BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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                                 THIRD READING


          Bill No:  SB 757
          Author:   Kehoe (D)
          Amended:  5/27/05
          Vote:     21

           
           SEN.  ENERGY, UTIL. & COMMUNICATIONS COMM.  :  7-3, 4/5/05
          AYES:  Escutia, Alarcon, Bowen, Dunn, Kehoe, Murray,  
            Simitian
          NOES:  Battin, Campbell, Cox
          NO VOTE RECORDED:  Morrow

           SENATE ENVIRONMENTAL QUALITY COMMITTEE  :  6-3, 4/25/05
          AYES:  Lowenthal, Chesbro, Escutia, Figueroa, Kuehl,  
            Simitian
          NOES:  Runner, Campbell, Cox

           SENATE APPROPRIATIONS COMMITTEE  :  8-5, 5/26/05
          AYES:  Migden, Alarcon, Alquist, Escutia, Florez, Murray,  
            Ortiz, Romero
          NOES:  Aanestad, Ashburn, Battin, Dutton, Poochigian


           SUBJECT  :    Oil Conservation, Efficiency, and Alternative  
          Fuels Act

           SOURCE  :     Author


           DIGEST  :    This bill enacts the Oil Conservation,  
          Efficiency and Alternative Fuels Act.

           ANALYSIS  :    Existing law requires the State Energy  
                                                           CONTINUED





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          Resources Conservation and Development Commission  
          (California Energy Commission or CEC) to implement and  
          administer various generation and conservation programs.   
          Additionally, CEC is responsible for monitoring  
          transportation fuel supplies and prices in the state.  The  
          CEC is required, under current law, to develop biennially  
          an integrated energy policy report that looks at issues of  
          supply, demand, and supply reliability for transportation  
          fuel.

          This bill enacts the Oil Conservation, Efficiency, and  
          Alternative Fuels Act and does all of the following:

          1.Makes legislative findings and declarations.

          2.Sets a policy that state agencies shall take every  
            cost-effective and technologically feasible action to  
            reduce the growth of petroleum demand and increase  
            vehicle energy efficiency and the use of alternative  
            fuels.  The bill provides that state agencies shall take  
            the state's transportation energy goals into account in  
            adopting rules and regulations.  The bill provides a  
            definition for "technologically feasible".

          3.Requires the Air Resources Board (ARB), in adopting rules  
            and regulations to reduce air pollution and toxic air  
            contaminants from motor vehicle fuels, to consider  
            requirements, incentives, and partnerships for public and  
            private fleet operators to purchase and install  
            alternative fuel vehicles and advanced transportation  
            technologies, as specified.

          4.Requires the California Environmental Protection Agency  
            (CalEPA), in consultation with ARB, the Department of  
            Toxic Substances Control, the State Water Resources  
            Control Board, and air quality management districts, to  
            develop and consider adoption of model rules, best  
            practices guidelines, and pollution prevention strategies  
            to ensure that petroleum refining, storage, and waste  
            management and disposal sources install best available  
            technology and pollution prevention measures reflecting  
            the best practices available to provide the maximum  
            feasible and cost-effective reduction in air pollution,  
            water pollution, and toxic waste generation, while  







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            protecting the public and community health, and worker  
            health and safety over a 10-uear phased period not to  
            extend beyond January 1, 2017.

          5.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.

          6.Requires the Secretary of the Business, Transportation  
            and Housing Agency to submit recommendations to the  
            Governor and Legislature by March 31, 2007, 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.

          7.Requires CalEPA, with assistance of the ARB, CEC, and the  
            South Coast Air Quality Management district, to adopt  
            recommendations, policies, and programs by January 1,  
            2007, and every third year thereafter, to reduce the rate  
            of growth in petroleum consumption and increase  
            transportation energy efficiency, and the use of  
            alternative fuels, as specified.

          8.Requires CalEPA 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 forums that the  
            secretary deems useful.  Costs associated with this  
            provision will be minimal.

           Comments

          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,  







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          will be vulnerable to external disruptions and geopolitical  
          instability, making the reduction of petroleum consumption  
          a matter of energy dependence."

          This bill addresses improvement of oil refinery safety and  
          pollution prevention, alternatives to petroleum based  
          transportation fuels, and monitoring global petroleum  
          adequacy.  The author's office 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.

           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 2002,  
          recommended that the state adopt a policy to reduce  
          gasoline and diesel fuel demand to 15 percent 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 percent  
          of on-road fuel consumption by 2020 and 30 percent by 2030.

           NOTE:  For extensive background information, please refer  
                 to the Senate Energy, Utilities and Communications  
                 Committee analysis.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  5/31/05) 

          American Lung Association of California
          California Communities Against Toxics
          California League of Conservation Voters
          California Natural Gas Vehicle Coalition







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          California Thoracic Society
          Clean Power Campaign
          Heal the Bay
          Natural Resources Defense Council
          Planning and Conservation League
          Sacramento Metropolitan Air Quality Management District
          Sierra Club
          Union of Concerned Scientists

           OPPOSITION  :    (Verified  5/31/05) 

          Alliance of Automobile Manufacturers
          California Business Alliance
          California Business Roundtable
          California Chamber of Commerce
          California Citrus Mutual
          California Council for Environmental and Economic Balance
          California Farm Bureau Federation
          California Grocers Association
          California Hispanic Chamber of Commerce
          California Independent Oil Marketers Association
          California Independent Petroleum Association
          California League of Food Processors
          California Manufacturers and Technology Association
          California Mining Association
          California Motor Car Dealers
          California Retailers Association
          California Taxpayers' Association
          California Taxpayer Protection Committee
          California Women in Agriculture
          Howard Jarvis Taxpayers Association
          Olive Growers Council of California
          Small Business Action Committee
          Western Growers Association
          Western Plant Health Association
          Western States Petroleum Association


          NC:cm  5/31/05   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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