The California Integrated Waste Management Act of 1989, administered by the Department of Resources Recycling and Recovery, generally regulates the disposal, management, and recycling of solid waste. The act authorizes each county, city, district, or other local governmental agency to determine whether aspects of solid waste handling services are to be provided by franchise, contract, license, permit, or other authorization. The act prohibits a person, other than an authorized recycling agent, from removing specified materials that have been segregated from solid waste materials and placed at a designated recycling collection location for residential curbside collection programs authorized by a city, county, or local agency for the purposes of collection and recycling or at a designated recycling collection location by any commercial or industrial entity. Existing law authorizes a court, in a civil action by a recycling agent against a person alleged to have violated these laws, to either allow treble damages or award a civil penalty, as specified, against the unauthorized person removing the recyclable material, and to allow treble damages or award a higher civil penalty, as specified, against a person for a second violation and subsequent violations.

This bill, until January 1, 2022, bill would require a court to award to a prevailing party reasonable attorneys fees, expert witness fees, and other costs incurred in a civil action brought to enforce a franchise, contract, license, permit, or other authorization for solid waste handling services in an amount the court deems appropriate, but would prohibit the court from awarding those fees and costs under specified circumstances. The bill would expand civil enforcement to knowing and willful participation in the unauthorized removal of the segregated recyclable material, would explicitly authorize a local governmental agency to bring an enforcement action, and would require a court to award to the prevailing party reasonable attorneys fees, expert witness fees, and costs incurred in the course of the litigation, except as specified. The bill would require a plaintiff, in order for a court to award to a prevailing party those costs and fees, to first notify and request approval to proceed from the relevant local agency. The bill would require the local agency to post all notices and approval requests it receives on the local agencys Internet Web site, as specified. By imposing additional duties on local agencies, the bill would impose a state-mandated local program. The bill would require a person seeking costs and fees in accordance with that provision to notify the department, and would require the department to report to the Legislature the total number and dispositions of actions filed in accordance with that provision for the previous calendar year. The bill would repeal these provisions as of January 1, 2022.

The California Integrated Waste Management Act of 1989, administered by the Department of Resources Recycling and Recovery, generally regulates the disposal, management, and recycling of solid waste. The act authorizes each county, city, district, or other local governmental agency to determine whether aspects of solid waste handling services are to be provided by franchise, contract, license, permit, or other authorization. The act prohibits a person, other than an authorized recycling agent, from removing specified materials that have been segregated from solid waste materials and placed at a designated recycling collection location for residential curbside collection programs authorized by a city, county, or local agency for the purposes of collection and recycling or at a designated recycling collection location by any commercial or industrial entity. Existing law authorizes a court, in a civil action by a recycling agent against a person alleged to have violated these laws, to either allow treble damages or award a civil penalty, as specified, against the unauthorized person removing the recyclable material, and to allow treble damages or award a higher civil penalty, as specified, against a person for a second violation and subsequent violations.

This bill, where a city, county, or other local government agency has authorized a solid waste enterprise to handle solid waste, would subject an unauthorized person to these same damages for collecting, removing, or transporting solid waste generated by another person on residential, commercial, or industrial premises, except in compliance with applicable law. until January 1, 2022, would require a court to award to a prevailing party reasonable attorneys fees, expert witness fees, and other costs incurred in a civil action brought to enforce a franchise, contract, license, permit, or other authorization for solid waste handling services in an amount the court deems appropriate, but would prohibit the court from awarding those fees and costs under specified circumstances. The bill would expand civil enforcement to knowing and willful participation in violations of these laws, the unauthorized removal of the segregated recyclable material, would explicitly authorize a local governmental agency to bring an enforcement action, and would require a court, if a plaintiff prevails in a civil action brought pursuant to these and related provisions, court to award to the plaintiff prevailing party reasonable attorneys fees, expert witness fees, and costs incurred in the course of the litigation, except as specified.

Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to develop design guidelines for new construction that include energy conserving options, including, among other things, building envelope solar heat gain control mechanisms and alternative energy systems such as solar energy for space heating and water heating and load management strategies.

Regulations on building standards adopted by the Energy Commission require certain residential and nonresidential buildings to have a solar zone, as defined, on the roof of the building that is designated and reserved for solar electric or solar thermal systems and that meets certain specifications relating to minimum area, orientation, and shading, among other things. Existing law requires a seller of production homes, as defined, to offer the option of a solar energy system, as defined, to all customers negotiating to purchase a new production home constructed on land meeting certain criteria and to disclose certain information. Existing law requires the Energy Commission, not later than July 1, 2007, to initiate a public proceeding to study and make findings whether, and under what conditions, solar energy systems should be required on new residential and nonresidential buildings and to periodically update the study thereafter.

This bill would require the Energy Commission to consider requiring, and would authorize the Energy Commission to update the building efficiency standards to require, a rooftop solar energy generation system, appropriately sized to be cost effective, to be installed in the solar zone of those buildings, during the construction of those buildings, by January 1, 2020, for residential buildings and by January 1, 2023, for nonresidential buildings. The bill would require the Energy Commission to consider impacts of this requirement on building affordability by climate zone. Commission, prior to adopting rooftop solar energy generation system requirements, to issue findings by climate zone jointly with the Department of Housing and Community Development as to whether adoption of the requirements will or will not unreasonably or unnecessarily impact the affordability of housing for Californians.

Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to develop design guidelines for new construction that include energy conserving options, including, among other things, building envelope solar heat gain control mechanisms and alternative energy systems such as solar energy for space heating and water heating and load management strategies. Existing law requires the Energy Commission to initiate a public proceeding to study and make findings as to whether, and under what conditions, solar energy systems should be required on new residential and new nonresidential buildings.

Regulations on building standards adopted by the Energy Commission require certain residential and nonresidential buildings to have a solar zone, as defined, on the roof of the building that is designated and reserved for solar electric or solar thermal systems and that meets certain specifications relating to minimum area, orientation, and shading, among other things. Existing law requires a seller of production homes, as defined, to offer the option of a solar energy system, as defined, to all customers negotiating to purchase a new production home constructed on land meeting certain criteria and to disclose certain information. Existing law requires the Energy Commission, not later than July 1, 2007, to initiate a public proceeding to study and make findings whether, and under what conditions, solar energy systems should be required on new residential and nonresidential buildings and to periodically update the study thereafter.

This bill would require the Energy Commission to consider requiring, and would authorize the Energy Commission to update the building efficiency standards to require, a rooftop solar energy generation system, appropriately sized to be cost effective, to be installed in the solar zone of those buildings, during the construction of those buildings, by January 1, 2020, for residential buildings and by January 1, 2023, for nonresidential buildings. The bill would require the Energy Commission to consider impacts of this requirement on building affordability by climate zone.

Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to develop design guidelines for new construction that include energy conserving options, including, among other things, building envelope solar heat gain control mechanisms and alternative energy systems such as solar energy for space heating and water heating and load management strategies. Existing law requires the commission Energy Commission to initiate a public proceeding to study and make findings as to whether, and under what conditions, solar energy systems should be required on new residential and new nonresidential buildings.

Regulations on building standards adopted by the Energy Commission require certain residential and nonresidential buildings to have a solar zone, as defined, on the roof of the building that is designated and reserved for solar electric or solar thermal systems and that meets certain specifications relating to minimum area, orientation, and shading, among other things. Existing law requires a seller of production homes, as defined, to offer the option of a solar energy system, as defined, to all customers negotiating to purchase a new production home constructed on land meeting certain criteria and to disclose certain information. Existing law requires the Energy Commission, not later than July 1, 2007, to initiate a public proceeding to study and make findings whether, and under what conditions, solar energy systems should be required on new residential and nonresidential buildings and to periodically update the study thereafter.

This bill would require a solar electric or solar thermal system the Energy Commission to consider requiring, and would authorize the Energy Commission to update the building efficiency standards to require, a rooftop solar energy generation system, appropriately sized to be cost effective, to be installed in the solar zone of those residential and nonresidential buildings on which construction commences on or after January 1, 2018, during that construction. The bill would authorize the California Building Standards Commission, in collaboration with the State Energy Resources Conservation and Development Commission and other relevant state agencies, to adopt regulations to impose additional standards on solar electric and solar thermal systems on those buildings to reflect the most recent technology available. buildings, during the construction of those buildings, by January 1, 2020, for residential buildings and by January 1, 2023, for nonresidential buildings.

Existing law requires the State Energy Resources Conservation and Development Commission to develop design guidelines for new construction that include energy conserving options, including, among other things, building envelope solar heat gain control mechanisms and alternative energy systems such as solar energy for space heating and water heating and load management strategies. Existing law requires the commission to initiate a public proceeding to study and make findings as to whether, and under what conditions, solar energy systems should be required on new residential and new nonresidential buildings.

Existing regulations on building standards require certain residential and nonresidential buildings to have a solar zone, as defined, on the roof of the building that is designated and reserved for solar electric or solar thermal systems and that meets certain specifications relating to minimum area, orientation, and shading, among other things.

This bill would require a solar electric or solar thermal system to be installed in the solar zone of those residential and nonresidential buildings on which construction commences on or after January 1, 2018, during that construction. The bill would authorize the California Building Standards Commission, in collaboration with the State Energy Resources Conservation and Development Commission and other relevant state agencies, to adopt regulations to impose additional standards on solar electric and solar thermal systems on those buildings to reflect the most recent technology available.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. Existing statutes and decisions of the Public Utilities Commission govern the California Solar Initiative, a program that provides ratepayer-funded incentives for eligible solar energy systems.

The Solar Water Heating and Efficiency Act of 2007, until August 1, 2018, requires the Public Utilities Commission, if it determines that a solar water heating program is cost effective for ratepayers and in the public interest, to implement a program to promote the installation of 200,000 solar water heating systems in homes, businesses, and buildings or facilities of eligible customer classes receiving natural gas service throughout the state by 2017.

This bill would express the intent of the Legislature to enact future legislation that would require the installation of solar photovoltaic systems or solar water heating systems in solar zones provided for pursuant to specified regulations.

Date of Hearing: August 15, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 71

Author:(Wiener) – As Amended Ver:August 6, 2018

Urgency: No State Mandated Local Program: Yes Reimbursable: Yes

SUMMARY:

This bill provides a prevailing party in litigation to enforce a franchise, or other authorization to collect waste, with the ability to recover attorney fees and other costs and requires reporting of litigation to enforce agreements to CalRecycle. Specifically, this bill:

1. Provides that a court shall award the following to a prevailing party in any civil action to enforce a franchise, contract, license, permit, or other authorization granted by a local agency pursuant to existing law: reasonable attorney’s fees, expert witness fees, and other costs incurred in the course of the litigation in an amount the court deems appropriate, but only if the plaintiff, prior to the civil action does both the following:
   1. Provides written notice to the defendant, demanding that the illegal action cease.
   2. Provides the notice transmitted to the defendant to, and requests written approval from the appropriate local agency to seek legal costs associated with the enforcement of the waste hauling agreement.
2. Requires a local agency receiving the notice and request to seek legal enforcement costs to approve or deny the request within 15 business days, or the request shall be deemed approved.
3. Requires a local agency to post all received notices and requests on the agency’s internet website within three days of receiving it.
4. Provides the court shall not award fees or costs of the following circumstances:
   1. A civil action in which the value of the stolen recyclable materials is $50 or less, or no vehicle in connection with the removal of the materials was used.
   2. A civil action in which a person is alleged to be transporting organic materials to a facility that composts or vermicomposts green material, agricultural material, food material, and vegetative food material, alone or in combination, if the total amount of feedstock and compost onsite at the facility that at any one time does not exceed 100 cubic yards and 750 square feet.
   3. A civil action in which a person is transporting food destined for human consumption.
   4. A civil action in which a person is alleged to be transporting byproducts from processing food, if those byproducts originated from agricultural or industrial sources, do not include animal or fish processing byproducts, are source separated by the generator of the byproducts, are not discarded, and are destined for animal feed.
5. Provides the person seeking costs and fees shall notify and submit to CalRecycle the notice transmitted to the defendant and a copy of the initial complaint filed in the superior court.
6. Provides the person seeking the costs and fees shall, after the action or violation is subject either to a settlement or a judgment, submit to CalRecycle a reporting form that includes the results of that settlement or judgment and the final disposition of the case, even if dismissed.
7. Requires CalRecycle, on June 1, 2020, and annually thereafter, to submit to the Legislature a report detailing the total number of actions filed and dispositions, if known, for all actions submitted to the department for the previous calendar year. The information shall be reported statewide and by county.
8. Sunsets the above provisions on January 1, 2022.

Additionally, this bill provides that in any civil action by a recycling agent or a local governmental agency against a person alleged to have violated an agreement between the recycling agent and local governmental agency, the court may either allow treble damages, as measured by the market value of the recyclable material removed, or award a civil penalty of not more than $2,000, whichever is greater, for each unauthorized removal, against the unauthorized person removing the recyclable material. Subsequent violations are subject to civil penalties of $5,000 or treble damages, whichever is greater. Penalties do not apply if the value of the stolen recyclable materials are is $50 or less, or if no vehicle was used in connection with the removal of the materials.

FISCAL EFFECT:

1. Unknown reimbursable state-mandated local costs. By requiring local agencies to provide written approval for plaintiffs to seek judicial recourse and post all notices and requests, this bill creates a state-mandated local program. To the extent the Commission on State Mandates determines the provisions of the bill create a new program or impose a higher level of service on local agencies, local agencies could claim reimbursement for costs (General Fund). The magnitude of those costs is unknown, but would likely exceed $150,000 over the life of the bill.
2. According to CalRecyle, reporting costs are minor and absorble.

