Amended in Assembly August 17, 2016

Amended in Assembly June 30, 2016

Amended in Senate May 31, 2016

Amended in Senate April 26, 2016

Amended in Senate March 28, 2016

Senate BillNo. 887


Introduced by Senator Pavley

(Coauthors: Senators Allen and De León)

(Coauthor: Assembly Member Wilk)

January 20, 2016


An act to add Chapter 6 (commencing with Section 42710) to Part 4 of Division 26 of the Health and Safety Code,begin delete andend delete to amend Sectionbegin delete 3236.5end deletebegin insert 3403.5end insert of, and to addbegin delete Sections 3133, 3134, 3135, 3136, 3137, 3138, 3139, 3140, 3141, 3142, 3143, 3144, 3145, and 3146 to,end deletebegin insert Article 3.5 (commencing with Section 3180) to Chapter 1 of Division 3 of,end insert the Public Resources Code,begin insert and to add Section 1103 to the Public Utilities Code,end insert relating to natural gas.

LEGISLATIVE COUNSEL’S DIGEST

SB 887, as amended, Pavley. Natural gas storage wells.

begin delete

Under

end delete

begin insert(1)end insertbegin insertend insertbegin insertUnderend insert 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 provides that a person who fails to comply with specific laws relating to the regulation of oil or gas operations is guilty of a misdemeanor.

This bill would requirebegin insert the operator ofend insert abegin delete naturalend delete gas storage well, before January 1, 2018,begin delete and annually thereafter, to be tested across its entire length for a loss of integrity resulting in a leak and to have those results reported to the division, and would prescribe standards for a natural gas storage well, including among other things, required baseline and follow-on proactive evaluations. This bill would require, on or before July 1, 2018, all natural gas storage wells, except low-risk natural gas storage wells, as defined, to be equipped with an automatic downhole shutoff system and to conduct natural gas injection and production through tubing only and be isolated from contact with the well casing. The bill would require low-risk natural gas storage wells to comply with those requirements on or before July 1, 2019, except as provided. This bill would require all newly constructed natural gas storage wells to have a cement barrier, as determined by the supervisor. This bill would require, in the event of a loss of the integrity of a natural gas storage well, well casing, or cementing resulting in a large ongoing leak of natural gas and associated gases and materials that pose a significant present or potential hazard to public health and safety, property, or to the environment, that preparations for the drilling of a relief well begin within 24 hours of the discovery of the leak. Thisend deletebegin insert to have commenced a mechanical integrity testing regime specified by the division and would require the division to promulgate regulations that establish standards for all gas storage wells, as specified. This bill would require the division to determine by regulation what constitutes a reportable leak from a gas storage well and the timeframe for reporting those leaks, as specified. Until the regulations are in effect, thisend insert bill would require thebegin delete operator, in the event ofend deletebegin insert operator to notify the division immediately ofend insert a leak of any size from abegin delete naturalend delete gas storagebegin delete well, to notify the division immediately andend deletebegin insert well. This billend insert would require the division to post information aboutbegin delete theend deletebegin insert a reportedend insert leakbegin insert that cannot be controlled within 48 hoursend insert on its Internet Web site, as prescribed.begin insert This bill would require the supervisor, within 72 hours of being notified of a reportable leak, to determine if a relief well is necessary. If the supervisor makes that determination, whether within the first 72 hours or after, the bill would require the operator to immediately begin preparation for, and commence the drilling of, a relief well.end insert This bill would require an operator of abegin delete naturalend delete gas storage well to develop and maintain a comprehensive gas storage well training and mentoring program for those employees whose job duties involve the safety of operations and maintenance ofbegin delete naturalend delete gas storage wells and associated equipment, as specified.begin delete This bill would require the division to convene an independent panel of recognized experts to develop best practices for natural gas storage facilities and to review and incorporate the best practices developed by the panel into its regulations for natural gas storage wells, if appropriate, and to the extent those practices are applicable, for other wells under the division’s jurisdiction. The bill would require the division to periodically, and whenever necessary, review advances in relevant technologies and best practices for natural gas storage facilities and, if appropriate, to incorporate changes in best practices into its regulations for natural gas storage wells and, to the extent those practices are applicable, for other wells under the division’s jurisdiction.end deletebegin insert This bill would require certain materials, relating to wells serving or located in a natural gas storage facility, including, among others, a site-specific risk management plan, to be submitted by the operator and approved at the supervisor’s discretionend insertbegin insert.end insert This bill would require the divisionbegin delete to, as feasible, incorporate federal regulations applicable to natural gas storage facilities, including, into the division’s gas storage well regulations, andend delete to perform unannounced random onsite inspections of somebegin delete naturalend delete gas storage wells annually.begin delete This bill would require the Office of Environmental Health Hazard Assessment and the State Department of Public Health, in consultation with the division, to perform a risk assessment of natural gas storage wells to determine, among other things, appropriate setback distances for natural gas storage wells and to report the findings of the risk assessment to the Legislature.end delete This bill would require the State Air Resources Board, in consultation with any local air district and the division, to develop guidelines for a monitoring program that includes continuous monitoring of the ambient concentration of natural gas at sufficient locations throughout a natural gas storage facility or planned natural gas storage facility to identify natural gas leaks and the presence of natural gas emissions in the atmosphere. The bill would require an operator of a natural gas storage facility to develop and submit to the state board a facility monitoring plan that satisfies the program requirements, and would require the state board to review the plan and to either approve or disapprove the plan. This bill would requirebegin insert an operator of a natural gas storage facility to provide theend insert monitoring data tobegin delete be provided toend delete the state board. This bill would require thebegin delete divisionend deletebegin insert state board or the division, as applicable,end insert to post and make available on itsbegin insert respectiveend insert Internet Web site all materials that are provided to the state board orbegin delete divisionend deletebegin insert division, as applicable,end insert in order to comply with the provisions added by this act. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program.

