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SB-709 Low-Carbon Fuel Standard regulations: biogas derived from livestock manure.(2023-2024)



Current Version: 03/30/23 - Amended Senate

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SB709:v98#DOCUMENT

Amended  IN  Senate  March 30, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill
No. 709

Introduced by Senator Allen

February 16, 2023

An act to amend Section 39716 of 39730.7 of, and to add Section 39730.9 to, the Health and Safety Code, relating to greenhouse gases.


LEGISLATIVE COUNSEL'S DIGEST


SB 709, as amended, Allen. Greenhouse Gas Reduction Fund: investment plan. Low-Carbon Fuel Standard regulations: biogas derived from livestock manure.
The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. The act requires the state board to adopt rules and regulations to achieve the maximum technologically feasible and cost-effective greenhouse gas emissions reductions to ensure that the statewide greenhouse gas emissions are reduced to at least 40% below the statewide greenhouse gas emissions limit, as defined, no later than December 31, 2030. Pursuant to the act, the state board has adopted the Low-Carbon Fuel Standard regulations.
Existing law requires the state board to approve and begin implementing a comprehensive strategy to reduce emissions of short-lived climate pollutants in the state to achieve, among other things, a reduction in methane emissions to 40% below 2013 levels by 2030. Existing law requires the state board, in consultation with the Department of Food and Agriculture, to adopt regulations to reduce methane emissions from livestock manure management operations and dairy manure management operations consistent with the strategy, as specified. Existing law requires those regulations to be implemented on or after January 1, 2024, if the state board, in consultation with the department, makes certain determinations.
Existing law requires the state board to provide guidance on credits generated pursuant to the Low-Carbon Fuel Standard regulations, and the market-based compliance mechanism, adopted pursuant to the act from the methane reduction protocols described in the comprehensive strategy for short-lived climate pollutants. Existing law requires the state board to ensure that projects developed before the implementation of the regulations to reduce methane emissions from livestock manure management operations and dairy manure management operations receive credit under the Low-Carbon Fuel Standard regulations and the market-based compliance mechanism for at least 10 years. Existing law also makes projects eligible for an extension of credits after the first 10 years, as specified.
This bill would eliminate the requirement that the state board ensure those projects receive credit for at least 10 years and would eliminate the requirement for those projects to be eligible for an extension of credits after the first 10 years.
This bill would require the state board, in implementing the Low-Carbon Fuel Standard regulations, to update the carbon intensity of each pathway for fuel derived from livestock manure to include all emissions of greenhouse gases generated from the production of the fuel and all emissions of greenhouse gases generated from the production of the feedstock. The bill would require the state board to limit the generation of credits for fuel pathway holders for biogas derived from livestock manure to the volume of feedstock at each associated dairy or livestock operation on January 1, 2017, or on the date the pathway was certified, whichever is less. The bill would require a new fuel pathway application that includes the use of biogas derived from livestock manure to include all information and calculations used to determine carbon intensity and would require the state board to make that information publicly available on its internet website. The bill would also require an existing fuel pathway holder whose pathway includes the use of biogas derived from livestock manure to file a document that includes all information and calculations used to determine carbon intensity with the state board on or before January 31, 2024, and would require the state board to make that information publicly available on its internet website on or before March 31, 2024.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund. Existing law requires the Department of Finance, in consultation with the state board and any other relevant state agency, to develop, as specified, a 3-year investment plan for the moneys deposited in the fund.

This bill would require the 3-year investment plan to additionally identify and analyze conflicts and overlapping policies, where applicable, in current state strategies to meeting the state’s greenhouse gas emissions reduction goals and targets by sector.

