BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 438 (Hill) - Earthquake safety:  statewide earthquake early  
          warning program and system
          
           ----------------------------------------------------------------- 
          |                                                                 |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Version: August 1, 2016         |Policy Vote: T. & H. 11 - 0,    |
          |                                |          JUD. 7 - 0            |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Urgency: No                     |Mandate: No                     |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Hearing Date: August 25, 2016   |Consultant: Mark McKenzie       |
          |                                |                                |
           ----------------------------------------------------------------- 


          This bill meets the criteria for referral to the Suspense File.   
          However, it was referred to the Committee pursuant to Senate  
          Rule 29.10 (d), which only provides the option to (1) hold the  
          bill, or (2) return the bill as approved by the Committee to the  
          Senate floor for consideration of the bill as amended in the  
          Assembly.


          Bill  
          Summary:  SB 438 would establish the California Earthquake Early  
          Warning Advisory Board (Advisory Board) and the California  
          Earthquake Early Warning Program (EEW Program) within the Office  
          of Emergency Services (OES), and require OES and the Advisory  
          Board to develop and submit a business plan for the EEW Program  
          to the Legislature by February 1, 2018, as specified.
          The bill would also delete funding restrictions and conditions  
          that must be met before OES can take actions to establish a  
          statewide earthquake early warning system (EEWS), including an  
          existing prohibition against using the General Fund for that  
          purpose, as well as a deadline to identify funds by a July 1,  
          2016 sunset date.







          SB 438 (Hill)                                          Page 1 of  
          ?
          
          




          Fiscal  
          Impact:  
           Initial estimated capital costs of approximately $28 million  
            (General Fund) to establish the EEWS, according to a recent  
            EEWS Project Implementation Framework report (see staff  
            comments).  The General Fund impacts could be partially  
            mitigated to the extent funds are identified for EEWS purposes  
            from other state, local, federal, or private sources.  Staff  
            notes that the 2016-17 Budget includes a one-time General Fund  
            appropriation of $6.875 million for capital funding for EEWS  
            purposes. 

           Ongoing annual administrative costs of approximately $17  
            million (General Fund) beginning in 2017-18 to operate and  
            maintain an EEWS, according to the Project Implementation  
            Framework report (see staff comments).  The General Fund  
            impacts could be partially mitigated to the extent funds are  
            identified for EEWS purposes from other state, local, federal,  
            or private sources.  Staff notes that the 2016-17 Budget  
            includes a one-time General Fund appropriation of $3.125  
            million for state operations related to the development of the  
            EEWS:  $734,000 for 4 PY of staff at OES, $150,000 for a  
            financial strategy contract, and $2.241 million for public  
            education and training.

           OES indicates costs related to the establishment of the  
            Advisory Board and development of a business plan would be  
            minor and absorbable.  Staff estimates there could be  
            significant costs related to ongoing activities of OES and the  
            Advisory Board beyond the current fiscal year for which  
            funding has been appropriated, but these costs could be  
            included in the above estimate of ongoing administrative  
            costs.


          Background:  California is the second most seismically active state in the  
          country, behind Alaska. The Uniform California Earthquake  
          Rupture Forecast (UCERF) forecasts a 99.7% chance of a magnitude  
          6.7 or larger earthquake in the state during the next 30 years.  
          Some countries that experience high seismic activity have  








          SB 438 (Hill)                                          Page 2 of  
          ?
          
          
          developed early earthquake warning (EEW) systems.  Currently,  
          Japan is the only country with a nationwide system, while  
          Turkey, Mexico, Taiwan, and others have implemented local  
          systems.  Generally, these detection systems are based upon the  
          finding that the first waves emanating from the epicenter of the  
          earthquake, primary waves (P-waves), cause less damage but  
          travel faster than the slower and damage-causing secondary waves  
          (S-waves).  This "single-station" approach can be used in  
          conjunction with a "network approach" that combines signals from  
          a regional seismic network of sensors that is capable of  
          characterizing large and complex earthquakes as they evolve.   
          EEW systems harness the sensor signals and provide a warning to  
          the public and active users of the system before a shaking  
          event.  Depending on the distance from the epicenter, these  
          systems can provide advanced warning time ranging from seconds  
          to minutes, outside a 20-mile "blind zone" near an epicenter.   
          This would allow for emergency shutdowns of critical  
          infrastructure, such as trains, utilities, and industrial  
          processes, and allow the general public to take protective  
          action.

