(1)Existing law creates, within the office of the Governor, the Office of Emergency Services, which, under the Director of Emergency Services, coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.

This bill would establish the Office of Emergency Services as the lead agency for emergency response to a large, ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or the environment. The bill would require the Office of Emergency Services to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.

(2)The Public Utilities Act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the Public Utilities Commission where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act requires the state board to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020. Existing law requires the California Environmental Protection Agency to identify disadvantaged communities.

This bill would require a penalty assessed against a gas corporation pursuant to the Public Utilities Act in regards to a natural gas storage facility leak to at least equal the amount necessary to fully offset the impact on the climate from the greenhouse gases emitted by the leak from the natural gas storage facility, as determined by the state board, and would require the commission to consider the extent to which the gas corporation has mitigated, or is in the process of mitigating, the impact on the climate from greenhouse gas emissions resulting from the leak, as specified. The bill would require the commission to deposit moneys from penalties assessed against a gas corporation in regards to a natural gas storage facility leak into the Gas Storage Facility Leak Mitigation Account, which the bill would establish in the State Treasury. The bill would require that moneys in this account be expended, upon appropriation by the Legislature, solely for direct emissions reductions in furtherance of achieving the greenhouse gas emissions limit and, if sufficient moneys remain after mitigating the impact on the climate from the gas corporations emissions, to reimburse state and local response costs. The bill would require these moneys to be expended in a manner that achieves a reduction in greenhouse gases that will fully offset the impact on the climate from those gases emitted by the leak, and in accordance with provisions requiring specified allocations to disadvantaged communities. The bill would require the state board to determine the amount of, and impact on the climate from, greenhouse gases emitted by a leak for these purposes. The bill would require that moneys in the fund resulting from penalties assessed for the Aliso Canyon gas leak be expended, consistent with the state boards Aliso Canyon Climate Impacts Mitigation Program, for specified purposes.

(1)Existing law creates, within the office of the Governor, the Office of Emergency Services, which, under the Director of Emergency Services, coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.

This bill would establish the Office of Emergency Services as the lead agency for emergency response to a large, ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or the environment. The bill would require the Office of Emergency Services to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.

(2)The Public Utilities Act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the Public Utilities Commission where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act requires the state board to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020. Existing law requires the California Environmental Protection Agency to identify disadvantaged communities.

This bill would require a penalty assessed against a gas corporation pursuant to the Public Utilities Act in regards to a natural gas storage facility leak to at least equal the amount necessary to fully offset the impact on the climate from the greenhouse gases emitted by the leak from the natural gas storage facility, as determined by the state board, and would require the commission to consider the extent to which the gas corporation has mitigated, or is in the process of mitigating, the impact on the climate from greenhouse gas emissions resulting from the leak, as specified. The bill would require the commission to deposit moneys from penalties assessed against a gas corporation in regards to a natural gas storage facility leak into the Gas Storage Facility Leak Mitigation Account, which the bill would establish in the State Treasury. The bill would require that moneys in this account be expended, upon appropriation by the Legislature, solely for direct emissions reductions in furtherance of achieving the greenhouse gas emissions limit and, if sufficient moneys remain after mitigating the impact on the climate from the gas corporations emissions, to reimburse state and local response costs. The bill would require these moneys to be expended in a manner that achieves a reduction in greenhouse gases that will fully offset the impact on the climate from those gases emitted by the leak, and in accordance with provisions requiring specified allocations to disadvantaged communities. The bill would require the state board to determine the amount of, and impact on the climate from, greenhouse gases emitted by a leak for these purposes. The bill would require that moneys in the fund resulting from penalties assessed for the Aliso Canyon gas leak be expended, consistent with the state boards Aliso Canyon Climate Impacts Mitigation Program, for specified purposes.

(1)Existing law creates, within the office of the Governor, the Office of Emergency Services, which, under the Director of Emergency Services, coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.

This bill would establish the Office of Emergency Services as the lead agency for emergency response to a large, ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or the environment. The bill would require the Office of Emergency Services to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.

(2)The Public Utilities Act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the Public Utilities Commission where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act requires the state board to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020. Existing law requires the California Environmental Protection Agency to identify disadvantaged communities.

This bill would require a penalty assessed against a gas corporation pursuant to the act in regards to a natural gas storage facility leak to at least equal the amount necessary to fully offset the impact on the climate from the greenhouse gases emitted by the leak from the natural gas storage facility, as determined by the state board, and would require the commission to consider the extent to which the gas corporation has mitigated, or is in the process of mitigating, the impact on the climate from greenhouse gas emissions resulting from the leak, as specified. The bill would require the commission to deposit moneys from penalties assessed against a gas corporation in regards to a natural gas storage facility leak into the Gas Storage Facility Leak Mitigation Account, which the bill would establish in the State Treasury. The bill would require that moneys in this account be expended, upon appropriation by the Legislature, solely for direct emissions reductions in furtherance of achieving the greenhouse gas emissions limit. limit and, if sufficient moneys remain after mitigating the impact on the climate from the gas corporations emissions, to reimburse state and local response costs. The bill would require these moneys to be expended in a manner that achieves a reduction in greenhouse gases that equals the amount of will fully offset the impact on the climate from those gases emitted by the leak, and in accordance with provisions requiring specified allocations to disadvantaged communities. The bill would require the state board to determine the amount of of, and impact on the climate from, greenhouse gases emitted by a leak for these purposes. The bill would require that moneys in the fund resulting from penalties assessed for the Aliso Canyon gas leak be expended, consistent with the state boards Aliso Canyon Climate Impacts Mitigation Program, for specified purposes.

(1)Existing law creates, within the office of the Governor, the Office of Emergency Services Services, which, under the Director of Emergency Services, coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.

This bill would establish the Office of Emergency Services as the lead agency for emergency response to a large large, ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or to the environment. The bill would require the Office of Emergency Services to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.

(2)Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including gas corporations, as defined. The Public Utilities Act requires the commission to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the commission, investigation by it, and authorizes the commission to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. The act The Public Utilities Act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the commission, Public Utilities Commission where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

This bill would require the commission to deposit moneys from penalties assessed against a gas corporation in regards to a gas storage facility leak into the Gas Storage Facility Leak Mitigation Account, which the bill would establish in the State Treasury. The bill would provide require that moneys in this account shall be expended, upon appropriation by the Legislature, solely for direct emissions reductions in furtherance of the achievement of achieving the greenhouse gas emissions limit, as specified. limit. The bill would require these moneys to be expended in a manner that achieves a reduction in greenhouse gases that equals the amount of those gases emitted by the leak, and in accordance with provisions requiring specified allocations to disadvantaged communities. The bill would require the State Air Resources Board state board to determine the amount of greenhouse gases emitted by a leak for these purposes. The bill would require that moneys in the fund resulting from penalties assessed for the Aliso Canyon gas leak be expended, consistent with the state boards Aliso Canyon Climate Impacts Mitigation Program, for specified purposes.

(1)Existing law creates, within the office of the Governor, the Office of Emergency Services which, under the Director of Emergency Services, coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.

This bill would establish the Office of Emergency Services as the lead agency for emergency response to a significant large ongoing leak or release of natural gas and associated gases from a natural gas storage facility. facility that poses a significant present or potential hazard to the public health and safety, property, or to the environment. The bill would require the Office of Emergency Services to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.

(2)Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including gas corporations, as defined. The Public Utilities Act requires the commission to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the commission, investigation by it, and authorizes the commission to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. The act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the commission, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

This bill would require the commission to deposit moneys from penalties assessed against a gas corporation in regards to a gas storage facility leak into the Gas Storage Facility Leak Mitigation Account, which the bill would establish in the State Treasury. The bill would provide that moneys in this account shall be expended, upon appropriation by the Legislature, solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit, as specified. The bill would require the State Air Resources Board to determine the amount of gases emitted by a leak for these purposes.

(1)Existing law creates, within the office of the Governor, the Office of Emergency Services which, under the Director of Emergency Services, coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.

This bill would establish the Office of Emergency Services as the lead agency for emergency response to a significant leak of natural gas from a natural gas storage facility. The bill would require the Office of Emergency Services to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.

(2)Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including gas corporations, as defined. The Public Utilities Act requires the commission to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the commission, investigation by it, and authorizes the commission to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. The act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the commission, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

This bill would require the commission to deposit moneys from penalties assessed against a gas corporation in regards to a gas storage facility leak into the Gas Storage Facility Leak Mitigation Account, which the bill would establish in the State Treasury. The bill would provide that moneys in this account shall be expended, upon appropriation by the Legislature, solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit, as specified. The bill would require the State Air Resources Board to determine the amount of gases emitted by a leak for these purposes.

(1)Existing law creates, within the office of the Governor, the Office of Emergency Services which, under the Director of Emergency Services, coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.

This bill would establish the Office of Emergency Services as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. The bill would require the Office of Emergency Services to coordinate among other state agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.

(2)Under existing law, the Public Utilities Commission has regulatory authority over public utilities, utilities, including gas corporations, as defined. The Public Utilities Act requires the commission to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the commission, investigation by it, and authorizes the commission to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. The act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the commission, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

This bill would require the commission to deposit moneys from penalties assessed against a gas corporation in regards to a gas storage facility leak into the Gas Storage Facility Leak Mitigation Account, which the bill would establish in the State Treasury. The bill would provide that moneys in this account shall be expended, upon appropriation by the Legislature, solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit, as specified. The bill would prohibit a gas corporation from recovering any moneys paid for fines, penalties, or damages to residents, businesses, and other parties adversely affected by a gas storage facility leak in any rate approved by the commission, and would require that those costs and expenses be paid for by the gas corporation and its shareholders. Because this provision of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by creating a new crime.

(1)Existing law creates, within the office of the Governor, the Office of Emergency Services which, under the Director of Emergency Services, coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.

This bill would establish the Office of Emergency Services as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. The bill would require the Office of Emergency Services to coordinate among other state agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.

(2)Under existing law, the Public Utilities Commission has regulatory authority over public utilities, as defined. The Public Utilities Act requires the commission to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the commission, investigation by it, and authorizes the commission to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. The act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the commission, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

This bill would require the commission to deposit moneys from penalties assessed against a gas corporation in regards to a gas storage facility leak into the Gas Storage Facility Leak Mitigation Account, which the bill would establish in the State Treasury. The bill would provide that moneys in this account shall be expended, upon appropriation by the Legislature, solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit, as specified. The bill would prohibit a gas corporation from recovering any moneys paid for fines, penalties, or damages to residents, businesses, and other parties adversely affected by a gas storage facility leak in any rate approved by the commission, and would require that those costs and expenses be paid for by the gas corporation and its shareholders. Because this provision of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by creating a new crime.

(3)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

 UNFINISHED BUSINESS  

Bill No: SB 888

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 9-0, 3/8/16

AYES: Hall, Block, Glazer, Hernandez, Hill, Hueso, Lara, McGuire, Vidak

NO VOTE RECORDED: Berryhill, Gaines, Galgiani, Runner

SENATE ENERGY, U. & C. COMMITTEE: 9-2, 4/19/16

AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley, Wolk

NOES: Morrell, Gaines

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

SENATE FLOOR: 28-10, 6/2/16

AYES: Allen, Beall, Block, Cannella, De León, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan, Pavley, Roth, Vidak, Wieckowski, Wolk

NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Moorlach, Morrell, Nguyen, Nielsen, Stone

NO VOTE RECORDED: Galgiani, Runner

ASSEMBLY FLOOR: 59-21, 8/24/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill establishes the California Office of Emergency Services (OES) as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility.

Assembly Amendments (1) require the moneys in the Gas Storage Facility Leak Mitigation fund resulting from penalties assessed for the Aliso Canyon gas leak be expended, consistent with the State Air Resources Board’s (ARB) Aliso Canyon Climate Impacts Mitigation Program, for specified purposes, (2) require a penalty assessed against a gas corporation in regards to a natural gas storage facility leak to fully offset the impact on the climate from the greenhouse gases emitted by the leak, as specified, and (3) require, if sufficient moneys remain after mitigating the impact on the climate form the gas corporation’s emissions, to reimburse state and local response costs.

ANALYSIS:

Existing law:

1. Creates OES, within the Office of the Governor, which coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.
2. Provides that the Public Utilities Commission (PUC) has regulatory authority over public utilities, including gas corporations, as defined.
3. Requires the PUC to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the PUC, investigation by it, and authorizes the PUC to make any order or recommendation with respect to the investigation that it determines to be just and reasonable.
4. Provides that any public utility that violates any provision or that fails or neglects to comply with any order, decision, decree, rule direction, demand, or requirement of the PUC, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense.
5. Requires that any fine or penalty imposed by the PUC and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

This bill:

1. Establishes OES as the lead agency for emergency response to a large ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or to the environment.
2. Requires OES to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.
3. Creates the Gas Storage Facility Leak Mitigation Account (account) and requires the Public Utilities Commission (CPUC) to deposit any penalties assessed against a gas corporation pursuant to a gas storage facility leak into the account.
4. Requires a penalty assessed in regards to a natural gas storage facility leak shall at least equal the amount necessary to reduce the impact on the climate by an amount equivalent to the greenhouse gases emitted by the leak from the storage facility, as determined by the ARB.
5. Provides that the CPUC, in determining the amount necessary to fully offset the impact on the climate from the gases emitted by the leak, shall consider the extent to which the gas corporation has mitigated, or is in the process of mitigating, the impact on the climate from greenhouse gas emissions resulting from the leak.
6. Specifies that moneys in the account shall be expended, upon appropriation by the Legislature, subject to all of the following conditions:
   1. Moneys shall be expended solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit established by the California Global Warming Solutions Act of 2006. If sufficient moneys remain after mitigating the impact on the climate from the gas corporation's emissions, it shall be used for reimbursing state and local response costs. Moneys shall not be used for the purchase of allowances or offsets otherwise authorized by the California Global Warming Solutions Act of 2006.
   2. Moneys shall be expended in a manner to be determined by the CPUC, in consultation with the ARB, to achieve a reduction in greenhouse gases that will fully offset the impact on the climate from those gases emitted by that leak.
   3. Moneys shall be expended consistent with Health and Safety Code Section 39713. Specifically, 25% of the available moneys in the account shall be allocated to provide benefits to disadvantaged communities.
   4. Consistent with the ARB's Aliso Canyon Climate Impacts Mitigation Program, moneys in the fund resulting from penalties assessed for the Aliso Canyon gas leak shall be expended to do any the following:
      1. Generate significant and quantifiable reductions in methane emissions within the agriculture and waste sectors.
      2. Promote a more sustainable energy infrastructure by promoting energy efficiency and decreasing reliance on fossil fuels.
      3. Address emissions from methane hot spots not presently targeted under federal, state, or local laws.
      4. Where feasible, yield cobenefits in communities directly affected by the leak and in disadvantaged communities.
      5. Prioritize projects in nearby communities harmed by the leak and other communities directly affected by methane emissions, disadvantaged communities, and communities within the Aliso Canyon service area.

Background

Purpose of SB 888. According to the author, “this bill is part of a comprehensive package of legislation introduced in the Senate to address the Aliso Canyon leak disaster. While the State’s response to the leak was swift, at least seven different agencies have been involved with no statutory single point of responsibility and accountability to oversee efforts and remediation actions.”

The author further argues that “unlike oil spill response, which is dictated by a robust framework to streamline agency coordination and collaboration, California lacks a plan to quickly and efficiently address a massive natural gas leak. Given the extensive infrastructure of underground natural gas storage facilities throughout California, and having seen the potential for significant health and environmental problems that can result from a leak, California should have a framework in place to respond quickly and efficiently.”

The bill also creates the Gas Storage Facility Leak Mitigation Account which would fund the mitigation of greenhouse gas impacts through direct measures to reduce emissions.

Aliso Canyon Gas Leak. The Aliso Canyon gas leak was a massive natural gas leak that started on October 23, 2015, at the Aliso Canyon underground storage facility near Porter Ranch, Los Angeles. The leak was discovered during one of Southern California Gas Company’s (SoCal Gas) twice daily well observations. The Aliso Canyon facility is the second largest gas storage facility of its kind in the United States and it is owned by the SoCal Gas, a subsidiary of Sempra Energy. The facility is maintained in accordance with safety regulations established by the Department of Oil, Gas, and Geothermal Resources, the PUC, and other local, state and federal agencies. Days after the leak was discovered, a dozen or more local and state agencies were involved in an attempt to plug the leak.

It is estimated that the leak was responsible for approximately one million barrels of gas being released per day. Experts estimate that the carbon footprint of the Aliso Canyon leak is larger than the Deepwater Horizon leak in the Gulf of Mexico, which is considered the largest accidental marine oil spill in the world and at that time the largest environmental disaster in United States history.

Natural Gas is largely composed of methane, an odorless and invisible greenhouse gas with a global warming potential of approximately 86 times greater than carbon dioxide in a 20-year time frame. Initially the leak released about 44,000 kilograms of methane per hour which is the equivalent of 1,200 tons of methane every day. In terms of greenhouse gas output per month, it is the equivalent of the greenhouse gas output of 200,000 cars in a year. According to a Time Magazine article on January 11, 2016, the 1.6 million pounds of methane released each day is comparable to the emissions of six coal fired power plants, 2.2 million cows per day, or 4.5 million cars. Besides methane, the gas leak also contained tert-butyl mercaptan, tetrahydrothiophene, and methyl mercaptan, which gives the gas a rotten egg smell and is known to cause headaches, vomiting, and nausea.

While the leak occurred in a mountainous area more than a mile away from any residential areas, residents have complained of headaches, nausea, vomiting and trouble breathing. Though SoCal Gas has claimed that “scientists agree that natural gas is not toxic and that its odorant is harmless at the minute levels at which it is added to natural gas,” the company has been paying to temporarily relocate residents in and around Porter Ranch. In early January, SoCal Gas reported that it had temporarily relocated 2,824 households or roughly 11,296 individuals.

The leak was finally permanently plugged on February 18, 2016. When it was all said and done, the Aliso Canyon gas leak was the worst natural gas leak in United States history in terms of its environmental impact.

Related/Prior Legislation

SB 380 (Pavley, Chapter 14, Statutes of 2016) continued the moratorium on injection of natural gas at the Aliso Canyon gas storage facility until specified criteria, including testing, are met, requires the feasibility of the storage facility to be addressed and requires the PUC, with input from others, to determine the amount of gas necessary at the facility for safety, regional reliability to ensure just and reasonable rates, as specified, among other provisions.

SB 887 (Pavley, 2016) provides a framework for reforming oversight of natural gas storage facilities. (Pending on the Senate Floor)

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee, the total annual cost of this bill depends on the number of significant gas leaks that occur in that year. The costs per significant gas leak event include:

1. Minor costs per major event for OES to deploy an onsite coordinator. These costs would be recovered from the responsible party.
2. Approximately $100,000 per major event for ARB to contract for downwind flights to characterize the natural gas release rate at reasonable periodic intervals using small planes with monitors to measure methane. (Oil, Gas and Geothermal Administrative Fund)
3. Additional unknown, but potentially significant, redirection of penalty revenue from the General Fund.

SUPPORT: (Verified 8/24/16)

California Public Interest Research Group

Clean Water Action

Consumer Attorneys of California

Environment California

Environmental Working Group

Los Angeles Unified School District Board Member District 3, Scott M. Schmerelson

National Parks Conservation Association

Sierra Club California

South Coast Air Quality Management District

Union of Concerned Scientists

OPPOSITION: (Verified 8/24/16)

None received

ARGUMENTS IN SUPPORT: The California Public Interest Research Group states that “SB 888 would ensure that monetary penalties paid by the responsible gas company are used specifically for greenhouse gas emissions reduction. This bill will also help ensure that emergency responses to future gas leaks are more effective. Specifically, it will designate Cal OES as the lead response agency for natural gas leaks from storage facilities.”

The Sierra Club California states that, “SB 888 will help ensure that communities like Porter Ranch get the help they need as soon as the emergency arises and that the state can get environmental disasters like this under control sooner. The bill would also establish the Gas Storage Facility Leak Mitigation Account, managed by the PUC. It will be funded by penalties that arise from gas storage facility leaks and those funds must be used in a manner that will result in greenhouse gas reductions that are at least greater than gases emitted by the leak.”

ASSEMBLY FLOOR: 59-21, 8/24/16

AYES: Alejo, Arambula, Atkins, Baker, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine, Linder, Lopez, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell, Olsen, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wilk, Williams, Wood, Rendon

NOES: Achadjian, Travis Allen, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Harper, Jones, Kim, Mathis, Mayes, Melendez, Obernolte, Patterson, Steinorth, Wagner, Waldron

Prepared by:

8/25/16 17:34:51

**** END ****

SENATE THIRD READING

STR Bill Id:SB 888

Author:(Allen)

As Amended Ver:August 19, 2016

Majority vote

SENATE VOTE: 28-10

SUMMARY: Establishes the California Office of Emergency Services (Cal OES) as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. Specifies how penalty money assessed against a gas corporation for a gas storage leak should be spent. Specifically, this bill:

1. Establishes Cal OES as the lead agency for emergency response to a large ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or to the environment.
2. Requires Cal OES to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.
3. Creates the Gas Storage Facility Leak Mitigation Account (account) and requires the Public Utilities Commission (CPUC) to deposit any penalties assessed against a gas corporation pursuant to a gas storage facility leak into the account.
4. Requires a penalty assessed in regards to a natural gas storage facility leak shall at least equal the amount necessary to reduce the impact on the climate by an amount equivalent to the greenhouse gases emitted by the leak from the storage facility, as determined by the State Air Resources Board (ARB).
5. Provides that the CPUC, in determining the amount necessary to fully offset the impact on the climate from the gases emitted by the leak, shall consider the extent to which the gas corporation has mitigated, or is in the process of mitigating, the impact on the climate from greenhouse gas emissions resulting from the leak.
6. Specifies that moneys in the account shall be expended, upon appropriation by the Legislature, subject to all of the following conditions:
   1. Moneys shall be expended solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit established by the California Global Warming Solutions Act of 2006. If sufficient moneys remain after mitigating the impact on the climate from the gas corporation's emissions, it shall be used for reimbursing state and local response costs. Moneys shall not be used for the purchase of allowances or offsets otherwise authorized by the California Global Warming Solutions Act of 2006.
   2. Moneys shall be expended in a manner to be determined by the CPUC, in consultation with the ARB, to achieve a reduction in greenhouse gases that will fully offset the impact on the climate from those gases emitted by that leak.
   3. Moneys shall be expended consistent with Health and Safety Code Section 39713. Specifically, 25% of the available moneys in the account shall be allocated to provide benefits to disadvantaged communities.
   4. Consistent with the ARB's Aliso Canyon Climate Impacts Mitigation Program, moneys in the fund resulting from penalties assessed for the Aliso Canyon gas leak shall be expended to do any the following:
      1. Generate significant and quantifiable reductions in methane emissions within the agriculture and waste sectors.
      2. Promote a more sustainable energy infrastructure by promoting energy efficiency and decreasing reliance on fossil fuels.
      3. Address emissions from methane hot spots not presently targeted under federal, state, or local laws.
      4. Where feasible, yield cobenefits in communities directly affected by the leak and in disadvantaged communities.
      5. Prioritize projects in nearby communities harmed by the leak and other communities directly affected by methane emissions, disadvantaged communities, and communities within the Aliso Canyon area.
7. Provides that Section 2 of the bill shall not affect the authority of the ARB to adopt rules and regulations to reduce greenhouse gas emissions at natural gas storage facilities or to require mitigation of natural gas leaks from those facilities.

EXISTING LAW:

1. Creates Cal OES, within the Office of the Governor, which coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.
2. Establishes the Division of Oil, Gas, and Geothermal Resources (DOGGR) as the state's oil and gas regulator.
3. Requires the state's Oil and Gas Supervisor (Supervisor) to supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities attendant to oil and gas production.
4. Defines "well" to mean any oil or gas well or well for the discovery of oil or gas; any well on lands producing or reasonably presumed to contain oil or gas; any well drilled for the purpose of injecting fluids or gas for stimulating oil or gas recovery, repressuring or pressure maintenance of oil or gas reservoirs, or disposing of waste fluids from an oil or gas field; any well used to inject or withdraw gas from an underground storage facility; or any well drilled within or adjacent to an oil or gas pool for the purpose of obtaining water to be used in production stimulation or repressuring operations.
5. Requires the operator of any well, before commencing the work of drilling the well, to file with the Supervisor a notice of intention (NOI). Requires approval of the NOI by the Supervisor. Authorizes the Supervisor to deny approval of proposed well operations for failure to comply with an order until the operator brings its existing well operations into compliance with the order.
6. Allows DOGGR to apply to the United States Environmental Protection Agency (US EPA) to receive "primacy" to operate the Class II Underground Injection Control (UIC) program for oil and gas injection wells at the state level. The US EPA granted primacy and delegated authority to DOGGR to operate the UIC program in 1983.
7. Prohibits the unreasonable waste of natural gas by the act, omission, sufferance, or insistence of the lessor, lessee, or operator of any land containing oil or gas, or both.
8. Provides that a person who violates the state's oil and gas laws or regulations is subject to a civil penalty not to exceed $25,000 for each violation. Requires the Supervisor to consider specified circumstances when establishing the amount of the civil penalty such as:
   1. The extent of harm caused by the violation;
   2. The persistence of the violation;
   3. The pervasiveness of the violation; and,
   4. The number of prior violations by the same violator.
9. Authorizes the CPUC to regulate gas corporations, including natural gas storage facilities (Facilities).
10. Requires Facilities to receive a Certificate of Public Convenience and Necessity (CPCN) before constructing a Facility. Requires that the CPUC grant a CPCN on the grounds that the present or future public convenience and necessity requires or will require the Facility.
11. Requires, pursuant to the California Global Warming Solutions Act (AB 32 (Núñez), Chapter 488, Statutes of 2006), the Air Resources Board (ARB) to adopt a statewide greenhouse gas (GHG) emissions limit equivalent to 1990 levels by 2020 and to adopt rules and regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions.
12. Requires the Supervisor to continue the prohibition against Southern California Gas Company injecting any natural gas into the Aliso Canyon Facility located in the County of Los Angeles until a comprehensive review of the safety of the gas storage wells at the Facility is completed and the supervisor determines that well integrity has been ensured by the review. Prohibits the Supervisor from lifting the prohibition on injection until the Executive Director of the CPUC has concurred via letter with the Supervisor regarding his or her determination of safety.
13. Requires the CPUC, no later than July 1, 2017, to open a proceeding on the feasibility of minimizing or eliminating use of the Aliso Canyon Facility while still maintaining energy and electric reliability for the region.

FISCAL EFFECT: According to Assembly Appropriations Committee, the total annual cost of this bill depends on the number of significant gas leaks that occur in that year. The costs per significant gas leak event include:

1. Minor costs for CalOES to deploy an onsite coordinator. This would be recovered from the responsible party.
2. Approximately $100,000 per major event for ARB to contract for downwind flights to characterize the natural gas release rate at reasonable periodic intervals using small planes with monitors to measure methane. (Oil, Gas and Geothermal Administrative Fund)
3. Additional unknown, but potentially significant, redirection of penalty revenue from the General Fund.

COMMENTS:

Background: The Aliso Canyon gas leak was a massive natural gas leak that started on October 23, 2015, at the Aliso Canyon underground storage facility near Porter Ranch, Los Angeles. The leak was discovered during one of Southern California Gas Company's (SoCal Gas) twice daily well observations. The Aliso Canyon facility is the second largest gas storage facility of its kind in the United States and it is owned by the SoCal Gas, a subsidiary of Sempra Energy. The facility is maintained in accordance with safety regulations established by the DOGGR, the CPUC, and other local, state and federal agencies. Days after the leak was discovered, a dozen or more local and state agencies were involved in an attempt to plug the leak.

It is estimated that the leak was responsible for approximately one million barrels of gas being released per day. Experts estimate that the carbon footprint of the Aliso Canyon leak is larger than the Deepwater Horizon leak in the Gulf of Mexico, which is considered the largest accidental marine oil spill in the world and at that time the largest environmental disaster in United States history.

Natural Gas is largely composed of methane, an odorless and invisible greenhouse gas with a global warming potential of approximately 86 times greater than carbon dioxide in a 20-year time frame. Initially the leak released about 44,000 kilograms of methane per hour which is the equivalent of 1,200 tons of methane every day. In terms of greenhouse gas output per month, it is the equivalent of the greenhouse gas output of 200,000 cars in a year. According to a Time Magazine article on January 11, 2016, the 1.6 million pounds of methane released each day is comparable to the emissions of 6 coal fired power plants, 2.2 million cows per day, or 4.5 million cars. Besides methane, the gas leak also contained tert-butyl mercaptan, tetrahydrothiophene, and methyl mercaptan, which gives the gas a rotten egg smell and is known to cause headaches, vomiting, and nausea.

While the leak occurred in a mountainous area more than a mile away from any residential areas, residents have complained of headaches, nausea, vomiting and trouble breathing. Though SoCal Gas has claimed that "scientists agree that natural gas is not toxic and that its odorant is harmless at the minute levels at which it is added to natural gas," the company has been paying to temporarily relocate residents in and around Porter Ranch. In early January, SoCal Gas reported that it had temporarily relocated 2,824 households or roughly 11,296 individuals.

The leak was finally permanently plugged on February 18, 2016. The Aliso Canyon gas leak was the worst natural gas leak in United States history in terms of its environmental impact.

Purpose of the Bill: According to the author, "The leak at Aliso Canyon took nearly four months to plug and spewed more than 100,000 metric tons of methane. The leak was the worst in United States history, and at its height, more than doubled the methane emissions of the entire Los Angeles Basin and surpassed what is released by all industrial activity in the state. To ensure we stay on track to meet our climate goals, the Gas Company must fully mitigate the methane emissions from this disaster. SB 888 requires the fines and penalties the Gas Company pays as a result of this leak to be used to make certain the leak is fully mitigated. This will ensure the mitigation is not paid by rate payers, but instead comes from the company's profits."

The author states, "While the Division of Oil, Gas and Geothermal Resources (DOGGR) was notified of the leak right away, the Air Resources Board said it wasn't notified of the leak until November 5, 2015. State officials might have more quickly understood the severity of the leak if emissions had been measured earlier. Further, a Unified Command structure under the direction of the Office of Emergency Services (OES) was not established until January 2016. Given the aging infrastructure at many of these facilities, it is critically important that we take the lessons learned from this leak and better prepare for the next one. SB 888 makes OES the immediate lead point of contact for future significant leads, allowing them to act quickly to protect public health and the environment."

Cal OES: The California Office of Emergency Services is responsible for overseeing and coordinating emergency preparedness, response, recovery and homeland security activities within the state. In years past, Cal OES' primary focus was exclusively on emergency management, but over the last decade their mission has expanded to include responsibilities in criminal justice, victim services, homeland security, and public safety communications.

The Cal OES began as the State War Council in 1943. With an increasing emphasis on emergency management, it officially became Cal OES in 1970. In 2004, the California Legislature merged Cal OES and the Governor's Office of Criminal Justice Planning, which was responsible for providing state and federal grant funds to local communities to prevent crime and help crime victims.

In 2003, with the State increasing its focus on terrorism prevention after the attacks of September 11, 2001, the Governor's Office of Homeland Security (OHS) was established through an Executive Order by Governor Gray Davis. In 2009, the California Legislature merged the powers, purposes, and responsibilities of the former Cal OES with those of the OHS into the newly-created California Emergency Management Agency (Cal EMA). On July 1, 2014, Governor Brown's Reorganization Plan No. 2 eliminated the Cal EMA and restored it to the Governor's Office, renaming it Cal OES.

Cal OES is responsible for developing the State Emergency Plan, which addresses the state's response to extraordinary emergency situations associated with natural disasters or human-caused emergencies. In accordance with the California Emergency Services Act, the plan describes the methods for carrying out emergency operations, the process for rendering mutual aid, the emergency services of governmental agencies, how resources are mobilized, how the public will be informed and the process to ensure continuity of government during and emergency or disaster. Cal OES would apply the same methodology and emergency response plan should they become the lead agency for emergency response to a large ongoing leak like the one that occurred in Aliso Canyon.

Standardized Emergency Management System (SEMS): SEMS is the system used for coordinating state and local emergency response in California. SEMS provides a multiple level emergency response organization that facilitates the flow of emergency information and resources. SEMS consists of the Incident Command System (ICS), mutual aid, the operational area concept and multi-interagency coordination. SEMS is designed to be flexible and adaptable to the varied emergencies that can occur in California, and to meet the emergency management needs of all responders. Government Code 8607(a), requires CalOES, in coordination with other state agencies and interested local emergency management agencies, to establish SEMS by regulation.

Operational Area (OA): OAs encompass the county and all political subdivisions within the county. The OA serves as a focal point for all local emergency management information and the provision of mutual aid. It manages information, resources, and priorities among local governments within the OA. The OA also serves as the coordination and communication link between the local government level and the regional level. SEMS regulations authorize each County Board of Supervisors to designate an OA lead agency.

Disadvantaged Communities: Authorized by the California Global Warming Solutions Act of 2006 (AB 32), the cap-and-trade program is one of several strategies that California uses to reduce greenhouse gas emissions that cause climate change. Funds received from the program are deposited into the Greenhouse Gas Reduction Fund (GGRF) and appropriated by the Legislature. They must be used for programs that further reduce emissions of greenhouse gases.

Disadvantaged communities in California are specifically targeted for investment of proceeds from the State's cap-and-trade program. These investments are aimed at improving public health, quality of life and economic opportunity in California's most burdened communities at the same time they're reducing pollution that causes climate change.

In 2012, the Legislature passed SB 535 (De León), Chapter 830, directing that, in addition to reducing greenhouse gas emissions, a quarter of the proceeds from the Greenhouse Gas Reduction Fund must also go to projects that provide a benefit to disadvantaged communities, specifically, a minimum of 25% of the available moneys in the fund to projects that provide benefits to identified disadvantaged communities; and a minimum of 10% of the available moneys in the fund to projects located within identified disadvantaged communities. The legislation gives the California Environmental Protection Agency responsibility for identifying those communities.

Prior/Related Legislation: SB 380 (Pavley), Chapter 14, Statutes of 2016. Requires the State Oil and Gas Supervisor to immediately institute a moratorium on injections of natural gas into any wells located within and serving the Aliso Canyon storage facility located in the County of Los Angeles until specified conditions are met, including that the integrity of each well has been quantitatively and objectively evaluated using state-of-the-art technology, as determined by the Supervisor with input from independent experts, and the risks posed by well failure have been evaluated.

SB 887 (Pavley) of the current legislative session. Requires the Division of Oil, Gas, and Geothermal Resources to, before January 1, 2018, and annually thereafter, inspect all natural gas storage wells serving or located in a natural gas storage facility and would prescribe standards for natural gas storage wells. (Pending on Assembly Floor)

SB 535 (De León), Chapter 830, Statutes of 2012. Requires the California Environmental Protection Agency to identify disadvantaged communities for investment opportunities. The bill would require the Department of Finance, when developing a specified 3-year investment plan, to allocate 25% of the available moneys in the Greenhouse Gas Reduction Fund to projects that provide benefits to disadvantaged communities, as specified, and to allocate a minimum of 10% of the available moneys in the Greenhouse Gas Reduction Fund to projects located within disadvantaged communities

Analysis Prepared by: Kenton Stanhope / G.O. / (916) 319-2531 FN: 0004629

SENATE THIRD READING

STR Bill Id:SB 888

Author:(Allen)

As Amended Ver:June 29, 2016

Majority vote

SENATE VOTE: 28-10

SUMMARY: Establishes the California Office of Emergency Services (Cal OES) as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. Specifically, this bill:

1. Establishes Cal OES as the lead agency for emergency response to a large ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or to the environment.
2. Requires Cal OES to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.
3. Creates the Gas Storage Facility Leak Mitigation Account (account) and requires the Public Utilities Commission (PUC) to deposit any penalties assessed against a gas corporation pursuant to a gas storage facility leak into the account.
4. Specifies that moneys in the account shall be expended, upon appropriation by the Legislature, subject to all of the following conditions:
   1. Moneys shall be expended solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit established by the California Global Warming Solutions Act of 2006. Moneys shall not be used for the purchase of allowances or offsets otherwise authorized by the California Global Warming Solutions Act of 2006.
   2. Moneys shall be expended in a manner that, at a minimum, achieves a reduction in greenhouse gases that equals the amount of those gases emitted by that leak, as determined by the State Air Resources Board (ARB).
   3. Moneys shall be expended consistent with Health and Safety Code Section 39713. Specifically, 25% of the available moneys in the account shall be allocated to provide benefits to disadvantaged communities.
   4. Consistent with the ARB's Aliso Canyon Climate Impacts Mitigation Program, moneys in the fund resulting from penalties assessed for the Aliso Canyon gas leak shall be expended to do any the following:

i) Generate significant and quantifiable reductions in methane emissions within the agriculture and waste sectors.

ii) Promote a more sustainable energy infrastructure by promoting energy efficiency and decreasing reliance on fossil fuels.

iii) Address emissions from methane hot spots not presently targeted under federal, state, or local laws.

iv) Yield cobenefits in communities directly affected by the leak and in disadvantaged communities.

v) Prioritize projects in nearby communities harmed by the leak and other communities directly affected by methane emissions, disadvantaged communities, and communities within the Aliso Canyon service area.

EXISTING LAW:

1) Creates Cal OES, within the Office of the Governor, which coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.

2) Provides that the PUC has regulatory authority over public utilities, including gas corporations, as defined.

3) Requires the PUC to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the PUC, investigation by it, and authorizes the PUC to make any order or recommendation with respect to the investigation that it determines to be just and reasonable.

4) Provides that any public utility that violates any provision or that fails or neglects to comply with any order, decision, decree, rule direction, demand, or requirement of the PUC, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense.

5) Requires that any fine or penalty imposed by the PUC and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

FISCAL EFFECT: According to Assembly Appropriations Committee, the total annual cost of this bill depends on the number of significant gas leaks that occur in that year. The costs per significant gas leak event include:

1. Minor costs for CalOES to deploy an onsite coordinator. This would be recovered from the responsible party.
2. Approximately $100,000 per major event for ARB to contract for downwind flights to characterize the natural gas release rate at reasonable periodic intervals using small planes with monitors to measure methane. (Oil, Gas and Geothermal Administrative Fund)
3. Additional unknown, but potentially significant, redirection of penalty revenue from the General Fund.

COMMENTS:

Background: The Aliso Canyon gas leak was a massive natural gas leak that started on October 23, 2015, at the Aliso Canyon underground storage facility near Porter Ranch, Los Angeles. The leak was discovered during one of Southern California Gas Company's (SoCal Gas) twice daily well observations. The Aliso Canyon facility is the second largest gas storage facility of its kind in the United States and it is owned by the SoCal Gas, a subsidiary of Sempra Energy. The facility is maintained in accordance with safety regulations established by the Department of Oil, Gas, and Geothermal Resources (DOGGR), the PUC, and other local, state and federal agencies. Days after the leak was discovered, a dozen or more local and state agencies were involved in an attempt to plug the leak.

It is estimated that the leak was responsible for approximately one million barrels of gas being released per day. Experts estimate that the carbon footprint of the Aliso Canyon leak is larger than the Deepwater Horizon leak in the Gulf of Mexico, which is considered the largest accidental marine oil spill in the world and at that time the largest environmental disaster in United States history.

Natural Gas is largely composed of methane, an odorless and invisible greenhouse gas with a global warming potential of approximately 86 times greater than carbon dioxide in a 20-year time frame. Initially the leak released about 44,000 kilograms of methane per hour which is the equivalent of 1,200 tons of methane every day. In terms of greenhouse gas output per month, it is the equivalent of the greenhouse gas output of 200,000 cars in a year. According to a Time Magazine article on January 11, 2016, the 1.6 million pounds of methane released each day is comparable to the emissions of 6 coal fired power plants, 2.2 million cows per day, or 4.5 million cars. Besides methane, the gas leak also contained tert-butyl mercaptan, tetrahydrothiophene, and methyl mercaptan, which gives the gas a rotten egg smell and is known to cause headaches, vomiting, and nausea.

While the leak occurred in a mountainous area more than a mile away from any residential areas, residents have complained of headaches, nausea, vomiting and trouble breathing. Though SoCal Gas has claimed that "scientists agree that natural gas is not toxic and that its odorant is harmless at the minute levels at which it is added to natural gas," the company has been paying to temporarily relocate residents in and around Porter Ranch. In early January, SoCal Gas reported that it had temporarily relocated 2,824 households or roughly 11,296 individuals.

The leak was finally permanently plugged on February 18, 2016. The Aliso Canyon gas leak was the worst natural gas leak in United States history in terms of its environmental impact.

Purpose of the Bill: According to the author, "The leak at Aliso Canyon took nearly four months to plug and spewed more than 100,000 metric tons of methane. The leak was the worst in United States history, and at its height, more than doubled the methane emissions of the entire Los Angeles Basin and surpassed what is released by all industrial activity in the state. To ensure we stay on track to meet our climate goals, the Gas Company must fully mitigate the methane emissions from this disaster. SB 888 requires the fines and penalties the Gas Company pays as a result of this leak to be used to make certain the leak is fully mitigated. This will ensure the mitigation is not paid by rate payers, but instead comes from the company’s profits."

The author states, "While the Division of Oil, Gas and Geothermal Resources (DOGGR) was notified of the leak right away, the Air Resources Board said it wasn't notified of the leak until November 5, 2015. State officials might have more quickly understood the severity of the leak if emissions had been measured earlier. Further, a Unified Command structure under the direction of the Office of Emergency Services (OES) was not established until January 2016. Given the aging infrastructure at many of these facilities, it is critically important that we take the lessons learned from this leak and better prepare for the next one. SB 888 makes OES the immediate lead point of contact for future significant leads, allowing them to act quickly to protect public health and the environment."

Cal OES: The California Office of Emergency Services is responsible for overseeing and coordinating emergency preparedness, response, recovery and homeland security activities within the state. In years past, Cal OES' primary focus was exclusively on emergency management, but over the last decade their mission has expanded to include responsibilities in criminal justice, victim services, homeland security, and public safety communications.

The Cal OES began as the State War Council in 1943. With an increasing emphasis on emergency management, it officially became Cal OES in 1970. In 2004, the California Legislature merged Cal OES and the Governor's Office of Criminal Justice Planning, which was responsible for providing state and federal grant funds to local communities to prevent crime and help crime victims.

In 2003, with the State increasing its focus on terrorism prevention after the attacks of September 11, 2001, the Governor's Office of Homeland Security (OHS) was established through an Executive Order by Governor Gray Davis. In 2009, the California Legislature merged the powers, purposes, and responsibilities of the former Cal OES with those of the OHS into the newly-created California Emergency Management Agency (Cal EMA). On July 1, 2014, Governor Brown's Reorganization Plan No. 2 eliminated the Cal EMA and restored it to the Governor's Office, renaming it Cal OES.

Cal OES is responsible for developing the State Emergency Plan, which addresses the state's response to extraordinary emergency situations associated with natural disasters or human-caused emergencies. In accordance with the California Emergency Services Act, the plan describes the methods for carrying out emergency operations, the process for rendering mutual aid, the emergency services of governmental agencies, how resources are mobilized, how the public will be informed and the process to ensure continuity of government during and emergency or disaster. Cal OES would apply the same methodology and emergency response plan should they become the lead agency for emergency response to a large ongoing leak like the one that occurred in Aliso Canyon.

Standardized Emergency Management System (SEMS): SEMS is the system used for coordinating state and local emergency response in California. SEMS provides a multiple level emergency response organization that facilitates the flow of emergency information and resources. SEMS consists of the Incident Command System (ICS), mutual aid, the operational area concept and multi-interagency coordination. SEMS is designed to be flexible and adaptable to the varied emergencies that can occur in California, and to meet the emergency management needs of all responders. Government Code 8607(a), requires CalOES, in coordination with other state agencies and interested local emergency management agencies, to establish SEMS by regulation.

Operational Area (OA): OAs encompass the county and all political subdivisions within the county. The OA serves as a focal point for all local emergency management information and the provision of mutual aid. It manages information, resources, and priorities among local governments within the OA. The OA also serves as the coordination and communication link between the local government level and the regional level. SEMS regulations authorize each County Board of Supervisors to designate an OA lead agency.

Disadvantaged Communities: Authorized by the California Global Warming Solutions Act of 2006 (AB 32 (Núñez), Chapter 488, Statutes of 2006), the cap-and-trade program is one of several strategies that California uses to reduce greenhouse gas emissions that cause climate change. Funds received from the program are deposited into the Greenhouse Gas Reduction Fund (GGRF) and appropriated by the Legislature. They must be used for programs that further reduce emissions of greenhouse gases.

Disadvantaged communities in California are specifically targeted for investment of proceeds from the State's cap-and-trade program. These investments are aimed at improving public health, quality of life and economic opportunity in California's most burdened communities at the same time they’re reducing pollution that causes climate change.

In 2012, the Legislature passed SB 535 (De León), Chapter 830, directing that, in addition to reducing greenhouse gas emissions, a quarter of the proceeds from the Greenhouse Gas Reduction Fund must also go to projects that provide a benefit to disadvantaged communities, specifically, a minimum of 25% of the available moneys in the fund to projects that provide benefits to identified disadvantaged communities; and a minimum of 10% of the available moneys in the fund to projects located within identified disadvantaged communities. The legislation gives the California Environmental Protection Agency responsibility for identifying those communities.

Prior/Related Legislation: SB 380 (Pavley), Chapter 14, Statutes of 2016. Requires the State Oil and Gas Supervisor to immediately institute a moratorium on injections of natural gas into any wells located within and serving the Aliso Canyon storage facility located in the County of Los Angeles until specified conditions are met, including that the integrity of each well has been quantitatively and objectively evaluated using state-of-the-art technology, as determined by the Supervisor with input from independent experts, and the risks posed by well failure have been evaluated.

SB 887 (Pavley) of the current legislative session. Requires the DOGGR to, before January 1, 2018, and annually thereafter, inspect all natural gas storage wells serving or located in a natural gas storage facility and would prescribe standards for natural gas storage wells. (Pending in the Assembly)

SB 535 (De León), Chapter 830, Statutes of 2012. Requires the California Environmental Protection Agency to identify disadvantaged communities for investment opportunities. The bill would require the Department of Finance, when developing a specified 3-year investment plan, to allocate 25% of the available moneys in the Greenhouse Gas Reduction Fund to projects that provide benefits to disadvantaged communities, as specified, and to allocate a minimum of 10% of the available moneys in the Greenhouse Gas Reduction Fund to projects located within disadvantaged communities.

Analysis Prepared by: Kenton Stanhope / G.O. / (916) 319-2531 FN: 0004032

Date of Hearing: August 3, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 888

Author:(Allen) – As Amended Ver:June 29, 2016

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

SUMMARY:

This bill establishes the California Office of Emergency Services (CalOES) as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. This bill also directs the California Public Utilities (CPUC) to deposit any penalties on a gas corporation related to a gas storage leak into the Gas Storage Facility Leak Mitigation Account, to be spent in a specified manner, including that expenditures achieve a reduction in greenhouse gasses equivalent to the amount of gases emitted by the leak, as determined by the State Air Resources Board (ARB).

FISCAL EFFECT:

The total annual cost of this bill depends on the number of significant gas leaks that occur in that year. The costs per significant gas leak event include:

1. Minor costs per major event for CalOES to deploy an onsite coordinator. These costs would be recovered from the responsible party.
2. Approximately $100,000 per major event for ARB to contract for downwind flights to characterize the natural gas release rate at reasonable periodic intervals using small planes with monitors to measure methane. (Oil, Gas and Geothermal Administrative Fund)
3. Additional unknown, but potentially significant, redirection of penalty revenue from the General Fund.

COMMENTS:

1. Purpose. According to the author, California currently lacks a plan to quickly and efficiently address a massive gas leak. SB 888 is intended to streamline agency coordination and collaboration while ensuring that penalties and fines collected from responsible parties go toward mitigating emissions that result from the leak.
2. Aliso Canyon. On October 23, 2015, Southern California Gas Company discovered a significant natural gas leak Aliso Canyon Natural Gas Storage Facility. Several days passed before it was disclosed to the community that a significant uncontrolled leak was occurring. The leak lasted for four months and resulted in the relocation of more than 5,000 households and hundreds of public health complaints. In addition to the public health concerns, ARB’s initial coarse estimates indicate that about 95,000 metric tons of methane was released into the air, adding approximately 20% to the statewide methane emissions during the duration of the leak.
3. Current regulatory structure and agency response to Aliso Canyon. Although natural gas storage facilities are subject to the overall utilities jurisdiction of the CPUC, natural gas storage wells and associated piping and equipment fall under the jurisdiction of the Department of Conservation’s Division of Oil, Gas and Geothermal Resources (DOGGR).

The Aliso Canyon gas leak response involved numerous agencies in addition to CPUC and DOGGR. The Governor’s January 6, 2016 proclamation of a state of emergency resulted in the following actions, coordinated by CalOES:

• 1. Direction to DOGGR to continue prohibiting all injections into Aliso Canyon;
  2. Direction to CPUC and California Energy Commission (CEC) to reduce the pressure of the facility by withdrawing gas;
  3. Directing ARB to require real-time monitoring of emissions;
  4. Direction to Office of Environmental Health Hazard Assessment to review public health concerns, ensure energy and natural gas reliability;
  5. Direction to DOGGR to promulgate emergency regulations to require new safety and reliability measures for underground natural gas storage facilities; and,
  6. Direction to DOGGR, CPUC, ARB, and CEC to assess the long-term viability of natural gas storage facilities.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: June 27, 2016

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Das Williams, Chair

SBPCA Bill Id:SB 888

Author:(Allen) – As Amended Ver:May 31, 2016

SENATE VOTE: 28-10

SUBJECT: Gas corporations: emergency management

SUMMARY: Establishes the California Office of Emergency Services (Cal OES) as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. Specifies how penalty money assessed against a gas corporation for a gas storage leak should be spent.

EXISTING LAW:

1. Creates Cal OES, within the Office of the Governor, which coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.
2. Requires the handler of hazardous material to immediately report any release or threatened release of a hazardous material to the unified program agency and to Cal OES.
3. Directs the California Air Resources Board (ARB) to monitor and regulate sources of emissions of greenhouse gases (GHGs) that cause global warming in order to reduce GHG emissions to 1990 levels by 2020.
4. Authorizes the California Public Utilities Commission (CPUC) to fix rates, establish rules, examine records, issue subpoenas, administer oaths, take testimony, punish for contempt, and prescribe a uniform system of accounts for all public utilities, including electrical and gas corporations, subject to its jurisdiction.
   
5. Declares it is the policy of the state that the CPUC and each gas corporation place safety of the public and gas corporation employees as the top priority. Requires CPUC to take all reasonable and appropriate actions necessary to carry out the safety priority policy of this paragraph consistent with the principle of just and reasonable cost-based rates.

1. Requires any public utility that violates or fails to comply with any provision of the Constitution of this state or fails or neglects to comply with any part or provision of any order, decision, decree, rule, direction, demand, or requirement of the CPUC, in a case in which a penalty has not otherwise been provided, is subject to a penalty of not less than five hundred dollars ($500), nor more than fifty thousand dollars ($50,000) for each offense.
2. Prohibits a gas corporation from recovering any fine or penalty in any rate approved by the CPUC. Requires that any fine or penalty imposed by the CPUC and collected from a public utility be paid to the General Fund.

THIS BILL:

1. Establishes Cal OES as the lead agency for emergency response to a large ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or to the environment.
2. Requires Cal OES to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.
3. Creates the Gas Storage Facility Leak Mitigation Account (Account) and requires CPUC to deposit any penalties assessed against a gas corporation pursuant to a gas storage facility leak into the Account.
4. Specifies that moneys in the Account shall be expended, upon appropriation by the Legislature, subject to both of the following conditions:
   1. Requires money to be expended solely for direct emissions reductions in furtherance of the achievement of the GHG emissions limit established by the California Global Warming Solutions Act of 2006. Prohibits moneys from being used for the purchase of allowances or offsets.
   2. Requires moneys from penalties to be expended in a manner that, at a minimum, achieves a reduction in GHGs that equals the amount of those gases emitted by that leak, as determined by ARB.

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. Approximately $600 (including staffing and travel costs) for CalOES to deploy an onsite coordinator. This would be recovered from the responsible party.
2. Approximately $100,000 (Oil, Gas and Geothermal Administrative Fund) for ARB to contract for downwind flights to characterize the natural gas release rate at reasonable periodic intervals using small planes with monitors to measure methane.
3. Additional unknown, but potentially significant, redirection of penalty revenue from the General Fund.
   

COMMENTS:

1. Author’s statement:

The unprecedented natural gas leak at Southern California Gas Company’s Aliso Canyon storage field has shed light on the lack of a meaningful State response plan to such disasters. While the State’s response to the leak was swift, at least seven different agencies have been involved with no statutory single point of responsibility and accountability to oversee efforts and remediation actions. Unlike oil spill response, which is dictated by robust framework to streamline agency coordination and collaboration, California lacks a plan to quickly and efficiently address a massive natural gas leak.

In fact, while the Division of Oil, Gas and Geothermal Resources (DOGGR) was notified of the leak right away, the ARB said it wasn't notified of the leak until Nov. 5th. State officials might have more quickly understood the severity of the leak if emissions had been measured earlier. Further, a Unified Command structure, similar to what is put in place following significant oil spill, was not established until January.

Further, existing law would require the fines and penalties assed by the CPUC to go directly to the General Fund. While it is imperative that the Gas Company fully mitigate the methane emissions from this disaster to ensure we stay on track to meet our climate goals, there is no statutory requirement that they do. Using the fine and penalty money to mitigate emissions ensures the mitigation happens and also ensures that it is paid for using shareholder profits, not ratepayers dollars.

1. Aliso Canyon Leak. On October 23 2015, a natural gas storage well, known as “SS-25” owned by Southern California Gas (SoCalGas) and located in the Aliso Canyon storage field in close proximity to the Porter Ranch neighborhood in Los Angeles County began leaking natural gas. The leak continued until it was initially controlled on February 11, 2016, and the well was successfully sealed on February 18, 2016. During the four months the well leaked, there were numerous attempts to control it. All attempts to stop the leak from the top of the well failed. A relief well was finally able to stop the natural gas leak by plugging the leaking well at its base. According to a recent study, the leak at Aliso Canyon was the largest natural gas leak recorded in the United States, doubling the methane emission rate of the entire Los Angeles basin. Methane is a potent GHG with a global warming potential more than 80 times as powerful as carbon dioxide.

The South Coast Air Quality Management District has received thousands of complaints regarding the odor. Complaints by residents suggest that mercaptans, which are odorants required to be added to natural gas, have been present in Porter Ranch at varying levels since the gas leak started. Some people may experience adverse health effects to the strong odors of mercaptans, such as nausea and headaches. In mid-November, the Los Angeles County Department of Public Health, citing public health concerns associated with the use of odorants in the natural gas, ordered SoCal Gas to provide temporary housing relocation assistance to affected residents. Over 8,000 households were relocated due to the leak. Now that the leak has been stopped, residents are returning home, regulators are investigating the cause of the leak, and a comprehensive safety review of the other 114 wells at the field is in progress.

1. Natural Gas Storage Facilities. Natural gas providers inject natural gas into large underground reservoirs for storage before later withdrawing the gas for sale during peak load periods. These underground reservoirs often contained oil or gas that has already been extracted. Natural gas providers utilize these natural gas storage facilities (Facilities) to reduce the cost of procurement and to maintain adequate supply of natural gas during peak times. While the CPUC regulates natural gas providers, natural gas transmission lines, and the permitting of Facilities, it is DOGGR that regulates the wells that natural gas is injected into and withdrawn from. Gas storage injection wells are the only type of injection wells in DOGGR’s UIC program that are not part of the primacy agreement with United States Environmental Protection Agency (US EPA). DOGGR’s UIC program regulates 14 active gas storage facilities in 12 separate fields across the state to ensure well construction and integrity, appropriateness of the injection site, and zonal isolation of the injections. Each Facility may contain dozens of active gas storage wells. There are 343 active and 85 idle natural gas storage wells in the state. Some natural gas storage facilities have been in operation since the 1940s and approximately half of the active wells are over 40 years old. Natural gas storage wells vary in construction, depth, design, age, location, and operating conditions. In Aliso Canyon, the wells were drilled in the 1940s for production purposes and then converted into storage wells. The wells at Aliso Canyon do not contain a cement barrier along its entire length of the casing and have had a history of well integrity issues.
2. State Actions. On January 6, 2016, the Governor issued a proclamation of a state of emergency, which directed several state agencies to act in response to the Aliso Canyon gas leak. These actions included all of the following:
   1. Direction to DOGGR to continue prohibiting all injections into Aliso Canyon;
   2. Direction to CPUC and California Energy Commission (CEC) to reduce the pressure of the facility by withdrawing gas;
   3. Directing ARB to require real-time monitoring of emissions;
   4. Direction to Office of Environmental Health Hazard Assessment to review public health concerns, ensure energy and natural gas reliability;
   5. Direction to DOGGR to promulgate emergency regulations to require new safety and reliability measures for underground natural gas storage facilities; and,
   6. Direction to DOGGR, CPUC, ARB, and CEC to assess the long-term viability of natural gas storage facilities.

The effort to address the leak required numerous state and local entities to work together under the direction of CalOES. On February 5, 2016, DOGGR established emergency regulations to improve the regulation of gas storage wells. The regulations include the requirement that within six months (August 6) after the regulations become effective, the operator of a gas storage facility to submit a Risk Management Plan to DOGGR to assess the integrity and risk associated with their gas storage project. DOGGR has yet to receive a risk management plan from an operator. DOGGR is working with Lawrence Berkeley National Laboratory, Lawrence Livermore National Laboratory, and Sandia National Laboratory on its permanent regulations for gas storage wells. A draft of the regulations is expected in July.

1. Penalties. The investigation of the Aliso Canyon leak and SoCalGas is ongoing and it is unclear whether the CPUC will pursue penalties. If the CPUC did assess penalties against SoCalGas or any other Facility for a leak, this bill would direct the money into the newly created Account for GHG reduction purposes rather than the General Fund. However, SoCalGas may face other legal or administrative actions against it due to the leak. DOGGR may pursue penalties based on the leak being an unreasonable waste of natural gas. The leak did not violate AB 32 because it was an accidental release. ARB has proposed regulations to regulate future leaks at Facilities under AB 32. The Attorney General, ARB, the City of Los Angeles, and the County of Los Angeles have filed suit against SoCalGas to mitigate the impacts of the uncontrolled emission of a massive quantity of GHGs into the environment and impose appropriate civil penalties as allowed by law. The parties seek equitable relief, civil penalties, and attorney’s fees.
2. Mitigation. On December 18, 2016, the CEO of SoCalGas sent a letter to Governor Brown pledging to mitigate the environment impact of the leak. Governor Brown subsequently issued a proclamation that directed ARB to prepare a program, to be funded by SoCalGas, that will “fully mitigate the methane emissions from the leak and prioritize reductions of short-lived climate pollutants.” There has been disagreement over how much emissions need to be mitigated, how quickly, and whether the mitigation should happen in California and should they prioritize short-lived climate pollutants. It is unclear whether the lawsuit mentioned above would be pursued if an agreement was reached.
   
3. Double referral and amendments. This bill was heard in the Governmental Organization Committee on June 22, and passed with a 16-2 vote. Due to timing, amendments agreed to in the Government Organization Committee will be adopted in this Committee. The amendments require the Account to allocate a minimum of 25% of the available moneys to projects that provide benefits to disadvantaged communities and 10% in those communities. Please see the Government Organization Committee analysis for further information. In addition to those amendments, the author and committee may wish to consider amending the bill to make expenditures from the Account consistent with ARB’s Aliso Canyon Climate Impacts Mitigation Program.
4. Related legislation.

SB 380 (Pavley), Chapter 14, Statutes of 2016, sets in statute criteria for testing and inspection of the natural gas storage wells at the Aliso Canyon facility and required the CPUC and others to study the feasibility of minimizing the use of or shutting down the Aliso Canyon gas storage facility.

AB 1903 (Wilk, 2016) requires a long-term health impact study from the Aliso Canyon gas leak, as specified. This bill is awaiting hearing in the Senate Environmental Quality Committee.

AB 1905 (Wilk, 2016) requires the Natural Resources Agency, on or before July 1, 2017, to complete an independent scientific study on natural gas injection and storage practices and facilities. This bill was held on the suspense file in the Assembly Appropriations Committee.

SB 887 (Pavley, 2016) provides a framework for reforming the oversight of natural gas storage wells. This bill requires continuous monitoring of natural gas storage wells, as well as evaluation, testing, and installation of specified technology and practices for operating natural gas storage wells. This bill is scheduled to be heard in this committee on June 27, 2016.

REGISTERED SUPPORT / OPPOSITION:

Support

South Coast Air Quality Management District

Opposition

None on file

Analysis Prepared by: Michael Jarred / NAT. RES. / (916) 319-2092

Date of Hearing: June 22, 2016

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Adam Gray, Chair

SBPCA Bill Id:SB 888

Author:(Allen) – As Amended Ver:May 31, 2016

SENATE VOTE: 28-10

SUBJECT: Gas corporations: emergency management

SUMMARY: This bill establishes the California Office of Emergency Services (Cal OES) as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. Specifically, this bill:

1. Establishes Cal OES as the lead agency for emergency response to a large ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or to the environment.
2. Requires Cal OES to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.
3. Creates the Gas Storage Facility Leak Mitigation Account (account) and requires the Public Utilities Commission (PUC) to deposit any penalties assessed against a gas corporation pursuant to a gas storage facility leak into the account.
4. Specifies that moneys in the account shall be expended, upon appropriation by the Legislature, subject to both of the following conditions:
   1. Moneys shall be expended solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit established by the California Global Warming Solutions Act of 2006. Moneys shall not be used for the purchase of allowances or offsets otherwise authorized by the California Global Warming Solutions Act of 2006.
   2. Moneys from penalties assessed for a gas storage facility leak shall be expended in a manner that, at a minimum, achieves a reduction in greenhouse gases that equals the amount of those gases emitted by that leak, as determined by the State Air Resources Board (ARB).

EXISTING LAW:

1) Creates Cal OES, within the Office of the Governor, which coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.

2) Provides that the PUC has regulatory authority over public utilities, including gas corporations, as defined.

3) Requires the PUC to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the PUC, investigation by it, and authorizes the PUC to make any order or recommendation with respect to the investigation that it determines to be just and reasonable.

4) Provides that any public utility that violates any provision or that fails or neglects to comply with any order, decision, decree, rule direction, demand, or requirement of the PUC, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense.

5) Requires that any fine or penalty imposed by the PUC and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

FISCAL EFFECT: According to Senate Appropriations Committee, the annual cost of this bill would depend upon how many “significant” leaks occur in that year. Both OES and ARB provided the per incident costs below:

• Approximately $600 (including staffing and travel costs) for OES to deploy an onsite coordinator. This would be recovered from the responsible party.
• Approximately $100,000 (Oil, Gas and Geothermal Administrative Fund) for ARB to contract for downwind flights to characterize the natural gas release rate at reasonable periodic intervals using small planes with monitors to measure methane.

Additional unknown, but potentially significant, redirection of penalty revenue from the General Fund to the Gas Storage Facility Leak Mitigation Account created by this bill.

COMMENTS:

Background: The Aliso Canyon gas leak was a massive natural gas leak that started on October 23, 2015 at the Aliso Canyon underground storage facility near Porter Ranch, Los Angeles. The leak was discovered during one of Southern California Gas Company’s (SoCal Gas) twice daily well observations. The Aliso Canyon facility is the second largest gas storage facility of its kind in the United States and it is owned by the SoCal Gas, a subsidiary of Sempra Energy. The facility is maintained in accordance with safety regulations established by the Department of Oil, Gas, and Geothermal Resources (DOGGR), the PUC, and other local, state and federal agencies. Days after the leak was discovered, a dozen or more local and state agencies were involved in an attempt to plug the leak.

It is estimated that the leak was responsible for approximately one million barrels of gas being released per day. Experts estimate that the carbon footprint of the Aliso Canyon leak is larger than the Deepwater Horizon leak in the Gulf of Mexico, which is considered the largest accidental marine oil spill in the world and at that time the largest environmental disaster in United States history.

Natural Gas is largely composed of methane, an odorless and invisible greenhouse gas with a global warming potential of approximately 86 times greater than carbon dioxide in a 20-year time frame. Initially the leak released about 44,000 kilograms of methane per hour which is the equivalent of 1,200 tons of methane every day. In terms of greenhouse gas output per month, it is the equivalent of the greenhouse gas output of 200,000 cars in a year. According to a Time Magazine article on January 11, 2016, the 1.6 million pounds of methane released each day is comparable to the emissions of 6 coal fired power plants, 2.2 million cows per day, or 4.5 million cars. Besides methane, the gas leak also contained tert-butyl mercaptan, tetrahydrothiophene, and methyl mercaptan, which gives the gas a rotten egg smell and is known to cause headaches, vomiting, and nausea.

While the leak occurred in a mountainous area more than a mile away from any residential areas, residents have complained of headaches, nausea, vomiting and trouble breathing. Though SoCal Gas has claimed that “scientists agree that natural gas is not toxic and that its odorant is harmless at the minute levels at which it is added to natural gas,” the company has been paying to temporarily relocate residents in and around Porter Ranch. In early January, SoCal Gas reported that it had temporarily relocated 2,824 households or roughly 11,296 individuals.

The leak was finally permanently plugged on February 18, 2016. The Aliso Canyon gas leak was the worst natural gas leak in United States history in terms of its environmental impact.

Purpose of the Bill: According to the author, “The leak at Aliso Canyon took nearly four months to plug and spewed more than 100,000 metric tons of methane. The leak was the worst in United States history, and at its height, more than doubled the methane emissions of the entire Los Angeles Basin and surpassed what is released by all industrial activity in the state. To ensure we stay on track to meet our climate goals, the Gas Company must fully mitigate the methane emissions from this disaster. SB 888 requires the fines and penalties the Gas Company pays as a result of this leak to be used to make certain the leak is fully mitigated. This will ensure the mitigation is not paid by rate payers, but instead comes from the company’s profits.”

The author states, “While the Division of Oil, Gas and Geothermal Resources (DOGGR) was notified of the leak right away, the Air Resources Board said it wasn't notified of the leak until November 5, 2015. State officials might have more quickly understood the severity of the leak if emissions had been measured earlier. Further, a Unified Command structure under the direction of the Office of Emergency Services (OES) was not established until January 2016. Given the aging infrastructure at many of these facilities, it is critically important that we take the lessons learned from this leak and better prepare for the next one. SB 888 makes OES the immediate lead point of contact for future significant leads, allowing them to act quickly to protect public health and the environment.”

Cal OES: The California Office of Emergency Services is responsible for overseeing and coordinating emergency preparedness, response, recovery and homeland security activities within the state. In years past, Cal OES’ primary focus was exclusively on emergency management, but over the last decade their mission has expanded to include responsibilities in criminal justice, victim services, homeland security, and public safety communications.

The Cal OES began as the State War Council in 1943. With an increasing emphasis on emergency management, it officially became Cal OES in 1970. In 2004, the California Legislature merged Cal OES and the Governor’s Office of Criminal Justice Planning, which was responsible for providing state and federal grant funds to local communities to prevent crime and help crime victims.

In 2003, with the State increasing its focus on terrorism prevention after the attacks of September 11, 2001, the Governor’s Office of Homeland Security (OHS) was established through an Executive Order by Governor Gray Davis. In 2009, the California Legislature merged the powers, purposes, and responsibilities of the former Cal OES with those of the OHS into the newly-created California Emergency Management Agency (Cal EMA). On July 1, 2014, Governor Brown’s Reorganization Plan #2 eliminated the Cal EMA and restored it to the Governor’s Office, renaming it Cal OES.

Cal OES is responsible for developing the State Emergency Plan, which addresses the state's response to extraordinary emergency situations associated with natural disasters or human-caused emergencies. In accordance with the California Emergency Services Act, the plan describes the methods for carrying out emergency operations, the process for rendering mutual aid, the emergency services of governmental agencies, how resources are mobilized, how the public will be informed and the process to ensure continuity of government during and emergency or disaster. Cal OES would apply the same methodology and emergency response plan should they become the lead agency for emergency response to a large ongoing leak like the one that occurred in Aliso Canyon.

Standardized Emergency Management System (SEMS): SEMS is the system used for coordinating state and local emergency response in California.  SEMS provides a multiple level emergency response organization that facilitates the flow of emergency information and resources.  SEMS consists of the Incident Command System (ICS), mutual aid, the operational area concept and multi-interagency coordination.  SEMS is designed to be flexible and adaptable to the varied emergencies that can occur in California, and to meet the emergency management needs of all responders.  Government Code 8607(a), requires CalOES, in coordination with other state agencies and interested local emergency management agencies, to establish SEMS by regulation.

Operational Area (OA): OAs encompass the county and all political subdivisions within the county.  The OA serves as a focal point for all local emergency management information and the provision of mutual aid.  It manages information, resources, and priorities among local governments within the OA. The OA also serves as the coordination and communication link between the local government level and the regional level.  SEMS regulations authorize each County Board of Supervisors to designate an OA lead agency.

Green House Gas Reduction Fund (GGRF): Authorized by the California Global Warming Solutions Act of 2006 (AB 32), the cap-and-trade program is one of several strategies that California uses to reduce greenhouse gas emissions that cause climate change. Funds received from the program are deposited into the GGRF and appropriated by the Legislature. They must be used for programs that further reduce emissions of greenhouse gases.

Disadvantaged communities in California are specifically targeted for investment of proceeds from the State’s cap-and-trade program. These investments are aimed at improving public health, quality of life and economic opportunity in California’s most burdened communities at the same time they’re reducing pollution that causes climate change. 

In 2012, the Legislature passed Senate Bill 535 (De León) directing that, in addition to reducing greenhouse gas emissions, a quarter of the proceeds from the Greenhouse Gas Reduction Fund must also go to projects that provide a benefit to disadvantaged communities, specifically, a minimum of 25% of the available moneys in the fund to projects that provide benefits to identified disadvantaged communities; and a minimum of 10% of the available moneys in the fund to projects located within identified disadvantaged communities. The legislation gives the California Environmental Protection Agency responsibility for identifying those communities.  

SB 888 would direct penalty fees from a gas leak collected by the PUC to be used for the same purpose as the funds in the GGRF. However, rather than placing the fees in the GGRF, this bill creates a new account, the Gas Storage Facility Leak Mitigation Account, in which the fees are placed prior to being used for greenhouse gas reduction purposes.

The Committee may wish to consider whether it is more appropriate for the fees collected by the PUC be placed in the GGRF since they are being used for the same purpose. At minimum, should there be a legitimate need to create a the new account, the Committee may wish to consider placing the same constraints on the account that are in place for the GGRF, specifically 25% of funds must benefit disadvantaged communities.

Suggested Amendment: Per the discussion above, add in language to ensure the Gas Storage Facility Leak Mitigation Account be subject to the same funding provisions as the GGRF, specifically 25% of the available moneys in the fund go to projects that provide benefits to disadvantaged communities; and a minimum of 10% of the available moneys in the fund to projects located within identified disadvantaged communities (see below).

(3) Moneys in the account shall be expended consistent Section 39713 of the Health and Safety Code.

Double referral: Should SB 888 pass the Assembly Committee on Governmental Organization on Wednesday, June 22, 2016, this bill will be referred to the Assembly Committee Natural Resources for further consideration.

Prior/Related Legislation: SB 380 (Pavley) of 2015-2016 Legislative Session. Requires the State Oil and Gas Supervisor to immediately institute a moratorium on injections of natural gas into any wells located within and serving the Aliso Canyon storage facility located in the County of Los Angeles until specified conditions are met, including that the integrity of each well has been quantitatively and objectively evaluated using state-of-the-art technology, as determined by the Supervisor with input from independent experts, and the risks posed by well failure have been evaluated. (Pending in the Assembly Utilities and Commerce Committee)

SB 887 (Pavley) of 2015-2016 Legislative Session. Requires the Division of Oil, Gas, and Geothermal Resources to, before January 1, 2018, and annually thereafter, inspect all natural gas storage wells serving or located in a natural gas storage facility and would prescribe standards for natural gas storage wells. (Pending in the Senate Natural Resources and Water Committee)

SB 535 (De León, Chapter 830, Statutes of 2012). Requires the California Environmental Protection Agency to identify disadvantaged communities for investment opportunities. The bill would require the Department of Finance, when developing a specified 3-year investment plan, to allocate 25% of the available moneys in the Greenhouse Gas Reduction Fund to projects that provide benefits to disadvantaged communities, as specified, and to allocate a minimum of 10% of the available moneys in the Greenhouse Gas Reduction Fund to projects located within disadvantaged communities.

REGISTERED SUPPORT / OPPOSITION:

Support

California Public Interest Research Group

Clean Water Action

Consumer Attorneys of California

Environment California

Environmental Working Group

National Parks Conservation Association

LAUSD Board Member District 3, Scott M. Schmerelson

National Parks Conservation Association

Sierra Club California

South Coast Air Quality Management District

Union of Concerned Scientists

Opposition

None on File

Analysis Prepared by: Kenton Stanhope / G.O. / (916) 319-2531

 THIRD READING  

Bill No: SB 888

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 9-0, 3/8/16

AYES: Hall, Block, Glazer, Hernandez, Hill, Hueso, Lara, McGuire, Vidak

NO VOTE RECORDED: Berryhill, Gaines, Galgiani, Runner

SENATE ENERGY, U. & C. COMMITTEE: 9-2, 4/19/16

AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley, Wolk

NOES: Morrell, Gaines

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

SUBJECT:

SOURCE: Author

DIGEST: This bill establishes the California Office of Emergency Services (Cal OES) as the lead agency for emergency response to a large ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or to the environment.

ANALYSIS:

Existing law:

1. Creates Cal OES, within the Office of the Governor, which coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.
2. Provides that the Public Utilities Commission (PUC) has regulatory authority over public utilities, including gas corporations, as defined.
3. Requires the PUC to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the PUC, investigation by it, and authorizes the PUC to make any order or recommendation with respect to the investigation that it determines to be just and reasonable.
4. Provides that any public utility that violates any provision or that fails or neglects to comply with any order, decision, decree, rule direction, demand, or requirement of the PUC, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense.
5. Requires that any fine or penalty imposed by the PUC and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

This bill:

1. Establishes Cal OES as the lead agency for emergency response to a large ongoing leak or release of natural gas and associated gases from a natural gas storage facility that poses a significant present or potential hazard to the public health and safety, property, or to the environment.
2. Requires Cal OES to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.
3. Creates the Gas Storage Facility Leak Mitigation Account and requires the PUC to deposit any penalties assessed against a gas corporation pursuant to a gas storage facility leak into the account.
4. Specifies that moneys in the account shall be expended, upon appropriation by the Legislature, subject to both of the following conditions:
   1. Moneys shall be expended solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit established by the California Global Warming Solutions Act of 2006. Moneys shall not be used for the purchase of allowances or offsets otherwise authorized by the California Global Warming Solutions Act of 2006.
   2. Moneys from penalties assessed for a gas storage facility leak shall be expended in a manner that, at a minimum, achieves a reduction in greenhouse gases that equals the amount of those gases emitted by that leak, as determined by the State Air Resources Board (ARB).

Background

Purpose of SB 888. According to the author, “this bill is part of a comprehensive package of legislation introduced in the Senate to address the Aliso Canyon leak disaster. While the State’s response to the leak was swift, at least seven different agencies have been involved with no statutory single point of responsibility and accountability to oversee efforts and remediation actions.”

The author further argues that “unlike oil spill response, which is dictated by a robust framework to streamline agency coordination and collaboration, California lacks a plan to quickly and efficiently address a massive natural gas leak. Given the extensive infrastructure of underground natural gas storage facilities throughout California, and having seen the potential for significant health and environmental problems that can result from a leak, California should have a framework in place to respond quickly and efficiently.”

The bill also creates the Gas Storage Facility Leak Mitigation Account which would fund the mitigation of greenhouse gas impacts through direct measures to reduce emissions.

Aliso Canyon Gas Leak. The Aliso Canyon gas leak was a massive natural gas leak that started on October 23, 2015, at the Aliso Canyon underground storage facility near Porter Ranch, Los Angeles. The leak was discovered during one of Southern California Gas Company’s (SoCal Gas) twice daily well observations. The Aliso Canyon facility is the second largest gas storage facility of its kind in the United States and it is owned by the SoCal Gas, a subsidiary of Sempra Energy. The facility is maintained in accordance with safety regulations established by the Department of Oil, Gas, and Geothermal Resources, the PUC, and other local, state and federal agencies. Days after the leak was discovered, a dozen or more local and state agencies were involved in an attempt to plug the leak.

It is estimated that the leak was responsible for approximately one million barrels of gas being released per day. Experts estimate that the carbon footprint of the Aliso Canyon leak is larger than the Deepwater Horizon leak in the Gulf of Mexico, which is considered the largest accidental marine oil spill in the world and at that time the largest environmental disaster in United States history.

