BILL NUMBER: SB 380	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 19, 2016
	AMENDED IN ASSEMBLY  MARCH 30, 2016
	AMENDED IN ASSEMBLY  MARCH 7, 2016
	AMENDED IN ASSEMBLY  FEBRUARY 16, 2016
	AMENDED IN SENATE  JANUARY 27, 2016

INTRODUCED BY   Senator Pavley
   (Principal coauthors: Senators De León and Huff)
   (Coauthors: Senators Allen, Hertzberg, and Runner)
   (Coauthor: Assembly Member Wilk)

                        FEBRUARY 24, 2015

   An act to add and repeal Section 3217 of the Public Resources
Code, and to add and repeal Sections 714 and 715 of the Public
Utilities Code, relating to natural gas, and declaring the urgency
thereof, to take effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 380, as amended, Pavley. Natural gas storage: moratorium.
   (1) Under existing law, the Division of Oil, Gas, and Geothermal
Resources in the Department of Conservation regulates the drilling,
operation, maintenance, and abandonment of oil and gas wells in the
state. Existing law requires the State Oil and Gas Supervisor to
supervise the drilling, operation, maintenance, and abandonment of
wells and the operation, maintenance, and removal or abandonment of
tanks and facilities related to oil and gas production within an oil
and gas field, so as to prevent damage to life, health, property, and
natural resources, as provided; to permit owners and operators of
wells to utilize all known methods and practices to increase the
ultimate recovery of hydrocarbons; and to perform the supervisor's
duties in a manner that encourages the wise development of oil and
gas resources to best meet oil and gas needs in this state. Under
existing law, a person who fails to comply with certain requirements
relating to the regulation of oil or gas operations is guilty of a
misdemeanor.
   This bill would require the supervisor to continue the prohibition
against Southern California Gas Company injecting any natural gas
into the Aliso Canyon natural gas storage facility located in the
County of Los Angeles until a comprehensive review of the safety of
the gas storage wells at the facility is completed, as specified, the
supervisor determines that well integrity has been ensured by the
review, the risks of failures identified in the review have been
addressed, the supervisor's duty to prevent damage to life, health,
property, and natural resources, and other requirements is satisfied,
and the Executive Director of the Public Utilities Commission has
concurred via letter with the supervisor regarding his or her
determination of safety. The bill would require the supervisor to
determine criteria for the gas storage well comprehensive safety
review with input from independent experts and would require the
criteria to include, but not be limited to, specified tests and
inspections.  The bill would require the division to hold at
least one public meeting to provide the public an opportunity to
comment on the criteria.  The bill would require the
supervisor to direct the contracted independent experts to provide a
methodology to be used in assessing the tests and inspections
specified in the criteria. The bill would require the division to
post the methodology on a public portion of its Internet Web site.
The bill would require the operator of the facility to provide the
division with the proposed maximum reservoir pressure and to include
data and calculations supporting the basis for the pressure limit.
The bill would authorize the supervisor to allow injections of
natural gas into the facility once the gas storage well comprehensive
safety review is  complete   complete, the
division holds a duly noticed public hearing in the affected
community to provide the public an opportunity to   comment
on the safety review findings and the proposed pressure limit, 
and the supervisor has approved the maximum and minimum reservoir
pressure at the facility. The bill would also require that, before
the completion of the gas storage well comprehensive safety review,
the production of natural gas from gas storage wells at the facility
be limited to gas storage wells that have satisfactorily completed
the testing and remediation required under the review, except as
specified. The bill would require the supervisor to direct the
operator of the facility to provide a plan to ensure, at the earliest
possible time, the availability of sufficient gas production
capacity using gas storage wells that have satisfactorily completed
the testing and remediation required under the review. The bill would
require all gas storage wells returning to service under these
provisions to inject or produce gas only through the interior metal
tubing, and would require the operator to conduct ongoing pressure
monitoring and comply with any other requirements specified by the
supervisor. The bill would require the gas storage wells at the
facility that are plugged and abandoned pursuant to these provisions
to be periodically inspected by the operator for leaks using
effective gas leak detection techniques. The bill would require the
division, with respect to the review and in a timely manner, to post
all testing, inspection and monitoring results, and other safety
review-related materials to a public portion of the division's
Internet Web site. Because a violation of certain of these
requirements would be a crime, the bill would impose a state-mandated
local program. The bill would repeal these provisions on January 1,
2021.