          The California Geological Survey (CGS), within the Department of  
          Conservation, currently operates over 5,000 seismic instruments  
          that monitor ground movement around the state through the Strong  
          Motion Instrumentation Program (SMIP).  This is the largest  
          portion of the broader California Integrated Seismic Network  
          (CISN), which is comprised of 1,900 monitoring sites operated in  
          partnership with the U.S. Geological Survey, Caltech, and the UC  
          Berkeley Seismological Lab.  Information from these instruments  
          is used for research and planning purposes, and to produce  
          "Shakemaps," which inform emergency responders where the worst  
          shaking occurred within minutes of an earthquake.  The U.S.  
          Geological Survey is currently operating a small warning system  
          pilot program based on this instrumentation network, and  
          additional federal and foundation grants have been awarded to  
          support the development of a local earthquake early warning  
          system for the Los Angeles and Long Beach areas.


          Existing inoperative law requires OES, in collaboration with  
          specified entities, to develop a comprehensive statewide EEWS  
          that includes specified features through a public-private  
          partnership.  This provision is only operative if OES identified  
          funding for the system from non-General Fund sources, including  








          SB 438 (Hill)                                          Page 3 of  
          ?
          
          
          federal funds, revenue bonds, local funds, and private funds, by  
          July 1, 2016.  If the funding is not identified by that date,  
          the requirement to establish an EEWS is repealed.




          Proposed Law:  
            SB 438 would delete restrictions and conditions for funding  
          and establishing an EEWS, and establish the Advisory Board and  
          EEW Program within OES.  Specifically, this bill would:
           Delete provisions indicating that the requirement to establish  
            the EEWS is inoperative until OES identifies non-General Fund  
            funding for that purpose.
           Delete provisions that prohibit OES from identifying the  
            General Fund as a funding source for the purpose of  
            establishing the EEWS.
           Delete provisions that limit EEWS funding to federal funds,  
            revenue bond funds, local funds, and private funds.
           Delete provisions that repeal the statute on July 1, 2016 if  
            non-General Fund funding for the EEWS is not identified by  
            that date, and delete a requirement for OES to notify the  
            Secretary of State that funding was not identified by that  
            date.
           Establish the Advisory Board within OES and require the Board  
            to be composed of the following seven voting members: the  
            Secretaries, or their designees, of the California Natural  
            Resource Agency, the California Health and Human Services  
            Agency, the California Transportation Agency, and the  
            California Business Consumer Services, and Housing Agency, as  
            well as appointees by the Assembly, Senate, and Governor, as  
            specified.  The Advisory Board would also include the  
            Chancellor of the California State University, or a designee,  
            as a nonvoting member, and may also include the President of  
            the University of California, or a designee, as a nonvoting  
            member.
           Specify that Advisory Board members serve without  
            compensation, but authorize reimbursement for actual and  
            necessary costs to attend board meetings.
           Require the Advisory Board to convene periodically and advise  
            OES on all aspects of the EEW Program, including system  
            operations, research and development, finance and investment,  
            and training and education.
           Require the Advisory Board to also involve specified entities  








          SB 438 (Hill)                                          Page 4 of  
          ?
          
          
            to fulfill certain objectives of the EEW Program, include  
            public participation, and to consult with program  
            participants, state entities, private businesses,  
            postsecondary educational institutions, and subject matter  
            experts on the development, implementation, and maintenance of  
            the EEWS.
           Require the CISN to be responsible for the generation of an  
            earthquake early warning alert and related systems operations.
           Require the Advisory Board to comply with specified state open  
            meeting and public records statutes, but prohibit the  
            disclosure of specified trade secrets of private entities that  
            are participating in the EEWS or cooperating with the Advisory  
            Board.
           Require OES, in consultation with the Advisory Board, to  
            develop and submit a business plan for the EEW Program to the  
            Legislature and the Legislative Analyst's Office by February  
            1, 2018 that includes the following elements:  (1) a funding  
            plan for the program and estimated costs, including specific  
            cost estimates for EEW Program components and identification  
            of specific sources of funding; (2) expected roles and  
            responsibilities of program participants; (3) expected  
            schedules for system completion and provision of actual  
            alerts; and (4) a discussion of reasonably foreseeable EEW  
            Program risks and plans for managing risk.
           Require OES to annually report to the Legislature on any  
            changes to the initial business plan and an update on progress  
            of the EEW Program and system implementation, as specified. 




          Related  
          Legislation:  SB 135 (Padilla), Chap. 342/2013, requires OES to  
          establish a statewide EEWS, as specified.  This requirement is  
          only operative after OES identifies non-General Fund funding for  
          the system, and only if it does so by January 1, 2016.
          SB 494 (Hill), Chap. 799/2015, established the California  
          Earthquake Safety Fund to be used for seismic safety and  
          earthquake-related programs, including the EEWS, and extended  
          the OES deadline for identifying non-General funds for the  
          system until July 1, 2016.


          AB 1346 (Gray), which is currently pending on the Senate Floor,  








          SB 438 (Hill)                                          Page 5 of  
          ?
          
          
          previously included provisions that would have deleted funding  
          restrictions and conditions that must be met before OES may take  
          actions to establish an EEWS.  These provisions are identical to  
          those included in SB 438, but they were amended out of the bill  
          by the author when the bill was approved by this Committee on  
          August 11, 2016.