begin delete

Existing

end delete

begin insert(2)end insertbegin insertend insertbegin insertExistingend insert law requires the operator of a well to file a written notice of intention to commence drilling with, and prohibits any drilling until approval is given by, the supervisor or district deputy. Under existing law, the notice is deemed approved if the supervisor or district deputy fails to respond to the notice in writing within 10 working days from receipt and is deemed canceled if operations have not commenced within one year of receipt. Existing law provides that these provisions also apply to the deepening or redrilling of the well, any operation involving the plugging of the well, or any operations permanently altering in any manner the casing of the well.

This bill would requirebegin delete certain materials, relating to wells serving or located in a natural gas storage facility, to be submitted by the operator and approved at the supervisor’s discretion before approval of the notice. This bill would provide that the public has a right to review the locations of all new natural gas storage wells or existing wells converting to natural gas storage wells before the approval of the notice.end deletebegin insert the division, on a weekly basis, to post on its Internet Web site a list of the notices of intention received by the division, and to provide copies of those notices to the public upon request.end insert

begin delete

Existing law requires the owner or operator of any well to keep, or cause to be kept, a careful and accurate log, core record, and history of the drilling of the well.

end delete
begin delete

This bill would require the well history to include all operations, injection, production, and emplacement of any materials into a natural gas storage well, and to be disclosed to the division by the operator, as specified.

end delete
begin delete

Under existing law, a person who violates certain statutes or regulations relating to oil and gas well operations is subject to a civil penalty not to exceed $25,000 for each violation. Existing law provides that the unreasonable waste of natural gas by act, omission, sufferance, or insistence is opposed to the public interest and is unlawful.

end delete
begin delete

This bill would provide that a violation of the prohibition against the unreasonable waste of natural gas is subject to the civil penalty not to exceed $25,000 for each violation.

end delete
begin insert

(3) Under existing law, the supervisor is required to impose an annual charge computed at a uniform rate based on the number of wells used to inject and withdraw gas from an underground storage facility during the preceding calendar year. Existing law requires the charge to defray the costs incurred by the state in maintaining surveillance over those facilities.

end insert
begin insert

This bill would instead require that annual charge to be the proportionate share of the total regulatory costs projected for each fiscal year based on the field capacity and number of wells of each underground gas storage facility. The bill would require an additional charge to be imposed on an operator, if an uncontrolled leak or release of gas occurs at the operator’s underground gas storage facility, to defray the costs of the response effort of the division, as specified.

end insert
begin insert

(4) The Administrative Procedure Act governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law. Existing law provides that, if a state agency makes a finding that the adoption of a regulation or order of repeal is necessary for the immediate preservation of the public peace, health and safety, or general welfare, the regulation or order of repeal may be adopted as an emergency regulation or order of repeal. Under existing law, a regulation, amendment, or order of repeal adopted as an emergency regulation remains in effect no more than 180 days unless the adopting agency and the Office of Administrative Law comply with certain requirements.

end insert
begin insert

Until January 1, 2019, this bill would instead require that emergency regulations adopted by the division effective February 5, 2016, continue in effect until the adoption, amendment, or repeal of the regulation is promulgated by the division pursuant to the act.

end insert
begin insert

(5) Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including gas corporations. The Public Utilities Act prohibits any gas corporation from beginning the construction of, among other things, a line, plant, or system, or of any extension thereof, without having first obtained from the commission a certificate that the present or future public convenience and necessity require or will require that construction.

end insert
begin insert

This bill, if a new underground gas storage facility is proposed, would require the commission to ensure that a risk assessment evaluating the potential impact of a leak from the facility on public and environmental health, safety, and welfare is conducted by the project proponent, as specified. This bill would require that the findings of any risk assessment conducted pursuant to these provisions be subjected to peer review by independent experts and reported to the Legislature, as specified.

end insert
begin delete

The

end delete

begin insert(6)end insertbegin insertend insertbegin insertTheend insert 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.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P6    1

SECTION 1.  

The Legislature finds and declares as follows:

2(a) Public transparency regarding risks, the regulations designed
3to mitigate those risks, and regulatory activity are essential to
4protect public health and welfare and natural resources.

5(b) Public disclosure and safe operation of gas storage wells
6and associated piping and equipment are essential in order to
7provide for public, environmental, and occupational health and
8welfare, including a proactive approach to potential problems.

9(c) On October 23, 2015, a significant, uncontrolled leak from
10a natural gas storage well that was originally drilled over 60 years
11ago was discovered in the Aliso Canyon natural gas storage facility
12located in the County of Los Angeles. Initial efforts to stop the
13leak failed.

14(d) The Division of Oil, Gas, and Geothermal Resources in the
15Department of Conservation responded swiftly to the leak,
16including by issuing two orders that, among other things, require
17the use of relief wells. The division worked around the clock
18overseeing efforts to stop the leak.

19(e) It was several days before the community was notified of
20the leak, although numerous residents started reporting odor
21concerns almost immediately. The leaking well is up the hill and
22approximately one and one-quarter miles away from the nearest
23home. Other natural gas storage wells serving this facility are
24located closer to homes and businesses.

