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
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          |Author:    |Allen, et al.                                        |
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          |Version:   |1/20/2016    Introduced                              |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Felipe Lopez                                         |
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          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. 







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          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  








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            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  








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          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.








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          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








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            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
          

          









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