United States: Halftime In California — Which Climate And Environmental Bills Are On The Board?

Last Updated: September 28 2017
Article by Buck B. Endemann and Molly Suda

The California legislature conducts its business in two-year sessions starting on the first Monday in December following an election. Last Friday, September 15, 2017, marked the last day for the California legislature to pass bills before a long interim recess lasting until January 3, 2018. Over the past nine months, the first half of the 2017–2018 legislative session saw a flurry of bills fueled by climate goals and the speculation of eroding federal support for environmental regulation.

Below is a summary of the primary successful and not-so-successful climate and environmental bills that were debated right down to the halftime whistle. On the whole, California made incremental progress in funding clean transportation efforts and incentivizing the deployment of energy storage systems, distributed energy resources, and energy efficiency strategies. While some of California's grander schemes like the 100% Renewable Portfolio Standard (RPS) and California Independent System Operator (CAISO) regionalization fell short, Senate President Pro Tem Kevin de León has vowed to carry those efforts into the second half of the 2017–2018 session. K&L Gates' energy and environmental attorneys will continue to monitor California's progress toward its bold climate and environmental goals.

California's Budget Sets Aside Significant Cap-and-Trade Funds For Renewable and Electrification Projects

In July 2017, AB 398 extended California's signature cap-and-trade program to 2030. The law was passed with two-thirds majorities in the Assembly and Senate, a show of strength required to dilute long-running challenges that the existing cap-and-trade program was an unconstitutional "tax" levied on California citizens by a simple majority of legislators. 1 AB 398's passage stabilized and strengthened the California Air Resources Board's quarterly auctions for greenhouse gas emissions allowances, with the August 2017 auction completely selling out of allowances and raising an estimated record $640 million for the state.

A 2017–2018 budget bill passed at the deadline outlines where the discretionary portion of the cap-and-trade auction monies will be spent. According to budget summaries prepared by the Los Angeles Times and The Mercury News:

  • $895 million is directed at programs to replace gas and diesel-burning vehicles, with special earmarks for the state's ports, farm vehicles, and electric car rebates;
  • $225 million will go toward fire prevention and response;
  • $165 million will be directed toward agriculture programs, including $99 million to curb methane emissions;
  • $61 million will be budgeted for urban forestry, healthy forests, and wetlands restoration;
  • $44 million will be spent for programs promoting energy efficiency;
  • $40 million will be aimed at improving the state's recycling infrastructure; and
  • $11 million will be directed to the University of California for energy research.

The budgeting of cap-and-trade monies reflects certain compromises between Republicans and Democrats as well as compromises between different factions of left-leaning legislators. For instance, the $225 million for fire prevention was seen to comfort Assembly Republicans who provided Democrats with the supermajority required to pass cap-and-trade with a two-thirds vote. Additionally, California will only provide clean vehicle rebates for electric cars manufactured by companies that are "fair and responsible in the treatment of their workers," a requirement that some see as putting pressure on electric car manufacturers not to obstruct efforts to unionize their employees.

Several Energy Storage and Distributed Energy Resource Bills Await Governor Brown's Signature

SB 338, passed by the California Senate on September 6, would require the California Public Utilities Commission and the governing boards of local publicly-owned electric utilities to consider how energy storage, energy efficiency strategies, and distributed energy resources can help utilities meet peak demand electricity needs while reducing the need for new electricity generation and transmission facilities.

Although California has plenty of renewable energy resources, it experiences a deep drop in solar electricity production in the late afternoon and early evening just as people are returning home from work and causing energy demand to spike (i.e., the "duck curve"). This sudden surge in demand is met currently by gas-fired generation, which can be expensive to run in short bursts and does not advance California's clean energy goals. SB 338 would require utilities to consider how this period of peak demand could be met instead by resources that align more closely with California's climate and renewable energy goals, such as fast-ramping energy storage resources and efficiency and demand response strategies. SB 338 is on Governor Brown's desk awaiting signature.

The Assembly passed another storage-oriented bill, AB 546, on September 7. AB 546 will require all local governments to make available online all permitting applications for behind-the-meter advanced energy storage systems, and to accept such applications electronically. The law is meant to reduce the burden and costs on residential customers and prompt greater deployment of customer-sited energy storage systems. Like SB 338, AB 546 is enrolled and awaiting Governor Brown's signature.