25(f) The operator of the leaking well had removed a subsurface
26safety valve decades earlier and had not replaced it. Regulations
27in effect at that time did not require approval or replacement of
28the valve. There was no automatic downhole shutoff system
29installed in the event of a leak. In 2014, the operator acknowledged
P7    1publicly in a filing to the Public Utilities Commission that many
2of its wells needed additional assessment and repair. There was
3no requirement to disclose to potential homebuyers and business
4owners the existence of the Aliso Canyon natural gas storage
5facility and its attendant risks.

6(g) The Governor declared a state of emergency on January 6,
72016, in order to facilitate the ongoing state response and efforts
8to stop the leak.

9(h) On February 18, 2016, the Division of Oil, Gas, and
10Geothermal Resources in the Department of Conservation certified
11that the Aliso Canyon leak had been stopped. Reports estimate
12almost 100,000 metric tons of the potent greenhouse gas methane
13were emitted to the atmosphere.begin delete Communityend deletebegin insert In addition to climate
14risks, communityend insert
health concerns continue postleak with hundreds
15of complaints reported to the County of Los Angeles along with
16widespread concern about the short- and long-term impacts of the
17leak on public health and economic welfare in the area.

18(i) The standards for natural gas storage wells need to be
19improved in order to reflect 21st century technology, disclose and
20mitigate any risks associated with those wells, recognize that these
21facilities may be in locations near population centers, and ensure
22a disaster like the Aliso Canyon leak does not happen again.

23

SEC. 2.  

Chapter 6 (commencing with Section 42710) is added
24to Part 4 of Division 26 of the Health and Safety Code, to read:

25 

26Chapter  6. Natural Gas Storage Facility Monitoring
27

 

28

42710.  

(a) The state board, in consultation with any local air
29district and the Division of Oil, Gas, and Geothermal Resources
30in the Department of Conservation, shall develop a natural gas
31storage facility monitoring program that includes continuous
32monitoring of the ambient concentration of natural gas at sufficient
33locations throughout a natural gas storage facility or planned
34natural gas storage facility to identify natural gas leaks and the
35presence of natural gas emissions in the atmosphere. The
36continuous monitoring program may be supplemented by daily
37leak detection measurements.

38(b) begin insert(1)end insertbegin insertend insert The program shall include guidelines for the continuous
39monitoring which shall include, at minimum, optical gasbegin delete imagingend delete
40begin insert imaging, where applicable,end insert and accurate quantitative monitoring
P8    1of natural gas concentrations. The program shall include protocols
2for both stationary and mobile monitoring, as well as fixed and
3temporary monitoring locations.

begin insert

4
(2) The program shall require optical gas imaging when a large,
5ongoing leak occurs.

end insert

6(c) An operator of a natural gas storage facility shall develop
7and submit to the state board a facility monitoring plan that satisfies
8program requirements pursuant tobegin delete subdivision (a).end deletebegin insert subdivisions
9(a) and (b).end insert
The state board shall review the plan and may approve
10or disapprove the plan.

begin insert

11
(d) An operator of a natural gas storage facility shall conduct
12monitoring in accordance with the facility monitoring plan
13approved by the state board pursuant to subdivision (c).

end insert
begin delete

14(d) Monitoring data shall be provided

end delete

15begin insert(e)end insertbegin insertend insertbegin insertAn operator of a natural gas storage facility shall provide
16monitoring dataend insert
to the state board. All materials provided to
17comply with this section shall be posted and available to the public
18on the Internet Web site of thebegin delete Division of Oil, Gas, and
19Geothermal Resources.end delete
begin insert state board.end insert

begin delete
20

SEC. 3.  

Section 3133 is added to the Public Resources Code,
21to read:

22

3133.  

(a) (1) As used in this article, “natural gas storage well”
23means an active or idle well used solely to inject gas into or
24withdraw gas from an underground gas storage facility.

25(2) (A) For purposes of this section, a “low-risk natural gas
26storage well” means a natural gas storage well that meets all of
27the following:

28(i) The well is not subject to Section 3217.

29(ii) The well is located in a nonurban area.

30(iii) The well meets or exceeds current well construction
31standards for gas storage wells.

32(iv) The well was constructed specifically for natural gas storage
33and was constructed after January 1, 1997.

34(v) The well has a consistent and demonstrated record of
35mechanical integrity, as determined by the supervisor.

36(vi) The well is in compliance with all other applicable
37requirements imposed by this article and the division’s regulations.

38(B) (1) The division may deem any natural gas storage well as
39ineligible for classification as a low-risk natural gas storage well
40to protect public safety and natural resources.

P9    1(2) If the division exercises the authority provided in paragraph
2(1), the division shall make a written finding of that decision.

3(b) Before January 1, 2018, and annually thereafter, all natural
4gas storage wells shall be tested across their entire length for a loss
5of integrity resulting in a leak and the results of the testing shall
6be reported to the division.

7(c) (1) Except as provided in paragraph (2), all natural gas
8storage wells shall, on or before July 1, 2018, comply with both
9of the following:

10(A) Have an automatic downhole shutoff system, including, but
11not limited to, surface-controlled subsurface safety valves,
12deployed in order to limit leaks associated with a loss of the
13integrity of a well, well casing, or cementing. The shutoff system
14shall be tested and the results of the test shall be reported to the
15division no less than semiannually.

16(B) Conduct natural gas injection and production through tubing
17only and be isolated from contact with the well casing.

18(2) All low-risk natural gas storage wells shall comply with
19subparagraphs (A) and (B) of paragraph (1) on or before July 1,
202019.

21(d) The division shall review and update practices for the use
22of subsurface safety valves in natural gas storage wells to reflect
23the best practices established by independent experts pursuant to
24Section 3140.

25(e) All newly constructed natural gas storage wells shall have
26a cement barrier, as determined by the supervisor.

