BILL ANALYSIS
SB 757
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Date of Hearing: June 27, 2005
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jenny Oropeza, Chair
SB 757 (Kehoe) - As Amended: May 27, 2005
SENATE VOTE : 21-15
SUBJECT : Petroleum dependency
SUMMARY : Requires state agencies to reduce the growth of
petroleum demand, increase vehicle energy efficiency, and
increase the use of alternative fuels. Specifically, this bill :
1)Makes legislative findings and declarations regarding the need
to reduce the state's dependency on unstable global oil
supplies.
2)Establishes a policy that state agencies must 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.
3)Requires state agencies to take the state's transportation
energy goals into account in adopting rules and regulations.
4)Defines "technologically feasible," for the purposes of this
bill, as meaning capable of being successfully accomplished
taking into account environmental, economic, social, and
technological factors.
5)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.
6)Requires the California Environmental Protection Agency
(CalEPA), 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,
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storage, and waste management and disposal sources install
best available technology and pollution prevention measures to
reduce air pollution, water pollution, and toxic waste
generation, and to protect the health and safety, phased in
over a 10-year period not to extend beyond January 1, 2017.
7)Authorizes the California Energy Commission (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. CEC would be
required to refer cases to the Attorney General when there may
be market abuse or unfair competition.
8)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 lost gasoline and diesel fuel
taxes that would otherwise fund state transportation
infrastructure investments.
9)Requires CalEPA, with assistance of 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.
10) 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.
EXISTING LAW : Requires CEC to implement and administer various
generation and conservation programs. Additionally, CEC is
responsible for monitoring transportation fuel supplies and
prices in the state and is required to develop biennially an
integrated energy policy report that looks at issues of supply,
demand, and supply reliability for transportation fuel.
FISCAL EFFECT : According to the Senate Appropriations Committee
analysis, this bill will require expenditures by ARB and CEC of
$200,000 in fiscal year 2005-06 and $400,000 annually
thereafter.
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COMMENTS : According to supporters "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 dependence."
The author notes that California is in a constant gasoline
crisis and is dependent upon imported fuel to meet and keep up
with consumer demand. The state has already reached the point
where it can no longer refine enough fuel in state to meet the
needs of its consumers. The state must import 57% of its oil by
tanker ship in order to be refined into gasoline and diesel, but
it also imports 10% of its gasoline to keep up with current
demand. The price of oil has doubled in the past two years:
current oil prices are approaching $60 per barrel, compared to a
$37 per barrel average in 2004 and $27 per barrel average in
2003.
According to CEC, demand for gasoline will outstrip refined
supply by almost 2 billion gallons by 2008 and each year after.
Without state policies to examine alternative sources for fuel,
increased fuel efficiency and conservation measures, the author
contends that California's consumers will experience with higher
and higher prices at the pump. She also argues that continued
reliance on foreign oil places the state at the mercy of
geopolitical influences beyond our control and that instability
abroad, along with the increasing need for oil by other growing
industrialized nations, will add to the volatility of oil
prices.
This bill 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 would strengthen
national security, support energy independence, create jobs and
business opportunities, and reduce air, water, and soil
pollution while improving public health and worker safety, and
increase the economic competitiveness of alternative fuels and
energy resources.
AB 2076 (Shelley), Chapter 936, Statutes of 2000, required CEC
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and ARB to present recommendations for the Governor and the
Legislature by January 31, 2002, on a strategy to reduce
petroleum dependence. The CEC report, "Reducing California's
Petroleum Dependence" 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 specific recommendations such as
using more fuel efficient tires, improving vehicle maintenance,
doubling light duty vehicle fuel efficiency, and developing fuel
cell-powered vehicles. It also recommended adopting a general
goal of increasing the use of non-petroleum fuels to 20% of
on-road fuel consumption by 2020 and 30% by 2030.
The oil industry argues that investment in oil refineries will
suffer if California establishes a goal of reducing gasoline
demand by 2020. The industry also complains that the bill would
require petroleum facilities to install best available control
technology (BACT) irrespective of the date of the facility's
original construction or installation. "Perversely, under SB
757, a refinery could spend millions of dollars installing BACT
in 2006, only to have the state redefine BACT in 2007, requiring
an additional investment of millions of dollars and forcing the
refinery to shut down for construction to install the 'new
technology.'"
An umbrella group of opponents further speculates that this bill
"could lead to increased gas taxes, vehicle fees, and other fees
to increase the cost of gasoline." (In actuality, neither
existing law, nor anything in this bill, authorizes ARB to take
any action regarding gas taxes or vehicle fees.)
The author counters opponents' gas tax argument by reporting
that the average price of regular gasoline, which was $1.99 in
January of 2005, had increased to $2.46 by April 4, 2005. "That
47 cent increase in four months happened free of any government
involvement, yet the opposition to SB 757 continues to wring its
hands over the possibility that maybe someday the gasoline tax
might be raised by a penny or two, thus ruining the economy."
Double referral : This bill has also been referred to the
Assembly Committee on Utilities and Commerce.
REGISTERED SUPPORT / OPPOSITION :
Support
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American Lung Association of California
California Communities Against Toxics
California League of Conservation Voters
California Natural Gas Vehicle Coalition
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 California
Union of Concerned Scientists
Opposition
Alliance of Automobile Manufacturers
California State Automobile Association
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 Trucking Association
California Women in Agriculture
Consumers First Inc.
Howard Jarvis Taxpayers Association
Olive Growers Council of California
Small Business Action Committee
Stop Hidden Gas Taxes
Western Growers Association
Western Plant Health Association
Western States Petroleum Association
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Analysis Prepared by : Howard Posner / TRANS. / (916) 319-2093