Date of Hearing: June 2, 2020

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2736

Author:(Eduardo Garcia) – As Amended Ver:May 18, 2020

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

SUMMARY:

This bill requires a person who extracts or uses water from a groundwater basin within 20 miles of Joshua Tree National Park, for purposes of construction and operation of a closed-loop pumped hydroelectric energy storage system, to submit to the State Water Resources Control Board (State Water Board), any plans, technical reports or monitoring data reports required under any license for hydroelectric generation issued by the Federal Energy Regulatory Commission (FERC). Additionally, this bill:

1. Provides any person who fails to submit the require information to the State Water Board in a timely manner is subject to a penalty up to $10,000 per day.
2. Authorizes the State Water Board to review the materials and, if it concludes the person is not in compliance with its hydroelectric generating license from FERC, to petition FERC to ensure compliance with the terms and conditions of the license.
3. Allows State Water Board to charge civil penalties for the extraction of groundwater in excess of maximum allowable change thresholds by a pumped hydroelectric energy storage facility in an amount not to exceed $10 per gallon of excess groundwater extracted, with the aggregate penalty not to exceed $1,000,000. Creates the Joshua Tree National Park Environmental Protection Fund and requires civil penalties to be deposited in the fund and used to mitigate environmental harm caused by the specified pumped hydro energy storage project.
4. Makes findings and declarations about the importance of the project and state oversight of the project, including that the California Public Utilities Commission has identified approximately 1,000 megawatts to 1,600 megawatts of pumped hydroelectric energy storage systems as necessary and cost-effective additions to California’s electric resource portfolio by 2026.

FISCAL EFFECT:

1. Cost pressures, potentially in the low millions of dollars, resulting from the creation of the Joshua Tree National Park Environmental Protection Fund, to provide resources other than civil penalty monies to mitigate the environmental harms caused by a project (GF, bond or special fund).
2. Potential State Water Board legal costs concerning its permissive authority to petition FERC to ensure compliance (GF or special fund).
3. State Water Board costs of $100,000 annually to perform the duties of the bill (special fund).

COMMENTS:

1. Purpose. According to the author:

The intent of AB 2736 is to enhance the state’s ability to monitor and timely respond with tangible enforcement mechanisms to prevent or mitigate any potential threat to the natural resources of Joshua Tree Nation Park from renewable energy development. Eastern Riverside County has a strong history of leadership in developing renewable energy solutions to the state’s green energy challenges. From solar fields to wind farms to geothermal, Eastern Riverside County has shown the state and the nation how renewables can be developed responsibly while providing economic benefit.

Although this bill is not project-specific, there is only one project under consideration that meets the specifics of the bill, and that is the Eagle Mountain Pumped Storage Project.

1. State Water Board Authority. According to the State Water Board, it attempted, but was denied the ability to issue a “401 water discharge permit” for the project. (Any applicant for a federal license or permit to conduct any activity including, but not limited to, the construction or operation of facilities, which may result in any discharge into the navigable waters, shall provide the licensing or permitting agency, in this case FERC, a permit to ensure any such activities comply with applicable conditions, laws and regulations).

The State Water Board was, however, able to put many of the conditions in the FERC license that appear in the bill. According to the State Water Board, it does not believe it has the authority to enforce the conditions in the FERC license, with or without this bill.

1. Support and Opposition. This bill is widely supported throughout the area of the project by business, labor, local governments and local leaders who claim it strikes an important balance by protecting the area’s treasured National Park and bringing jobs and clean energy to the region. Supporters further state the facility would be strategically placed near existing transmission lines and when operational, will reduce GHG emissions by up to one million tons per year, equivalent to taking more than 200,000 vehicles off the road.

Opponents include numerous local and statewide environmental and conservation groups, park advocates, veteran organizations and renewable energy companies. Conservation groups and park advocates do not believe there is an environmentally safe way to site this facility and pump groundwater so close to the park. They also would like to see the area become part of the park. Others are concerned that because the site used to be an iron mine, the groundwater may become contaminated and spread throughout the groundwater table. Energy companies are concerned the bill, through its findings and declarations, states a technology-specific and project-specific procurement policy for the California Public Utilities Commission to prioritize Eagle Crest.

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

Date of Hearing: May 14, 2020

ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE

Eduardo Garcia, Chair

ABPCA Bill Id:AB 2736 (

Author:Eduardo Garcia) – As Amended Ver:May 5, 2020

SUBJECT: Groundwater: pumped hydroelectric energy storage systems: Joshua Tree National Park.