27(f) (1) The division may modify the requirements of subdivision
28(c) for low-risk natural gas storage wells to protect public safety
29and natural resources.

30(2) If the division exercises the authority provided in paragraph
31(1), the division shall make a written finding of that decision.

32(g) Nothing in this section shall be construed as limiting the
33supervisor’s authority to take action to respond to a hazard.

34

SEC. 4.  

Section 3134 is added to the Public Resources Code,
35to read:

36

3134.  

A natural gas storage well shall meet all of the following
37requirements:

38(a) (1) Baseline and follow-on proactive evaluations of the
39integrity of the well, well casing, and cementing across the entire
40length of the well shall be conducted to thoroughly, quantitatively,
P10   1and accurately assess their condition. These assessments shall be
2performed using the best available technology. Based upon these
3assessments, the risks posed by erosion, corrosion, material
4deterioration, scaling, cracking, and any other process that may
5produce natural gas leaks shall be determined.

6(2) By January 1, 2018, the division shall develop a schedule
7for the completion of baseline proactive evaluations for all natural
8gas storage wells.

9(3) The division shall also develop a schedule for performing
10follow-on proactive evaluations for all natural gas storage wells
11in order to measure any changes in well condition after the baseline
12proactive evaluations are completed. The schedule shall be
13determined based upon an assessment of risk. The natural gas
14storage wells at lowest risk of a loss of integrity shall be
15reevaluated pursuant to this paragraph at least once every four
16years and natural gas storage wells at high risk of a loss of integrity
17shall be reevaluated pursuant to this paragraph at least annually.

18(4) A natural gas storage well that has lost integrity or that is at
19risk of an imminent loss of integrity shall be immediately repaired
20before returning to service.

21(b) Annular pressure and production or injection flow rate shall
22be continuously monitored.

23

SEC. 5.  

Section 3135 is added to the Public Resources Code,
24to read:

25

3135.  

(a) For the purposes of this section, “sensitive receptor”
26means any living quarters, including private homes, condominiums,
27apartments, retirement homes, prisons, dormitories, or other
28housing; education resources, including preschools and schools
29operating kindergarten or any of grades 1 to 12, inclusive; daycare
30centers; and health care facilities, including hospitals, nursing
31homes, and long-term care and hospice facilities.

32(b) The Office of Environmental Health Hazard Assessment
33and the State Department of Public Health, in consultation with
34the division, shall perform a science-based risk assessment of
35natural gas storage wells. The goal of the risk assessment shall be
36to determine appropriate setback distances for natural gas storage
37wells from different locations, activities, and receptors. The risk
38assessment shall include, but is not limited to, all of the following
39information:

P11   1(1) The construction, service history, and operating conditions
2of a well.

3(2) The potential impact of a leak on public and environmental
4health, safety, and welfare. Both acute and chronic exposures for
5a range of expected emissions and emissions rates shall be
6considered.

7(3) The factors relevant to determining setback distances
8including, but not limited to, population density, sensitive receptors,
9environmentally sensitive areas, emergency response times,
10evacuation times, leak duration, chemical species emitted, and
11local meteorology.

12(4) The data necessary to determine appropriate setback
13distances.

14(c) The risk assessment conducted pursuant to subdivision (b)
15shall be subjected to peer review by independent experts.

16(d) The findings of the risk assessment required by subdivision
17(b) shall be reported to the Legislature in accordance with Section
189795 of the Government Code.

19(e) Upon completion of the risk assessment required by
20subdivision (b), the division shall review and, as appropriate, revise
21its regulations.

22

SEC. 6.  

Section 3136 is added to the Public Resources Code,
23to read:

24

3136.  

(a) The operator of a natural gas storage well shall
25submit for the supervisor’s approval the following materials:

26(1) A regular maintenance program for the well and the portion
27of the facility within the division’s jurisdiction. The maintenance
28program shall include training for site personnel and proactive
29replacement of equipment at risk of failure to ensure safe operation.

30(2) Design and operating conditions and parameters for the well
31and the portion of the facility within the division’s jurisdiction.

32(3) An inspection, leak detection, and monitoring program for
33the well and the portion of the facility within the division’s
34jurisdiction that includes monitoring of natural gas concentrations
35pursuant to Chapter 6 (commencing with Section 42710) of Part
364 of Division 26 of the Health and Safety Code. Ambient natural
37gas monitoring sufficient to include monitoring of a new or
38reworked well shall be in operation before a new well is drilled or
39a well is reworked.

P12   1(4) A site-specific risk management plan to identify and plan
2for mitigation of all threats and hazards and potential threats and
3hazards associated with natural gas storage well operation in order
4to ensure internal and external mechanical integrity of a well. The
5risk management plan shall provide for regular review and revision,
6as needed, to ensure the plan appropriately reflects current
7conditions. The risk management plan shall include, but is not
8limited to, all of the following:

9(A) A natural gas leak prevention and response program that
10addresses the full range of natural gas leaks possible at the facility
11with specific response plans that provide for immediate control of
12the leak. The prevention and response program shall include, but
13is not limited to, all of the following:

14(i) A protocol for public notice of the leak to the community by
15the operator.

16(ii) Prepositioning, as feasible, and identification of materials
17and personnel necessary to respond to leaks. This shall include
18materials and equipment to respond to and stop the leak itself as
19well as to protect public health.

20(iii) A training program to ensure site personnel are prepared
21to respond to a leak, consistent with the requirements of Section
223144.

23(B) A plan for corrosion monitoring and evaluation.

24(C) A schedule for regular well and reservoir integrity
25assessments.