Finally, SB 801, passed by the Senate on September 13, is the latest legislative effort to increase the deployment of energy storage and distributed energy resources to mitigate potential energy shortages caused by the Aliso Canyon gas leak. SB 801 specifically requires the "local publicly owned electric utility that provides electric service to 250,000 or more customers within the Los Angeles Basin" (i.e., the Los Angeles Department of Water and Power, or LADWP) to do three things. First, LADWP must share electrical grid data with any persons interested in greater deployment of distributed energy resources. Second, SB 801 requires LADWP to undertake load reduction measures by favoring demand response, renewable energy resources, and energy efficiency strategies over simply meeting demand with increased gas-fired generation. Third, LADWP must determine by June 1, 2018, the cost-effectiveness and feasibility of deploying 100 MW of energy storage in the Los Angeles Basin. SB 801 also requires any private utility serving the Los Angeles Basin (e.g., Southern California Edison) to deploy at least 20 MW of energy storage "to the extent that doing so is cost effective and feasible and necessary to meet . . . reliability requirements."

California Says "Not So Fast" to 100% RPS Target

One of the higher-profile bills to fall short was Senate President Pro Tem Kevin de León's SB 100, which would have required California to procure 100% of its energy from carbon-free sources by 2045 and would have accelerated California's current 50% RPS target from 2030 to 2026. In the waning days of the session, SB 100 faced opposition from energy companies and unions worried about the bill's effect on jobs, and it did not have the full support of Governor Brown. Senator de León has committed to continuing to fight for a 100% RPS in the second half of the 2017–2018 legislative session.

Effort to Accelerate Renewable Energy Procurement and Expand CAISO Regionalization Delayed

The last days of the legislative session also saw the introduction of two bills, AB 726 and AB 813, proposing to transition CAISO's governance structure from a board appointed entirely by the California governor to a new, independent board. Having an independent board would allow CAISO to move towards the model used by other regional transmission operators and pave the way for greater regionalization, i.e., expanding CAISO from what is now essentially a one-state wholesale electricity market to a market covering California, the Pacific Northwest, and perhaps the Mountain and Interior West states.

The bills would have also required certain utilities to procure "tax-advantaged renewable resources" over and above those resources necessary to meet the minimum renewable procurement requirements for RPS compliance. Tax-advantaged renewable resources would have included resources that achieve commercial operation after January 1, 2019, and are eligible for the federal investment tax credit or the federal production tax credit available for wind, solar, and certain other renewable generation. The law's stated goal was to reduce the long-term costs of procuring renewable energy by taking advantage of available federal incentives before they expire.

Neither bill passed. Regionalization opponents argued that CAISO board independence would result in California relinquishing control over its resource planning and potentially lead to greater imports of coal-fired generation outside of California. Supporters of regionalization respond that a more integrated grid and regional energy market would provide for greater cost savings, and would allow California to more efficiently dispatch and export excess solar production that occasionally faces negative pricing conditions in the middle of the day.

Despite legislative delays in regionalizing a fully-functional day-ahead market, since 2014 CAISO's Energy Imbalance Market (EIM) has successfully integrated four western utilities into CAISO's real-time market, achieving over $170 million in cost savings. Seven more western utilities are scheduled to join the EIM over the next three years.

AB 726 and AB 813 are not California's first attempts at regionalizing CAISO and reforming its governance structure — California legislative efforts also stalled in 2016. While the bills did not move forward, the bills' supporters have pledged to revisit the proposals in 2018.

Existing Federal Environmental Protections Fail Will Not Be Enshrined in California Law

SB 49 was introduced to preserve existing air, water quality, drinking water, worker safety, and species protection laws if the Trump Administration rolls back such protections at the federal level. In the event of a federal retreat from existing standards, SB 49's anti-backsliding proposals would have allowed California agencies to quickly pass "emergency regulations" without the need for the normal notice and environmental review processes. SB 49 was ultimately amended and re-referred to committee on September 12, where it stalled.

Footnotes

[1] See Cal. Chamber of Commerce v. State Air Res. Bd., 10 Cal. App. 5th 604, 649 (2017) (summarizing cap-and-trade challenges and ruling that an emissions allowance is not a tax but "a payment for the privilege to pollute the air in California.").

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions