BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1420 (Salas) - Oil and gas: pipelines.
          
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          |Version: July 6, 2015           |Policy Vote: N.R. & W. 9 - 0,   |
          |                                |          E.Q. 7 - 0            |
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          |Urgency: No                     |Mandate: Yes (see staff         |
          |                                |comment)                        |
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          |Hearing Date: August 24, 2015   |Consultant: Marie Liu           |
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          This bill meets the criteria for referral to the Suspense File. 


          Bill  
          Summary:  AB 1420 would require a local health officer to take  
          specified actions when there is a leak in a gas pipeline and  
          would require mechanical integrity tests of gas pipelines in  
          sensitive areas every two years.


          Fiscal  
          Impact:  
           First year costs of $3.4 million and ongoing costs of $2.9  
            million to the Oil, Gas, and Geothermal Administrative Fund  
            (special) for personnel and equipment necessary to identify  
            all pipelines in sensitive areas and to perform required  
            mechanical integrity tests as required. These costs are likely  
            to necessitate an increase in the fee that provides revenues  
            to the fund.









          AB 1420 (Salas)                                        Page 1 of  
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          Background:  Existing law establishes the Division of Oil, Gas, and  
          Geothermal Resources (DOGGR) within the Department of  
          Conservation as the state's oil and gas regulator. The Oil and  
          Gas Supervisor is the lead of the division and has broad  
          authority to supervise the operation, maintenance, and removal  
          or abandonment of tanks and facilities, including pipelines,  
          related to oil and gas production within an oil and gas field to  
          prevent damage to life, health, property, and natural resources.  
          (PRC §3106) The division is required to prescribe minimum  
          facility maintenance standards for oil and gas production  
          facilities including pipelines that are not under the  
          jurisdiction of the State Fire Marshal (PRC §3270), including  
          for leak detection. 


          Proposed Law:  
            This bill would require a local health officer to take the  
          following actions if it determines that there is a leak in a gas  
          pipeline within a sensitive area and the response by the owner  
          or operator of the pipeline has been inadequate:
           Direct the responsible party to test the soil, air, and water  
            in the affected area for contamination
           Determine whether the leak poses a serious threat to public  
            health and safety of the residents
           Direct the responsibly party to notify all residents affected  
            by the leak if there is a serious threat to public health and  
            safety.


          The responsible party would be liable for all costs incurred by  
          the local health officer.


          This bill would require the owner or operator of a pipeline to  
          notify DOGGR and the local health officer of a leak discovered  
          from an active gas pipeline. 


          This bill would direct DOGGR to require a mechanical integrity  
          test of all active gas pipelines of any diameter within  
          sensitive areas every two years. By January 1, 2018, DOGGR would  
          be responsible for identifying all active gas pipelines subject  
          to this requirement.









          AB 1420 (Salas)                                        Page 2 of  
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          For the purposes of this bill, a "sensitive area" is an area  
          with buildings intended for human occupancy within 300 feet of  
          an active gas pipeline that are not necessary to the operation  
          of the pipeline; an area determined by the supervisor to present  
          significant threat to life, health, property, or natural  
          resources; or an area determined by the supervisor to have a  
          history of chronic leaks




          Staff  
          Comments:  This bill would require a significant new workload  
          for DOGGR to identify all pipelines in sensitive areas and to  
          oversee mechanical integrity tests of such pipelines every two  
          years. Specifically, DOGGR estimates needing 10 technicians to  
          verify the accuracy and completeness of operator-submitted  
          pipeline locations and three engineer positions to analyze  
          operational history of pipelines to help identify sensitive  
          areas. These positions would also be responsible for witnessing  
          pipeline testing activity. Additional positions would be needed  
          for compliance and enforcement, management of data, and provide  
          general support for the program. In total, DOGGR estimates that  
          it would need 22 staff at an ongoing cost of $2.85 million.  
          There would also be anticipated one-time costs of $570,000 for  
          equipment, including vehicles. 
          DOGGR notes that there are insufficient funds in the Oil, Gas,  
          and Geothermal Administration Fund to support these additional  
          activities. As such it anticipates needing to raise industry  
          fees by 1.75 cents per barrel.


           Staff notes  that there is an incorrect reference in Section 1 of  
          the bill. The reference in §101042(a) should be to §3270.5  
          instead of §3270.6. 


          There are two local mandates created by this bill- the first is  
          the creation of a crime. However, under the California  
          Constitution, costs associated with this mandate are not  
          reimbursable. The other mandate created in this bill is the  
          requirement for the local health officer to take specific  
          actions in the event of a gas leak. But as the bill specifies  








          AB 1420 (Salas)                                        Page 3 of  
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          that the responsible party is liable for the costs incurred by  
          the local health officer, this mandate is not likely to be  
          reimbursable. 




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