26(D) An assessment of the risks associated with the natural gas
27storage well and its operation.

28(E) Planned risk mitigation efforts.

29(b) All of the materials described in subdivision (a) shall be
30approved by the supervisor, at his or her discretion, and in the
31possession of the division before the supervisor or district deputy
32approves a notice required pursuant to Section 3203.

33(c) All of the materials described in subdivision (a) shall be
34reported to the division annually. The operator shall not deviate
35from the programs, plans, and other conditions and protocols
36contained in the materials without prior written approval by the
37supervisor.

38

SEC. 7.  

Section 3137 is added to the Public Resources Code,
39to read:

P13   1

3137.  

The public has a right to review the location of a natural
2gas storage well or conversion of an existing well to a natural gas
3storage well before the approval of any notice required pursuant
4to Section 3203.

5

SEC. 8.  

Section 3138 is added to the Public Resources Code,
6to read:

7

3138.  

In the event of a loss of the integrity of a natural gas
8storage well, well casing, or cementing resulting in a large ongoing
9leak of natural gas and associated gases and materials that pose a
10significant present or potential hazard to public health and safety,
11property, or to the environment, preparations for the drilling of a
12relief well shall begin within 24 hours of the discovery of the leak
13regardless of any other activities undertaken to stop the leak.

14

SEC. 9.  

Section 3139 is added to the Public Resources Code,
15to read:

16

3139.  

In the event of a leak of any size from a natural gas
17storage well, the operator shall notify the division immediately.
18Within 24 hours of notification, the division shall post information
19about the leak on its Internet Web site and provide regular updates
20to the public until the leak is stopped.

21

SEC. 10.  

Section 3140 is added to the Public Resources Code,
22to read:

23

3140.  

(a) The division shall convene an independent panel of
24recognized experts to develop best practices for natural gas storage
25facilities. The panel shall consider at least all of the following:

26(1) The proximity of a natural gas storage facility and wells to
27populations of people.

28(2) The conditions at which a well should be plugged and
29abandoned, and what standards the plugging and abandonment
30should meet.

31(3) The range of proactive methods to assess the integrity of a
32well, well casing, and cementing, and identifying the best available
33technology for these assessments.

34(4) A thorough analysis of the risks associated with the
35conversion of a well for use as a natural gas storage well.

36(5) Natural gas storage well design, operating, maintenance,
37and monitoring standards, including, but not limited to, placement
38of observation wells, soil monitoring, training, and well monitoring
39after plugging and abandonment.

P14   1(6) Risk assessment and management tools for all threats and
2hazards and potential threats and hazards associated with natural
3gas storage wells, including identifying data requirements for those
4tools, with the goal of providing for a standardized and comparable
5approach to evaluate natural gas storage wells statewide.

6(7) Automatic shutoff systems including the location and
7placement of subsurface and surface safety valves, shutoff control
8systems, reliability, and appropriate use.

9(b) Upon completion of the panel’s work pursuant to subdivision
10(a), the division shall review and incorporate best practices
11developed by the panel into its regulations for natural gas storage
12wells, if appropriate, and, to the extent those practices are
13applicable, for other wells under the division’s jurisdiction.

14(c) The division shall periodically, and whenever necessary,
15review advances in relevant technologies and best practices for
16natural gas storage facilities and, if appropriate, shall incorporate
17changes in best practices into its regulations for natural gas storage
18wells and, to the extent those practices are applicable, for other
19wells under the division’s jurisdiction.

20

SEC. 11.  

Section 3141 is added to the Public Resources Code,
21to read:

22

3141.  

In order to facilitate consistency, standardization, and
23training, the division shall, as feasible, incorporate federal
24regulations applicable to natural gas storage facilities, including,
25but not limited to, Parts 190 to 199, inclusive, of Title 49 of the
26Code of Federal Regulations into the division’s natural gas storage
27well regulations.

28

SEC. 12.  

Section 3142 is added to the Public Resources Code,
29to read:

30

3142.  

To ensure that the division has all the records it needs
31to evaluate natural gas storage wells, the well history maintained
32pursuant to Section 3213 shall include all operations, injection,
33production, and emplacement of any materials into the well. The
34operator shall disclose the well history to the division for each
35operation, injection, production, and emplacement of any material
36into the well.

37

SEC. 13.  

Section 3143 is added to the Public Resources Code,
38to read:

39

3143.  

The division shall perform unannounced random onsite
40inspections of some natural gas storage wells annually. The results
P15   1shall be posted and available to the public on the division’s Internet
2Web site.

3

SEC. 14.  

Section 3144 is added to the Public Resources Code,
4to read:

5

3144.  

An operator of a natural gas storage well shall develop
6and maintain a comprehensive gas storage well training and
7mentoring program for those employees whose job duties involve
8the safety of operations and maintenance of natural gas storage
9wells and associated equipment. The training program shall include,
10but is not limited to, gas storage well operations, including best
11practices to prevent leaks, maintenance and testing, gas storage
12well safety regulations, emergency response, and incident reporting.
13If employees are represented by a labor union, the operator shall
14consult with the union on safety issues and, when requested,
15establish a framework to provide training through a joint
16labor-management training program.

17

SEC. 15.  

Section 3145 is added to the Public Resources Code,
18to read:

19

3145.  

All materials provided to the division to comply with
20Section 3133 to 3143, inclusive, shall be posted and available to
21the public on the Internet Web site of the division.

22

SEC. 16.  

Section 3146 is added to the Public Resources Code,
23to read:

24

3146.  

A member of the public may bring suit for writ of
25mandate against the division for failure to enforce Sections 3133
26to 3145, inclusive.

