BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2788


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          Date of Hearing:  May 18, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2788 (Gatto) - As Amended May 5, 2016


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          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          are either made permanent, amended, or repealed.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


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          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  








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            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.  








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            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  








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            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.










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            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