
qualifiers are not weaker than BACT, local and state law,
and any requirements for this technology to be installed at
an earlier date. This provision should also clarify the
term "phase-in period."
4) Changing title of Act . The author wishes to change the
title of this Act to The Transportation Energy Efficiency
and Alternative Fuels Diversification Act.
5) Technical considerations . There is no definition of "net
zero increase" on page 7, line 4.
6) Related legislation . AB 1468 (Kehoe) would enact the
California on the Move-Petroleum Demand Reduction Act to
require measures to achieve an interim petroleum demand
reduction goal to limit onroad petroleum fuel demand to a
level not exceeding 2004, adjusted annually to reflect
changes in state population. This bill failed passage on
the Senate Floor (18-15).
SOURCE : Senator Kehoe
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SUPPORT : American Lung Association of California,
California Thoracic Society, Clean Power
Campaign, Heal the Bay, Natural Resources
Defense Council, Planning and Conservation
League, Sierra Club, Union of Concerned
Scientists
OPPOSITION : Alliance of Automobile Manufacturers,
California Business Alliance, California
Business Roundtable, California Chamber of
Commerce, California Citrus Mutual, California
Farm Bureau Federation, California Grocers
Association, California Independent Oil
Marketers Association, California Independent
Petroleum Association, California League of
Food Processors, California Manufacturers &
Technology Association, California Mining
Association, California Motor Car Dealers
Association, California Retailers Association,
California Taxpayers' Association, California
Taxpayer Protection Committee, California Women
in Agriculture, Howard Jarvis Taxpayers
Association, Olive Growers Council of
California, Western Growers Association,
Western Plant Health Association, Western
States Petroleum Association