COMMENTS:

1. Purpose. This bill seeks to protect local waste hauling franchises from illegal operations by providing those authorized by a franchise or other agreement with a local government to provide such services the ability to seek attorney fees and other costs in litigation to enforce their waste hauling agreements through private rights of action.
2. Arguments in Support. In support of this measure a coalition of over two-dozen waste haulers highlight the harm that waste theft causes the industry. Reflecting the comments of the coalition, Recology, one of the bill’s co-sponsors notes:

Current law does not provide adequate disincentives to prevent unauthorized collection operations from stealing valuable recyclable material at the curb, or from locally franchised waste and recycling containers. The high costs required to bring forth a civil action to enforce local agreements has historically resulted in few attempts to protect these essential solid waste and recycling services. SB 71 provides a key strategy to ensure that Recology can enforce solid waste and recycling programs established in the interests of public health and safety.

1. Arguments in Opposition. The Association of Independent Haulers argues their members offer superior customer service, up-front pricing, convenient pick up, and responsible recycling and disposal of waste and material. In opposition to the bill, they argue:

This bill could be used to prevent some small business owners from providing recycling and pick up services in certain jurisdictions which would impact jobs and our ability to assist customers in managing their waste and “junk.”

Often, jurisdictional solid waste haulers use their jurisdictional contracts to push out legitimate recyclers which reduces competition, increases recycling rates, results in “downcycling” and foregoes providing the “highest and best use” available for this material

Also in opposition to this measure, a coalition of agricultural interests worry about the bill’s potential for increased litigation as a result of their agricultural byproduct reuse operations. The coalition writes:

California has very significant organic diversion goals. In order to meet these goals all recycling and diversion options must be available to municipalities and the state. This bill provides extraordinary enforcement opportunities. Food and agricultural byproducts comprise a significant portion of the diet of California’s livestock industry. Forty-one percent of a diary ration and 17 percent of a poultry ration are comprised of recycled byproducts. Recycling these products is one of the “highest and best” uses according to the US EPA hierarchy of food waste.

Providing the powers enumerated in SB 71 to private waste hauling entities may make the collection of many organic materials more difficult and costly, driving the value down and having them inadvertently included in solid waste jurisdictional contracts.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: July 3, 2018

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

SBPCA Bill Id:SB 71

Author:(Wiener) – As Amended Ver:June 27, 2018

As Proposed to be Amended

SENATE VOTE: Not Relevant

SUBJECT: Solid waste: ENFORCEMENT OF fRANCHISE AGREEMENTS

KEY ISSUE: SHOULD THE PREVAILING PARTY IN LITIGATION BE ABLE, UNTIL JANUARY 1, 2022, TO ENFORCE A SOLID WASTE HAULING FRANCHISE AGREEMENT BE ENTITLED TO ATTORNEY FEES AND OTHER COSTS, IN MOST CIRCUMSTANCES?

SYNOPSIS

This bill reflects the third iteration of a measure seeking to provide a means for waste haulers to strengthen the enforcement of locally approved franchise agreements that provide a waste hauler with the exclusive right to haul solid waste within a jurisdiction. Unlike the prior measures, as proposed to be amended, this bill permits a waste hauler to recover the costs and fees associated with litigation to enforce the hauler’s existing legal rights, but does not create any new cause of action. This bill would provide that no fees or costs can be recovered from a defendant that is a composter, provides animal feed or food donations, or is a low-income Californian removing solid waste valued below $50 or not using the waste to power an automobile. Regardless of the defendant, a hauler must notify the local agency that granted the franchise of their intent to seek costs and fees associated with enforcing the waste hauling agreement and seek that agency’s approval, as provided, to proceed with the action. Finally, to ensure proper state-level oversight of the provisions of this bill, as proposed to be amended, this bill adopts a robust reporting requirement to be overseen by the Department of Resources Recycling and Recovery in order to enable the Legislature to evaluate the impact of this bill when its provisions come up for a sunset review prior to 2022.

This bill is sponsored by two waste haulers, Recology and Republic Services, and is supported by over two dozen additional haulers. They contend the cost and fee provisions provided by this bill are essential to ensure proper enforcement of waste hauling franchises, and to deter illegal waste theft, in the absence of robust local enforcement of waste hauling franchise agreements. This bill is opposed by a coalition of agriculture and food processing organizations, including the California Farm Bureau, who argue that this bill will result in potential litigation and deter organizations like theirs from continuing their strong waste diversion practices, including the practice of diverting food processing byproducts. Although the proposed amendments satisfy some of the concerns expressed by these organizations, it is unclear if the amendments fully address their concerns or remove their opposition. This bill was substantially amended in the Assembly and no longer reflects the version that passed the Senate. This bill was previously heard, and substantially amended, by the Assembly Committee on Natural Resources, where it was approved by a vote of six to one.

SUMMARY: Provides for the ability to recover attorney fees and other costs to the prevailing party in litigation to enforce a franchise, contract, license, permit, or other authorization to collect waste within the jurisdiction given by a local agency to a hauler of solid waste, and requires the reporting of litigation to enforce agreements to the Department of Resources Recycling and Recovery. Specifically, this bill:

1. Provides that a court shall award a prevailing party in any civil action to enforce a franchise, contract, license, permit, or other authorization granted by a local agency pursuant to existing law, reasonable attorney’s fees, expert witness fees, and other costs incurred in the course of the litigation in an amount the court, in its discretion, deems appropriate, but only if the plaintiff, prior to the civil action does both the following:
   1. Provide written notice to the defendant, demanding that the illegal action cease; and
   2. Provide the notice transmitted to the defendant to, and request written approval from, the local agency that granted the franchise, contract, license, permit, or other authorization granted pursuant to existing law to seek legal costs associated with the enforcement of the waste hauling agreement.
2. Requires a local agency receiving the notice and request pursuant to b) of 1), above, to approve or deny the request within 15 business days, or the request shall be deemed approved.
3. Requires a local agency receiving the notice and request pursuant to b) of 1), above, to post all notices and requests received to the agency’s publically accessible internet website within three days of receiving the notice and request.
4. Provides that the court shall not award fees or costs pursuant to 1), above, in any of the following circumstances:
   1. A civil action in which the value of the stolen recyclable materials is 50 dollars ($50) or less, or no vehicle, as defined in the Vehicle Code, was used in connection with the removal of the materials;
   2. A civil action in which a person is alleged to be transporting organic materials to a facility that composts or vermicomposts green material, agricultural material, food material, and vegetative food material, alone or in combination, if the total amount of feedstock and compost onsite at the facility that at any one time does not exceed 100 cubic yards and 750 square feet;
   3. A civil action in which a person is transporting food destined for human consumption; or
   4. A civil action in which a person is alleged to be transporting byproducts from processing food, if those byproducts originated from agricultural or industrial sources, do not include animal or fish processing byproducts, are source separated by the generator of the byproducts, are not discarded, and are destined for animal feed.
5. Provides that the person seeking the costs and fees provided in 1), above, shall notify the Department of Resources Recycling and Recovery and submit to the Department the notice transmitted to the defendant and a copy of the initial complaint filed in the superior court.
6. Provides that the person seeking the costs and fees provided in 1), above, shall, after the action or violation is subject either to a settlement or a judgment, submit to the Department of Resources Recycling and Recovery a reporting form that includes the results of that settlement or judgment and the final disposition of the case, even if dismissed.
7. Requires the Department of Resources Recycling and Recovery to develop a reporting form that specifies the information required pursuant to 6), above, and any other information deemed necessary by the Department.
8. Requires the Department of Resources, Recycling, and Recovery to maintain the documents submitted pursuant to subdivisions 6) and 7), above, and to make them available to the public or the Legislature upon request.
9. Requires the Department of Resources Recycling and Recovery, on June 1, 2020, and annually thereafter, to submit to the Legislature a report detailing the total number of actions filed and dispositions, if known, for all actions submitted to the Department for the previous calendar year. The information shall be reported statewide and by county.
10. Provides that the provisions of 1) through 9), above, shall remain in effect only until January 1, 2022, and as of that date are repealed.
11. Provides that in any civil action by a recycling agent or a local governmental agency against a person alleged to have violated, or to have knowingly and willfully participated in the violation of, an agreement between the recycling agent and local governmental agency, the court may either allow treble damages, as measured by the market value of the recyclable material removed, or award a civil penalty of not more than 2,000 dollars ($2,000), whichever is greater, for each unauthorized removal, against the unauthorized person removing the recyclable material.
12. Provides that in any civil action by a recycling agent or local governmental agency against a person alleged to have violated , or to have knowingly and willfully participated in the violation of, an agreement between the recycling agent and local governmental agency for a second, or subsequent time, in any 12-month period, the court may either allow treble damages, as measured by the market value of the recyclable material removed, or award a civil penalty of not more than 5,000 dollars ($5,000), whichever is greater, for each unauthorized removal against the unauthorized person removing the recyclable material.
13. Provides that the court shall award the prevailing party in any civil action filed described in 11) or 12), above, costs and fees as deemed reasonable by the court.
14. Provides that the provisions of 13), above, shall not apply if the value of the stolen recyclable materials is 50 dollars ($50) or less, or if no vehicle, as defined in the Vehicle Code, was used in connection with the removal of the materials.
15. Replaces all references to the California Integrated Waste Management Board with references to the Department of Resources Recycling and Recovery.
16. Makes technical, numbering, and confirming changes to existing law to implement the bill.

EXISTING LAW:

1. Establishes the California Integrated Waste Management Act of 1989 and requires the board and local agencies implementing the Act do both of the following:
   1. Promote waste management practices including source reduction, recycling and composting, and environmentally safe transformation and environmentally safe land disposal, at the discretion of the city or county, and
   2. Maximize the use of all feasible source reduction, recycling, and composting options in order to reduce the amount of solid waste that must be disposed of by transformation and land disposal. For wastes that cannot feasibly be reduced at their source, recycled, or composted, the local agency may use environmentally safe transformation or environmentally safe land disposal, or both of those practices. (Public Resources Code Section 40051.)
2. Defines the following terms for the purpose of the California Integrated Waste Management Act of 1989:
   1. “Indemnity obligation” means any indemnity obligation directly or indirectly related to the failure of a local agency to meet the solid waste diversion requirements, that is expressly assumed by, or imposed upon, the solid waste enterprise, whether pursuant to ordinance, contract, franchise, license, permit, or other entitlement or right, for the benefit of the local agency;
   2. “Local agency” means any county, city, city and county, district, regional agency, or other local government agency. (Public Resources Code Section 40059.1 (b).)
   3. “Solid waste” means all putrescible and nonputrescible solid, semisolid, and liquid wastes, including garbage, trash, refuse, paper, rubbish, ashes, industrial wastes, demolition and construction wastes, abandoned vehicles and parts thereof, discarded home and industrial appliances, dewatered, treated, or chemically fixed sewage sludge which is not hazardous waste, manure, vegetable or animal solid and semisolid wastes, and other discarded solid and semisolid wastes. Solid waste does not include hazardous waste, medical waste, and radioactive waste. (Public Resources Code Section 40191.)
3. Provides that each local agency has the responsibility for diverting 50 percent of all solid waste generated within the local agency’s jurisdiction. (Public Resources Code Section 40059.1 (a)(1).)
4. Provides that any provision, term, condition, or requirement contained in any ordinance, contract, franchise, license, permit, or other entitlement or right adopted, entered into, issued, or granted, as the case may be, by a local agency for solid waste collection and handling, including the recycling, processing, or composting of solid waste, or in any request for bids or proposals in connection with any such contract or franchise, that authorizes or requires the imposition of an indemnity obligation, shall, notwithstanding any such provision, term, condition, or requirement, be subject to all of the following restrictions:
   1. Any indemnity obligation shall not be enforceable if the California Integrated Waste Management Board imposed penalty is based solely upon the failure of the local agency to establish and maintain a source reduction and recycling element as required by existing law;
   2. Any California Integrated Waste Management Board imposed penalty based upon a local agency’s failure to meet the solid waste diversion requirements imposed by, resulting in whole or in part from the solid waste enterprise’s breach of contract or noncompliance with any other authorization, shall be apportioned in accordance with the percentage of fault of the local agency and the solid waste enterprise; and
   3. A solid waste enterprise is not liable for the indemnity obligation to the extent that the solid waste enterprise’s breach or noncompliance resulted from the action or failure to act of the local agency. (Public Resources Code Section 40059.1 (c).)
5. Provides that, notwithstanding any other law, a county, city, district, or other local governmental agency may determine all of the following:
   1. Aspects of solid waste handling which are of local concern, including, but not limited to, frequency of collection, means of collection and transportation, level of services, charges and fees, and nature, location, and extent of providing solid waste handling services, and
   2. Whether the services are to be provided by means of nonexclusive franchise, contract, license, permit, or otherwise, either with or without competitive bidding, or if, in the opinion of its governing body, the public health, safety, and well-being so require, by partially exclusive or wholly exclusive franchise, contract, license, permit, or otherwise, either with or without competitive bidding. The authority to provide solid waste handling services may be granted under terms and conditions prescribed by the governing body of the local governmental agency by resolution or ordinance. (Public Resources Code Section 40059 (a).)
6. Establishes, within the California Environmental Protection Agency, the Department of Resources Recycling and Recovery, and provides that the Department shall be administered by an executive officer known as the Director of Resources Recycling and Recovery. (Public Resources Code Section 40400.)
7. Provides that, unless otherwise provided, the Department of Resources Recycling and Recovery is vested with all of the authority, duties, powers, purposes, responsibilities, and jurisdiction of the former California Integrated Waste Management Board. (Public Resources Code Section 40401.)
8. Provides that no person, other than the authorized recycling agent of the city or county, shall remove paper, glass, cardboard, plastic, used motor oil, ferrous metal, aluminum, or other recyclable materials which have been segregated from solid waste materials and placed at a designated recycling collection location for residential curbside collection programs authorized by a city, county, or local agency for the purposes of collection and recycling. (Public Resources Code Section 41950.)
9. Provides that, unless otherwise provided by contract, paper, glass, cardboard, plastics, used motor oil, ferrous metal, aluminum, and other recyclable materials, which have been segregated from other waste materials, and placed at the designated recycling collection location by any commercial or industrial entity, shall not be removed by anyone other than the authorized recycling agent. (Public Resources Code Section 41951.)
10. Provides that in any civil action by a recycling agent against a person alleged to have violated 8) or 9), above, the court may either allow treble damages, as measured by the market value of the recyclable material removed, or award a civil penalty of not more than 2,000 dollars ($2,000), whichever is greater, for each unauthorized removal, against the unauthorized person removing the recyclable material. (Public Resources Code Section 41953 (a).)
11. In any civil action by a recycling agent against a person alleged to have violated 8) or 9) above, for a second or subsequent time in any 12-month period, the court may either allow treble damages, as measured by the market value of the recyclable material removed, or award a civil penalty of not more than 5,000 dollars ($5,000), whichever is greater, for each unauthorized removal against the unauthorized person removing the recyclable material. (Public Resources Code Section 41953 (b).)
12. Defines “vehicle” as a device by which any person or property may be propelled, moved, or drawn upon a highway, excepting a device moved exclusively by human power or used exclusively upon stationary rails or tracks. (Vehicle Code Section 670.)

FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.

COMMENTS: Seeking to protect local waste hauling franchises from illegal operations, and to ensure compliance with California’s robust waste diversion laws, this bill would provide waste haulers, authorized by a franchise or other agreement with a local government to provide such services, the ability to seek attorney fees and other costs in litigation to enforce their waste hauling agreements.

Existing law grants local governments the ability to permit exclusive franchises for waste collection and hauling within their jurisdiction. Existing law provides local agencies with the ability to contract out waste collection services to private third parties, and enables those agreements to provide the third party the exclusive right to haul waste within the jurisdiction. Additionally, these laws permit the local agencies to require a waste hauler to indemnify the local agency against potential action for failing to meet California’s goals for diverting recyclable solid waste from landfills. The franchise agreements are awarded through a local rate-making process whereby the local agency determines a price for service with the hauler based on an assessment of industry-related variables including tonnages collected, recycled commodity prices, and customer population. The local agency, frequently, then assesses fees on local residents for this service.

While considered little more than trash to many Californians, some solid waste items can generate revenue on a resale or recycling market. Accordingly, the theft of items put out for disposal can pose problems for waste haulers. The author and sponsor of this bill contend that as commodity prices for recyclable material increase over time, the rate of waste theft tends to increase in a corresponding fashion. The supporters of this measure contend that waste theft has evolved into a large scale criminal enterprise, with fleets of vehicles monitoring collection routes and openly operating in communities on designated garbage and recycling collection days in advance of authorized collection vehicles.

Regardless of the degree of theft occurring in any jurisdiction, any waste theft skews the total tonnage of waste collected, and thus obscures local waste hauling rates. Furthermore, large scale theft operations can significantly lower the tonnage of material a waste hauler is able to report as diverted from landfills. Missing state mandated diversion levels can lead to fines and penalties being imposed on a local agency which may then pass the cost to the waste hauler pursuant to an indemnification agreement. Furthermore, the author and supporters of this measure contend that, too frequently, the local agency awarding the franchise lacks sufficient will or resources to enforce existing laws against illicit hauling. They suggest that in the absence of local enforcement, the waste haulers themselves are left to bear the burden of enforcing their contractual rights against illegal waste hauling operations.

This bill. Seeking to ease the burden of enforcing existing waste hauling agreements, this bill, as currently in print, seeks to enable those haulers to recover costs and fees when litigating the enforcement of their contractual rights. The haulers suggest that the costs associated with investigating and litigating these cases is prohibitively high, thus deterring haulers from taking legal action, especially when they are uncertain that they will be able to recover attorney fees and costs. To avoid potential abuses of this power, amendments taken in the Assembly Committee on Natural Resources limit cost and fee recovery in certain cases. Haulers cannot recover costs in any action taken against a person taking less than 50 dollars’ worth of goods, or any person who does not use an automobile to collect waste. In all cases, parties must be provided with notice of the violation and an opportunity to cease the behavior, before litigation can commence. These provisions should protect needy Californians who are forced to collect recyclables as a means of basic survival from having their rights trampled by large corporations. Additionally, this bill limits recovery against persons who haul food for human consumption and persons who haul waste for composting operations.

Additionally, as currently in print, this bill makes several technical changes to other contract enforcement provisions, most significantly by providing for the opportunity, under limited circumstances, to recover treble damages or civil penalties for recycling theft. The bill replaces outdated references to the California Integrated Waste Management Board with contextually appropriate references to Cal Recycle and makes numerous technical and conforming changes.

Author’s statement. Recognizing the problems caused by waste theft, especially in large cities like the Senator’s hometown of San Francisco, the author is advancing this measure and states the following:

Local governments and agencies contract with waste haulers to operate their recycling programs in order to achieve the state’s environmental goals. The local jurisdiction and hauler agree upon program costs and set a rate that will be set for business and residential generators. That rate is based on the number or recyclables the company projects will be received through curbside recycling programs. Unfortunately, illegal operations raid curbside pick-up bins and steal the most valuable materials. In other cases non-franchised haulers illegally place collection containers and steal valuable materials. Both illegal activities increase system costs, reduce verifiable recycling and cause rate increases for residences and businesses.

This measure would allow the waste management companies to go after these illegal operators in court and be able to [recoup] their court fees. By this they are hoping to deter these illegal actors from stealing recyclable materials.

This bill prohibits any person, other than a solid waste enterprise authorized by a city, county, or other local governmental agency to handle solid waste, from collecting, removing, or transporting solid waste generated by another person from residential, commercial, or industrial premises, except in compliance with applicable law. SB 71 authorizes local governmental agencies to pursue civil actions for the theft of recyclable materials. The bill specifies that a person who "knowingly participated" in the theft of recyclables or hauling solid waste without local government authorization is subject to civil penalties. The bill specifies that if a plaintiff prevails in a civil action for the theft of recyclables or hauling solid waste without local government authorization, the court shall award reasonable attorney's fees, expert witness fees, and costs incurred in the course of litigation to the plaintiff. The bill also excludes from this provision theft of materials worth $50 or less.

Existing law’s broad definition of “solid waste” adds ambiguity to franchise agreements’ scope with regards to legitimate businesses and local residents. Existing law broadly defines solid waste as nearly everything discarded by Californians that is not hazardous, radioactive, or from a medical facility. This broad definition of waste, accordingly, encompasses nearly everything from discarded food scarps, to plant clippings, to drywall from a home remodel, to the grease produced from restaurant kitchens. It is unclear to this Committee how much nuance is added in defining what is included in “solid waste” by local agencies when they approve exclusive franchise agreements. It appears that most contracts simply refer to solid waste, thus prior litigation in this area has focused on whether or not an item is “discarded.” In interpreting the Integrated Waste Management Act of 1989, the California Supreme Court sought to differentiate between discarding an item (throwing an item away) and disposing of an item (transferring or parting with an item). (Waste Management of the Desert, Inc. v. Palm Spring Recycling Center, Inc. (1994) 7 Cal. 4th 478,486.) However, the distinction remains murky at best, and accordingly frequent litigation continues regarding whether or not an activity is subject to the Integrated Waste Management Act of 1989 and what is the scope of exclusive franchise agreements entered into under the authority of the Act. (See, e.g., City of San Marcos v. Coast Waste Management Inc. (1996) 47 Cal.App.4th 320.)

Given the lack of clarity surrounding the meaning of “discarding” of an item, this bill may expose local residents and businesses to potential litigation costs and fees should they inadvertently run afoul of an exclusive waste hauling franchise. For example, a neighbor leaving some old fence posts outside for another neighbor to pick-up and repurpose may expose both parties to liability and litigation costs and fees due to a poorly defined local franchise agreement. To remedy some of these concerns, the Assembly Natural Resources Committee adopted amendments which narrowed the scope of this measure. Those amendments prohibit a hauler from seeking costs and fees against low income Californians who are simply collecting cans or other recyclables to survive, take waste valued at under $50, or collect food donations, as well as composters who divert waste but may have nonetheless have been caught up by this measure.

Seeking to protect local residents and innovative waste diversion operations, proposed amendments enhance the role of local agencies in the enforcement process. Even with the amendments taken in the Assembly Committee on Natural Resources to narrow the scope of this measure, that Committee suggested that this Committee continue to examine and suggest potential additional procedural steps to further narrow the scope of this measure. As this bill was negotiated in both Committees, it became clear that many local agencies have abdicated their responsibility to enforce waste hauling franchise agreements and represent the needs of their local residents and commercial businesses. Existing law generally requires a local agency to provide an opportunity for public input at the time when an agreement is formed. (Op. Att. Gen. 06-404.) However, there is no guaranteed public engagement in the process after an agreement is formed, and the local agencies appear to be neglecting their duty to enforce the agreements. Accordingly, enforcement of the franchise is left to the haulers themselves with little public oversight.

Given that many waste haulers are for-profit entities that are potentially subject to fines for failing to adequately divert waste, haulers would have an incentive to broadly utilize the cost and fee provisions of this bill to file numerous enforcement actions. There is little doubt that the law currently provides haulers with the right to enforce their franchise agreements should any entity infringe on the agreements (See Pleasant Hill Bayshore Disposal, Inc. v. Chip-It Recycling, Inc. (2001) 91 Cal.App.4th 678). However, it is less clear whether a local agency has any obligation to participate in, or place restrictions on, such enforcements to ensure that a hauler is enforcing an agreement in a manner consistent with the local agency’s original understanding of the franchise.

To increase local government’s role in the enforcement process and ensure that enforcement of a waste hauling agreement is not exceeding the scope intended by a local agency, as proposed to be amended, this bill would require local agencies to approve or deny a waste hauler’s ability to recover the costs provided by this bill. Amendments would require a waste hauler seeking to recover fees and costs to file a notice with the local agency and seek approval to obtain recovery costs and fees. Amendments would require a local agency to post the notice and request online, thereby permitting the public to weigh-in, and to require approval or disapproval of the request within 15 business days. Recognizing that some local agencies may refuse, or otherwise fail to act, amendments would deem the cost recovery request approved if the local agency fails to act within 15 business days. However, by vesting some approval responsibility in the local agency, these amendments would ensure that the public would at least have an avenue to voice their concerns with any potential enforcement action, or pressure the local government to modify an overly broad franchise agreement.

Additional protections needed for legitimate agricultural operations. In addition to Californians adopting their own innovative means of reducing waste, as currently in print, this bill may have significant impacts on agricultural and food processing operations, particularly those related to animal products and feed stock. Included in the previous definition of solid waste are many bi-products of agricultural production and food processing. While most waste is disposed of, some organic waste can be processed into animal feed or sent to rendering plants to be processed for future use. For example, the California Dairy Research Foundation notes that 82 percent of cow feed is derived from byproducts of food for human consumption, including almond hulls, bakery waste, pulps and pomaces from fruits and vegetables, and distillery waste. Without an exemption to this bill, transferring these products from food processors to farmers and ranchers would be subject to potential legal costs and fees for violating a franchise or at minimum, litigation would be needed to determine if such practices fell within the scope of this bill. Accordingly, as proposed to be amended, this bill would exempt byproducts that originated from agricultural or industrial sources, would not include animal or fish processing byproducts that are separated by the generator of the byproducts, not discarded, and destined for animal feed.

This exemption will assist many of California’s farmers and ranchers. However, it will not be sufficient to exempt other agricultural producers and the kitchen grease rendering industry from the provisions of this bill. Although the kitchen grease rendering industry has its own state laws to deter waste theft, and these products would likely be considered “disposed of” and not “discarded” under the Supreme Court’s logic (Waste Management of the Desert, Inc. Inc., supra at 487.), the industry opposes this measure. The author may wish to continue to work with this industry to mitigate any possible impacts this bill may have on legitimate kitchen grease hauling operations as a means to lessen the possibility of future litigation between waste haulers and grease haulers.

Enhancing state oversight of local franchises. As noted, waste hauling franchises are deemed to be a local concern under state law. Nonetheless, the state has mandated significant waste diversion requirements on local agencies. These requirements may provide incentives to increase the rate of litigation to enforce local franchises. In order to address concerns that the fee provisions in the bill may significantly increase litigation, the Natural Resources Committee required the provisions to sunset on January 1, 2022. In order to better evaluate the outcomes of the bill, that Committee requested a reporting requirement be attached to this measure. However, due to this bill’s double referral and upcoming legislative deadline, a final consensus on the sunset provision was not reached before that Committee heard the bill. Following additional discussions between both Committees and stakeholders, as proposed to be amended, this bill now places the record keeping and reporting requirements with Cal Recycle. The reporting requirements mandate that waste haulers, seeking costs and fees, must submit all notices, filed complaints, and information on the disposition of litigation to Cal Recycle. The department must then aggregate the information on a statewide and per county basis and submit an annual report to the Legislature.

