BILL ANALYSIS Ó
AB 2788
Page 1
Date of Hearing: May 3, 2016
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
AB 2788
(Gatto) - As Introduced February 19, 2016
SUBJECT: Natural gas storage: emergency regulations (Urgency)
SUMMARY: Requires Division of Oil, Gas, and Geothermal
Resources' (DOGGR) emergency regulations related to underground
gas storage projects to remain in effect until the regulations
are either made permanent, amended, or repealed.
EXISTING LAW:
1)Establishes DOGGR as the state's oil and gas regulator.
2)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.
3)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
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the UIC program in 1983.
4)Pursuant to the Administrative Procedures Act (APA), allows an
agency to adopt emergency regulations that remain in effect
for 180 days. Authorizes the Office of Administrative Law
(OAL) to approve two re-adoptions of emergency regulations for
a period not to exceed 90 days. Allows the agency to make
regulations permanent if the agency adopts the emergency
regulation through the regular rulemaking process within the
time period the emergency regulations are in effect.
FISCAL EFFECT: Unknown
COMMENTS:
1)Author's statement:
AB 2788 was introduced in response to the natural gas
leak discovered in Porter Ranch, California in
October, 2015 at the Aliso Canyon storage facility.
This gas leak has been called the largest natural
disaster since the BP oil spill due to the large
amounts of methane released into the atmosphere. In
addition, mercaptans, or odorants added to the gas for
leak detection purposes, migrated into surrounding
neighborhoods and contributed to headaches, nose
bleeds, and nausea for many community members. As a
result, Governor Brown declared a state of emergency
in the Porter Ranch area, and DOGGR issued emergency
regulations to ensure additional gas leaks would not
occur. Under normal circumstances, emergency
regulations would dissolve after 180 days. This bill
would make these emergency regulations permanent to
ensure the most protective measures remain in effect
as agencies take substantive time to analyze,
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understand, and address the incident.
2)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 greenhouse gas 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
5,000 Porter Ranch households were relocated due to the leak.
Now that the leak has been stopped, residents are returning
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home, regulators are investigating the cause of the leak, and
a comprehensive safety review of the other 114 wells at the
field has begun.
3)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 facilities to reduce the cost of procurement and
to maintain adequate supply of natural gas during peak times.
While the California Public Utilities Commission (CPUC)
regulates natural gas providers, natural gas transmission
lines, and the permitting of natural gas storage 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 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 natural gas
storage facility may contain dozens of active gas storage
wells. Many of these natural gas storage wells are near
residential development, similar to the Aliso Canyon facility.
Some natural gas storage facilities have been in operation
since the 1940s and approximately half of the active wells are
over 40 years old. Many of the older wells were not built to
today's well construction standards and lack the best
technology available to operate safely.
4)DOGGR's UIC Problems. In 1974, the Safe Drinking Water Act
gave the US EPA the authority and responsibility to control
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underground injection to protect underground drinking water
sources. In 1983, a primacy agreement was signed that allowed
DOGGR to implement the US EPA's UIC program for oil and gas
wells in California. DOGGR's handling of the portion of the
UIC program delegated to it by the US EPA has come under
criticism in recent years. A 2011 US EPA audit of DOGGR's UIC
program implementation concluded that DOGGR was misclassifying
underground sources of drinking water and doing an
insufficient job monitoring the UIC program. In June 2014, it
was discovered that DOGGR was approving injection wells in
nonexempt aquifers. This included injections into aquifers
that were not properly exempted, but also included injections
into aquifers that were never exempt. California
Environmental Protection Agency's (CalEPA) review found that
DOGGR's district offices were approving projects without
review from DOGGR and were making errors identifying the
injectable zone of exempt aquifers. This included
misidentifying the borders and depth of the aquifer and
allowing expansion of productive limits over time beyond
boundaries established in the Primacy Application.
Last year, SB 83 (Committee on Budget and Fiscal Review),
Chapter 24, Statutes of 2015, required the Secretary of CalEPA
and the Secretary of Natural Resources Agency (NRA) to appoint
an independent review panel (Panel), on or before January 1,
2018. The Panel will evaluate the regulatory performance of
DOGGR's administration of the UIC program and make
recommendations on how to improve its effectiveness. The
recommendations the Panel can make include: requests for
additional resources; needed statutory or regulatory changes;
proposals for program reorganization; and, whether to transfer
the UIC program to the State Water Resources Control Board.
In October 2015, DOGGR released a plan titled "Renewal Plan
For Oil and Gas Regulation," which was intended to address
concerns over its handling of the UIC program and its
regulation of oil and gas in general. The plan called for the
review of all injection projects and the review and updating
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of all UIC regulations. Many of those regulations had not
been changed in decades. Concerns have been raised that DOGGR
has not required adequate inspections, maintenance, or
upgrades for older natural gas storage wells to prevent leaks.
DOGGR indicates they were already in the process of updating
their gas storage regulations when the leak occurred.
5)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:
a) Direction to DOGGR to continue prohibiting all
injections into the Aliso Canyon facility;
b) Direction to CPUC and California Energy Commission (CEC)
to reduce the pressure of the facility by withdrawing gas;
c) Directing the California Air Resources Board (ARB) to
require real-time monitoring of emissions;
d) Direction to the Office of Environmental Health Hazard
Assessment to review public health concerns, and ensure
energy and natural gas reliability;
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e) Direction to DOGGR to promulgate emergency regulations
to require new safety and reliability measures for
underground natural gas storage facilities; and,
f) Direction to DOGGR, CPUC, ARB, and CEC to assess the
long-term viability of natural gas storage facilities.
On February 5, 2016, DOGGR adopted emergency regulations to
improve the regulation of gas storage wells. The regulations
include additional data reporting from the operator, testing
of the gas storage facility, and the submission of a Risk
Management Plan by the Operator to DOGGR to assess the
integrity and risk associated with their gas storage project.
6)This bill. This bill would require DOGGR's emergency
regulations to remain in effect until the agency either
permanently adopts, amends, or appeals the regulations. The
author states, "This bill would suspend the APA and allow
these emergency regulations to remain in effect beyond 180
days in order to provide ample time for permanent regulations
to be adopted though the appropriate administrative
procedures." However, if DOGGR never adopted permanent
regulations, the emergency regulations would be permanent
without going through the normal APA process. The normal APA
process provides for more public review and a more through OAL
review of the regulations than the emergency rulemaking
process. The author and committee may wish to consider
amending the bill to sunset its provisions in two years to
clarify that DOGGR must eventually go through the APA process.
In addition, the author and committee may wish to consider
amending the bill to specify that the emergency regulations
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were effective February 5, 2016.
5)Related Legislation.
AB 1905 (Wilk) requires NRA, on or before July 1, 2017, to
complete an independent scientific study on natural gas
injection and storage practices and facilities. This bill is
currently on the suspense file in the Assembly Appropriations
Committee.
SB 380 (Pavley) imposes an immediate moratorium on natural gas
injection and a restriction on natural gas production at the
Aliso Canyon storage facility until certain conditions are met.
This bill is on the Assembly Floor.
SB 887 (Pavley) revises requirements for natural gas storage
facilities. This bill is awaiting hearing in the Senate
Appropriations Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file
AB 2788
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Opposition
None on file
Analysis Prepared by:Michael Jarred / NAT. RES. / (916) 319-2092