27

SEC. 17.  

Section 3236.5 of the Public Resources Code is
28amended to read:

29

3236.5.  

(a) A person who violates this chapter or a regulation
30implementing this chapter is subject to a civil penalty not to exceed
31twenty-five thousand dollars ($25,000) for each violation. A person
32who commits a violation of Article 3 (commencing with Section
333150) or Section 3300 is subject to a civil penalty of not less than
34ten thousand dollars ($10,000) and not to exceed twenty-five
35thousand dollars ($25,000) per day per violation. An act of God
36and an act of vandalism beyond the reasonable control of the
37operator shall not be considered a violation. The civil penalty shall
38be imposed by an order of the supervisor pursuant to Section 3225
39upon a determination that a violation has been committed by the
40person charged. The imposition of a civil penalty under this section
P16   1shall be in addition to any other penalty provided by law for the
2violation. When establishing the amount of the civil penalty
3pursuant to this section, the supervisor shall consider, in addition
4to other relevant circumstances, all of the following:

5(1) The extent of harm caused by the violation.

6(2) The persistence of the violation.

7(3) The pervasiveness of the violation.

8(4) The number of prior violations by the same violator.

9(b) An order of the supervisor imposing a civil penalty shall be
10reviewable pursuant to Article 6 (commencing with Section 3350).
11When the order of the supervisor has become final and the penalty
12has not been paid, the supervisor may apply to the appropriate
13superior court for an order directing payment of the civil penalty.
14 The supervisor may also seek from the court an order directing
15that production from the well or use of the production facility that
16is the subject of the civil penalty order be discontinued until the
17violation has been remedied to the satisfaction of the supervisor
18and the civil penalty has been paid.

19(c) Any amount collected under this section shall be deposited
20in the Oil, Gas, and Geothermal Administrative Fund.

end delete
21begin insert

begin insertSEC. 3.end insert  

end insert

begin insertArticle 3.5 (commencing with Section 3180) is added
22to Chapter 1 of Division 3 of the end insert
begin insertPublic Resources Codeend insertbegin insert, to read:end insert

begin insert

23 

24Article begin insert3.5.end insert  Natural Gas Storage Wells
25

 

26

begin insert3180.end insert  

(a) As used in this article, “gas storage well” means
27an active or idle well used primarily to inject natural gas into or
28withdraw natural gas from an underground natural gas storage
29facility.

30
(b) On or before January 1, 2018, the operators of all gas
31storage wells shall have commenced a mechanical integrity testing
32regime specified by the division. The testing regime shall include
33all of the following:

34
(1) Regular leak testing.

35
(2) Casing wall thickness inspection.

36
(3) Pressure test of the production casing.

37
(4) Any additional testing deemed necessary by the division to
38demonstrate the integrity of the well.

P17   1
(c) All anomalies identified in the testing shall be immediately
2reported to the appropriate district office and explained to the
3supervisor’s satisfaction.

4
(d) (1) The division shall promulgate regulations that establish
5standards for the design, construction, and maintenance of all gas
6storage wells to ensure that integrity concerns with a gas storage
7well are identified and addressed before they can become a threat
8to life, health, property, the climate, or natural resources.

9
(2) The regulations shall require that gas storage wells be
10designed, constructed, and maintained to ensure that a single point
11of failure does not pose an immediate threat of loss of control of
12fluids, as determined by the supervisor.

13
(3) In developing the regulations, the division shall consider
14enhanced design, construction, and maintenance measures that
15could meet the standard in paragraph (2), including any of the
16following:

17
(A) Primary and secondary mechanical well barriers to isolate
18the storage gas within the storage reservoir and transfer storage
19gas from the surface into and out of the storage reservoir.

20
(B) Production casing to the surface with the required integrity
21to contain reservoir pressure.

22
(C) Tubing and packer and production tree with the required
23integrity to contain reservoir pressure.

24
(D) Surface controlled subsurface safety valves or Christmas
25tree valves with the required integrity to contain reservoir pressure
26that halt flow through the well.

27
(E) Secondary barrier with overlapping cement casing between
28two concentric casings with good quality cement bond.

29
(F) Wellhead with annular valves and seals and the required
30integrity to contain reservoir pressure.

31
(G) Casing with a hanger and seal assembly.

32
(H) Any other well construction requirements the supervisor
33determines would improve the protection of public health, safety,
34the environment, and natural resources.

35
(4) In developing the regulations, the division shall develop a
36schedule for ongoing mechanical integrity testing.

37
(e) In order to facilitate consistency, standardization, and
38training for site inspection and maintenance, to the extent that the
39regulations promulgated by the division pursuant to subdivision
40(d) address surface equipment associated with an underground
P18   1gas storage facility, the division shall ensure that those regulations
2are consistent with comparable requirements in Parts 190 to 199,
3inclusive, of Title 49 of the Code of Federal Regulations.

4

begin insert3181.end insert  

(a) The operator of a gas storage well shall submit for
5the supervisor’s approval the following materials:

6
(1) Data describing the gas storage project and gas storage
7wells that demonstrate that stored gas will be confined to the
8approved zone or zones. Updated data shall be provided to the
9division if conditions change or if more accurate data become
10available.