ARGUMENTS IN SUPPORT: In support of this measure a coalition of over two-dozen waste haulers highlight the harm that waste theft causes the industry. Reflecting the comments of the coalition, Recology, one of the bill’s co-sponsors notes:

In our service areas, we are aware of a number of outside, illegal collection activities that are chipping away at the underlying foundation that keeps our waste and recycling programs sound. Recycling theft in our service areas has evolved into large-scale criminal operations, with fleets of vehicles monitoring collections routes and operating on designated collections days in advance of authorized recycling vehicles.

Current law does not provide adequate disincentives to prevent unauthorized collection operations from stealing valuable recyclable material at the curb, or from locally franchised waste and recycling containers. The high costs required to bring forth a civil action to enforce local agreements has historically resulted in few attempts to protect these essential solid waste and recycling services. SB 71 provides a key strategy to ensure that Recology can enforce solid waste and recycling programs established in the interests of public health and safety.

ARGUMENTS IN OPPOSITION: In opposition to this measure, a coalition of agricultural interests worry about the bill’s potential for increased litigation as a result of their agricultural byproduct reuse operations. The coalition writes:

California has very significant organic diversion goals. In order to meet these goals all recycling and diversion options must be available to municipalities and the state. This bill provides extraordinary enforcement opportunities. Food and agricultural byproducts comprise a significant portion of the diet of California’s livestock industry. Forty-one percent of a diary ration and 17 percent of a poultry ration are comprised of recycled byproducts. Recycling these products is one of the “highest and best” uses according to the US EPA hierarchy of food waste.

Providing the powers enumerated in SB 71 to private waste hauling entities may make the collection of many organic materials more difficult and costly, driving the value down and having them inadvertently included in solid waste jurisdictional contracts.

Prior Related Legislation. AB 1147 (Salas, 2017) This bill was substantially similar to the introduced version of this measure. AB 1147 was held in the Assembly Committee on Natural Resources

AB 1103 (Dodd, Ch.443, Stats. 2016) This bill added self-haulers to the requirement that exporters, brokers, and transporters of recyclables or compost submit specified, periodic information to CalRecycle and requires CalRecycle to develop regulations to define "self-hauler." An earlier version of this bill included provisions that were substantially similar to the introduced version of this bill before provisions were removed from the bill prior to being heard in the Senate Environmental Quality Committee.

AB 1566 (Holden, Ch. 595, Stats. 2014) This bill increased the authority of the California Department of Food and Agriculture and the California Highway Patrol to oversee and enforce laws related to the collection, transportation, storage, and rendering of inedible kitchen grease in order to prevent the theft of inedible kitchen grease from legitimate grease haulers.

REGISTERED SUPPORT / OPPOSITION:

Support

Recology (sponsor)

Republic Services (sponsor)

Aces Waste Services

Advance Disposal

Alameda County Industries

Atlas Disposal

Bay Counties Smart

BLT Enterprises

Blue Line Transfer

BMS Technologies

Burrtec Waste Industries

California Alliance for Community Composting (if amended)

California Refuse Recycling Council

Cal-Waste Recovery Systems

Clean Energy

CR&R Incorporated Environmental Services

Davis Waste Removal

Desert Valley Disposal

East Bay Sanitary
Fremont Recycling and Transfer Station

Garaventa Enterprises
Garden City Sanitation

GreenWaste Recovery

Inland Empire Disposal Association

Kern Refuse Disposal

Livermore Sanitation

Los Angeles County Waste Management Association

Marin Sanitary Service

Mid Valley Disposal

Mission Trail Waste System

Mt. Diablo Resource Recovery

Napa County Recycling and Waste Services

Napa Recycling and Waste Services

Northern Recycling and Waste Services

Olympic Wire and Equipment

Palm Springs Disposal Services

Peña's Disposal Service

Peninsula Sanitary Service

Pleasanton Garbage Service

Sierra Waste Transfer

Solid Waste Association of Orange County

Solid Waste Insurance Marketing

South Lake Refuse Recycling

South San Francisco Scavenger

Southern California Disposal and Recycling

Specialty Solid Waste and Recycling

Standard Iron and Metals

Stanford Recycling Center

Thomas Refuse Service

Tracy Delta Solid Waste Management

Upper Valley Disposal Recycling

Varner Bros., Inc.

Waste Connections

Westhoff, Cone, and Holmstedt

Zanker Road Resource Management

Opposition

Association of California Egg Farmers

California Advanced Biofuels

California Cattlemen's Association

California Farm Bureau Federation

California Food Producers

California Grain and Feed Association

Pacific Coast Rendering Association

Western United Dairymen

Analysis Prepared by: Nicholas Liedtke / JUD. / (916) 319-2334

Date of Hearing: June 25, 2018

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Al Muratsuchi, Acting Chair

SBPCA Bill Id:SB 71

Author:(Wiener) – As Amended Ver:February 26, 2018

SENATE VOTE: Not relevant

SUBJECT: Solid waste: disposal

SUMMARY: Prohibits any entity other than a solid waste enterprise authorized by a local government from collecting, transporting, or hauling solid waste. Expands civil enforcement provisions associated with the theft of recycled materials.

EXISTING LAW:

1. Pursuant to the Integrated Waste Management Act:
   1. Establishes a state recycling goal of 75% of solid waste generated be diverted from landfill disposal by 2020 through source reduction, recycling, and composting.
   2. Requires each local jurisdiction to divert 50% of solid waste from landfill disposal through source reduction, recycling, and composting.
      
   3. Requires commercial waste generators, including multi-family dwellings, to arrange for recycling services and requires local governments to implement commercial solid waste recycling programs designed to divert solid waste from businesses.
      
   4. Requires generators of specified amounts of organic waste (i.e., food waste and yard waste) to arrange for recycling services for that material.
   5. Establishes methane emission reduction goals that include targets to reduce the landfill disposal of organic waste 50% by 2020 and 75% by 2025 from the 2014 level. Requires the Department of Resources Recycling and Recovery (CalRecycle), in consultation with the Air Resources Board, to adopt regulations to achieve the organics reduction targets, which go into effect in 2022.
   6. Requires exporters, brokers, and transporters of recyclables or compost to submit periodic information to CalRecycle on the types, quantities, and destinations of materials that are disposed of, sold, or transferred.
   7. Establishes practices and procedures related to waste tracking in the state.
   8. Prohibits the theft of recyclable materials, including those that are placed at curbside for pickup by an authorized recycling agent.
   9. Authorizes a court, in any civil action by a recycling agent against a person that steals recyclable materials, to award treble damages, as measured by the market value of the recyclable material or an award of a civil penalty up to $2,000, whichever is greater. For a subsequent offense within any 12-month period, authorizes a court to award treble damages or award a civil penalty of up to $5,000, whichever is greater.
   10. Specifies that nothing in this article limits the authority of a local agency to adopt or enforce regulations or ordinances on this issue.
   11. If the value of the stolen recyclable material is greater than $50, but less than $950, states that a violation may be charged as a misdemeanor or an infraction. A violation after a second conviction within a 12-month period shall be charged as a misdemeanor punishable by imprisonment in the county jail not exceeding six months, or by fine not exceeding one thousand dollars ($1,000), or both.
   12. Defines "solid waste enterprise" as any individual, partnership, joint venture, unincorporated private organization, or private corporation, which is regularly engaged in the business of providing solid waste handlings services.
   13. Defines "solid waste" as all putrescible and nonputrescible solid, semisolid, and liquid wastes, including garbage, trash, refuse, paper, rubbish, ashes, industrial wastes, demolition and construction wastes, abandoned vehicles and parts thereof, discarded home and industrial appliances, dewatered, treated, or chemically fixed sewage sludge, manure, vegetable or animal solid and semisolid wastes, and other discarded solid and semisolid wastes. Specifies that solid waste does not include medical, radioactive, or hazardous waste.
2. Pursuant to the Unfair Practices Act (Act):
   1. States that the purpose of the Act is to safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition by prohibiting unfair, dishonest, deceptive, destructive, fraudulent, and discriminatory practices by which fair and honest competition is destroyed or prevented.
   2. Prohibits unfair competition, which is defined as unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising.
   3. Establishes civil penalties up to $2,500 for each violation. Authorizes the courts to make orders or judgements necessary to prevent the use or employment by any person that constitutes unfair competition, or as necessary to restore to any person in interest any money or property acquired by unfair competition. Establishes civil penalties up to $6,000 for any violation of an injunction issued by a court to prevent unfair competition.

THIS BILL:

1. Where a city, county, or other local agency has authorized a solid waste enterprise to handle solid waste, prohibits any person from collecting, removing, or transporting solid waste generated by another person from residential, commercial, or industrial premises in violation of the rights authorized by the agency, except in compliance with applicable law.
2. Authorizes local governmental agencies, in addition to recycling agents, to pursue civil actions for the theft of recyclable materials or for the unauthorized collection of solid waste.
3. Establishes civil penalties of $2,000 or treble damages, as specified, for a first violation and $5,000 or treble damages for a subsequent violation of Bullet 1 (above).
4. Specifies that a person who "knowingly participated" in the theft of recyclables or collecting solid waste without local government authorization is subject to civil penalties.
5. Requires the plaintiff, prior to bringing action, to provide written notice to the defendant to cease illegal actions.
6. Specifies that if a plaintiff prevails in a civil action for the theft of recyclables or hauling solid waste without local government authorization, the court shall award reasonable attorney's fees, expert witness fees, and costs incurred in the course of litigation to the plaintiff. Excludes from this provision theft of materials worth $50 or less or if no vehicle was used in connection with the collection of the recyclable materials or solid waste.
7. Specifies that no reimbursement is required by the bill because the only costs will be incurred because the bill creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction.

FISCAL EFFECT: Nonfiscal

COMMENTS:

1. Author's statement:

The problem of theft of recyclable material has become worse over time. In many cases, this theft has evolved into large scale criminal operations, with fleets of vehicles monitoring collections routes, openly operating in communities on designated collections days in advance of authorized recycling vehicles. Current law does not provide adequate disincentives to prevent these organized operations from stealing valuable recyclable material from a franchisee’s bins, or from collecting and removing material using their own bin. Existing law provides that it is illegal for anyone to tamper with, scavenge from, the contents of a residential or commercial recycling container. However, existing law does not provide for the recovery of attorney fees and costs in any civil action brought to enforce the law. As a result, violations are rarely prosecuted because of the difficulty in identifying the responsible party and the cost of such litigation exceeds the immediate benefit.

This bill prohibits any person, other than a solid waste enterprise authorized by a city, county, or other local governmental agency to handle solid waste, from collecting, removing, or transporting solid waste generated by another person from residential, commercial, or industrial premises, except in compliance with applicable law. SB 71 authorizes local governmental agencies to pursue civil actions for the theft of recyclable materials. Specifies that a person who "knowingly participated" in the theft of recyclables or hauling solid waste without local government authorization is subject to civil penalties. The bill specifies that if a plaintiff prevails in a civil action for the theft of recyclables or hauling solid waste without local government authorization, the court shall award reasonable attorney's fees, expert witness fees, and costs incurred in the course of litigation to the plaintiff. The bill also excludes from this provision theft of materials worth $50 or less.

1. Meeting the state’s recycling goals. An estimated 35 million tons of waste are disposed of in California’s landfills annually, of which 32% is compostable organic materials, 29% is construction and demolition debris, and 17% is paper. CalRecycle is tasked with diverting at least 75% of solid waste statewide by 2020. Local governments have been required to divert 50% of the waste generated within the jurisdiction from landfill disposal since 2000. AB 341 (Chesbro), Chapter 476, Statutes of 2011, requires commercial waste generators, including multi-family dwellings, to arrange for recycling services for the material they generate and requires local governments to implement commercial solid waste recycling programs designed to divert solid waste from businesses. A follow up bill, AB 1826 (Chesbro), Chapter 727, Statutes of 2014, requires generators of organic waste (i.e., food waste and yard waste) to arrange for recycling services for that material.

Organic materials make up one-third of the waste stream and food continues to be the greatest single item disposed, making up over 15% of materials landfilled. Recycling technologies for organic waste include composting, anaerobic digestion, and other types of processing that generate renewable fuels, energy, soil amendments, and mulch. Compost and other soil amendments that can be produced from organic materials have been shown to improve soil health by incorporating organic matter, beneficial micro-organisms, and nutrients and reduce the need for chemical pesticides and fertilizers. These products also conserve water by allowing water to penetrate the soil more quickly decreasing runoff.

1. This bill. Currently, most jurisdictions in the state operate with some form of "franchise," or contract, that limits solid waste hauling within the jurisdiction to one or more companies. Franchises are often, but not always, accompanied by a local ordinance. Exclusive franchises specify one hauler within a jurisdiction. Non-exclusive franchises allow for more than one hauler, but establish specific requirements for hauling within the jurisdiction. Franchises can apply to residential, commercial, or industrial solid waste hauling and any combination thereof. Not all communities in California have franchise agreements. Franchises generally include a "franchise fee," which is a payment made by the franchise hauler to the local government that holds the franchise. Franchise fees vary; for example, the City of Los Angeles' franchise fee is $35 million per year. Smaller cities' franchise fees can be $1 million.