Natural Gas is largely composed of methane, an odorless and invisible greenhouse gas with a global warming potential of approximately 86 times greater than carbon dioxide in a 20-year time frame. Initially the leak released about 44,000 kilograms of methane per hour which is the equivalent of 1,200 tons of methane every day. In terms of greenhouse gas output per month, it is the equivalent of the greenhouse gas output of 200,000 cars in a year. According to a Time Magazine article on January 11, 2016, the 1.6 million pounds of methane released each day is comparable to the emissions of six coal fired power plants, 2.2 million cows per day, or 4.5 million cars. Besides methane, the gas leak also contained tert-butyl mercaptan, tetrahydrothiophene, and methyl mercaptan, which gives the gas a rotten egg smell and is known to cause headaches, vomiting, and nausea.

While the leak occurred in a mountainous area more than a mile away from any residential areas, residents have complained of headaches, nausea, vomiting and trouble breathing. Though SoCal Gas has claimed that “scientists agree that natural gas is not toxic and that its odorant is harmless at the minute levels at which it is added to natural gas,” the company has been paying to temporarily relocate residents in and around Porter Ranch. In early January, SoCal Gas reported that it had temporarily relocated 2,824 households or roughly 11,296 individuals.

The leak was finally permanently plugged on February 18, 2016. When it was all said and done, the Aliso Canyon gas leak was the worst natural gas leak in United States history in terms of its environmental impact.

Related/Prior Legislation

SB 380 (Pavley, Chapter 14, Statutes of 2016) continued the moratorium on injection of natural gas at the Aliso Canyon gas storage facility until specified criteria, including testing, are met, requires the feasibility of the storage facility to be addressed and requires the PUC, with input from others, to determine the amount of gas necessary at the facility for safety, regional reliability to ensure just and reasonable rates, as specified, among other provisions.

SB 887 (Pavley, 2016) provides a framework for reforming oversight of natural gas storage facilities. (Pending on the Senate Floor)

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, the annual cost of this bill would depend upon how many “significant” leaks occur in that year. Both OES and the ARB provided the per incident cost as follows:

• Approximately $600 (including staffing and travel costs) for OES to deploy an onsite coordinator. This would be recovered from the responsible party.
• Approximately $100,000 (Oil, Gas, and Geothermal Administrative Fund) for ARB to contract for downwind flights to characterize the natural gas release rate at reasonable periodic intervals using small planes with monitors to measure methane.

In addition, unknown, but potentially significant, redirection of penalty revenue from the General Fund to the Gas Storage Facility Leak Mitigation Account created by this bill.

SUPPORT: (Verified 5/31/16)

California Public Interest Research Group

Clean Water Action

Consumer Attorneys of California

Environment California

Environmental Working Group

LAUSD Board Member District 3, Scott M. Schmerelson

National Parks Conservation Association

Sierra Club California

South Coast Air Quality Management District

Union of Concerned Scientist

OPPOSITION: (Verified 5/31/16)

None received

ARGUMENTS IN SUPPORT: The California Public Interest Research Group states that “SB 888 would ensure that monetary penalties paid by the responsible gas company are used specifically for greenhouse gas emissions reduction. This bill will also help ensure that emergency responses to future gas leaks are more effective. Specifically, it will designate Cal OES as the lead response agency for natural gas leaks from storage facilities.”

The Sierra Club California states that, “SB 888 will help ensure that communities like Porter Ranch get the help they need as soon as the emergency arises and that the state can get environmental disasters like this under control sooner. The bill would also establish the Gas Storage Facility Leak Mitigation Account, managed by the PUC. It will be funded by penalties that arise from gas storage facility leaks and those funds must be used in a manner that will result in greenhouse gas reductions that are at least greater than gases emitted by the leak.”

Prepared by:

5/31/16 21:58:35

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 888 (Allen) - Gas corporations: emergency management

Bill Summary:

SB 888 declares the Office of Emergency Services (OES) as the lead agency for emergency response to a significant leak of natural gas from a natural gas storage facility. The bill also directs the California Public Utilities (CPUC) to place any penalties assessed against a gas corporation for a natural gas storage facility leak into a special account and places requirements and restrictions on the use of the monies in the account.

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

The following information is revised to reflect amendments

adopted by the committee on May 27, 2016

Fiscal Impact:

• The annual cost of this bill would depend upon how many “significant” leaks occur in that year. Both OES and ARB provided the per incident costs below:
  • Approximately $600 (including staffing and travel costs) for OES to deploy an onsite coordinator. This would be recovered from the responsible party.
  • Approximately $100,000 (Oil, Gas and Geothermal Administrative Fund) for ARB to contract for downwind flights to characterize the natural gas release rate at reasonable periodic intervals using small planes with monitors to measure methane.
• Unknown, but potentially significant, redirection of penalty revenue from the General Fund to the Gas Storage Facility Leak Mitigation Account created by this bill.

Committee Amendments:

• Clarifies that the Office of Emergency Services is the lead on significant gas leaks that pose a present or potential hazard to public health and safety, property, or to the environment.

-- END --

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 888 (Allen) - Gas corporations: emergency management

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

Bill Summary:

SB 888 declares the Office of Emergency Services as the lead agency for emergency response to a significant leak of natural gas from a natural gas storage facility. The bill also directs the CPUC to place any penalties assessed against a gas corporation for a natural gas storage facility leak into a special account and places requirements and restrictions on the use of the monies in the account.

Fiscal Impact:

• Potentially significant costs for OES and ARB to deploy resources when a gas leak is reported. (See staff comments).
• Minor costs to the Department of Conservation (DOC) and the CPUC for consultation and gas leak response activities when a gas leak is reported.
• Unknown, but potentially significant, redirection of penalty revenue from the General Fund to the Gas Storage Facility Leak Mitigation Account.

Background:

Regulation of natural gas storage wells. Although natural gas storage facilities are subject to the overall utilities jurisdiction of the CPUC, natural gas storage wells and associated piping and equipment fall under the jurisdiction of DOC’s Division of Oil, Gas and Geothermal Resources (DOGGR). Natural gas storage wells represent a small component of the overall Underground Injection Control (UIC) program (approximately 400 wells out of 52,000 statewide), which generally covers permitting, inspection, enforcement, mechanical integrity testing, plugging and abandonment oversight, data management, and public outreach. DOGGR has acknowledged widespread failures in the implementation of its UIC program, and has released a “Renewal Plan” to guide its commitment to reform. DOGGR has received personnel and funding through recent budgets to improve program implementation, data management, enforcement, and other functions.

Aliso Canyon gas leak impacts. On October 23, 2015, Southern California Gas Company (SoCalGas) discovered a significant natural gas leak from “Standard Sesnon 25” (SS 25) well at their Aliso Canyon Natural Gas Storage Facility (Aliso Canyon). The Aliso Canyon is located adjacent to the community of Porter Ranch within the city of Los Angeles. Several days passed before SoCalGas disclosed to the community that a significant uncontrolled leak was occurring. The leak lasted for four months, resulted in the relocation of more than 5,000 households (at SoCal Gas’s expense), and resulted in hundreds of public health complaints. In addition to the public health concerns, ARB’s initial coarse estimates indicate that about 95,000 metric tons of methane was released into the air, adding approximately 20% to the statewide methane emissions during the duration of the leak.

What is a gas leak? On Jan. 26, 2016, the California Public Utilities Commission’s (CPUC) Safety and Enforcement Division (SED) directed all California natural gas storage operators to immediately inspect all natural gas storage facilities for leaks and report the information to the state. The results indicated that 218 of the 229 (95 percent) of the leaks reported across all natural gas storage fields between October 26, 2015 and February 5, 2016, were non-hazardous and required minor responses such as tightening or lubricating valves. Eight were “Grade 1”, meaning that they potentially posed a safety hazard. All the identified leaks were above ground (not leaking from the well storage zone) except for one below ground leak on a flange, which has been repaired.

Proposed Law:

This bill:

Declares OES as the lead agency for emergency response to a significant leak of natural gas from a natural gas storage facility.

Requires OES to coordinate among other state and local agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.

Requires the CPUC to deposit any penalties assessed against a gas corporation into the Gas Storage Facility Leak Mitigation Account, which is established by the bill.

Requires moneys in the account to be expended, upon appropriation by the Legislature solely for direct emissions reductions.

Requires penalty revenues to achieve GHG emission reductions equal to the amount of gases emitted by a gas leak, as determined by the ARB.

Related Legislation:

AB 56 (Hill, Chapter 519, Statutes of 2011) prohibited a gas corporation from recovering any fine or penalty in any rate approved by the CPUC.

SB 380 (Pavley, 2016) calls for a moratorium on injecting or producing natural gas at the Aliso Canyon facility until certain safety measures have been performed and confirmed. On the Governor’s desk.

SB 887 (Pavley, 2016) reforms natural gas storage well standards and operations. The bill is pending consideration in this committee.

Staff Comments:

The annual cost of this bill would depend upon how many “significant” leaks occur in that year. Both OES and ARB provided the per incident costs below:

• Approximately $600 (including staffing and travel costs) for OES to deploy an onsite coordinator. This would be recovered from the responsible party.
• Approximately $100,000 for ARB to contract for downwind flights to characterize the natural gas release rate at reasonable periodic intervals using small planes with monitors to measure methane.

The bill does not define a “significant” leak. The above-referenced CPUC report indicated that 229 leaks occurred across all natural gas storage fields between October 26, 2015 and February 5, 2016, though only eight potentially posed a safety hazard. It unclear how each operator would define “significant” for the purposes of this bill.

-- END --

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2015 - 2016 Regular

Bill No: Hearing Date: 4/19/2016

SUBJECT:

DIGEST: This bill prohibits a gas corporation from recovering from ratepayers any money paid in fines, penalties or damages to residents, businesses and other parties harmed by a gas storage leak. This bill also directs any penalties assessed against a gas corporation for a gas storage facility leak into a dedicated account, to be used for direct greenhouse gas (GHG) emissions reductions. Finally, this bill designates the Office of Emergency Services (OES) as the lead agency for emergency response to a leak from a natural gas storage facility.

ANALYSIS:

Existing law:

1. Directs the California Air Resources Board (ARB) to monitor and regulate sources of emissions of GHGs that cause global warming in order to reduce GHG emissions to 1990 levels by 2020. (Health & Safety Code §38510 et seq.)
2. Authorizes the California Public Utilities Commission (CPUC) to fix rates, establish rules, examine records, issue subpoenas, administer oaths, take testimony, punish for contempt, and prescribe a uniform system of accounts for all public utilities, including electrical and gas corporations, subject to its jurisdiction. (Article 12 of the California Constitution)
3. Requires that all charges demanded or received by any public utility for any product, commodity or service be just and reasonable, and that every unjust or unreasonable charge is unlawful. (Public Utilities Code §451)
4. Prohibits a gas corporation from recovering any fine or penalty in any rate approved by the CPUC. (Public Utilities Code §959)

This bill:

1. Prohibits a gas corporation from recovering from ratepayers any money paid in fines, penalties or damages to residents, businesses and other parties harmed by a gas storage leak.
2. Directs any penalties assessed against a gas corporation for a gas storage facility leak into a dedicated account, to be used for direct GHG emissions reductions.
3. Designates the OES as the lead agency for emergency response to a leak from a natural gas storage facility.

Background

Aliso Canyon Gas Storage Facility leak – a disaster. On October 23, 2016, the Southern California Gas Company (SoCalGas) discovered a leak from a well at the company’s Aliso Canyon Gas Storage Facility. The Division of Oil, Gas and Geothermal Resources (DOGGR) – the state agency responsible for regulating Aliso Canyon’s natural gas storage wells – reports that it was informed of the leak soon after its discovery. Other state and local agencies, as well as nearby residents threatened by the leak, were notified sometime later.

For more than 100 days, the well continued to dump tons of methane gas into the atmosphere, along with irritants and other substances. According to the ARB, the leak emitted almost 100,000 tons of methane, a potent GHG, adding approximately 20 percent to statewide methane emissions over its duration.^[1] Many resident from nearby Porter Ranch suffered noxious odors. Others reported more serious health effects, including nose bleeds, rashes and respiratory problems. Hundreds were relocated from their homes. Despite assurances from public health agencies, many fear the leak’s long term effects on health and wellbeing.

According to the ARB SoCalGas has committed to paying for the damage caused by its leak, including mitigation of the emission of thousands of tons of methane. Last month, ARB released its Aliso Canyon Methane Leak Climate Impacts Mitigation Program, which recommends a program that will:

• Generate significant and quantifiable reductions in methane emissions within the agriculture and waste sectors.
• Promote a more sustainable energy infrastructure by promoting energy efficiency and decreasing reliance on fossil fuels.
• Address emissions from methane “hot spots” not presently targeted under federal, state, or local laws.

The investigation into the cause of the leak continues. The Attorney General, ARB, the City of Los Angeles and the County of Los Angeles have formally accused SoCalGas of violating California laws. The CPUC, which regulates the rates of SoCalGas, is considering penalties against the gas company.

This bill attempts to address a number of discrete issues related to or emerging from the Aliso Canyon leak. First, this bill declares the OES as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. Second, this bill directs the CPUC to place any penalties assessed against a gas corporation for a gas storage facility leak into a special account and places requirements and restrictions on the use of the monies in the account. Finally, this bill prohibits a gas corporation from recovering in rates approved by CPUC the money paid by the gas corporation for fines, penalties, or damages to residents, businesses, and other parties harmed by a gas storage facility leak.

