BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Isadore Hall, III Chair 2015 - 2016 Regular Bill No: SB 888 Hearing Date: March 8, 2016 ----------------------------------------------------------------- |Author: |Allen, et al. | |-----------+-----------------------------------------------------| |Version: |1/20/2016 Introduced | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Felipe Lopez | | | | ----------------------------------------------------------------- SUBJECT: Gas corporations: emergency management DIGEST: This bill establishes the California Office of Emergency Services (Cal OES) as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. ANALYSIS: Existing law: 1)Creates Cal OES, within the office of the Governor, which coordinates disaster response, emergency planning, emergency preparedness, disaster recovery, disaster mitigation, and homeland security activities. 2)Provides that the Public Utilities Commission (PUC) has regulatory authority over public utilities, as defined. 3)Requires the PUC to investigate the cause of all accidents occurring upon the property of any public utility, or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the PUC, investigation by it, and authorizes the PUC to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. SB 888 (Allen) Page 2 of ? 4)Provides that any public utility that violates any provision or that fails or neglects to comply with any order, decision, decree, rule direction, demand, or requirement of the PUC, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. 5)Requires that any fine or penalty imposed by the PUC and collected from a public utility be paid to the State Treasury to the credit of the General Fund. This bill: 1)Establishes Cal OES as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. 2)Requires Cal OES to coordinate among other state agencies the emergency response, public health and environmental assessment, monitoring, and long-term management and control of the leak. 3)Creates the Gas Storage Facility Leak Mitigation Account and requires the PUC to deposit any penalties assessed against a gas corporation pursuant to a gas storage facility leak into the account. 4)Specifies that moneys in the account shall be expended, upon appropriation by the Legislature, subject to both of the following conditions: a) Moneys shall be expended solely for direct emissions reductions in furtherance of the achievement of the greenhouse gas emissions limit established by the California Global Warming Solutions Act of 2006. Moneys shall not be used for the purchase of allowances or offsets otherwise authorized by the California Global Warming Solutions Act of 2006. b) Moneys from penalties assessed for a gas storage facility leak shall be expended in a manner that, at a minimum, achieves a reduction in greenhouse gases that exceeds the amount of those gases emitted by that leak. 5)Prohibits a gas corporation from recovering any moneys paid SB 888 (Allen) Page 3 of ? for fines, penalties, or damages to residents, businesses, and other parties adversely affected by a gas storage facility leak in any rate approved by the PUC. Those costs shall be paid for by the gas corporation and its shareholders. Background Purpose of the Bill. According to the author, "this bill is part of a comprehensive package of legislation introduced in the Senate to address the Aliso Canyon leak disaster. While the State's response to the leak was swift, at least seven different agencies have been involved with no statutory single point of responsibility and accountability to oversee efforts and remediation actions." The author further argues that "unlike oil spill response, which is dictated by a robust framework to streamline agency coordination and collaboration, California lacks a plan to quickly and efficiently address a massive natural gas leak. Given the extensive infrastructure of underground natural gas storage facilities throughout California, and having seen the potential for significant health and environmental problems that can result from a leak, California should have a framework in place to respond quickly and efficiently." The bill also creates the Gas Storage Facility Leak Mitigation Account which would fund the mitigation of greenhouse gas impacts through direct measures to reduce emissions. Aliso Canyon Gas Leak. The Aliso Canyon gas leak was a massive natural gas leak that started on October 23, 2015 at the Aliso Canyon underground storage facility near Porter Ranch, Los Angeles. The leak was discovered during one of Southern California Gas Company's (SoCal Gas) twice daily well observations. The Aliso Canyon facility is the second largest gas storage facility of its kind in the United States and it is owned by the SoCal Gas, a subsidiary of Sempra Energy. The facility is maintained in accordance with safety regulations established by the Department of Oil, Gas, and Geothermal Resources, the PUC, and other local, state and federal agencies. Days after the leak was discovered, a dozen or more local and state agencies were involved in an attempt to plug the leak. It is estimated that the leak was responsible for approximately one million barrels of gas being released per day. Experts SB 888 (Allen) Page 4 of ? estimate that the carbon footprint of the Aliso Canyon leak is larger than the Deepwater Horizon leak in the Gulf of Mexico, which is considered the largest accidental marine oil spill in the world and at that time the largest environmental disaster in United States history. Natural Gas is largely composed of methane, an odorless and invisible greenhouse gas with a global warming