This bill prohibits the hauling of any solid waste in any jurisdiction that has a franchise by any entity that is not authorized by the local government. Because the definition of solid waste is so broad, and because in some areas there are multiple local governments within a very small area, it will be challenging for entities that haul material that meets the definition of solid waste outside of traditional waste haulers. For example, landscapers or tree services may visit several homes or businesses over multiple jurisdictions in one day and then haul the organic material to a compost facility. Renderers haul and recycle butcher shop scraps, food waste, and agricultural byproducts for recycling into animal feed. Ranchers pick up food and agricultural byproducts to feed their livestock. Construction companies that may have projects in multiple jurisdictions haul construction and demolition material for disposal. Organizations transport unused, edible food from events to homeless shelters. Small-scale community compost organizations collect organic material for local compost and soil improvement projects. Carpet installers, mattress delivery services that remove old mattresses and many other entities may find themselves inadvertently violating this provision if they do not have the express authorization to operate in every jurisdiction they visit. These activities generally result in the recycling the material and have been taking place since before the state mandated organic waste recycling. While the Legislature has an interest in ensuring that waste materials are managed appropriately, should the Legislature enact policies that may result in the redirection of material that is already being recycled into the traditional solid waste management system?

Under current law, the most that can be recovered in a civil action brought against someone who unlawfully collects recyclable materials is $2,000 or three times the amount of the stolen recycled materials, whichever is greater, for a first offense, and up to $5,000 for subsequent offenses. This bill requires a court to also award attorneys' fees, expert witness fees, and "costs incurred in the course of the litigation" if a plaintiff prevails in a civil action and expands this provision to include hauling solid waste without local government authorization. It is not unreasonable to expect this fee recovery to exceed $40,000 or $50,000. The supporters of this bill state that the high cost of pursuing a court case and the low penalty amounts for these violations discourage enforcement actions. This bill is intended to improve enforcement of the theft of recyclables and unauthorized solid waste hauling.

1. Double referral. This bill has also been referred to the Assembly Judiciary Committee.
2. Suggested amendments. The current language in this bill has the potential to significantly impact recycling that takes place outside of the waste franchise model. In order to ensure that this bill accomplishes its goals without hampering alternative reuse and recycling efforts, this committee and the Assembly Judiciary Committee have drafted a number of amendments. Due to legislative deadlines and the jurisdictions' of the committees, this committee may wish to adopt some amendments and defer adoption of others to the Judiciary Committee.
   
   This committee may wish to amend the bill to do the following:
   1. Move the provisions relating to the award of attorneys' fees and court costs for violations of a franchise agreement to the Chapter of law relating to franchises.
   2. Specify that attorneys' fees be awarded to the prevailing party, rather than the only the plaintiff.
   3. Exempt small-scale community composting operations and edible food recovery programs.
   4. Sunset the section allowing the recovery of attorneys' fees and court costs for franchise violations on January 1, 2022.
   5. Clarify that violations of the provisions increasing liability for the theft of recyclables applies to knowing and willful violations.
   6. Make a number of technical and clarifying changes.

The Assembly Judiciary Committee may wish to adopt amendments that:

• 1. Require that specified information relating to any court cases filed for violations of franchise agreements be reported to the state and available to the Legislature and the public upon request.
  2. Clarify the entities subject to enforcement under the bill.
  3. Clarify judicial discretion with regard to awarding attorneys' fees and court costs.
  4. Make other amendments deemed appropriate by the committee.

1. Previous legislation.

AB 1147 (Salas, 2017) was substantially similar to this bill and was held in this committee at the request of the author.

AB 1103 (Dodd), Chapter 443, Statutes of 2016, added self-haulers to the requirement that exporters, brokers, and transporters of recyclables or compost submit specified, periodic information to CalRecycle and requires CalRecycle to develop regulations to define "self-hauler." An earlier version of this bill included provisions that were substantially similar to this bill. Those provisions were removed from the bill prior to being heard in the Senate Environmental Quality Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Aces Waste Services

Advance Disposal
Alameda County Industries

Atlas Disposal
Bay Counties Smart
BLT Enterprises

Blue Line Transfer

BMS Technologies

Burrtec Waste Industries

California Refuse Recycling Council

Cal-Waste Recovery Systems

Clean Energy

Davis Waste Removal

Desert Valley Disposal

East Bay Sanitary
Fremont Recycling and Transfer Station

Garaventa Enterprises
Garden City Sanitation

GreenWaste Recovery

Inland Empire Disposal Association

Kern Refuse Disposal

Livermore Sanitation

Los Angeles County Waste Management Association

Marin Sanitary Service

Mid Valley Disposal
Mission Trail Waste System

Mt. Diablo Resource Recovery

Napa County Recycling and Waste Services

Napa Recycling and Waste Services

Northern Recycling and Waste Services

Olympic Wire and Equipment

Palm Springs Disposal Services

Peña's Disposal Service
Peninsula Sanitary Service
Pleasanton Garbage Service

Sierra Waste Transfer

Solid Waste Association of Orange County

Solid Waste Insurance Marketing

South Lake Refuse Recycling

South San Francisco Scavenger

Southern California Disposal and Recycling

Specialty Solid Waste and Recycling

Standard Iron and Metals
Stanford Recycling Center

Thomas Refuse Sercie

Tracy Delta Solid Waste Management

Upper Valley Disposal Recycling

Varner Bros

Waste Connections

Westhoff, Cone, and Holmstedt

Zanker Road Resource Management

1 individual

Opposition

Association of California Egg Farmers
California Advanced Biofuels
California Alliance for Community Composting
California Cattlemen's Association
California Farm Bureau Federation
California Feed and Grain Association
California Food Producers
Sustainable Economies Law Center

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. /

 THIRD READING  

Bill No: SB 71

Author:

Amended: 5/26/17

Vote:

SENATE ENERGY, U. & C. COMMITTEE: 8-3, 4/4/17

AYES: Hueso, Bradford, Hertzberg, Hill, McGuire, Skinner, Stern, Wiener

NOES: Morrell, Cannella, Vidak

SENATE TRANS. & HOUSING COMMITTEE: 9-3, 5/9/17

AYES: Beall, Allen, Atkins, McGuire, Mendoza, Roth, Skinner, Wieckowski, Wiener

NOES: Bates, Gaines, Morrell

NO VOTE RECORDED: Cannella

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/25/17

AYES: Lara, Beall, Bradford, Hill, Wiener

NOES: Bates, Nielsen

SUBJECT:

SOURCE: Author

DIGEST:

This bill requires the California Energy Commission to consider requiring installation of a solar energy generation system on all new buildings.

ANALYSIS:

Existing law:

1. Directs the California Energy Commission (CEC) to reduce the wasteful, uneconomic, inefficient, or unnecessary consumption of energy, including the energy associated with the use of water, through the several actions, including regulation of lighting, insulation climate control system, and other building design and construction standards that increase the efficiency in the use of energy and water for new residential and new nonresidential buildings.  (Public Resources Code §25402)  
2. Requires electric utilities to procure 50 percent of their retail sales of electricity from renewable energy by 2030. This is known as the Renewable Portfolio Standard. (Public Utilities Code §399.11 et seq.)
3. Requires every electric utility–other than a local public owned utilities that serves more than 750,000 customers and that also conveys water to its customers–to offer net-energy metering (NEM) to eligible customer-generators, upon request, on a first-come-first-served basis until the total rated generating capacity used by eligible customer-generators exceeds five percent of the electric utility’s aggregate customer peak demand.
4. Directs the California Public Utilities Commission (CPUC) to develop a standard tariff or contract, known as the “successor tariff,” for eligible customer-generators with a renewable electrical generation facility no later than December 31, 2015.
5. Requires, for each large electrical corporation, using the successor tariff, to continue to offer NEM to its customers on July 1, 2017, or upon reaching the five-percent NEM program limit, whichever is earlier. (Public Utilities Code §2827 et seq.)
6. Requires certain new residential and non-residential buildings to maintain approximately 15 percent of their total rooftop area free of shade and encumbrances to facilitate the installation of solar panels. This is known as the “solar ready” requirement. (Section 110.10 of Part 6 of Title 24 of the California Code of Regulations)

This bill:

1. Requires the CEC to consider requiring the installation of a cost-effective rooftop solar electric or solar thermal energy generation system on all new buildings. This bill requires the CEC to make its consideration by January 1, 2020, for new residential buildings and by January 1, 2023, for new nonresidential buildings.
2. Directs the CEC to issue, jointly with the Department of Housing and Community Development (HCD) prior to adopting rooftop energy generation system requirements, climate-zone-specific findings of whether adoption of such requirements would unreasonably or unnecessarily effect the affordability of housing in California.

Background

CEC Regulates Building Efficiency. State law provides CEC with several authorities, among them, the reduction of wasteful, uneconomic, inefficient, or unnecessary consumption of energy. To achieve such reduction, statute empowers CEC to adopt energy efficiency standards for new construction. Statute specifies that the standards must be cost-effective to the building owner when taken in their entirety and when amortized over the economic life of the structure compared with historic practice. The CEC updates it building efficiency standards on a rolling three-year basis. Currently, CEC is developing its 2019 standards.

Eventually, CEC’s energy efficiency standards are adopted by Building Standards Commission as part of the California Building Standards Code, which serves as the basis for building and construction in California.

CEC might require solar photovoltaic (PV) on new roofs. In 2008, the CPUC adopted the California Long-term Energy Efficiency Strategic Action Plan. The Plan’s authors developed the Plan around four programmatic goals, established in prior CPUC decisions in 2007 and referred to as “Big Bold Energy Efficiency Strategies.” Among those four goals were the following:

• All new residential construction in California will be zero net energy (ZNE) by 2020.
• All new commercial construction in California will be ZNE by 2030.

As described in the plan, ZNE describes a building with a net energy consumption of zero over a typical year.

In June of 2015, the CEC and CPUC issued California Energy Efficiency Strategic Plan: new residential zero net energy action plan 2015-2020. According the 2015 plan, it is “designed to operationalize the…goal to have 100 percent of new homes achieve ZNE beginning in 2020.”

Currently, CEC is developing its 2019 iteration of its building energy efficiency standards. This work builds upon CEC’s prior building energy efficiency standards, which require most types of new buildings be designed to make it easier to install solar PV or solar thermal equipment in the future. The standards designate a certain portion – generally 15 percent of surface area – of each new roof of most types of building a “solar zone” that is compatible with solar energy generation. Consistent with the strategic plans, CEC is considering the adoption of building energy efficiency standards that would require the installation of a solar PV system on all new residential buildings, beginning in 2020. CEC is not currently considering requiring solar on all nonresidential buildings, though it could do so in the future.

CEC’s work in pursuit of ZNE notwithstanding, it is not clear that the individual building is the appropriate unit of analysis when measuring net energy consumption. As the CEC acknowledges, the customer meter is becoming a less useful point of distinction when evaluating the system benefit of distributed energy resources. Nor is it clear why a technology-specific remedy is needed. The attributes the author describes as benefits of rooftop solar may be provided by different distributed generation technologies, or by different energy resources.

Some have questioned the authority of the CEC to require onsite generation as part of its building energy efficiency standards. This bill would definitively resolve that question by providing the CEC the authority to require installation of solar systems on buildings at the time of construction.

Housing Costs. Affordability is distinct from cost-effectiveness. The Senate Committee on Transportation and Housing, when it heard this bill, expressed concerns about the effect of mandatory solar installation on the affordability of California housing, regardless of the cost-effectiveness of such a mandate. According to the that Committee’s analysis of this bill, the CEC reports that requiring solar installations on new homes is cost effective, but it will add at least $6,000, and perhaps as much as $15,000, to the cost of a home. [This bill appears to be modeled on a recently enacted San Francisco ordinance, which requires PV installations on most new non-high rise construction. According to the analysis of that ordinance by the San Francisco Department of the Environment, the cost of a PV system for a two unit residential building is $26,523, or $13,260 per unit. Because of San Francisco’s mild climate, these systems are sized relatively small. For other less temperate climates larger systems would be necessary at higher cost.] Given those concerns and statute’s requirement that CEC focus on cost-effectiveness, it is appropriate that this bill, in its latest iteration, requires CEC and HCD to jointly consider the effect of any solar installation mandate on the affordability of housing in California.

Related/Prior Legislation

AB 693 (Eggman, Chapter 582, Statutes of 2016) created the Multifamily Affordable Housing Solar Roofs Program, to provide financial incentives–up to $100 million annually, for qualified solar installations at multifamily affordable housing properties funded from investor-owned utilities greenhouse gas allowances.

AB 217 (Bradford and De León, Chapter 609, Statutes of 2013) extended the low-income programs of the California Solar Initiative (CSI) from 2016 until 2021, authorized the collection of an additional $108 million for these programs, and added additional standards to the program, as specified.

AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers and revised the NEM program.

SB 1 (Murray, Chapter 132, Statutes of 2006) established the electric portion of the CSI with a 10-year budget of $2.2 billion collected from ratepayers.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• $1.85 million (Energy Resources Program Account) to the CEC for staff and technology upgrades necessary to conduct analysis.
• Potentially significant ongoing costs (General Fund and various special funds) to the state resulting from increased costs to purchase or lease buildings.

SUPPORT: (Verified 5/30/17)

350 Bay Area

Brightline Defense

California League of Conservation Voters

California Solar Energy Industries Association

Dynamic Grid Council

Environment California

Sierra Club California

Silicon Valley Leadership Group

Solar Energy Industries Association

SolarCity

Sunrun, Inc.

TechNet

The Utility Reform Network

Vote Solar

OPPOSITION: (Verified 5/25/17)

None received

ARGUMENTS IN SUPPORT: According to the author:

While California has made great strides in promoting rooftop solar and other forms of renewable energy, the State is not fully capitalizing on the myriad opportunities to harness solar energy. For example, surveys of existing building stock indicate that fewer than 30 percent of existing nonresidential buildings have suitable locations to install solar PV or solar heating systems. Furthermore, current regulations impose no solar infrastructure requirements, such as installation of conduit or piping, inclusion of collateral structural loads, or pre-installed mounting hardware.