SUMMARY: Requires a person who extracts or uses water from a groundwater basin in the vicinity of Joshua Tree National Park related to hydroelectric generation to submit certain documents to the State Water Resources Control Board (SWRCB), and allows the SWRCB to administer civil penalties for the extraction of groundwater in excess of maximum allowable change thresholds by a pumped hydroelectric energy storage facility, as specified. Specifically, this bill:

1. Requires a person who extracts or uses water from a groundwater basin within 20 miles of Joshua Tree National Park for purposes of construction and operation of a closed-loop pumped hydroelectric energy storage system to submit to the SWRCB any plans, technical reports, or monitoring data reports related to groundwater required under any license for hydroelectric generation issued by the Federal Energy Regulatory Commission (FERC).
2. Require the materials submitted to the SWRCB to include other information relating to groundwater monitoring and environmental impacts that is submitted to FERC.
3. Requires the information to be reported to the SWRCB on the same schedule, and in the same manner as provided in the FERC license.
4. Makes the person who fails to submit the reports in a timely manner subject to a penalty by the SWRCB of up to $10,000 per day.
5. Requires the SWRCB to review the materials and, if it concludes the person is not in compliance with its hydroelectric generating license from FERC, to petition FERC to ensure compliance with the terms and conditions of the license.
6. Defines maximum allowable change thresholds as the change, measured in feet, that the water level at a monitoring well may decrease in reference to an elevation above sea level or any other method of water level measurement set forth in an applicable license issued by FERC.
7. Prohibits, subject to federal law, the extraction of groundwater in excess of maximum allowable change thresholds by a pumped hydroelectric energy storage facility, regardless of whether the groundwater basin is subject to an adjudication under California law, unless the extraction is permitted following consideration of an action or project that requires discretionary approval by a state or local governmental entity.
8. Allows the SWRCB to administer civil penalties for the extraction of groundwater in excess of maximum allowable change thresholds by a pumped hydroelectric energy storage facility in an amount not to exceed $10 per gallon of excess groundwater extracted, with the aggregate penalty not to exceed $1,000,000.
9. Makes findings and declarations about the importance of the project and state oversight of the project.

EXISTING LAW:

1. Requires, under the Sustainable Groundwater Management Act (SGMA) that all groundwater basins classified as critically overdrafted be managed under a groundwater sustainability plan (GSP) by January 31, 2020, and requires all other groundwater basins designated as high- or medium- priority to be managed in a similar manner by January 31, 2022. [Water Code (WAT) § 10720 et seq.]
2. Authorizes any local agency or combination of local agencies overlying a groundwater basin to become a groundwater sustainability agency (GSA). (WAT § 10723-10724)
3. States that the GSA shall consider the interests of all beneficial uses and users of groundwater, as well as those responsible for implementing groundwater sustainability plans. (WAT § 10720 et seq.)
4. Establishes, pursuant to the Porter-Cologne Water Quality Control Act (Porter-Cologne), the SWRCB and Regional Water Quality Control Boards to preserve, enhance, and restore the quality of California’s water resources and drinking water for the protection of the environment, public health, and all beneficial uses, and to ensure proper water resource allocation and efficient use, for the benefit of present and future generations. (WAT § 13000 et seq.)
5. Establishes the structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters. (33 United States Code (USC) § 1251 et seq.)
6. Makes it unlawful to discharge any pollutant from a point source into navigable waters, unless a permit was obtained. (33 USC § 1341)
7. Provides that the National Pollutant Discharge Elimination System (NPDES) permit program controls discharges. (33 USC § 1342)
8. Authorizes states to implement and enforce the NPDES permit program as long as the state’s provisions are as stringent as the federal requirements. (33 USC § 1342 (b))
9. Requires specified person to file with the appropriate regional board a waste discharge report; holds a person who, without regard to intent or negligence, causes or permits a hazardous substance to be discharged in or on any of the waters of the state, to be strictly liable civilly; and allows the SWRCB or a regional board to impose civil liability administratively. (WAT § 13260; § 13350)
10. Establishes the Death Valley and Joshua Tree National Parks and the Mojave National Preserve in the California desert. (16 U.S.C. §§ 410aaa through 410aaa-83)
11. Declares as its policy that appropriate public lands in the California desert must be included within the National Park System and the National Wilderness Preservation System to: preserve the unrivaled scenic, geologic and wildlife values of these lands; perpetuate their significant and diverse ecosystems; protect and preserve their historical and cultural values; provide opportunities for compatible outdoor public recreation, protect and interpret ecological and geological features, maintain wilderness resource values, and promote public understanding and appreciation; and retain and enhance opportunities for scientific research in undisturbed ecosystems. (16 U.S.C. § 410aaa notes.)

FISCAL EFFECT: Unknown, this bill is keyed fiscal.

COMMENTS:

Author’s Statement:

The intent of AB 2736 is to enhance the state’s ability to monitor and timely respond with tangible enforcement mechanisms to prevent or mitigate any potential threat to the natural resources of Joshua Tree Nation Park from renewable energy development. Eastern Riverside County has a strong history of leadership in developing renewable energy solutions to the state’s green energy challenges. From solar fields to wind farms to geothermal, Eastern Riverside County has shown the state and the nation how renewables can be developed responsibly while providing economic benefit.

Background: Pumped Storage Projects. Bulk energy storage, also known as grid-scale energy storage, can include any technology used to store energy on a large scale within the power grid. Pumped hydroelectric energy systems are the primary bulk energy technology deployed in California. However, there are other bulk energy storage technologies, including compressed air energy systems and advanced rail energy systems. Additionally, with advancements in technology, it is possible battery storage may one day become more commonly used as grid-scale energy storage.

Pumped hydroelectric energy storage, also known as pumped storage or pumped hydro, moves water between two reservoirs located at different elevations (i.e., an upper and lower reservoir) to store energy and generate electricity. Generally, when electricity demand is low (e.g., at night), excess electric generation capacity is used to pump water from the lower reservoir to the upper reservoir. When electricity demand is high, the stored water is released from the upper reservoir to the lower reservoir through a turbine to generate electricity. A generalized diagram of how pumped energy storage works is shown below (Figure 1).

This fluctuation and responsiveness to electricity needs throughout the day may help with renewables integration and could substitute for natural gas power plants that are currently utilized for power needs. However, pumped storage requires a significant amount of up front capital, a long construction timeline, and, like other electricity resources, connection to or construction of costly transmission lines to connect to the power grid. FERC has authorized a total of 24 pumped storage projects that are constructed and in operation, with a total installed capacity of over 16,500 megawatts (MW). Most of these projects were authorized more than 30 years ago.

Figure 1: Pumped Hydroelectric Storage

Source: Australian Renewable Energy Agency (ARENA), 2017.

Eagle Mountain Project. This bill applies to any proposed pumped storage projects within 20 miles of Joshua Tree National Park. This includes the Eagle Mountain Pumped Storage Project No. 13123 (Eagle Mountain Project). The Eagle Mountain Project is an unconstructed project located on the site of the inactive Eagle Mountain mine in Riverside County near the town of Desert Center. The location was formerly the site of the Kaiser iron mine. The Eagle Mountain Project is planned to operate as a closed-loop, pumped storage facility. Water for the initial reservoir fill and any ongoing replenishment would be supplied by groundwater wells. The project would occupy nearly 676 acres of federal land managed by the U.S. Department of the Interior, Bureau of Land Management (BLM) and an additional 1,546 acres of private lands.

The existing FERC license for the Eagle Mountain Project was issued in 2014 and authorized the construction of: an upper reservoir (capacity 20,000 acre-feet); an upper water conveyance system; generating/pumping facilities; a lower reservoir (capacity 21,900 acre-feet); a lower water conveyance system; transmission system; water supply system; water treatment system; and related facilities. Article 301 of the FERC license requires the licensee to commence construction of the project works within two years from the issuance date of the license (by June 19, 2016) and to complete construction of the project within seven years from the issuance date of the license (by June 19, 2021). In 2019, Eagle Crest Energy Company, licensee for the Eagle Mountain Project, requested extensions of time to commence project construction (until June 19, 2020) and to complete project construction (until June 19, 2023), as required by Article 301 of the project license. The request was granted (167 FERC p. 61,117).

Joshua Tree National Park. Local outdoors advocates, environmental groups, and tourism officials from the Greater Palm Springs Convention and Visitors Bureau have campaigned for the Eagle Mountain area to be added to Joshua Tree National Park. They argue the lands are traversed by bighorn sheep, golden eagles and desert tortoises. There is also a well-preserved ghost town from the area’s mining days, which conservationists say has historic value. Several lawsuits have been filed by environmental organizations arguing that the use of groundwater by potential pumped storage projects in the area will have significant impacts on the desert ecosystem, including to Joshua Tree National Park.

