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AB-2824 Air pollution: retrofit of oil refineries: loan guarantee program. (2001-2002)



Current Version: 04/02/02 - Amended Assembly

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AB2824:v98#DOCUMENT

Amended  IN  Assembly  April 02, 2002

CALIFORNIA LEGISLATURE— 2001–2002 REGULAR SESSION

Assembly Bill
No. 2824

Introduced  by  Assembly Member Cogdill

February 25, 2002

An act to amend Section 44003 of the Health and Safety Code, An act to add Chapter 4.7 (commencing with Section 25375) to Division 15 of the Public Resources Code, relating to air pollution.


LEGISLATIVE COUNSEL'S DIGEST


AB 2824, as amended, Cogdill. Air pollution: enhanced motor vehicle inspection and maintenance program retrofit of oil refineries: loan guarantee program.
Existing law designates local and regional authorities, including air pollution control districts and air quality management districts, as the agencies primarily responsible for the control of air pollution from all sources other than vehicular sources. Existing legislative findings declare that significant reductions in diesel emissions from existing vehicles can be achieved by the adoption of stricter diesel fuel specifications on sulfur, and that reduction of emissions from diesel powered vehicles, to the maximum extent feasible, is in the best interests of air quality and public health. Existing federal regulations require oil refineries to commence the production of diesel fuel for use in highway vehicles that has a sulfur content of no more than 15 parts per million no later than June 1, 2006.
This bill would require the Technology, Trade, and Commerce Agency to administer a program to guarantee a qualified oil refinery retrofit loan for any qualified oil refinery, as defined, as a means to facilitate the retrofitting of refineries in the state in order to meet the federal sulfur standard for diesel fuel. The bill would require the oil refinery, or its parent company, to file a surety bond or completion guarantee with the agency in order to protect the state against losses resulting from the failure to complete the retrofitting of the oil refinery within the budget submitted to the agency. The bill would establish the Ultra Low-sulfur Diesel Fuel Refinery Loan Guarantee Finance Fund in the State Treasury, to be administered by the agency. The bill would require the agency to adopt rules and regulations as necessary to implement those provisions. The bill would be implemented only during those fiscal years for which funds are appropriated for that purpose in the annual Budget Act or another measure.

Existing law establishes an enhanced motor vehicle inspection and maintenance program (smog check II) in each urbanized area of the state, any part of which is classified by the United States Environmental Protection Agency as a serious, severe, or extreme nonattainment area for carbon monoxide. Existing law authorizes the Department of Consumer Affairs to prescribe different test procedures and equipment requirements for those areas in the enhanced program. Existing law also requires the department and the State Air Resources Board to periodically determine whether changes in the program are warranted.

This bill would make technical, nonsubstantive changes.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

Section 44003 of the Health and Safety Code is

SECTION 1.

 The Legislature finds and declares all of the following:
(a) The United States Environmental Protection Agency has established a comprehensive national program regulating heavy-duty vehicles that includes new standards for heavy-duty trucks and buses and new standards for diesel fuel. Under these new standards, oil refiners are required, commencing June 1, 2006, to produce diesel fuel for use in highway diesel vehicles with a sulfur content of no more than 15 parts per million.
(b) In order to meet the new fuel standards, many oil refiners in the state will have to make costly retrofits to their refining facilities.
(c) It is the intent of the Legislature to create a loan guarantee program to assist oil refiners in making the necessary adjustments and upgrades to their facilities to ensure that oil refiners in the state can meet the new standards and therefore remain competitive in the diesel fuel industry.
Chapter 4.7 (commencing with Section 25375) is added to Division 15 of the Public Resources Code, to read:
CHAPTER  4.7. Ultra Low-Sulfur Diesel Fuel Refinery Loan Guarantee Program

25375.
 For the purposes of this chapter, the following terms have the following meanings:
(a) “Agency” means the Technology, Trade, and Commerce Agency.
(b) “Federal sulfur standard for diesel fuel” means the portion of the standard adopted by the United States Environmental Protection Agency (66 Fed. Reg. 5137 (Jan. 18, 2001)), that requires oil refiners, commencing June 1, 2006, to produce diesel fuel with a sulfur content of no more than 15 ppm.
(c) “Lender” means a state or national bank that is domiciled, or that has a branch office, in the state.
(d) “Ppm” means parts per million.
(e) “Program” means the Ultra Low-sulfur Diesel Fuel Refinery Loan Guarantee Program administered by the agency pursuant to this chapter.
(f) “Qualified oil refinery” means any oil refinery that refines oil in the state that requires retrofitting in order to meet the federal sulfur standard for diesel fuel.
(g) “Qualified oil refinery retrofit loan” means any loan that meet the requirements of Section 25377.