Recognizing the need to take the next step, the City of San Francisco passed a local ordinance in 2016 requiring solar panels to be installed on most new buildings up to ten stories in height and subject to the Title 24 “solar ready” zone regulations.

SB 71 builds on the work done by the City of San Francisco and other local jurisdictions and takes those efforts statewide by requiring all new construction subject to the “solar ready” requirements of Title 24 to install solar PV or solar heating panels in their required “solar ready” rooftop zones. This bill also recognizes the need for flexibility as technology advances and provides the Building Standards Commission and the CEC, in consultation with other relevant state agencies, the authority to adopt regulations to impose additional standards to reflect the most recent technology available.

Prepared by:

5/30/17 10:31:35

**** END ****

 THIRD READING  

Bill No: SB 71

Author:

:

Vote:

SENATE ENERGY, U. & C. COMMITTEE: 8-3, 4/4/17

AYES: Hueso, Bradford, Hertzberg, Hill, McGuire, Skinner, Stern, Wiener

NOES: Morrell, Cannella, Vidak

SENATE TRANS. & HOUSING COMMITTEE: 9-3, 5/9/17

AYES: Beall, Allen, Atkins, McGuire, Mendoza, Roth, Skinner, Wieckowski, Wiener

NOES: Bates, Gaines, Morrell

NO VOTE RECORDED: Cannella

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/25/17

AYES: Lara, Beall, Bradford, Hill, Wiener

NOES: Bates, Nielsen

SUBJECT:

SOURCE: Author

DIGEST:

This bill requires the California Energy Commission to consider requiring installation of a solar energy generation system on all new buildings.

ANALYSIS:

Existing law:

1. Directs the California Energy Commission (CEC) to reduce the wasteful, uneconomic, inefficient, or unnecessary consumption of energy, including the energy associated with the use of water, through the several actions, including regulation of lighting, insulation climate control system, and other building design and construction standards that increase the efficiency in the use of energy and water for new residential and new nonresidential buildings.  (Public Resources Code §25402)  
2. Requires electric utilities to procure 50 percent of their retail sales of electricity from renewable energy by 2030. This is known as the Renewable Portfolio Standard. (Public Utilities Code §399.11 et seq.)
3. Requires every electric utility–other than a local public owned utilities that serves more than 750,000 customers and that also conveys water to its customers–to offer net-energy metering (NEM) to eligible customer-generators, upon request, on a first-come-first-served basis until the total rated generating capacity used by eligible customer-generators exceeds five percent of the electric utility’s aggregate customer peak demand.
4. Directs the California Public Utilities Commission (CPUC) to develop a standard tariff or contract, known as the “successor tariff,” for eligible customer-generators with a renewable electrical generation facility no later than December 31, 2015.
5. Requires, for each large electrical corporation, using the successor tariff, to continue to offer NEM to its customers on July 1, 2017, or upon reaching the five-percent NEM program limit, whichever is earlier. (Public Utilities Code §2827 et seq.)
6. Requires certain new residential and non-residential buildings to maintain approximately 15 percent of their total rooftop area free of shade and encumbrances to facilitate the installation of solar panels. This is known as the “solar ready” requirement. (Section 110.10 of Part 6 of Title 24 of the California Code of Regulations)

This bill:

1. Requires the CEC to consider requiring the installation of a cost-effective rooftop solar electric or solar thermal energy generation system on all new buildings. This bill requires the CEC to make its consideration by January 1, 2020, for new residential buildings and by January 1, 2023, for new nonresidential buildings.
2. Directs the CEC to issue, jointly with the Department of Housing and Community Development (HCD) prior to adopting rooftop energy generation system requirements, climate-zone-specific findings of whether adoption of such requirements would unreasonably or unnecessarily effect the affordability of housing in California.

Background

CEC Regulates Building Efficiency. State law provides CEC with several authorities, among them, the reduction of wasteful, uneconomic, inefficient, or unnecessary consumption of energy. To achieve such reduction, statute empowers CEC to adopt energy efficiency standards for new construction. Statute specifies that the standards must be cost-effective to the building owner when taken in their entirety and when amortized over the economic life of the structure compared with historic practice. The CEC updates it building efficiency standards on a rolling three-year basis. Currently, CEC is developing its 2019 standards.

Eventually, CEC’s energy efficiency standards are adopted by Building Standards Commission as part of the California Building Standards Code, which serves as the basis for building and construction in California.

CEC might require solar photovoltaic (PV) on new roofs. In 2008, the CPUC adopted the California Long-term Energy Efficiency Strategic Action Plan. The Plan’s authors developed the Plan around four programmatic goals, established in prior CPUC decisions in 2007 and referred to as “Big Bold Energy Efficiency Strategies.” Among those four goals were the following:

• All new residential construction in California will be zero net energy (ZNE) by 2020.
• All new commercial construction in California will be ZNE by 2030.

As described in the plan, ZNE describes a building with a net energy consumption of zero over a typical year.

In June of 2015, the CEC and CPUC issued California Energy Efficiency Strategic Plan: new residential zero net energy action plan 2015-2020. According the 2015 plan, it is “designed to operationalize the…goal to have 100 percent of new homes achieve ZNE beginning in 2020.”

Currently, CEC is developing its 2019 iteration of its building energy efficiency standards. This work builds upon CEC’s prior building energy efficiency standards, which require most types of new buildings be designed to make it easier to install solar PV or solar thermal equipment in the future. The standards designate a certain portion – generally 15 percent of surface area – of each new roof of most types of building a “solar zone” that is compatible with solar energy generation. Consistent with the strategic plans, CEC is considering the adoption of building energy efficiency standards that would require the installation of a solar PV system on all new residential buildings, beginning in 2020. CEC is not currently considering requiring solar on all nonresidential buildings, though it could do so in the future.

CEC’s work in pursuit of ZNE notwithstanding, it is not clear that the individual building is the appropriate unit of analysis when measuring net energy consumption. As the CEC acknowledges, the customer meter is becoming a less useful point of distinction when evaluating the system benefit of distributed energy resources. Nor is it clear why a technology-specific remedy is needed. The attributes the author describes as benefits of rooftop solar may be provided by different distributed generation technologies, or by different energy resources.

Some have questioned the authority of the CEC to require onsite generation as part of its building energy efficiency standards. This bill would definitively resolve that question by providing the CEC the authority to require installation of solar systems on buildings at the time of construction.

Housing Costs. Affordability is distinct from cost-effectiveness. The Senate Committee on Transportation and Housing, when it heard this bill, expressed concerns about the effect of mandatory solar installation on the affordability of California housing, regardless of the cost-effectiveness of such a mandate. According to the that Committee’s analysis of this bill, the CEC reports that requiring solar installations on new homes is cost effective, but it will add at least $6,000, and perhaps as much as $15,000, to the cost of a home. [This bill appears to be modeled on a recently enacted San Francisco ordinance, which requires PV installations on most new non-high rise construction. According to the analysis of that ordinance by the San Francisco Department of the Environment, the cost of a PV system for a two unit residential building is $26,523, or $13,260 per unit. Because of San Francisco’s mild climate, these systems are sized relatively small. For other less temperate climates larger systems would be necessary at higher cost.] Given those concerns and statute’s requirement that CEC focus on cost-effectiveness, it is appropriate that this bill, in its latest iteration, requires CEC and HCD to jointly consider the effect of any solar installation mandate on the affordability of housing in California.

Related/Prior Legislation

AB 693 (Eggman, Chapter 582, Statutes of 2016) created the Multifamily Affordable Housing Solar Roofs Program, to provide financial incentives–up to $100 million annually, for qualified solar installations at multifamily affordable housing properties funded from investor-owned utilities greenhouse gas allowances.

AB 217 (Bradford and De León, Chapter 609, Statutes of 2013) extended the low-income programs of the California Solar Initiative (CSI) from 2016 until 2021, authorized the collection of an additional $108 million for these programs, and added additional standards to the program, as specified.

AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers and revised the NEM program.

SB 1 (Murray, Chapter 132, Statutes of 2006) established the electric portion of the CSI with a 10-year budget of $2.2 billion collected from ratepayers.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• $1.85 million (Energy Resources Program Account) to the CEC for staff and technology upgrades necessary to conduct analysis.
• Potentially significant ongoing costs (General Fund and various special funds) to the state resulting from increased costs to purchase or lease buildings.

SUPPORT: (Verified 5/25/17)

350 Bay Area

Brightline Defense

California League of Conservation Voters

California Solar Energy Industries Association

Consumer Federation of California

Dynamic Grid Council

Environment California

Sierra Club California

Silicon Valley Leadership Group

Solar Energy Industries Association

SolarCity

Sunrun, Inc.

TechNet

The Utility Reform Network

Vote Solar

OPPOSITION: (Verified 5/25/17)

None received

ARGUMENTS IN SUPPORT: According to the author:

While California has made great strides in promoting rooftop solar and other forms of renewable energy, the State is not fully capitalizing on the myriad opportunities to harness solar energy. For example, surveys of existing building stock indicate that fewer than 30 percent of existing nonresidential buildings have suitable locations to install solar PV or solar heating systems. Furthermore, current regulations impose no solar infrastructure requirements, such as installation of conduit or piping, inclusion of collateral structural loads, or pre-installed mounting hardware.

Recognizing the need to take the next step, the City of San Francisco passed a local ordinance in 2016 requiring solar panels to be installed on most new buildings up to ten stories in height and subject to the Title 24 “solar ready” zone regulations.

SB 71 builds on the work done by the City of San Francisco and other local jurisdictions and takes those efforts statewide by requiring all new construction subject to the “solar ready” requirements of Title 24 to install solar PV or solar heating panels in their required “solar ready” rooftop zones. This bill also recognizes the need for flexibility as technology advances and provides the Building Standards Commission and the CEC, in consultation with other relevant state agencies, the authority to adopt regulations to impose additional standards to reflect the most recent technology available.

Prepared by:

5/27/17 17:44:42

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 71 (Wiener) - Electricity: solar energy systems

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 25, 2017

Bill Summary:

• SB 71 requires the California Energy Commission (CEC) to consider updating the building efficiency standards to require the installation of solar on all residential development by January 1, 2020 and all nonresidential by January 1, 2023, in the solar zone, as defined. The bill requires the CEC to work with the California Department of Housing and Community Development (HCD) to develop and issues findings regarding the impact the installation of solar will have on housing prices.

Fiscal Impact:

• Unknown, potentially significant, costs to. HCD (special fund) to develop required findings.
• Up to $1.85 million (Energy Resources Program Account) to the CEC for staff and technology upgrades necessary to conduct analysis, some of which may be offset by leveraging HCD’s expertise related to housing.
• Potentially significant ongoing costs (General Fund and various special funds) to the state resulting from increased costs to purchase or lease buildings.

Author Amendments:

• Require the CEC to work with HCD to develop and issues findings regarding the impact the installation of solar will have on housing prices.
• Make technical, nonsubstantive amendments.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 71 (Wiener) - Electricity: solar energy systems

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

1. SB 71 requires the California Energy Commission (CEC) to consider updating the building efficiency standards to require the installation of solar on all residential development by January 1, 2020 and all nonresidential by January 1, 2023, in the solar zone, as defined.

Fiscal Impact:

• $1.85 million (Energy Resources Program Account) to the CEC for staff and technology upgrades necessary to conduct analysis.
• Potentially significant ongoing costs (General Fund and various special funds) to the state resulting from increased costs to purchase or lease buildings.

Background:

Existing law:

1. Directs the CEC to reduce the wasteful, uneconomic, inefficient, or unnecessary consumption of energy, including the energy associated with the use of water, through the several actions, including regulation of lighting, insulation climate control system, and other building design and construction standards that increase the efficiency in the use of energy and water for new residential and new nonresidential buildings.  (Public Resources Code §25402)  
2. Requires electric utilities to procure 50 percent of their retail sales of electricity from renewable energy by 2030. This is known as the Renewable Portfolio Standard (RPS). (Public Utilities Code §399.11 et seq.)
3. Requires every electric utility–other than a local public owned utilities (POU) that serves more than 750,000 customers and that also conveys water to its customers–to offer net-energy metering (NEM) to eligible customer-generators, upon request, on a first-come-first-served basis until the total rated generating capacity used by eligible customer-generators exceeds five percent of the electric utility’s aggregate customer peak demand.
4. Directs the California Public Utilities Commission (CPUC) to develop a standard tariff or contract, known as the “successor tariff,” for eligible customer-generators with a renewable electrical generation facility no later than December 31, 2015.
5. Requires, for each large electrical corporation, using the successor tariff, to continue to offer NEM to its customers on July 1, 2017, or upon reaching the five-percent NEM program limit, whichever is earlier. (Public Utilities Code §2827 et seq.)

Proposed Law:

This bill:

1. Makes findings and declarations related to the benefits of installing solar electric or solar thermal systems.
2. Defines “Solar ready building” and “Solar zone”.
3. Requires the CEC, by January 1, 2020, to consider updating the building efficiency standards to require the installation of a rooftop solar energy generation system in the solar zone of all new residential solar ready buildings.
4. Requires the CEC, by January 1, 2023, to consider updating the building efficiency standards to require a rooftop solar energy generation system to be installed in the solar zone of all new nonresidential solar ready buildings.
5. Requires the CEC, in determining whether to require a cost-effective level of onsite solar energy generation, to consider the impact, if any, of such a requirement on building affordability by climate zone, including the purchase price, energy cost savings, and whether or not, and to what extent, the requirement may affect housing affordability in the state.