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

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Every Californian should enjoy the same degree of protection from environmental and health hazards. Every community should be a healthy environment in which to live, work, play, and learn.
(b) No single group of people should bear a disproportionate share of the negative environmental consequences and adverse health impacts arising from climate change policies or investments.
(c) California was one of the first states in the nation to put environmental justice considerations into law and defines environmental justice as the fair treatment of people of all races, cultures, and incomes with respect to the development, adoption, implementation, and enforcement of environmental laws, regulations, and policies.
(d) Established state environmental justice law and policies are only effective insofar as they result in true parity.
(e) It is the intent of the Legislature that the State of California bring true environmental justice to our state and begin to address the continuing disproportionate environmental burdens in the state by aligning our climate policies with environmental justice.
(f) Large concentrated animal feeding operations in California, primarily large dairies, are disproportionately located near low-income communities of color in California’s San Joaquin Valley.
(g) Concentrated animal feeding operations contribute to air and water pollution for communities in close proximity.
(h) Concentrated animal feeding operations are a significant source of greenhouse gas emissions in California.
(i) Liquefied manure management exacerbates the emissions and pollution described in subdivisions (g) and (h).
(j) Alternative manure management techniques are available. Techniques such as solid-liquid separation, scrape and vacuum collection of manure, composting, and pasture-based practices are all viable methods of manure management that would avoid or reduce methane creation and emissions caused by open-air lagoons of liquid manure.
(k) The Low-Carbon Fuel Standard regulations (Subarticle 7 (commencing with Section 95480) of Title 17 of the California Code of Regulations) provide a monetary incentive for fuel produced from livestock manure that is directly related to the amount of gas produced from a facility.
(l) Under the Low-Carbon Fuel Standard, the current life cycle analysis used to determine the issuance of carbon credits does not reflect all of the greenhouse gas emissions associated with biogas derived from livestock manure, including enteric emissions and emissions from manure before and after digestion.

SEC. 2.

 Section 39730.7 of the Health and Safety Code is amended to read:

