BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
                              Senator Ben Hueso, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 1903           Hearing Date:    6/13/2016
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          |Author:    |Wilk                                                 |
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          |Version:   |5/31/2016    As Amended                              |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Jay Dickenson                                        |
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          SUBJECT: Aliso Canyon gas leak:  health impact study

            DIGEST:   This bill requires completion of a study of the  
          long-term effects on health caused by the prolonged leak at the  
          Aliso Canyon natural gas storage facility.

          ANALYSIS:
          
          Existing law:
          
          1)Authorizes the California Public Utilities Commission (CPUC)  
            to regulate private corporations that own, operate, control,  
            or manage a line, plant, or system for the transportation or  
            the production, generation, transmission, or furnishing of  
            heat, power, or storage directly or indirectly to or for the  
            public. Authorizes the 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) 

          2)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) 

          3)Prohibits a gas corporation from recovering any fine or  
            penalty in any rate approved by the CPUC.  (Public Utilities  
            Code §959) 








          AB 1903 (Wilk)                                      Page 2 of ?
          
          
          This bill:

          1)Directs the CPUC to authorize and the Office of Environmental  
            Health Hazard Assessment (OEHHA) to undertake a study of the  
            long-term health effect of the natural gas leak from the Aliso  
            Canyon natural gas storage facility that occurred in 2015.

          2)Requires the study to include, at least, the following:

             a)   An investigation of the impact of the natural gas leak  
               on the health of persons who resided within a 12-mile  
               radius of the Aliso Canyon natural gas storage facility in  
               the County of Los Angeles between October 23, 2015, and the  
               date when the State Oil and Gas Supervisor has determined  
               that the gas well safety review conducted pursuant to Order  
               1109, issued by the State Oil and Gas Supervisor on March  
               4, 2016, is complete.

             b)   An evaluation of the impact on residents due to exposure  
               to chemicals, including, but not limited to, methane,  
               benzene, and mercaptan.

          3)Directs CPUC to transmit the study and ongoing findings to the  
            appropriate policy committees of the Legislature on a biennial  
            basis, on or before January 1 of every even-numbered year,  
            from 2018 until 2028.

          4)Directs the CPUC to order Southern California Gas Company  
            (SoCalGas) to pay for the study and to prohibit SoCalGas from  
            recovering any of the costs of the study in any rate approved  
            by the CPUC.

          5)States that if the CPUC penalizes SoCalGas for its  
            responsibilities related to the natural gas leak at the Aliso  
            Canyon natural gas storage facility, the CPUC may include the  
            costs of the study.

          6)Conditions the requirement that CPUC authorize the study upon  
            CPUC having recovered sufficient moneys to pay the costs of  
            the entire study and the Legislature having appropriated those  
            moneys for the study.

          Background

          Aliso Canyon Gas Storage Facility leak - a disaster.  On October  








          AB 1903 (Wilk)                                      Page 3 of ?
          
          
          23, 2016, the 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 California Air Resource Board  
          (ARB), the leak emitted almost 100,000 tons of methane, a potent  
          greenhouse gas (GHG), adding approximately 20 percent to  
          statewide methane emissions over its duration.  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.

          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.

          Bill requires study of health effects of leak, limits cost  
          recovery.  This bill directs CPUC to authorize and the OEHHA to  
          undertake a study of the long-term health effect of the natural  
          gas leak, provided CPUC has recovered sufficient moneys to pay  
          the costs of the entire study and the Legislature has  
          appropriated those moneys for the study.  This direction to the  
          CPUC is appropriate, considering the gas was released by a  
          facility owned by SoCalGas, a public utility regulated by the  
          CPUC.  

          This bill also includes provisions concerning the ability of  
          SoCalGas to recover the cost of the study from ratepayers.   
          These provisions are inappropriate - the CPUC reports such a  
          requirement might be unlawful - because they seek to punish  
          SoCalGas without establishing wrongdoing.  It may be the case  
          that the various investigations into the Aliso Canyon leak  
          reveal wrongdoing or negligence on the part of SoCalGas.  And  
          the CPUC will likely punish any such wrongdoing and negligence  
          through fines and penalties against SoCalGas.  Existing statute  








          AB 1903 (Wilk)                                      Page 4 of ?
          
          
          prohibits the gas company from recovering from ratepayers the  
          cost of such fines and penalties.  