Related Legislation:

AB 693 (Eggman, Chapter 582, Statutes of 2016) created the Multifamily Affordable Housing Solar Roofs Program, to provide up to $100 million annually (from investor-owned utility greenhouse gas allowances) in financial incentive to qualified solar installations at multifamily affordable housing properties.

AB 217 (Bradford and De León, Chapter 609, Statutes of 2013) extended the low-income programs of the California Solar Initiative (CSI) from 2016 until 2021, authorized the collection of an additional $108 million for these programs, and added additional standards to the program.

AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers and revised the NEM program.

SB 1 (Murray, Chapter 132, Statutes of 2006) established the electric portion of the ratepayer-funded CSI program, aimed at deploying 3000 MW of solar energy systems in 10 years through a declining subsidy. CSI had a 10-year budget of $2.2 billion.

Staff Comments:

$1.85 million unfunded mandate to the CEC and General Fund pressures. The CEC anticipates the need for four permanent staff positions and $1.25 million in contract costs for software updates necessary to conduct the required technical analyses.

This bill does not specify a funding source. The Energy Resources Program Account (ERPA), which funds most of the CEC’s activities, is in a structural deficit and cannot absorb additional costs. As such, this bill may result in a General Fund expense.

Significantly increases state costs to develop, purchase, and lease buildings. The cost to install solar depends on the system size, equipment options (panels and inverters), permitting costs, and labor costs. The CEC reports that solar installations can increase the cost of a new home by $6,000 and $15,000. Installation of solar on commercial and industrial buildings can reach the hundreds of thousands of dollars.

Each year, the state develops purchases, and leases properties and buildings, of varying types, to conduct its business. According to the Department of General Services’ Statewide Property Inventory (SPI), the state currently owns 2,614 office structures (buildings whose primary purpose is office space) and 22,778 other structures (structures other than office space, such as warehouses, laboratories, and classrooms). The state also pays more than $506 million in rent annually to lease an additional 2,283 properties. To the extent this bill increases the cost of procuring new properties, maintaining solar installations, and increasing lease rates, it will result in increased state expenditures from the General Fund and various special funds. Staff notes that some of these costs may be offset by energy cost savings in the long-term.

Get in the duck’s belly. The now (in)famous duck curve graph of power production depicts the timing imbalance between peak demand and renewable energy production over the course of many days in California. The belly of the duck represents the oversupply—when generation exceeds demand—during the day; the neck depicts the rapid increase in demand (and required rapid deployment of non-solar energy sources) occurring at sunset when solar is no longer available.

Oversupply of energy can lead to reductions in renewable energy generation below what could have been otherwise produced, known as curtailments. Curtailments, which occur as (1) low- or negative-energy pricing, (2) self-scheduled cuts in generation, or (3) orders to reduce output, can result in the uneconomic deployment of energy resources. In 2016, CAISO curtailed approximately 308,000 megawatt-hours (MW)—enough solar energy to power up to 77 million homes. (The Solar Energy Industries Association webpage indicates that 1 MW of solar powers 250 homes in California). It estimates that this may increase to 8,000 to 13,000 MW by 2024.

If the CEC requires the installation of solar as a result of this bill, the resulting increase in solar generation could exacerbate current oversupply conditions. To the extent that this leads to or increases the need to develop policies or incentive programs to mitigate for additional oversupply, or impacts state energy rates, this bill could result in state costs. Staff notes that many efforts are underway, but that enactment of legislation sets expectations.

-- END --

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2017 - 2018 Regular

Bill No: SB 71 Hearing Date: 5/9/2017

SUBJECT: Electricity: solar energy systems.

DIGEST: This bill authorizes the California Energy Commission (CEC) to require the installation of rooftop solar energy generation on new buildings.

ANALYSIS:

Existing law:

Requires the CEC to develop and adopt energy and water efficiency standards for new residential and non-residential buildings.

These standards are normally updated every three years with the next standard being considered in 2019 for implementation in 2020. These standards have been generally effective. According to the CEC, buildings constructed under the 2016 standards will use 28% less energy than those built to the 2013 standards. Buildings built under the 2013 standards use 25% less energy than those built to the 2008 standards.

Existing regulation:

Requires certain new residential and non-residential buildings to maintain approximately 15% of their total rooftop area free of shade and encumbrances to facilitate the installation of solar panels. This is known as the “solar ready” requirement.

This bill authorizes the CEC to require the installation of rooftop solar energy systems on residential buildings by January 1, 2020, and on non-residential buildings by January 1, 2023, as part of the CECs regular building standard review process.

COMMENTS:

1. Author’s Statement. While existing law requires certain new residential and non-residential buildings to set aside approximately 15% of their total rooftop area for the installation of solar photovoltaic panels (PV), these regulations impose no requirements to install solar infrastructure. There is a huge missed opportunity to require the installation of solar PV at the time of construction, where it is much more cost-effective as workers are already onsite; permitting, customer acquisition, and administrative costs are lower; financing the system is more efficient. SB 71 seeks to close this gap by directing the CEC to consider requiring the installation of solar PV panels on any new construction already subject to the solar ready requirement. This bill will help to advance California’s zero net energy goals, reduce the State’s contribution to climate change and ensure that all residents in California have the opportunity to go solar.
2. Rooftop Solar. California has a very successful program to encourage solar PV systems on roofs. This program, known as the California Solar Initiative (CSI), is a voluntary program which allows customers to install a PV system to benefit from a direct ratepayer subsidy plus a substantial indirect subsidy^[1]. The result is that California now has about 1800 megawatts (MW) of rooftop solar generation, equivalent to the capacity of four large power plants. The direct subsidies from the CSI have nearly run out, but the indirect subsidies remain. California is second only to Hawaii in the percentage of residential customers with rooftop solar systems.
3. Provides the CEC with Substantial New Authority. Current law gives the CEC broad authority to establish energy efficiency standards. The CEC is also required to study whether, and under what conditions, solar energy systems should be required on new buildings, but that statute expressly does not authorize the CEC to require installation. This bill gives the CEC that authority, which likely also gives the CEC the authority to require related energy storage systems, which the CEC is contemplating.^[2]

Granting the CEC this authority should be carefully considered because, as discussed below, it opens the door for more costly, riskier investments which will increase the price of a home much more significantly than other energy efficiency improvements. Requiring generation also will affect utility customers who don’t have new solar homes because of the way in which solar generation is subsidized and compensated for its output. Finally, the benefits of requiring the installation of solar energy systems aren’t clear because there are existing successful programs to require the use of more renewable energy.

1. Cost Effective and Costly. By law the CEC may only establish energy standards which are cost effective. That means that over the lifetime of the asset — 30 years in the case of a house — the cost of installing the energy efficiency measure must be paid for out of the energy savings. The CEC’s 2013 standards increase the cost of a new home by $2,290 but over 30 years return $6,200 in energy savings. The CEC’s 2016 standards increase the cost of a new home by $2,700 but over 30 years return $7,400 in savings. The CEC reports that requiring solar installations on new homes is cost effective, but it will add at least $6,000, and perhaps as much as $15,000, to the cost of a home.^[3] This may not matter in areas where new homes cost $1,000,000 but in lower-priced inland areas this could potentially disqualify potential buyers. For affordable housing, solar installations provide a significant benefit to occupants as they lower monthly electric bills. But the increased cost of construction may reduce the number of affordable housing units which are built.

The cost effectiveness analysis for the solar system may also be more uncertain than for traditional energy efficiency investments. That’s because the solar system requires a large up-front investment which is repaid over a long period of time through reduced energy bills. This means that the cost effectiveness calculation is very sensitive to forecasts of energy rates and interest rates. The CEC employs consultants to validate their forecasts, but these calculations are inherently much more uncertain than smaller investments with shorter paybacks. Longer payback periods also mean that the solar investment is not economic for owners who sell their properties before the payback period is reached, depending on whether the solar system value is reflected in the sales price.

The CECs cost effectiveness analysis is necessarily based on averages, such as average usage (albeit by climate zone), installed cost, size of system, and utility costs. But these factors can vary significantly depending on household characteristics (a single occupant or a family of five), electricity prices for the serving electric utility (e.g. SMUD rates are less than PG&E) and the price that utility pays for any surplus electricity generated by the solar system. So while on average a solar system may be cost effective, it will not be cost effective for every home. Were this bill to become law and the CEC to require installation of solar systems, the number of rooftop solar systems would increase by about 100,000 annually, which compares to about 150,000 residential solar installations in 2016.

1. Cost Effective, but for Whom? The CEC evaluation looks at the cost effectiveness of the investment for the homeowner. But homeowners with rooftop solar power have a financial effect on other utility customers who don’t have solar power. This is because rooftop solar customers still rely on the electric grid for many services and are compensated in a way which shifts costs. This is becoming more of an issue as California’s renewable energy policies, such as the Renewable Portfolio Standard which requires substantial renewable energy procurement by utilities and the CSI, have achieved their intended effect of greening California’s electric grid. This sort of system-wide study has not been performed by the CEC, but the California Public Utilities Commission is considering it in an ongoing proceeding.^[4]
2. Other Renewable Paths. While requiring solar energy systems on new buildings may be cost effective pursuant to the CEC’s calculations, they may not be the most cost effective way to increase the amount of renewable energy used in California. That’s because installing small, individually sized solar systems everywhere is probably more costly than building more efficient, well-maintained, industrial sized systems in locations best suited for solar. Depending on the circumstance, non-solar technologies such as wind and geothermal may also be more cost effective than rooftop solar. And for those customers wanting a green power supply, they already have a 33% renewable supply from their investor owned utility (increasing to 50% by 2030 and perhaps 100% by 2045), they can choose optional utility programs for greater than 33% renewable energy (PG&E and Southern California Edison have optional 50% and 100% renewable programs), or they can choose community choice aggregation programs which bypass the local utility. Increasing the use of renewable energy does not require the installation of solar systems on new buildings. Given the cost concerns and the alternative mechanisms for increasing renewable power purchases, the author may wish to consider revising the bill to have the CEC submit its cost effective analysis to the Legislature, where it can be considered in the context of the impact on electric rates and the effect a solar energy requirement would have on home affordability.

Greenhouse Gas Emissions. It isn’t clear that increasing rooftop solar systems will reduce GHG emissions. Again, this is due to California’s successful implementation of its renewable energy policies. Increased solar stresses the electric grid in a way which makes it necessary to use more fossil fueled power plants, deploy energy storage systems at great cost, or create new demand response programs. That’s because solar energy systems stop producing electricity when the sun sets. This production decline in the evening is steep, as is the production increase in the morning. To accommodate that rapidly changing supply the electric grid needs electric generation which can respond quickly so that supply and demand can remain balanced. This generation is typically a natural gas fired power plant, though energy storage and demand response programs will also help.

A Few Pioneers. The cities of Santa Monica, San Francisco, Sebastapol and Lancaster have adopted ordinances similar to this bill.

Double Referral. This bill was heard in the Senate Energy, Utilities and Communications Committee on April 4, 2017 and approved 8-3.

Related Legislation:

SB 1 (Murray; Chapter 132 of 2006) — statutorily establishes the California Solar Initiative which creates a goal of deploying 3000 MW of solar energy systems in 10 years through a declining subsidy.

FISCAL EFFECT: Appropriation: Fiscal Com.: Yes Local:

POSITIONS: (Communicated to the committee before noon on Wednesday,

May 3, 2017.)

SUPPORT:

Brightline Defense Project

California League of Conservation Voters

California Solar Energy Industries Association

Dynamic Grid Council

Environment California

Solar City

Solar Energy Industries Association

Sunrun, Inc.

TechNet

Vote Solar

350 Bay Area

OPPOSITION:

California Building Industry Association

California Business Properties Association

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1. The indirect subsidy is because rooftop solar energy systems are permitted to “net meter” their output. This provides system owners with credit for the electrical output at retail rates, which can be more than $0.34/kwh, rather than wholesale generation rates, which can be $0.05-0.10/kwh. ↑

2. The CEC asserts that Section 25402 of the Public Resources Code, enacted in 1977, already provides them the authority to mandate the reduction of use of “depletable” energy. ↑

3. This bill appears to be modeled on a recently enacted San Francisco ordinance, which requires PV installations on most new non-high rise construction. According to the analysis of that ordinance by the San Francisco Department of the Environment, the cost of a PV system for a 2 unit residential building is $26,523, or $13,260 per unit. Because of San Francisco’s mild climate, these systems are sized relatively small. For other less temperate climates larger systems would be necessary at higher cost. ↑

4. One nationwide study suggests that in California, because of the high residential PV penetration rate and generous compensation for PV output, rooftop solar has increased residential electric rates by roughly 3% in the short term. ↑

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2017 - 2018 Regular

Bill No: SB 71 Hearing Date: 4/4/2017

SUBJECT: Electricity: solar energy systems

DIGEST: This bill requires installation of a solar energy generating system on each newly constructed building, with some exceptions.

ANALYSIS:

Existing law:

1. Directs the California Energy Commission (CEC) to reduce the wasteful, uneconomic, inefficient, or unnecessary consumption of energy, including the energy associated with the use of water, through the several actions, including regulation of lighting, insulation climate control system, and other building design and construction standards that increase the efficiency in the use of energy and water for new residential and new nonresidential buildings.  (Public Resources Code §25402)  
2. Requires electric utilities to procure 50 percent of their retail sales of electricity from renewable energy by 2030. This is known as the Renewable Portfolio Standard (RPS). (Public Utilities Code §399.11 et seq.)
3. Requires every electric utility–other than a local public owned utilities (POU) that serves more than 750,000 customers and that also conveys water to its customers–to offer net-energy metering (NEM) to eligible customer-generators, upon request, on a first-come-first-served basis until the total rated generating capacity used by eligible customer-generators exceeds five percent of the electric utility’s aggregate customer peak demand.