   (2) Under existing law, the Public Utilities Commission is
authorized to supervise and regulate every public utility in the
state. Under existing law, a violation of the Public Utilities Act or
any order, decision, rule, direction, demand, or requirement of the
commission is a crime.
   This bill would require the commission, no later than July 1,
2017, to  open a proceeding to  determine the feasibility of
minimizing or eliminating use of the Aliso Canyon natural gas
storage facility located in the County of Los Angeles while still
maintaining energy and electric reliability for the region, and to
consult with specified entities in making its determination. The bill
would require the commission, in consultation with specified
entities, to determine the range of working gas necessary to ensure
safety and reliability for the region and just and reasonable rates
in California, and to direct the operator of the facility to provide
all information the commission deems necessary to make that
determination. The bill would require the commission, within 30 days
of the effective date of this act, to publish a report, including
specified information regarding gas production at the facility. The
bill would require the commission to make the report available on its
Internet Web site, and to seek public comments on the report, as
specified. The bill would require the executive director of the
commission, in consultation with the supervisor, to direct the
operator of the facility to maintain the specified range of working
gas after certain conditions have occurred. Certain provisions of
this bill would be part of the act and an order or other action of
the commission would be required to implement certain of the
provisions. Because a violation of the bill's provisions or of an
order or decision of the commission would be a crime, this bill would
impose a state-mandated local program by creating new crimes. The
bill would repeal these provisions on January 1, 2021.
   (3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   (4) This bill would declare that it is to take effect immediately
as an urgency statute.
   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 3217 is added to the Public Resources Code, to
read:
   3217.  (a) (1) The supervisor shall continue the prohibition
against Southern California Gas Company injecting any natural gas
into the Aliso Canyon natural gas storage facility located in the
County of Los Angeles until a comprehensive review of the safety of
the gas storage wells at the facility is completed and the supervisor
determines that well integrity has been ensured by the review, the
risks of failures identified in the review have been addressed, and
the supervisor's duty to prevent damage to life, health, property,
and natural resources, and other requirements, as specified in
Section 3106, is satisfied. The supervisor may not lift the
prohibition on injection until the Executive Director of the Public
Utilities Commission has concurred via letter with the supervisor
regarding his or her determination of safety.
   (2) For purposes of this section, "facility" means the Aliso
Canyon natural gas storage facility located in the County of Los
Angeles operated by Southern California Gas Company.
   (b) (1) The criteria for the gas storage well comprehensive safety
review shall be determined by the supervisor with input from
contracted independent experts and shall include the steps in
subdivision (c).  The division shall hold at least one public
meeting to provide the public an opportunity to comment on the
criteria. 
   (2) The supervisor shall direct the contracted independent experts
to provide a methodology to be used in assessing the tests and
inspections specified in the criteria. This requirement may be
satisfied by the independent experts reviewing and, if necessary,
revising the division's written methodology for assessing the tests
and inspections specified in the criteria. The methodology shall
include all tests and inspections required by the criteria. The
division shall post the methodology online on a public portion of its
Internet Web site.
   (c) The gas storage well comprehensive safety review shall include
the following steps to ensure external and internal well mechanical
integrity:
   (1) All gas storage wells shall be tested and inspected from the
surface to the packer or to any wellbore restriction near the top of
the geologic formation being used for gas storage, whichever is
higher in elevation, to detect existing leaks using temperature and
noise logs.
   (2) Any leaks shall be stopped and remediated to the satisfaction
of the supervisor.
   (3) Following remediation, leak detection tests shall be repeated
and results reviewed by the supervisor.
   (4) (A) Unless a well has been fully plugged and abandoned to the
supervisor's satisfaction and in accordance with Section 3208, the
well shall be evaluated and remediated in accordance with
subparagraph (B) or plugged in accordance with subparagraph (C).
   (B) If a gas storage well is intended to return to service for the
purposes of resuming injections to the facility, it shall be tested
and inspected from the surface to the packer or to any wellbore
restriction near the top of the geologic formation being used for gas
storage, whichever is higher in elevation, to ensure mechanical
integrity. As identified in the division's criteria, these tests and
inspections shall include the measurement of casing thickness and
integrity, an evaluation of the cement bond on the casing, the
determination as to whether any deformities in the well casing exist,
and an evaluation of the well's ability to withstand pressures that
exceed maximum allowable injection and production pressures, with a
reasonable margin for safety, at the facility in accordance with the
criteria determined by the supervisor with input from independent
experts pursuant to subdivision (b). If the tests reveal that a well
poses a risk of failure, the supervisor shall require remediation and
repeat tests as necessary to demonstrate to the satisfaction of the
supervisor that remediation has mitigated any potential identified
risks. If the operator cannot remediate the well to mitigate the
identified risks to the satisfaction of the supervisor, the well
shall be plugged and abandoned in accordance with Section 3208.