potential of approximately 86 times greater than carbon dioxide in a 20-year time frame. Initially the leak released about 44,000 kilograms of methane per hour which is the equivalent of 1,200 tons of methane every day. In terms of greenhouse gas output per month, it is the equivalent of the greenhouse gas output of 200,000 cars in a year. According to a Time Magazine article on January 11, 2016, the 1.6 million pounds of methane released each day is comparable to the emissions of 6 coal fired power plants, 2.2 million cows per day, or 4.5 million cars. Besides methane, the gas leak also contained tert-butyl mercaptan, tetrahydrothiophene, and methyl mercaptan, which gives the gas a rotten egg smell and is known to cause headaches, vomiting, and nausea. While the leak occurred in a mountainous area more than a mile away from any residential areas, residents have complained of headaches, nausea, vomiting and trouble breathing. Though SoCal Gas has claimed that "scientists agree that natural gas is not toxic and that its odorant is harmless at the minute levels at which it is added to natural gas," the company has been paying to temporarily relocate residents in and around Porter Ranch. In early January, SoCal Gas reported that it had temporarily relocated 2,824 households or roughly 11,296 individuals. The leak was finally permanently plugged on February 18, 2016. When it was all said and done the Aliso Canyon gas leak was the worst natural gas leak in United States history in terms of its environmental impact. Cal OES. The California Office of Emergency Services is responsible for overseeing and coordinating emergency preparedness, response, recovery and homeland security activities within the state. In years past, Cal OES' primary focus was exclusively on emergency management, but over the last decade their mission has expanded to include responsibilities in criminal justice, victim services, homeland security, and public safety communications. SB 888 (Allen) Page 5 of ? The Cal OES began as the State War Council in 1943. With an increasing emphasis on emergency management, it officially became Cal OES in 1970. In 2004, the California Legislature merged Cal OES and the Governor's Office of Criminal Justice Planning, which was responsible for providing state and federal grant funds to local communities to prevent crime and help crime victims. In 2003, with the State increasing its focus on terrorism prevention after the attacks of September 11, 2001, the Governor's Office of Homeland Security (OHS) was established through an Executive Order by Governor Gray Davis. In 2009, the California Legislature merged the powers, purposes, and responsibilities of the former Cal OES with those of the OHS into the newly-created California Emergency Management Agency (Cal EMA). On July 1, 2014, Governor Brown's Reorganization Plan #2 eliminated the Cal EMA and restored it to the Governor's Office, renaming it Cal OES. That same year, the Public Safety Communications Office was merged into Cal OES. Prior/Related Legislation SB 380 (Pavley, 2016) requires the State Oil and Gas Supervisor to immediately institute a moratorium on injections of natural gas into any wells located within and serving the Aliso Canyon storage facility located in the County of Los Angeles until specified conditions are met, including that the integrity of each well has been quantitatively and objectively evaluated using state-of-the-art technology, as determined by the Supervisor with input from independent experts, and the risks posed by well failure have been evaluated. (Pending in the Assembly Utilities and Commerce Committee) SB 887 (Pavley, 2016) requires the Division of Oil, Gas, and Geothermal Resources to, before January 1, 2018, and annually thereafter, inspect all natural gas storage wells serving or located in a natural gas storage facility and would prescribe standards for natural gas storage wells. (Pending in the Senate Natural Resources and Water Committee) FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes SB 888 (Allen) Page 6 of ? SUPPORT: California Public Interest Research Group Clean Water Action Consumer Attorneys of California Environment California Environmental Working Group LAUSD Board Member District 3, Scott M. Schmerelson National Parks Conservation Association Sierra Club California South Coast Air Quality Management District Union of Concerned Scientist OPPOSITION: None received ARGUMENTS IN SUPPORT: The California Public Interest Research Group states that "SB 888 would ensure that monetary penalties paid by the responsible gas company are used specifically for greenhouse gas emissions reduction. This bill will also help ensure that emergency responses to future gas leaks are more effective. Specifically, it will designate Cal OES as the lead response agency for natural gas leaks from storage facilities." The Sierra Club California states that, "SB 888 will help ensure that communities like Porter Ranch get the help they need as soon as the emergency arises and that the state can get environmental disasters like this under control sooner. The bill would also establish the Gas Storage Facility Leak Mitigation Account, managed by the PUC. It will be funded by penalties that arise from gas storage facility leaks and those funds must be used in a manner that will result in greenhouse gas reductions that are at least greater than gases emitted by the leak. To protect ratepayers, the bill will also prohibit the utility from throwing the cost onto its customers." DUAL REFERRAL: Senate Energy, Utilities and Communications Committee SB 888 (Allen) Page 7 of ?