11
(2) A site-specific risk management plan to identify and plan
12for mitigation of all threats and hazards and potential threats and
13hazards associated with gas storage well operation in order to
14ensure internal and external mechanical integrity of a well. The
15risk management plan shall provide for regular review and
16 revision, as needed, to ensure the plan appropriately reflects
17current conditions. The operator shall consult with local emergency
18response entities on the risk management plan. The risk
19management plan shall include, but is not limited to, all of the
20following:

21
(A) A natural gas leak prevention and response program that
22addresses the full range of natural gas leaks possible at the facility
23with specific response plans that provide for immediate control of
24the leak. The prevention and response program shall include, but
25is not limited to, all of the following:

26
(i) A protocol for public notice of a large, uncontrollable leak
27to any community within two miles of the leak if the leak cannot
28be controlled within 48 hours of discovery by the operator.

29
(ii) Prepositioning, as feasible, and identification of materials
30and personnel necessary to respond to leaks. This shall include
31materials and equipment to respond to and stop the leak itself as
32well as to protect public health.

33
(iii) The identification of personnel responsible for notifying
34regulatory authorities with jurisdiction over the range of leaks
35possible.

36
(B) A plan for corrosion monitoring and evaluation.

37
(C) A schedule for regular well and reservoir integrity
38assessments.

39
(D) An assessment of the risks associated with the gas storage
40well and its operation.

P19   1
(E) Planned risk mitigation efforts.

2
(F) A regular maintenance program for the well and the portion
3of the facility within the division’s jurisdiction. The maintenance
4program shall include training for site personnel and proactive
5replacement of equipment at risk of failure to ensure safe
6operation.

7
(3) In addition to other factors deemed relevant by the
8supervisor, the risk management plan required in paragraph (2)
9shall consider all of the following:

10
(A) The facility’s distance from dwellings, other buildings
11intended for human occupancy, or other well-defined outside areas
12where people may assemble such as campgrounds, recreational
13areas, or playgrounds.

14
(B) The risks to and from the well related to roadways, rights
15of way, railways, airports, and industrial facilities.

16
(C) Proximity to environmentally or culturally sensitive areas.

17
(D) The risks of well sabotage.

18
(E) The current and predicted development of the surrounding
19area.

20
(F) Topography and local wind patterns.

21
(b) All of the materials described in subdivision (a) shall be
22reported to the division according to a schedule approved by the
23supervisor. The operator shall not deviate from the programs,
24plans, and other conditions and protocols contained in the
25materials without prior written approval by the supervisor.

26

begin insert3182.end insert  

On a weekly basis, the division shall post a list of notices
27received pursuant to Section 3203 on the division’s Internet Web
28site. Copies of any notice shall be provided to members of the
29public upon request.

30

begin insert3183.end insert  

(a) The division, in consultation with the State Air
31Resources Board, shall determine and adopt by regulation what
32constitutes a reportable leak from a gas storage well and the
33timeframe for reporting that leak. The regulations shall require
34an operator to immediately report to the division a leak that poses
35a significant present or potential hazard to public health and safety,
36property, or to the environment.

37
(b) Until the regulations pursuant to subdivision (a) are in effect,
38a leak of any size from a gas storage well shall be deemed a
39reportable leak, and the operator shall notify the division
40immediately.

P20   1
(c) If a leak from a gas storage well that is reported to the
2 division pursuant to subdivision (a) or (b), as applicable, cannot
3be controlled within 48 hours, the division shall post information
4about the leak on its Internet Web site and provide regular updates
5to the public until the leak is stopped.

6

begin insert3184.end insert  

(a) Within 72 hours of being notified of a reportable
7leak, pursuant to Section 3183, the supervisor shall determine if
8the reportable leak poses a significant present or potential hazard
9to public health and safety, property, or to the environment such
10that a relief well is necessary. If the supervisor makes that
11determination, the operator shall immediately begin preparation
12for, and commence the drilling of, a relief well.

13
(b) Nothing in subdivision (a) shall prevent the supervisor from
14making a determination after the initial 72-hour period that a
15reportable leak poses a significant hazard to public health and
16safety, property, or to the environment and that a relief well is
17necessary. If the supervisor makes that determination, the operator
18shall immediately begin preparation for, and commence the drilling
19of, a relief well.

20
(c) If the operator is required to drill a relief well under
21subdivision (a) or (b), the operator’s efforts to drill the relief well
22shall continue until the reportable leak has been stopped and the
23cause of the reportable leak has been fully addressed or the
24supervisor determines that other means of controlling the
25reportable leak are appropriate.

26

begin insert3185.end insert  

The division shall perform unannounced random onsite
27inspections of some gas storage wells annually. The results shall
28be posted and available to the public on the division’s Internet
29Web site.

30

begin insert3186.end insert  

An operator of a gas storage well shall develop and
31maintain a comprehensive gas storage well training and mentoring
32program for those employees whose job duties involve the safety
33of operations and maintenance of gas storage wells and associated
34equipment. The training program shall include, but is not limited
35to, gas storage well operations, including best practices to prevent
36leaks, maintenance and testing, gas storage well safety regulations,
37emergency response, and incident reporting. If storage field
38employees are represented by a labor union, the operator shall
39consult with the relevant union local on safety issues and, when
P21   1requested, establish a framework to provide training through a
2joint labor-management training program.

3

begin insert3187.end insert  

All materials provided to the division and approved by
4the supervisor to comply with Sections 3181, 3184, and 3185 shall
5be posted and available to the public on the Internet Web site of
6the division in a timely manner.

end insert
7begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 3403.5 of the end insertbegin insertPublic Resources Codeend insertbegin insert is
8amended to read:end insert

9

3403.5.  

(a) The Legislature finds that there are underground
10storage facilities for gas that utilize depleted or partially depleted
11oil or gas reservoirs. Purchased gas, usually from out of state, is
12injected for storage and withdrawn during peak load periods. The
13supervisor is required to maintain surveillance over these facilities
14tobegin delete insureend deletebegin insert ensureend insert that the original reserves are not lost, that drilling
15of new wells is conducted properly, and that no damage occurs to
16the environment by reason of injection and withdrawal of gas.