   (C) (i) If a well is to be taken out of service before resumption
of gas injections at the facility, it shall be removed from operation
and isolated from the gas storage reservoir through plugging
according to the division's criteria, including, but not limited to,
the demonstration of sufficient cement to prevent migrations between
the reservoir and other zones, placement of a mechanical plug at the
bottom of the well, and subsequent filling of the well with fluid,
and to specifications approved by the supervisor. All gas storage
wells that are taken out of service under this subparagraph shall be
subjected to ongoing testing and monitoring requirements identified
in the criteria determined by the supervisor with input from
independent experts. The monitoring shall include, but not be limited
to, real-time and daily pressure monitoring, as applicable. A gas
storage well shall not be returned to service unless the testing and
remediation required under subparagraph (B) has been completed.
   (ii) A gas storage well, within one year of being plugged and
isolated from the gas storage reservoir pursuant to clause (i), shall
either be returned to service by satisfactorily completing the
testing and remediation required under subparagraph (B) or be
permanently plugged and abandoned to the supervisor's satisfaction in
accordance with Section 3208.
   (D) The supervisor shall make a written finding for each gas
storage well that has satisfactorily completed the testing and
remediation required under subparagraph (B).
   (5) The gas storage well comprehensive safety review is not
complete until every gas storage well at the facility has completed
the testing and remediation required under subparagraph (B) of
paragraph (4), been temporarily abandoned and isolated from the
reservoir as required under clause (i) of subparagraph (C) of
paragraph (4), or been fully plugged and abandoned to the supervisor'
s satisfaction in accordance with Section 3208. 
   (d) Upon completion of the gas storage well comprehensive safety
review but before authorizing the commencement of injections at the
facility, the division shall hold at least one duly noticed public
meeting in the affected community to provide the public an
opportunity to comment on the safety review findings and on the
proposed pressure limit as provided in subdivision (e). 

   (d) 
    (e)  (1) Before commencing injections at the facility,
the operator of the facility shall provide the division with the
proposed maximum reservoir pressure and include data and calculations
supporting the basis for the pressure limit. The pressure limit
shall account for the pressure required to inject intended gas
volumes at all proposed inventory levels and the pressure limit shall
not exceed the design pressure limits of the reservoir, wells,
wellheads, piping, or associated facilities with an appropriate
margin for safety.
   (2) The operator's proposed maximum reservoir pressure shall be
subject to review and approval by the supervisor, and the supervisor
shall consult with independent experts regarding the appropriate
maximum and minimum reservoir pressure at the facility. 
   (e) 
    (f)  Once the gas storage well comprehensive safety
review is complete pursuant to paragraph (5) of subdivision 
(c) and   (c),  the supervisor has approved the
maximum and minimum reservoir pressure pursuant to paragraph (2) of
subdivision  (d),   (e), and the public hearing
is held pursuant to subdivision (d),  the supervisor may allow
injections of natural gas at the facility. 
   (f) 
    (g)  All gas storage wells returning to service pursuant
to subdivision  (e)   (f)  shall only
inject or produce gas through the interior metal tubing and not
through the annulus between the tubing and the well casing. The
operator shall also conduct ongoing pressure monitoring and comply
with any other requirements specified by the supervisor. 
   (g) 
    (h)  The gas storage wells at the facility that are
plugged and abandoned in accordance with Section 3208 pursuant to
this section shall be periodically inspected by the operator for
leaks using effective gas leak detection techniques such as optical
gas imaging. 
   (h) 
    (i)  (1) Before the completion of the gas storage well
comprehensive safety review, production of natural gas from gas
storage wells at the facility shall be limited to gas storage wells
that have satisfactorily completed the testing and remediation
required under subparagraph (B) of paragraph (4) of subdivision (c)
unless insufficient production capacity is available. Only if
production capacity supplied by the tested and remediated wells is
demonstrably insufficient may the supervisor allow other gas storage
wells to be used.
   (2) The supervisor shall direct the operator of the facility to
provide a plan to ensure, at the earliest possible time, the
availability of sufficient gas production capacity using gas storage
wells that have satisfactorily completed the testing and remediation
required under subparagraph (B) of paragraph (4) of subdivision (c).