39730.7.
 (a) For purposes of this section, the following terms have the following meanings:
(1) “Department” means the Department of Food and Agriculture.
(2) “Commission” means the Public Utilities Commission.
(3) “Energy commission” means the State Energy Resources Conservation and Development Commission.
(4) “Strategy” means the strategy to reduce short-lived climate pollutants developed pursuant to Section 39730.
(b) (1) The state board, in consultation with the department, shall adopt regulations to reduce methane emissions from livestock manure management operations and dairy manure management operations, consistent with this section and the strategy, by up to 40 percent below the dairy sector’s and livestock sector’s 2013 levels by 2030.
(2) Prior to adopting regulations pursuant to paragraph (1), the state board shall do all of the following:
(A) Work with stakeholders to identify and address technical, market, regulatory, and other challenges and barriers to the development of dairy methane emissions reduction projects. The group of stakeholders shall include a broad range of stakeholders involved in the development of dairy methane reduction projects, including, but not limited to, project developers, dairy and livestock industry representatives, state and local permitting agencies, energy agency representatives, compost producers with experience composting dairy manure, environmental and conservation stakeholders, public health experts, and others with demonstrated expertise relevant to the success of dairy methane emissions reduction efforts.
(B) Provide a forum for public engagement by holding at least three public meetings in geographically diverse locations throughout the state where dairy operations and livestock operations are present.
(C) In consultation with the department, do both of the following:
(i) Conduct or consider livestock and dairy operation research on dairy methane emissions reduction projects, including, but not limited to, scrape manure management systems, solids separation systems, and enteric fermentation.
(ii) Consider developing and adopting methane emissions reduction protocols.
(3) The state board shall make available to the public by posting on its Internet Web site internet website a report on the progress made in implementing paragraph (2). Pursuant to Section 9795 of the Government Code, the state board shall notify the Legislature of the report.
(4) Notwithstanding the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the regulations adopted pursuant to paragraph (1) shall be implemented on or after January 1, 2024, if the state board, in consultation with the department, determines all of the following:
(A) The regulations are technologically feasible.
(B) The regulations are economically feasible considering milk and live cattle prices and the commitment of state, federal, and private funding, among other things, and that markets exist for the products generated by dairy manure management and livestock manure management methane emissions reduction projects, including composting, biomethane, and other products. The analysis shall include consideration of both of the following:
(i) Electrical interconnection of onsite electrical generation facilities using biomethane.
(ii) Access to common carrier pipelines available for the injection of digester biomethane.
(C) The regulations are cost effective.
(D) The regulations include provisions to minimize and mitigate potential leakage to other states or countries, as appropriate.
(E) The regulations include an evaluation of the achievements made by incentive-based programs.
(c) No later than July 1, 2020, the state board, in consultation with the department, shall analyze the progress the dairy and livestock sectors have made in achieving the goals identified in the strategy and specified in paragraph (1) of subdivision (b). The analysis shall determine if sufficient progress has been made to overcome technical and market barriers, as identified in the strategy. If the analysis determines that progress has not been made in meeting the targets due to insufficient funding or technical or market barriers, the state board, in consultation with the department and upon consultation with stakeholders, may reduce the goal in the strategy for the dairy and livestock sectors, as identified pursuant to paragraph (1) of subdivision (b).
(d) (1) (A) No later than January 1, 2018, the state board, in consultation with the commission and the energy commission, shall establish energy infrastructure development and procurement policies needed to encourage dairy biomethane projects to meet the goal identified pursuant to paragraph (1) of subdivision (b).
(B) The state board shall develop a pilot financial mechanism to reduce the economic uncertainty associated with the value of environmental credits, including credits pursuant to the Low-Carbon Fuel Standard regulations (Subarticle 7 (commencing with Section 95480) of Title 17 of the California Code of Regulations) from dairy-related projects producing low-carbon transportation fuels. The state board shall make recommendations to the Legislature for expanding this mechanism to other sources of biogas.
(2) No later than January 1, 2018, the commission, in consultation with the state board and the department, shall direct gas corporations to implement not less than five dairy biomethane pilot projects to demonstrate interconnection to the common carrier pipeline system. For the purposes of these pilot projects, gas corporations may recover in rates the reasonable cost of pipeline infrastructure developed pursuant to the pilot projects.
(e) (1) No later than January 1, 2018, the state board shall provide guidance on credits generated pursuant to the Low-Carbon Fuel Standard regulations (Subarticle 7 (commencing with Section 95480) of Title 17 of the California Code of Regulations) and the market-based compliance mechanism developed pursuant to Part 5 (commencing with Section 38570) of Division 25.5 from the methane reduction protocols described in the strategy and shall ensure that projects developed before the implementation of regulations adopted pursuant to subdivision (b) receive credit for at least 10 years. Projects shall be eligible for an extension of credits after the first 10 years to the extent allowed by regulations adopted pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500)). strategy.
(2) The state board shall not guarantee credits generated pursuant to the Low-Carbon Fuel Standard regulations for gas from livestock manure if the gas would not otherwise generate credits pursuant to those regulations.
(f) Enteric emissions reductions shall be achieved only through incentive-based mechanisms until the state board, in consultation with the department, determines that a cost-effective, considering the impact on animal productivity, and scientifically proven method of reducing enteric emissions is available and that adoption of the enteric emissions reduction method would not damage animal health, public health, or consumer acceptance. Voluntary enteric emissions reductions may be used toward satisfying the goals of this chapter.
(g) Except as provided in this section, the state board shall not adopt methane emissions reduction regulations controlling the emissions of methane from dairy operations or livestock operations to achieve the 2020 and 2030 greenhouse gas emissions reduction goals established pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500)).
(h) This section does not limit the authority of the state board to acquire planning and baseline information, including requiring the monitoring and reporting of emissions.
(i) This section does not in any way affect the state board’s or districts’ authority to regulate emissions of criteria pollutants, toxic air contaminants, or other pollutants pursuant to other provisions of this division.

SEC. 3.

