BILL ANALYSIS Ó AB 2788 Page 1 Date of Hearing: May 18, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2788 (Gatto) - As Amended May 5, 2016 ----------------------------------------------------------------- |Policy |Natural Resources |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: Yes State Mandated Local Program: NoReimbursable: No SUMMARY: This bill requires the 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to underground gas storage projects to remain in effect until the regulations are either made permanent, amended, or repealed. This bill sunsets January 1, 2019. FISCAL EFFECT: Minor administrative savings resulting from the extension of the emergency regulation deadline. AB 2788 Page 2 COMMENTS: 1)Purpose. According to the author, this bill 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. 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. This bill extends the operative period of the emergency regulations to ensure the most protective measures remain in effect as agencies take substantive time to analyze, understand, and address the incident. 2)Emergency Regulations. The Administrative Procedure Act (APA) was established in the 1940s in part due to California's landmark laws regarding the regulation of clean air, water, and energy efficiency. The Office of Administrative Law (OAL) was established by statute in 1979 to administer the APA. The creation of the oversight agency was in response to an unprecedented growth in the number of administrative regulations and the Legislature's desire to avoid unnecessary burden on Californians. Forming the OAL was viewed as a compromise and alternative to proposals to give the Legislature the ability to review and modify executive branch regulations. The APA allows an agency to adopt emergency regulations AB 2788 Page 3 through an expedited process to remain in effect for 180 days. Up to two 90-day re-adoptions are allowed if the state agency is making progress towards adopting permanent regulations. Emergency regulations can become permanent if the promulgating agency adopts the emergency regulation through the regular rulemaking process within the time period the emergency regulations are still in effect. On February 5, 2016, DOGGR adopted emergency regulations to improve the regulation of gas storage wells. The regulations include additional data reporting requirements, 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. Until January 1, 2019, this bill requires the emergency regulations to remain in effect until regulations are made permanent, amended, or repealed. 3)Aliso Canyon Gas Leak. The Aliso Canyon Gas Storage Facility is owned by the SoCalGas and is located in Los Angeles County just north of Porter Ranch. SoCalGas is a gas corporation regulated by the PUC. On October 23, 2015, SoCalGas detected a methane gas leak at its Aliso Canyon Gas Storage Facility at Well # SS-25. AB 2788 Page 4 Following an initial evaluation and several attempts to stop the leak, SoCalGas began drilling a relief well in order to plug the leaking well. The initial attempts to plug the leak failed, and the leak lasted 112 days before being permanently capped on February 18, 2016. A study in the journal Science confirmed that the methane gas leak was not only the largest in California's history, but also the second largest in the nation. According to the lead author of the study, as much as 60 metric tons of methane spewed from the leak each hour. The leak displaced over 5,000 households, requiring families to move into temporary housing and hotels provided by SoCalGas. Since October 25, 2016, no natural gas has been injected into the facility. However, on April 13, 2016, residents living near the natural gas storage field complained of a strong odor raising the question on whether another problem exists at the facility. 4)Related Legislation. Numerous bills have been introduced to respond to the Aliso Canyon Gas Storage Facility leak. SB 380 (Pavley) imposes an immediate moratorium on natural gas injection and a restriction on natural gas production at the AB 2788 Page 5 Aliso Canyon storage facility until certain conditions are met. This bill is on the Governor's desk for signature. SB 887 (Pavley) requires DOGGR to prescribe standards for natural gas storage wells and requires annual inspections. This bill is pending in the Senate Appropriations Committee. AB 1902 (Wilk) extends the statute of limitations for civil actions resulting from exposure to hazardous materials from the Aliso Canyon gas leak. This bill failed passage in the Assembly Judiciary Committee. AB 1903 (Wilk) directs the Office of Environmental Health Hazard Assessment (OEHHA) to study the long-term health impacts of the Aliso Canyon natural gas leak. This bill is currently in this committee's Suspense file. AB 1904 (Wilk) requires the OEHHAto evaluate and report to the Legislature on natural gas odorants and potential alternatives by January 1, 2018. This bill is currently in this committee's Suspense file. AB 1905 (Wilk) requires the Natural Resources Agency, 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 in this committee's Suspense file. AB 2788 Page 6 SB 887 (Pavley) requires DOGGR to prescribe standards for natural gas storage wells and requires annual inspections. This bill is pending in the Senate Environmental Quality Committee. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081