          The cost of the study required by this bill, however, is not  
          punitive.  The CPUC should retain the discretion to determine if  
          the cost of the study is just, reasonable and recoverable from  
          the gas company's ratepayers.  Therefore, the author may wish to  
          amend the bill to delete the provision that prohibit SoCalGas  
          from recovering any of the costs of the study in any rate  
          approved by the CPUC, as follows:

               SECTION 1.
                Section 911.3 is added to the Public Utilities Code, to  
               read:

               (a) If moneys are appropriated as specified in subdivision  
               (d), the commission shall authorize a study by the Office  
               of Environmental Health Hazard Assessment of the long-term  
               health impacts of the significant natural gas leak from the  
               Aliso Canyon natural gas storage facility located in the  
               County of Los Angeles that started approximately October  
               23, 2015. The study shall include, but is not limited to,  
               both of the following:
               (1) An investigation of the impact of the natural gas leak  
               on the health of persons who resided within a 12-mile  
               radius of the Aliso Canyon natural gas storage facility in  
               the County of Los Angeles between October 23, 2015, and the  
               date when the State Oil and Gas Supervisor has determined  
               that the gas well safety review conducted pursuant to Order  
               1109, issued by the State Oil and Gas Supervisor on March  
               4, 2016, is complete.
               (2) An evaluation of the impact on residents due to  
               exposure to chemicals, including, but not limited to,  
               methane, benzene, and mercaptan.
               (b) The commission shall publish and transmit the report by  
               the Office of Environmental Health Hazard Assessment and  
               its ongoing findings to the appropriate policy committees  
               of the Legislature on a biennial basis, on or before  
               January 1 of every even-numbered year, from 2018 until  
               2028.
               (c) (1) Consistent with its authority to bring enforcement  
               actions under this part, the commission shall order  
               Southern California Gas Company to pay for the study  
               described in subdivision (a).
                (2) The commission shall prohibit Southern California Gas  








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               Company from recovering any of the costs ordered to be paid  
               pursuant to paragraph (1) in any rate approved by the  
               commission.
               (3)   (2)  If the commission penalizes Southern California Gas  
               Company for its responsibilities related to the natural gas  
               leak at the Aliso Canyon natural gas storage facility, the  
               commission may include the costs of the study described in  
               subdivision (a) in any penalty assessment.
               (d) The commission shall authorize and the Office of  
               Environmental Health Hazard Assessment shall undertake the  
               study described in subdivision (a) only if the commission  
               has recovered sufficient moneys to pay the costs of the  
               entire study pursuant to subdivision (c) and the  
               Legislature has appropriated those moneys for the purpose  
               of this section.
               (e) This section shall remain in effect only until January  
               1, 2029, and as of that date is repealed, unless a later  
               enacted statute, that is enacted before January 1, 2029,  
               deletes or extends that date.

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

          Prior/Related Legislation
          
          SB 380 (Pavley, Chapter 14, Statutes of 2016) placed a  
          moratorium on injecting natural gas into the Aliso Canyon gas  
          storage facility and establishes requirements for resuming  
          natural gas injections at the facility. 

          AB 2798 (Gatto, 2016) expands the types of information a person  
          proposing to build a thermal powerplant must provide to the CEC  
          to newly include 1) the sources of the fuels to be used and 2)  
          the extent to which the facility will increase or decrease  
          reliance on underground natural gas storage.  The bill passed  
          the Assembly 78-0 and is under consideration by this committee.

          SB 888 (Allen, 2015) 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.  The bill passed  
          the Senate 28-10 and is pending referral in the Assembly.








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


            SUPPORT:  

          Common Sense Kids Action
          Los Angeles Unified School District

          OPPOSITION:

          None received

          ARGUMENTS IN SUPPORT:    According to the author:
          
          A study must be done to figure out whether there are long-term  
          health risks from the Aliso Canyon gas leak. Under existing law,  
          the CPUC has regulatory authority over public utilities,  
          including gas corporations.  The Natural Gas Pipeline Safety Act  
          of 2011, within the Public Utilities Act, designates the CPUC as  
          the state authority responsible for regulating and enforcing  
          federal law with respect to intrastate gas pipeline  
          transportation and pipeline facilities. Existing law requires  
          the OEHHA to evaluate the environmental and health risks posed  
          by various substances.
          
          
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