   (i) 
    (j)  With respect to the gas storage well comprehensive
safety review at the facility, all testing, inspection and monitoring
results reported to the division, gas storage well compliance
status, any required remediation steps, and other safety
review-related materials shall be posted in a timely manner by the
division online on a public portion of its Internet Web site.

   (j) 
    (k)  This section shall remain in effect only until
January 1, 2021, and as of that date is repealed, unless a later
enacted statute, that is enacted before January 1, 2021, deletes or
extends that date.
  SEC. 2.  Section 714 is added to the Public Utilities Code, to
read:
   714.  (a) The commission, no later than July 1, 2017, shall 
open a proceeding to  determine the feasibility of minimizing or
eliminating use of the Aliso Canyon natural gas storage facility
located in the County of Los Angeles while still maintaining energy
and electric reliability for the region. This determination shall be
consistent with the Clean Energy and Pollution Reduction Act of 2015
(Chapter 547 of the Statutes of 2015) and Executive Order B-30-2015.
The commission shall consult with the State Energy Resources
Conservation and Development Commission, the Independent System
Operator, the local publicly owned utilities that rely on natural gas
for electricity generation, the Division of Oil, Gas, and Geothermal
Resources in the Department of Conservation, affected balancing
authorities, and other relevant government entities, in making its
determination.
   (b) This section shall remain in effect only until January 1,
2021, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2021, deletes or extends
that date.
  SEC. 3.  Section 715 is added to the Public Utilities Code, to
read:
   715.  (a) The commission shall direct the operator of the Aliso
Canyon natural gas storage facility located in the County of Los
Angeles to provide all information the commission deems necessary for
the commission to determine, in consultation with the State Energy
Resources Conservation and Development Commission, the Independent
System Operator, and affected publicly owned utilities, the range of
working gas necessary to ensure safety and reliability for the region
and just and reasonable rates in California. The determination shall
be based on best available data, and shall incorporate data from
recent and ongoing studies being conducted to determine energy and
gas use in the region by the commission, the State Energy Resources
Conservation and Development Commission, the Independent System
Operator, and affected publicly owned utilities.
   (b) Within 30 days of the effective date of the act adding this
section, the commission shall publish a report that includes, but is
not limited to, all of the following:
   (1) The range of working gas necessary at the facility to ensure
safety and reliability and just and reasonable rates in California
determined pursuant to subdivision (a).
   (2) The amount of natural gas production at the facility needed to
meet safety and reliability requirements.
   (3) The number of wells and associated injection and production
capacity required.
   (4) The availability of sufficient natural gas production using
gas storage wells that have satisfactorily completed testing and
remediation required under subparagraph (B) of paragraph (4) of
subdivision (c) of Section 3217 of the Public Resources Code.
   (c) The commission shall make the report required under
subdivision (b) available on its Internet Web site and seek, either
through written comments or a workshop, public comments on the
report.
   (d) The executive director of the commission, in consultation with
the State Oil and Gas Supervisor, shall direct the operator to
maintain the specified range of working gas, determined pursuant to
subdivision (a), at the facility to ensure reliability and just and
reasonable rates in California, after all of the following occur:
   (1) The gas storage well comprehensive safety review is complete
pursuant to paragraph (5) of subdivision (c) of Section 3217 of the
Public Resources Code.
   (2) The State Oil and Gas Supervisor has approved the maximum and
minimum reservoir pressure pursuant to subdivision  (d)
  (e)  of Section 3217 of the Public Resources
Code.
   (3) The State Oil and Gas Supervisor has allowed injections of
natural gas at the facility, pursuant to subdivision  (e)
  (f)  of Section 3217 of the Public Resources
Code.
   (4) The commission has allowed, and received, public comment on
the report pursuant to subdivision (c).
   (e) In no case may the volume of working gas set by the executive
director of the commission result in reservoir pressures that fall
out of the range established pursuant to subdivision  (d)
  (e)  of Section 3217 of the Public Resources
Code.
   (f) This section shall remain in effect only until January 1,
2021, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2021, deletes or extends
that date.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
  SEC. 5.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   In order to mitigate, at the earliest possible time, ongoing harm
from the gas leak at the Aliso Canyon natural gas storage facility,
and to evaluate the integrity of and the risks associated with gas
storage wells at that facility, it is necessary that this act take
effect immediately.