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 ----------------------------------------------------------------- |Author: |Wilk | |-----------+-----------------------------------------------------| |Version: |5/31/2016 As Amended | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Jay Dickenson | | | | ----------------------------------------------------------------- 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 AB 1903 (Wilk) Page 5 of ? 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. AB 1903 (Wilk) Page 6 of ? 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. -- END --