          Staff  
          Comments:  This bill is intended to establish a governance  
          structure to coordinate and direct activities related to the  
          establishment of an EEWS, and eliminate current restrictions on  
          public funding.  OES indicates that the bill will provide an  
          organizational structure to enhance capabilities for developing  
          and implementing a comprehensive EEW Program while providing  
          assurances that are intended to demonstrate a commitment to the  
          program in order to attract investment from private partners and  
          other parties.
          OES established a working group in 2013 to formally initiate the  
          EEWS planning process, despite the restrictions in the recently  
          repealed law that explicitly state that the requirement to  
          establish an EEWS in consultation with stakeholders is not  
          operative until OES identifies sufficient funding.  The working  
          group released a "California Earthquake Early Warning System,  
          Project Implementation Framework" in April of this year.  The  
          Implementation Framework describes how the EEWS could be  
          implemented for public use by building upon the existing CISN  
          and ShakeAlert systems, including a five-year implementation  
          schedule that outlines governance needs, capital and operational  
          needs, and system deployment and public outreach plans.  The  
          Framework calls for expanding the current sensor network by 646  
          EEW-capable seismic stations (from the current 469 stations),  
          improving field telemetry for data communications, constructing  
          and upgrading central processing and notification centers,  
          establishing public notification paths, raising awareness  
          through public education efforts, and building in incremental  
          performance improvements.  The Project Implementation Framework  
          report also includes a cost estimate that calls for one-time  
          capital expenditures of $22 million for new and upgraded seismic  
          stations, GPS equipment, telemetry, microwave nodes, and other  
          overhead costs, one-time costs of $6 million to develop a public  
          education and outreach program (including social science, public  








          SB 438 (Hill)                                          Page 6 of  
          ?
          
          
          health, and risk communications research), and ongoing personnel  
          and operating costs of $17 million annually. 


          While the estimates provided in the Implementation Framework  
          report may be used as a preliminary assessment of costs to  
          establish and operate an EEWS, the actual costs to implement and  
          maintain a system are subject to a number of unknown variables  
          and risks that could result in higher costs.  Previous  
          estimates, according to CISN documentation, indicate that costs  
          to establish a robust, fully operational EEW-capable CISN system  
          in California would be approximately $80 million over five  
          years, not including costs associated with user implementation,  
          or ongoing operations and maintenance.  


          Staff notes that the 2016-17 Budget includes a one-time General  
          Fund appropriation of $10 million to support the implementation  
          of the California EEWS.  According to the Budget Change Proposal  
          (BCP) submitted by OES with the Governor's May Revision, $6.875  
          million will be used for capital costs, including seismic  
          stations, GPS equipment, telemetry, and microwave nodes, and  
          $3.125 million will be used for "recurring costs" of $2.241  
          million for public education and training, $150,000 for a  
          financial strategy, and $734,000 for 4 permanent PY of OES  
          staffing (even though the funding is one-time).  The BCP cited  
          the statutory requirement for OES to establish the EEWS as  
          justification for the funding, but failed to note the following:  
           (1) that OES is prohibited from identifying the General Fund as  
          a funding source for purposes of establishing the EEWS; (2) that  
          the requirement to establish the EEWS is inoperative until OES  
          identifies sufficient non-General Fund resources for that  
          purpose; and (3) that the statutory requirement was set to  
          expire before the budget year began.


          OES indicates that costs associated with this bill are minor and  
          absorbable, but details on that assessment were not available as  
          of the time of this analysis.  It is conceivable that costs to  
          develop the business plan would be relatively minor because OES  
          has dedicated resources to the preparation of the Implementation  
          Framework report, which can be used as a foundation for  
          developing a more detailed business plan.  The costs incurred by  
          OES to prepare the Implementation Framework report are unknown.   








          SB 438 (Hill)                                          Page 7 of  
          ?
          
          
          Staff assumes that OES will need to provide staff support to the  
          Advisory Board, and will incur costs to reimburse board members  
          for actual and necessary costs for meeting attendance, to comply  
          with open meeting laws, and to manage public records requests,  
          including legal analysis of what constitutes a "trade secret"  
          that must be redacted or withheld from the public.  Initial  
          administrative costs should be covered by the 2016-17 Budget Act  
          appropriation, but ongoing costs to support the Advisory Board  
          and EEW Program are unknown.


          Staff notes that the funding restrictions (limiting the EEWS  
          funding sources to federal funds, revenue bond funds, local  
          funds, and private funds), as well as the deadline to identify  
          funds prior to establishing an EEWS (both conditions that this  
          bill seeks to delete), were amended into SB 135 by this  
          Committee when it was released from the Suspense File and  
          approved on May 23, 2013.




                                      -- END --