BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1420 (Salas) - Oil and gas: pipelines. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: July 6, 2015 |Policy Vote: N.R. & W. 9 - 0, | | | E.Q. 7 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes (see staff | | |comment) | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 24, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- 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 ? 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 ? 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 ? that the responsible party is liable for the costs incurred by the local health officer, this mandate is not likely to be reimbursable. -- END --