17(b) In order to help support the regulatory effort of the
18supervisor, there shall be imposed an annual chargebegin delete computed at
19a uniform rate based on the number of wells used to inject and
20withdraw gas from an underground storage facility during the
21preceding calendar year. The charge shall defray the costs incurred
22by the state in conducting the activities described in this section.end delete

23
begin insert on operators of underground gas storage facilities to defray the
24regulatory costs incurred by the state in conducting the activities
25described in subdivision (a). Each underground gas storage facility
26operator shall pay a proportionate share of the total regulatory
27costs projected for each fiscal year based on the field capacity and
28number of wells for each underground gas storage facility. For
29each underground gas storage facility, the portion owed by the
30operator shall be computed by multiplying the operator’s field
31capacity by the number of the operator’s wells, and dividing that
32product by the product of the field capacity of all underground
33gas storage facilities statewide multiplied by the number of wells
34for all underground gas storage facilities statewide.end insert

begin insert

35
(c) In order to defray the costs of the response effort of the
36division in the event of a large, uncontrolled release of gas from
37an underground storage facility that poses a significant present
38or potential hazard to public health and safety, property, or to the
39environment, there shall be an additional charge imposed entirely
40on the operator of the underground storage facility at which the
P22   1uncontrolled leak or release of gas occurred. The charge shall be
2in the amount of the total directly associated costs incurred by the
3division in the previous calendar year in the course of responding
4to the release, including personnel hours, travel expenses,
5contracting costs, and any other directly associated costs incurred
6by the division.

end insert
begin insert

7
(d) For purposes of this section, the following terms have the
8following meanings:

end insert
begin insert

9
(1) “Field capacity” means the gas storage capacity of an
10underground gas storage facility, in cubic feet.

end insert
begin insert

11
(2) “Wells” means all wells associated with an underground
12gas storage facility except those that have been plugged and
13 abandoned pursuant to Section 3208 before the preceding calendar
14year.

end insert
15begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 1103 is added to the end insertbegin insertPublic Utilities Codeend insertbegin insert, to
16read:end insert

begin insert
17

begin insert1103.end insert  

(a) If a new underground gas storage facility is
18proposed, the commission shall ensure that a risk assessment
19evaluating the potential impact of a leak from the facility on public
20and environmental health, safety, and welfare is conducted by the
21project proponent. Both acute and chronic exposures from a range
22of expected emissions and emissions rates shall be evaluated. The
23evaluation shall include consideration of population density in
24proximal communities, environmentally sensitive areas, emergency
25response times, evacuation times, possible leak duration, possible
26chemical species emitted, and local meteorology.

27
(b) In evaluating the potential risks and impacts of acute and
28chronic exposures from emissions from a proposed new gas storage
29 facility, the project proponent shall assess or cause to be assessed
30risks associated with the proposed facility’s proximity to any living
31quarters, including private homes, condominiums, apartments,
32retirement homes, prisons, dormitories, or other housing; education
33resources, including preschools and schools operating
34kindergarten or any of grades 1 to 12, inclusive; day care centers;
35and health care facilities, including hospitals, nursing homes, and
36long-term care and hospice facilities. Based on the risk analysis,
37appropriate setbacks to the listed structure types shall be
38determined by the commission.

39
(c) The risk assessment conducted pursuant to this section shall
40be subjected to peer review by independent experts whose
P23   1demonstrated expertise includes, but is not limited to, the fields of
2public health, epidemiology, and toxicology.

3
(d) The findings of any risk assessment required by this section
4shall be reported to the Legislature in accordance with Section
59795 of the Government Code.

end insert
6begin insert

begin insertSEC. 6.end insert  

end insert

begin insert(a)end insertbegin insertend insertbegin insertNotwithstanding Chapter 3.5 (commencing with
7Section 11340) of Part 1 of Division 3 of Title 2 of the Government
8Code, including subdivisions (e) and (h) of Section 11346.1 of the
9Government Code, the emergency regulations amending Section
101724.9 of Title 14 of the California Code of Regulations adopted
11by the Division of Oil, Gas, and Geothermal Resources in the
12Department of Conservation effective February 5, 2016, shall
13continue end insert
begin insertin effect until the adoption, amendment, or repeal of the
14regulations is promulgated by the division pursuant to Chapter
153.5 (commencing with Section 11340) of Part 1 of Division 3 of
16Title 2 of the Government Code.end insert

begin insert

17
(b) This section shall remain in effect only until January 1, 2019,
18and as of that date is repealed, unless a later enacted statute, that
19is enacted before January 1, 2019, deletes or extends that date.

end insert
20begin insert

begin insertSEC. 7.end insert  

end insert

begin insertThis act shall neither impair nor diminish requirements
21imposed by Chapter 14 of the Statutes of 2016 related to the Aliso
22Canyon natural gas storage facility located in the County of Los
23Angeles.end insert

24

begin deleteSEC. 18.end delete
25
begin insertSEC. 8.end insert  

No reimbursement is required by this act pursuant to
26Section 6 of Article XIII B of the California Constitution because
27the only costs that may be incurred by a local agency or school
28district will be incurred because this act creates a new crime or
29infraction, eliminates a crime or infraction, or changes the penalty
30for a crime or infraction, within the meaning of Section 17556 of
31the Government Code, or changes the definition of a crime within
32the meaning of Section 6 of Article XIII B of the California
33Constitution.



O

    94