25376.
 (a) The agency shall administer a program to guarantee an oil refinery retrofit loan for any qualified oil refinery as a means to facilitate the retrofitting of refineries in the state in order to meet the federal sulfur standard for diesel fuel.
(b) The agency may approve the issuance of a loan guarantee upon approval of an application submitted by a lender who has agreed to make a qualified oil refinery retrofit loan to a qualified oil refinery.
(c) A lender may participate in the program if the agency determines that the lender meets both of the following criteria:
(1) Is financially viable and able to execute the qualified oil refinery retrofit loan.
(2) Has substantial experience in lending for the purpose of constructing or retrofitting oil refineries.
(d) Prior to the issuance of a guarantee pursuant to this chapter, the agency shall determine the maximum guarantee amount.
(e) The guarantee amount approved by the agency pursuant to this chapter shall not exceed ____.

25377.
 To qualify as an oil refinery retrofit loan, a loan shall meet all of the following criteria:
(a) The loan is made by a lender under a written loan agreement.
(b) The written loan agreement is entered into by the lender and a qualified oil refinery or its parent company for the purpose of retrofitting an oil refinery in the state to enable that refinery to meet the federal sulfur standard for diesel fuel.
(c) The written loan agreement provides that the loan is secured by a security interest in the oil refinery or the future profits of the oil refinery, or its parent company.

25378.
 An application for a loan guarantee under this chapter shall meet all of the following requirements:
(a) Is submitted by a lender to the agency.
(b) Contains the names and addresses of the lender and the oil refinery that is the subject of the loan.
(c) Contains a certification by an officer of the oil refinery that the oil refinery is a qualified oil refinery.
(d) Is accompanied by all of the following:
(1) A copy of the written loan agreement.
(2) A budget for retrofitting the oil refinery.
(3) A certification by the lender that all of the following are true:
(A) The lender prepared and reviewed the application.
(B) The budget to retrofit the oil refinery in the application is the same as the budget disclosed to the lender for the purpose of determining whether to make the loan.
(C) The information contained in the application is not contrary to the information submitted to the lender in connection with the loan.

25379.
 The oil refinery or its parent company shall file a surety bond or completion guarantee with the agency protecting the state against losses resulting from the failure to complete the retrofitting of the oil refinery within the budget submitted to the agency.

25380.
 (a) The Ultra Low-sulfur Diesel Fuel Refinery Loan Guarantee Finance Fund is hereby established in the State Treasury, to be administered by the agency.
(b) The following moneys shall be deposited in the fund:
(1) Money appropriated for the implementation and the administration of the program.
(2) Interest paid on moneys in the fund.
(3) Any proceeds from the realization of collateral provided to the state under this chapter.
(4) Any other amounts received by the state for loan guarantees approved for issuance pursuant to this chapter.

25381.
 The agency shall adopt rules and regulations as necessary to implement this chapter, which shall include, but are not limited to, both of the following:
(a) Terms and conditions for a security interest or other pledge of collateral to be provided to a lender or to the state as security for any default of a loan guaranteed pursuant to this program.
(b) Procedures for the enforcement of obligations owed and pledges of collateral provided to the agency pursuant to the program.

25382.
 This chapter shall be implemented only during those fiscal years for which funds are appropriated for the purposes of this chapter in the annual Budget Act or in another measure.

amended to read:

44003.

(a)(1)An enhanced motor vehicle inspection and maintenance program is established in each urbanized area of the state, any part of which is classified by the United States Environmental Protection Agency as a serious, severe, or extreme nonattainment area for ozone, or a moderate or serious nonattainment area for carbon monoxide with a design value greater than 12.7 ppm, and in other areas of the state as provided in this chapter.

(2)The enhanced motor vehicle inspection and maintenance program established pursuant to paragraph (1) shall be assessed jointly by the department and the state board periodically to determine whether changes in the program may be warranted. On or before January 1, 2003, the department and the state board shall jointly issue a report to the Legislature based on those periodic assessments, recommending any modifications to the enhanced program to improve its operations and lessen its impact on consumers while still achieving the necessary emission reductions to attain air quality standards. The report shall include a review of any program proposed pursuant to Section 15 of Chapter 803 of the Statutes of 1997.

(3)A basic vehicle inspection and maintenance program shall be continued in all other areas of the state where a program was in existence under this chapter as of March 30, 1994.

(b)The department may prescribe different test procedures and equipment requirements for those areas described in subdivision (a). Program components shall be operated in all program areas unless otherwise indicated, as determined by the department. In those areas where the biennial program is not implemented and smog check inspections are required to complete the requirements set forth in Sections 4000.1 and 4000.2 of the Vehicle Code, program elements that apply in basic areas, including test equipment requirements for smog check stations, shall apply.

(c)(1)Districts classified as attainment areas may request the department to implement all or part of the program elements defined in this chapter. However, the department shall not implement the program established by Section 44010.5 in any area other than an urbanized area, any part of which is classified by the United States Environmental Protection Agency as a serious, severe, or extreme nonattainment area for ozone or a moderate or serious nonattainment area for carbon monoxide with a design value greater than 12.7 ppm.

(2)Districts that include areas classified as basic program nonattainment areas pursuant to subdivision (a) may, except as provided in paragraph (1), request the implementation in those areas of test procedures and equipment required for enhanced program areas and any other program requirement specified for enhanced program areas.