Directs the California Public Utilities Commission (CPUC) to develop a standard tariff or contract, known as the “successor tariff,” for eligible customer-generators with a renewable electrical generation facility no later than December 31, 2015.

Requires, for each large electrical corporation, using the successor tariff, to continue to offer NEM to its customers on July 1, 2017, or upon reaching the five-percent NEM program limit, whichever is earlier. (Public Utilities Code §2827 et seq.)

This bill:

1. Requires a solar electric system or solar thermal system be installed on all buildings, with certain exceptions, for which construction begins on or after January 1, 2018.
2. Asserts the following:
   1. It is necessary to require building owners to take steps to produce renewable, low-carbon energy and to capture solar heat to reduce pollution and the global warming effects of energy consumption.
   2. Installing solar energy systems benefits the health, welfare and resiliency of the state and its residents.
   3. Requiring solar energy systems to be installed during building construction is more cost effective that installing such systems after building construction is complete.

Background

CEC Regulates Building Efficiency. State law provides CEC with several authorities, among them, the reduction of wasteful, uneconomic, inefficient, or unnecessary consumption of energy. To achieve such reduction, statute empowers CEC to adopt energy efficiency standards for new construction. Statute specifies that the standards must be cost-effective to the building owner when taken in their entirety and when amortized over the economic life of the structure compared with historic practice. The CEC updates it building efficiency standards on a rolling three-year basis. Currently, CEC is developing its 2019 standards.

Eventually, CEC’s energy efficiency standards are adopted by Building Standards Commission as part of the California Building Standards Code, which serves as the basis for building and construction in California.

The CEC first adopted building energy efficiency standards in 1977. The CEC reports that the energy efficiency building standards have saved Californians billions of dollars since their first adoption, avoided the need for powerplants and transmission lines, and helped keep California’s per-capita energy consumption flat.

CEC Might Require Solar PV on New Roofs. In 2008, the CPUC adopted the California Long-term Energy Efficiency Strategic Action Plan. The plan was the result of collaboration among the CPUC, the state’s large investor-owned utilities (IOU), and many other participants. The plan describes itself as “a strategic roadmap for integrating energy efficiency efforts to achieve the aggressive goals the state has set for itself.” The plan’s authors developed the plan around four programmatic goals, established in prior CPUC decisions in 2007 and referred to as “Big Bold Energy Efficiency Strategies.” Among those four goals were the following:

• All new residential construction in California will be zero net energy (ZNE) by 2020.
• All new commercial construction in California will be ZNE by 2030.

As described in the plan, ZNE describes a building with a net energy consumption of zero over a typical year. To achieve ZNE, a building potentially employs a variety of design features to minimize energy use, along with onsite renewable generation. In a ZNE home, onsite generation is sized to equal the amount of energy used by the building. However, because onsite generation and onsite demand do not always coincide, a ZNE building exports energy to the electricity grid when the building generates a surplus of energy and imports from the electricity grid when building demand outpaces onsite generation. In this way, an ideally functioning ZNE building “nets out” its energy usage; that is, in a typical year, a ZNE building produces as much energy as it consumes, regardless of the timing of that energy production and energy consumption over the course of the year.

Achievement of the administration’s “Big Bold Energy Efficiency Strategies,” including the ZNE goals, is not required by statute. Rather, the strategies are, according to the plan, “reach” goals intended to “capture the imagination and the spark the enthusiasm…in transforming residential new construction to ultra-high levels of energy efficiency.”

In June of 2015, the CEC and CPUC issued California Energy Efficiency Strategic Plan: new residential zero net energy action plan 2015-2020. According the 2015 plan, it is “designed to operationalize the…goal to have 100 percent of new homes achieve ZNE beginning in 2020.”

Currently, CEC is developing its 2019 iteration of its building energy efficiency standards. This work builds upon CEC’s prior building energy efficiency standards, which require most types of new buildings be designed to make it easier to install solar PV or solar thermal equipment in the future. The standards designate a certain portion – generally 15 percent of surface area – of each new roof of most types of building a “solar zone” that is compatible with solar energy generation.

Consistent with the strategic plans, CEC is considering the adoption of building energy efficiency standards that would require the installation of a solar photovoltaic (PV) system on all new residential buildings, beginning in 2020. This is because, according to CEC’s preliminary work, assuming installation of off cost-effective energy efficiency measures, installation of a PV solar system that is sized to displace a house’s annual electricity use is cost-effective for nearly all homes in each of the state’s 16 climate zones, even if the electricity generated is valued at wholesale rates. Notably, the CEC has not found installation of a solar thermal system to be similarly cost effective in any of the state’s climate zones.

CEC’s work in pursuit of ZNE notwithstanding, it is not clear that the individual building is the appropriate unit of analysis when measuring net energy consumption. As the CEC acknowledges, the customer meter is becoming a less useful point of distinction when evaluating the system benefit of distributed energy resources.

CPUC Working to Better Determine the Value of Distributed Energy Resources. Past state policy has sought to encourage installation of rooftop solar systems, regardless of location. This encouragement mainly has come through rebates to offset the cost of installation of a rooftop solar system and generous compensation through mandatory NEM. Both programs offered financial incentives, largely regardless of the location of the installation of the systems or of the location and timing of the generation.

The portion of the rebate program rebate program reserved for installations on existing buildings is now closed; another portion reserved for new construction continues. Statute, as part of a larger requirement to reform electricity rates, directs the CPUC to revise the NEM program to, among other things, (1) ensure that customer-sited renewable distributed generation continues to grow sustainably and (2) the total benefits to all customers and the electrical system are approximately equal to the total costs.

In 2016, the CPUC, for the most part, left the NEM program intact, despite statutory direction. In justifying its NEM decision, the CPUC concluded that it needs a better understanding of the effects of customer-sited distributed resources on the electric system before it could revise the NEM program to better align cost and benefits. The CPUC further concluded that such an understanding would come from work underway at the CPUC, specifically, the distributed resources plan proceeding, the integrated distributed energy resources proceeding, and the rulemaking on time-of-use rates. The CPUC specifically called out the second proceeding–focused on integrated distributed energy resources–as aimed at providing insight into the locational value of distributed energy resources.

Bill Mirrors Local Ordinances…and the Work of the CEC. Gets Ahead of the Work of the CPUC. The approach of SB 71 is simple: it requires installation of a solar energy generation system–PV or thermal–on the solar zone of all new buildings, as of January 1, 2018. The author describes the requirement as mirroring that of local ordinances in San Francisco, Santa Monica and Lancaster, among other locations. The author also describes the requirement as consistent with the motivations behind CEC’s building energy efficiency standards.

The author provides a number of justifications for requiring installation of solar PV or solar thermal on most all new buildings. Specifically, the author contends the requirement provides the following benefits:

• Relatively cost-effective installation of rooftop solar energy systems, when compared with the cost to install such a system after building construction is complete.
• Improved low-income-customer access to solar, when compared to existing state programs.
• Encourages collaboration between building designers and solar energy system designers early in the design process.
• Reduced need for new transmission and generation resources.

To some extent, this bill mirrors the work of state regulators, or, at least, their potential work. This bill, however, differs from that work, too, or even gets ahead of it.

This bill requires the installation of solar energy systems on the rooftops of most new buildings. In this way, the bill is similar to CEC building efficiency standards, which might require installation of solar energy systems on most new roofs. Should the CEC decide to make such a requirement, its ability to do so will be hemmed by the need to show installation of a specific amount of solar generation is cost-effective to the building owner. This bill’s requirement is not similarly limited by cost-effectiveness. Rather, the author contends that solar systems installed in keeping with the requirements of this bill will be affordable, but not necessarily cost-effective, through financial mechanisms such as a 30-year mortgage or an equipment lease.

Differing again from CEC’s potential standards, this bill does not prescribe or recommend a particular amount of solar generation that must be installed on a given roof. The author contends this lack of prescription provides flexibility to developers to meet the needs of building owners and anticipate tenants. Nonetheless, this bill could lead to the unlikely, but nonetheless absurd, outcome of a builder installing a one-inch by one-inch solar panel, just to satisfy statute.

While this bill does not condition its mandate upon cost-effectiveness to the building owner, the author justifies this bill’s mandate by the value of rooftop solar energy generation to the energy system as a whole. As the author describes it, rooftop solar benefits all ratepayers by avoiding the need for new generation and transmission, the costs of which must be borne by ratepayers and which uses land and other resources. In addition, the author describes the relative inefficiency of electricity transmitted over long distances, which loses energy as it travels, and the resiliency added to the electricity system through the distribution of generation resources.

The author is right. Or, rather, the author is potentially right. Distributed generation resources, including rooftop solar, have the potential to reduce or displace the need for new, distantly located generation and new transmission wires. In fact, as the author notes, PG&E recently announced cancellation of a planned transmission project that would have cost ratepayers $115 million. PG&E attributes the cancellation to a lack of demand for new resources brought about by installation of distributed energy resources.

However, it is not necessarily the case that installation of distributed energy resources removes the need for new generation or transmission investments. The electricity system is designed to meet energy demand at its peak. Rooftop solar, and other distributed energy resources, reduce the need for new generation and, in relation, new transmission, to the extent it reduces peak electricity demand. The author assumes rooftop solar reduces peak demand. Similarly, the author appears to assume installation of rooftop solar imposes no costs on the electricity system. Yet, these are precisely the questions the questions the CPUC is trying to answer in its distributed resources-related proceedings.

The bill opens with findings and declarations. These statements seem too certain, given the uncertainties described above. The author and committee may wish to amend this bill, as follows, to better reflect those uncertainties. (Deleted text is struck out; new text is underlined.)

SECTION 1.

 The Legislature finds and declares all of the following:

(a) It is necessary to require Requiring building owners to take steps to produce renewable, low-carbon electricity and to capture solar heat in order has the potential to reduce pollution and the global warming effects of energy consumption.

(b) Installing solar electric or solar thermal systems can benefits the health, welfare, and resiliency of the state and its residents.

(c) Requiring solar electric or solar thermal systems to be installed on a building during its construction is more cost effective than installing the equipment after construction because workers are already onsite, permitting and administrative costs are lower, and financing the systems is more efficient at that time.

In any case, it is not clear why a technology-specific remedy is needed. The attributes the author describes as benefits of rooftop solar may be provided by different distributed generation technologies, or by different energy resources. To the extent the state values such attributes, it should encourage or require their proliferation, in general.

Given that the CEC is likely (though not certain!) to require installation of some amount of solar PV on rooftops throughout the state, the requirements of the bill seem unneeded. However, some have questioned the authority of the CEC to require onsite generation as part of its building energy efficiency standards. The author and committee may wish to amend the bill to delete its current mandate and, instead, authorize the CEC, in consultation with the CPUC and California Independent System Operator, to require installation of onsite energy generation as part of its update of it building energy efficiency standards and further direct the CEC to consider mandating such installation.

Moreover, the author might want to consider empowering the CEC to consider societal benefits, not just the cost-effectiveness as CEC currently understands that concept, when developing and adopting its building energy efficiency standards.

Double Referral. Should this bill be approved by the committee, it will be re-referred to the Senate Committee on Transportation and Housing for its consideration.

Prior/Related Legislation

AB 693 (Eggman, Chapter 582, Statutes of 2016) created the Multifamily Affordable Housing Solar Roofs Program, to provide financial incentives–up to $100 million annually, for qualified solar installations at multifamily affordable housing properties funded from IOU greenhouse gas allowances.

AB 217 (Bradford and De León, Chapter 609, Statutes of 2013) extended the low-income programs of the California Solar Initiative from 2016 until 2021, authorizes the collection of an additional $108 million for these programs, and adds additional standards to the program, as specified.

AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers and revised the NEM program.

SB 1 (Murray, Chapter 132, Statutes of 2006) established the electric portion of the CSI with a 10-year budget of $2.2 billion collected from ratepayers.

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

SUPPORT:

350 Bay Area

Brightline Defense

California Solar Energy Industries Association

Dynamic Grid Council

Environment California

Sierra Club California

SolarCity

TechNet

The Utility Reform Network, if amended

Vote Solar

OPPOSITION:

California Building Industry Association, unless amended

California Business Properties Association, unless amended

ARGUMENTS IN SUPPORT: According to the author:

While California has made great strides in promoting rooftop solar and other forms of renewable energy, the State is not fully capitalizing on the myriad opportunities to harness solar energy. For example, surveys of existing building stock indicate that fewer than 30 percent of existing nonresidential buildings have suitable locations to install solar photovoltaic or solar heating systems. Furthermore, current regulations impose no solar infrastructure requirements, such as installation of conduit or piping, inclusion of collateral structural loads, or pre-installed mounting hardware.

Recognizing the need to take the next step, the City of San Francisco passed a local ordinance in 2016 requiring solar panels to be installed on most new buildings up to ten stories in height and subject to the Title 24 “solar ready” zone regulations.

SB 71 builds on the work done by the City of San Francisco and other local jurisdictions and takes those efforts statewide by requiring all new construction subject to the “solar ready” requirements of Title 24 to install solar photovoltaic or solar heating panels in their required “solar ready” rooftop zones. This bill also recognizes the need for flexibility as technology advances and provides the Building Standards Commission and the CEC, in consultation with other relevant state agencies, the authority to adopt regulations to impose additional standards to reflect the most recent technology available.

ARGUMENTS IN OPPOSITION: The California Building Industry Association objects to placing in statute the requirement to install solar on new buildings and recommends instead requiring the CEC to consider such a requirement as part of its regulatory process.

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