A 2016 National Park Service (NPS) Eagle Mountain Boundary Study found that about 20,000 acres around the existing park were worthy of inclusion within the park. Another 8,600 acres of land found to be suitable for addition to the national park may be considered for inclusion in the park boundary in the future if current or planned uses of those lands change and they are made available to the NPS. This area included the Eagle Mountain Project area, and the existing FERC license for the project was noted as an issue.

FERC License Provisions. In its license application, Eagle Crest proposed measures for aquifer and seepage monitoring (and any necessary remediation for water quality and quantity), construction constraints for air quality control, limiting light pollution during project operation, and measures to protect terrestrial resources such as the federally listed desert tortoise, and the development and implementation of management plans that cover a range of resources, including: water quality and quantity; wildlife habitat enhancement; vegetation; wildlife; recreation; aesthetics; and cultural resources.

A final Environmental Impact Statement was issued by FERC in 2012. The SWRCB issued a Final Water Quality Certification under Section 401 of the federal Clean Water Act in July 2013. However, FERC determined that the SWRCB lacked jurisdiction to issue the certification, as a project that does not discharge into waters of the United States does not require a certification. However, FERC considered the environmental conditions of the SWRCB certification to be recommendations submitted by the SWRCB under section 10(a) of the Federal Power Act and FERC included articles in the license that are consistent with most of the conditions in the SWRCB certification. While many of the SWRCB conditions are in the project’s FERC license, the state cannot enforce any of these conditions as they were not placed in the license as part of the Section 401 certification process.

Eagle Mountain’s FERC license includes provisions related to groundwater that prohibit withdrawals in excess of historic limits. In particular, the license requires that Eagle Mountain prepare a plan that includes, among other things:

• 24 months of groundwater level monitoring to establish baseline groundwater levels prior to initial use of water for reservoir filling;
• Sampling frequency of the monitoring wells of at least monthly during the initial fill period, at least quarterly for the first seven years of operations, and semi-annually thereafter for the term of the hydroelectric generating license; and
• Adaptive management that provides that should water levels fall to within one foot of maximum allowable change thresholds, or should trends indicate that levels may drop below those thresholds due to pumping, Eagle Mountain must:
  • reduce the pumping rate;
  • reduce the pumping duration; or
  • change the pumping location.

The license states that in no case can the water levels fall below the maximum allowable change thresholds. Only FERC would be responsible for enforcing these provisions.

There are many disputed facts about the impact of the Eagle Mountain Project between the project proponents and opponents, including the rate of groundwater recharge, the oversight of the FERC license conditions, and impacts on Joshua Tree National Park, sensitive desert habitat, and species.

State Authority is Limited. The Federal Power Act (FPA) authorizes FERC to issue licenses for dams to generate electrical power. The FPA preempts state regulatory authority. Courts have found that since Congress occupied the field (monopolized an area of statutory law), the state lacks the power to do anything but determine proprietary water rights for hydroelectric projects [California v. FERC, 495 U.S. 490, 110 S.Ct. 2024, 109 L.Ed.2d 474 (1990); Sayles Hydro Associates v. Maughan, 985 F.2d 451 (9th Cir. 1993)].

The state can still enforce federal law where that authority has been delegated to the state. However, in the case of the Eagle Mountain Project, since FERC found that the SWRCB did not have the authority to issue a Section 401 permit for the project, the SWRCB has no authority over the project. Since the water source for the project is groundwater, there is no water rights process in which the SWRCB could make a determination. As such, no further discretionary approval of the project by the SWRCB is required or allowed.

This Bill Cannot Give the SWRCB New Authority. This bill requires the submittal of specified documents to the SWRCB that are submitted to FERC. The SWRCB has the task of reviewing the materials submitted to FERC and making a determination about compliance with the FERC license. The SWRCB is required to petition FERC if it concludes the submitted materials are not in compliance with the existing FERC license. However, Sayles Hydro Associates v. Maughan found that project proponents cannot be ordered to provide information to the SWRCB.

This bill includes provisions that are present in the Eagle Mountain Project’s FERC license, including the prohibition on the extraction of groundwater in excess of maximum allowable change thresholds. Since the SWRCB has no further discretionary approval authority for the project, and cannot enforce the FERC license conditions, it is unlikely that the SWRCB could take action under this provision of the bill.

This bill authorizes the SWRCB to impose a civil penalty on a per gallon basis for each gallon of groundwater extracted in excess of the maximum allowable change thresholds. The penalty is not to exceed ten dollars per gallon, with the aggregate penalty not to exceed one million dollars ($1,000,000). It is important to note that WAT § 13350 does not currently cap civil penalties as this bill proposes. Similar to the issues noted above, since the SWRCB has no authority over the project, it could not enforce these provisions.