 Section 39730.9 is added to the Health and Safety Code, to read:

39730.9.
 (a) In implementing the Low-Carbon Fuel Standard regulations (Subarticle 7 (commencing with Section 95480) of Title 17 of the California Code of Regulations), the state board shall do all of the following:
(1) When calculating the carbon intensity of fuel derived from livestock manure, include all emissions of greenhouse gases generated from the production of the fuel and all emissions of greenhouse gases generated from the production of the feedstock. These emissions include, but are not limited to, enteric emissions; emissions from production and storage of feed, transport of feedstock, or fuel; emissions resulting from digestate handling, composting, or treatment; and emissions resulting from land application of manure or digestate.
(2) Update the carbon intensity of each pathway for fuel derived from livestock manure pursuant to paragraph (1).
(3) Limit the generation of credits for fuel pathway holders for biogas derived from livestock manure to the volume of feedstock at each associated dairy or livestock operation on January 1, 2017, or on the date the pathway was certified, whichever is less.
(b) (1) Notwithstanding any other law, a new fuel pathway application that includes the use of biogas derived from livestock manure shall include all information and calculations used to determine carbon intensity, including, but not limited to, herd size, volume of feedstock produced or used, and volume of biogas produced. The state board shall make the information and calculations used to determine carbon intensity publicly available on the state board’s internet website.
(2) An existing fuel pathway holder whose pathway includes the use of biogas derived from livestock manure shall file a document that includes all information and calculations used to determine carbon intensity, including, but not limited to, herd size, volume of feedstock produced or used, and volume of biogas produced, with the state board on or before January 31, 2024. The state board shall make the information and calculations reported pursuant to this paragraph publicly available on the state board’s internet website on or before March 31, 2024.
(3) The state board shall not approve a fuel pathway application that does not include the information described in paragraph (1). An existing fuel pathway holder who fails to comply with paragraph (2) shall be ineligible to generate credits for that fuel pathway.

SECTION 1.Section 39716 of the Health and Safety Code is amended to read:
39716.

(a)The Department of Finance, on behalf of the Governor, and in consultation with the state board and any other relevant state entity, shall develop and submit to the Legislature at the time of the department’s adjustments to the proposed 2013–14 fiscal year budget pursuant to subdivision (e) of Section 13308 of the Government Code a three-year investment plan. Commencing with the 2016–17 fiscal year budget and every three years thereafter, with the release of the Governor’s budget proposal, the Department of Finance shall include updates to the investment plan following the public process described in subdivisions (b) and (c). The investment plan, consistent with the requirements of Section 39712, shall do all of the following:

(1)Identify the state’s near-term and long-term greenhouse gas emissions reduction goals and targets by sector.

(2)Identify and analyze gaps, conflicts, and overlapping policies, where applicable, in current state strategies to meeting the state’s greenhouse gas emissions reduction goals and targets by sector.

(3)(A)Identify priority programmatic investments of moneys that will facilitate the achievement of feasible and cost-effective greenhouse gas emissions reductions toward achievement of greenhouse gas reduction goals and targets by sector, consistent with subdivision (c) of Section 39712.

(B)In identifying priority programmatic investments, the investment plan shall do both of the following:

(i)Assess how proposed investments interact with current state regulations, policies, and programs.

(ii)Evaluate if and how those proposed investments could be incorporated into existing programs.

(4)Recommend metrics that would measure progress and benefits from the proposed programmatic investments.

(b)(1)The state board shall hold at least two public workshops in different regions of the state and one public hearing prior to the Department of Finance submitting the investment plan.

(2)The state board shall, prior to the submission of each investment plan, consult with the Public Utilities Commission to ensure the investment plan is coordinated with, and does not conflict with or unduly overlap with, activities under the oversight or administration of the Public Utilities Commission undertaken pursuant to Part 5 (commencing with Section 38570) of Division 25.5 or other activities under the oversight or administration of the Public Utilities Commission that facilitate greenhouse gas emissions reductions consistent with this division. The investment plan shall include a description of the use of any moneys generated by the sale of allowances received at no cost by the investor-owned utilities pursuant to a market-based compliance mechanism.

(c)The Climate Action Team, established under Executive Order S-3-05, shall provide information to the Department of Finance and the state board to assist in the development of each investment plan. The Climate Action Team shall participate in each public workshop held on an investment plan and provide testimony to the state board on each investment plan. For purposes of this section, the Secretary of Labor and Workforce Development shall assist the Climate Action Team in its efforts.