It seems appropriate to designate OES as the lead agency to respond to leaks from a natural gas storage facility. Such a designation is consistent with OES’s responsibility for the coordination of overall state agency response to disasters. Surely, the Aliso Canyon disaster could have benefited from clear lines of responsibility (though, according to OES, SoCalGas, in failing to notify it of the Aliso Canyon leak sooner, violated existing law). The South Coast Air Quality Management District, writing in tentative support of this bill, recommends additionally requiring OES to work in coordination with local air districts.

The other aspects of this bill are addressed below.

GHG emissions reduction program allows for indirect emissions reductions. Existing law – ARB’s regulations to implement the Global Warming Solutions Act – authorizes the use of “market mechanisms” to reduce California’s emissions of GHGs. Specifically, ARB authorizes the creation of a “cap-and-trade” market, in which covered entities purchase tradable allowances authorizing the emission of a quantity of GHGs. Similarly, ARB has authorized covered entities to receive GHG emissions reduction credit for “offset” projects, that is, projects that, according to ARB, represent verified GHG emission reductions or removal enhancements. The rationale for use of both of these types of indirect emissions reductions is that allowances and offsets may allow a covered entity to reduce an amount of GHG emissions at a lower cost than would otherwise occur.

This bill requires that money in a special account established by this bill – the Gas Storage Facility Leak Mitigation Account – be expended only for direct GHG emissions reductions. Relatedly, this bill prohibits the money from being used for the purchase of GHG emissions allowances or offsets. This bill also requires that monies in the account be used in a manner that, at a minimum, reduces GHG in an amount at least as great as the amount of GHGs emitted by the leak.

It is unclear why this bill limits use of monies in the account in this way. According to ARB, allowances and offsets both represent real, verifiable and additional reductions in GHG emissions. Each, therefore, seems a legitimate tool for mitigating environmental damage caused by a gas storage facility leak.

The author describes the prohibitions against allowances and offsets as better assurance that benefits go most directly to those harmed by the leak. However, in the case of the Aliso Canyon leak, this bill does not restrict direct emissions reductions by SoCalGas to the area of surrounding Aliso Canyon. Under this bill, SoCalGas – the largest natural gas utility in the country – could reduce its direct emissions of methane in locations nowhere near Aliso Canyon. As the utility itself says, it operates across 20,000 square miles throughout Central and Southern California, from Visalia to the Mexican border.

In addition, the two requirements described above may be at odds with one another. At this point, it is unknown the dollar amount, if any, of penalties that would be assessed against a natural gas corporation for a storage facility leak (although substantial penalties against SoCalGas for the Aliso Canyon leak seem likely, to say the least). Generally, the purchase of allowances or the use of offsets is a more cost-effective way to reduce GHGs. The more cost-effective the uses of money in the account, the more GHG reductions are realized. This bill requires that monies in fund be used in a manner that, at a minimum, reduces GHG in an amount at least as great as the amount of GHGs emitted by the leak; it may be necessary to realize the most cost-effective reductions of GHGs possible to achieve the requirement of this bill.

Law already prohibits recovery of fines and penalties in rates. This bill creates a new prohibition against a gas corporation recovering in rates approved by CPUC the money paid by the gas corporation for fines, penalties, or damages to residents, businesses, and other parties harmed by a gas storage facility leak. This is appropriate: a utility should not recover from ratepayers the costs of its wrongdoing. However, existing statute already prevents such an outcome. Public Utilities Code §959, added following the explosion of a PG&E natural gas pipeline in San Bruno in 2010, prohibits a gas corporation from recovering any fine or penalty in any rate approved by the CPUC. The author’s office agrees that the existing prohibition is sufficient. Therefore, the author and committee may wish to amend this bill to delete Public Utilities Code §972(c), as that section reads in the latest version of this bill.

Prior/Related Legislation

AB 56 (Hill, Chapter 519, Statutes of 2011) prohibited a gas corporation from recovering any fine or penalty in any rate approved by the CPUC.

SB 380 (Pavley) calls for a moratorium on injecting or producing natural gas at the Aliso Canyon facility until certain safety measures have been performed and confirmed. The bill passed the Senate 40-0 and is pending consideration by Assembly Committee on Appropriations.

SB 887 (Pavley) reforms natural gas storage well standards and operations. The bill is pending consideration by Senate Committee on Environmental Quality.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

California Public Interest Research Group

Clean Water Action

Environment California

Environmental Working Group

Food & Water Watch

Los Angeles Unified School District

National Parks Conservation Association

Sierra Club California

South Coast Air Quality Management District

Union of Concerned Scientists

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: Supporters contend this bill protects ratepayers from preventing them from having to pay for misconduct of a gas corporation and better protects the public by designating OES as the lead agency for responding to leaks from natural gas storage facilities.

-- END --

1. http://www.arb.ca.gov/research/aliso_canyon/arb_aliso_canyon_methane_leak_climate_impacts_mitigation_program.pdf ↑

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Isadore Hall, III

Chair

2015 - 2016 Regular

Bill No: 888 Hearing Date: March 8, 2016

SUBJECT: Gas corporations: emergency management

DIGEST: This bill establishes the California Office of Emergency Services (Cal OES) as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility.

ANALYSIS:

Existing law:

1. Creates Cal OES, within the office of the Governor, which coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities.
2. Provides that the Public Utilities Commission (PUC) has regulatory authority over public utilities, as defined.
3. Requires the PUC to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the PUC, investigation by it, and authorizes the PUC to make any order or recommendation with respect to the investigation that it determines to be just and reasonable.
4. Provides that any public utility that violates any provision or that fails or neglects to comply with any order, decision, decree, rule direction, demand, or requirement of the PUC, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense.
5. Requires that any fine or penalty imposed by the PUC and collected from a public utility be paid to the State Treasury to the credit of the General Fund.

This bill:

1. Establishes Cal OES as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility.
2. Requires Cal OES to coordinate among other state agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak.
3. Creates the Gas Storage Facility Leak Mitigation Account and requires the PUC to deposit any penalties assessed against a gas corporation pursuant to a gas storage facility leak into the account.
4. Specifies that moneys in the account shall be expended, upon appropriation by the Legislature, subject to both of the following conditions:
   1. Moneys shall be expended solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit established by the California Global Warming Solutions Act of 2006. Moneys shall not be used for the purchase of allowances or offsets otherwise authorized by the California Global Warming Solutions Act of 2006.
   2. Moneys from penalties assessed for a gas storage facility leak shall be expended in a manner that, at a minimum, achieves a reduction in greenhouse gases that exceeds the amount of those gases emitted by that leak.
5. Prohibits a gas corporation from recovering any moneys paid for fines, penalties, or damages to residents, businesses, and other parties adversely affected by a gas storage facility leak in any rate approved by the PUC. Those costs shall be paid for by the gas corporation and its shareholders.

Background

Purpose of the Bill. According to the author, “this bill is part of a comprehensive package of legislation introduced in the Senate to address the Aliso Canyon leak disaster. While the State’s response to the leak was swift, at least seven different agencies have been involved with no statutory single point of responsibility and accountability to oversee efforts and remediation actions.”

The author further argues that “unlike oil spill response, which is dictated by a robust framework to streamline agency coordination and collaboration, California lacks a plan to quickly and efficiently address a massive natural gas leak. Given the extensive infrastructure of underground natural gas storage facilities throughout California, and having seen the potential for significant health and environmental problems that can result from a leak, California should have a framework in place to respond quickly and efficiently.”

The bill also creates the Gas Storage Facility Leak Mitigation Account which would fund the mitigation of greenhouse gas impacts through direct measures to reduce emissions.

Aliso Canyon Gas Leak. The Aliso Canyon gas leak was a massive natural gas leak that started on October 23, 2015 at the Aliso Canyon underground storage facility near Porter Ranch, Los Angeles. The leak was discovered during one of Southern California Gas Company’s (SoCal Gas) twice daily well observations. The Aliso Canyon facility is the second largest gas storage facility of its kind in the United States and it is owned by the SoCal Gas, a subsidiary of Sempra Energy. The facility is maintained in accordance with safety regulations established by the Department of Oil, Gas, and Geothermal Resources, the PUC, and other local, state and federal agencies. Days after the leak was discovered, a dozen or more local and state agencies were involved in an attempt to plug the leak.

It is estimated that the leak was responsible for approximately one million barrels of gas being released per day. Experts estimate that the carbon footprint of the Aliso Canyon leak is larger than the Deepwater Horizon leak in the Gulf of Mexico, which is considered the largest accidental marine oil spill in the world and at that time the largest environmental disaster in United States history.

Natural Gas is largely composed of methane, an odorless and invisible greenhouse gas with a global warming potential of approximately 86 times greater than carbon dioxide in a 20-year time frame. Initially the leak released about 44,000 kilograms of methane per hour which is the equivalent of 1,200 tons of methane every day. In terms of greenhouse gas output per month, it is the equivalent of the greenhouse gas output of 200,000 cars in a year. According to a Time Magazine article on January 11, 2016, the 1.6 million pounds of methane released each day is comparable to the emissions of 6 coal fired power plants, 2.2 million cows per day, or 4.5 million cars. Besides methane, the gas leak also contained tert-butyl mercaptan, tetrahydrothiophene, and methyl mercaptan, which gives the gas a rotten egg smell and is known to cause headaches, vomiting, and nausea.

While the leak occurred in a mountainous area more than a mile away from any residential areas, residents have complained of headaches, nausea, vomiting and trouble breathing. Though SoCal Gas has claimed that “scientists agree that natural gas is not toxic and that its odorant is harmless at the minute levels at which it is added to natural gas,” the company has been paying to temporarily relocate residents in and around Porter Ranch. In early January, SoCal Gas reported that it had temporarily relocated 2,824 households or roughly 11,296 individuals.

The leak was finally permanently plugged on February 18, 2016. When it was all said and done the Aliso Canyon gas leak was the worst natural gas leak in United States history in terms of its environmental impact.

Cal OES. The California Office of Emergency Services is responsible for overseeing and coordinating emergency preparedness, response, recovery and homeland security activities within the state. In years past, Cal OES’ primary focus was exclusively on emergency management, but over the last decade their mission has expanded to include responsibilities in criminal justice, victim services, homeland security, and public safety communications.

The Cal OES began as the State War Council in 1943. With an increasing emphasis on emergency management, it officially became Cal OES in 1970. In 2004, the California Legislature merged Cal OES and the Governor’s Office of Criminal Justice Planning, which was responsible for providing state and federal grant funds to local communities to prevent crime and help crime victims.

In 2003, with the State increasing its focus on terrorism prevention after the attacks of September 11, 2001, the Governor’s Office of Homeland Security (OHS) was established through an Executive Order by Governor Gray Davis. In 2009, the California Legislature merged the powers, purposes, and responsibilities of the former Cal OES with those of the OHS into the newly-created California Emergency Management Agency (Cal EMA).

On July 1, 2014, Governor Brown’s Reorganization Plan #2 eliminated the Cal EMA and restored it to the Governor’s Office, renaming it Cal OES. That same year, the Public Safety Communications Office was merged into Cal OES.

Prior/Related Legislation

SB 380 (Pavley, 2016) requires the State Oil and Gas Supervisor to immediately institute a moratorium on injections of natural gas into any wells located within and serving the Aliso Canyon storage facility located in the County of Los Angeles until specified conditions are met, including that the integrity of each well has been quantitatively and objectively evaluated using state-of-the-art technology, as determined by the Supervisor with input from independent experts, and the risks posed by well failure have been evaluated. (Pending in the Assembly Utilities and Commerce Committee)

SB 887 (Pavley, 2016) requires the Division of Oil, Gas, and Geothermal Resources to, before January 1, 2018, and annually thereafter, inspect all natural gas storage wells serving or located in a natural gas storage facility and would prescribe standards for natural gas storage wells. (Pending in the Senate Natural Resources and Water Committee)

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

California Public Interest Research Group

Clean Water Action

Consumer Attorneys of California

Environment California

Environmental Working Group

LAUSD Board Member District 3, Scott M. Schmerelson

National Parks Conservation Association

Sierra Club California

South Coast Air Quality Management District

Union of Concerned Scientist

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: The California Public Interest Research Group states that “SB 888 would ensure that monetary penalties paid by the responsible gas company are used specifically for greenhouse gas emissions reduction. This bill will also help ensure that emergency responses to future gas leaks are more effective. Specifically, it will designate Cal OES as the lead response agency for natural gas leaks from storage facilities.”

The Sierra Club California states that, “SB 888 will help ensure that communities like Porter Ranch get the help they need as soon as the emergency arises and that the state can get environmental disasters like this under control sooner. The bill would also establish the Gas Storage Facility Leak Mitigation Account, managed by the PUC. It will be funded by penalties that arise from gas storage facility leaks and those funds must be used in a manner that will result in greenhouse gas reductions that are at least greater than gases emitted by the leak. To protect ratepayers, the bill will also prohibit the utility from throwing the cost onto its customers.”

DUAL REFERRAL: Senate Energy, Utilities and Communications Committee