Considerations. The author’s stated intent is to give the state the ability to monitor and respond with tangible enforcement mechanisms to prevent or mitigate any potential threat to the natural resources of Joshua Tree Nation Park from renewable energy development. However, due to the preemption of state regulatory authority by the Federal Power Act, as described above, the Legislature may be unable to place additional environmental requirements on the Eagle Mountain Project. The author may wish to explore obtaining an opinion from Legislative Counsel that details how the Legislature might be able to enact additional environmental protections.

Committee Amendments. Suggested amendments would:

1. Authorize, rather than require, the SWRCB to petition FERC if it concludes the person is not in compliance with its hydroelectric generating license from FERC; and
2. Establish a fund called the Joshua Tree National Park Environmental Protection Fund for any civil penalties imposed under the provisions of the bill. The amendments would specify that the moneys in the fund would be available, upon appropriation, to mitigate the environmental harms caused by the extraction or use of water from a groundwater basin within 20 miles of the park related to the construction and operation of a pumped hydroelectric energy storage system.

Prior and Related Legislation

AB 2255 (Eggman, 2020) requires the Public Utilities Commission and the State Energy Resources Conservation and Development Commission (Energy Commission) to incorporate consideration of long-duration energy storage systems, as defined, into their energy and resource planning. This bill is in the Assembly Natural Resources Committee.

SB 307 (Roth), Chapter 169, Statutes of 2019, requires the State Lands Commission, in consultation with the Department of Fish and Wildlife and the Department of Water Resources, to find that the transfer of the water from a groundwater basin underlying specified Mojave Desert lands will not adversely affect the natural or cultural resources, including groundwater resources or habitat, of those federal and state lands in order for that transfer to be allowed.

SB 772 (Bradford, 2019) would have required the California Independent System Operator (CAISO) to solicit for up to 4,400 megawatts (MWs), as specified, of long-duration bulk energy storage recovered by electric ratepayers in the CAISO grid through a federally approved rate. The bill died on the Senate Floor.

AB 2787 (Quirk, 2018) would have required utilities to buy energy from pumped storage hydropower projects like Eagle Mountain. The bill died on the Senate Floor.

Arguments in Support: Those in support argue that the bill provides the state with meaningful mechanisms to monitor and enforce the terms and conditions of any license issued by FERC for construction and operation of a pumped hydroelectric facility within the vicinity of Joshua Tree National Park, including Eagle Mountain. It is a novel approach that enhances state oversight while enabling Eagle Mountain to help the state achieve its climate goals and stimulate new jobs and economic opportunity in eastern Riverside County.

Arguments in Opposition: Those in opposition argue that the bill does not address environmental concerns, will not protect the environment, and will do nothing to protect California ratepayers. They maintain that forcing costly duplicative processes and hollow authorities does not protect parks, wildlife, and water or resolve scientific discrepancies.

REGISTERED SUPPORT / OPPOSITION:

Support

Building & Construction Trades Council of San Bernardino & Riverside Counties, AFL-CIO

California Partnership

Castulo Estrada, Director, Coachella Valley Water District

Chiriaco Summit

City of Blythe

City of Needles

Coachella Valley Economic Partnership

Culturas, Music, & Arts

Gary Gardner, Councilman, Desert Hot Springs

Gracie Torres, Director, Western Municipal Water District

IBEW Local 440

Nextera Energy Resources Project Management Inc.

Palo Verde Valley Economic Alliance

Pueblo Unido CDC

Scott Matas, Mayor, Desert Hot Springs

V. Manuel Perez, Supervisor, County of Riverside

Wintec Energy, Ltd.

Oppose

Agricultural Energy Consumers Association

Audubon California

Basin and Range Watch

California Hydropower Reform Coalition

California League of Conservation Voters

California League of Food Producers

California Native Plant Society

California Sportfishing Protection Alliance

California Wilderness Coalition

Center for Biological Diversity

Coalition to Protect America's National Parks

Defenders of Wildlife

Environmental Working Group

Hydrostor

Independent Energy Producers Association

Large-scale Solar Association

Mojave Desert Land Trust

Morongo Basin Conservation Association

National Parks Conservation Association

Native American Land Conservancy

Northern California Power Agency

Planning and Conservation League

Sierra Club California

Solar Energy Industries Association

Southern California Public Power Authority

The Nature Conservancy

Vet Voice Foundation

Western Watersheds Project

Analysis Prepared by: Keith Cialino / W., P., & W. / (916) 319-2096