BILL ANALYSIS Ó
SB 888
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Date of Hearing: June 22, 2016
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Adam Gray, Chair
SB
888 (Allen) - As Amended May 31, 2016
SENATE VOTE: 28-10
SUBJECT: Gas corporations: emergency management
SUMMARY: 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. Specifically, this bill:
1)Establishes Cal OES as the lead agency for emergency response
to a large ongoing leak or release of natural gas and
associated gases from a natural gas storage facility that
poses a significant present or potential hazard to the public
health and safety, property, or to the environment.
2)Requires Cal OES to coordinate among other state and local
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
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(account) and requires the Public Utilities Commission (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
equals the amount of those gases emitted by that leak, as
determined by the State Air Resources Board (ARB).
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 PUC has regulatory authority over public
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utilities, including gas corporations, 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.
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.
FISCAL EFFECT: According to Senate Appropriations Committee,
the annual cost of this bill would depend upon how many
"significant" leaks occur in that year. Both OES and ARB
provided the per incident costs below:
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Approximately $600 (including staffing and travel costs)
for OES to deploy an onsite coordinator. This would be
recovered from the responsible party.
Approximately $100,000 (Oil, Gas and Geothermal
Administrative Fund) for ARB to contract for downwind
flights to characterize the natural gas release rate at
reasonable periodic intervals using small planes with
monitors to measure methane.
Additional unknown, but potentially significant, redirection of
penalty revenue from the General Fund to the Gas Storage
Facility Leak Mitigation Account created by this bill.
COMMENTS:
Background : 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 (DOGGR), the PUC, and
other local, state and federal agencies. Days after the leak
was discovered, a dozen or more local and state agencies were
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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
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
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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.
The Aliso Canyon gas leak was the worst natural gas leak in
United States history in terms of its environmental impact.
Purpose of the Bill : According to the author, "The leak at Aliso
Canyon took nearly four months to plug and spewed more than
100,000 metric tons of methane. The leak was the worst in United
States history, and at its height, more than doubled the methane
emissions of the entire Los Angeles Basin and surpassed what is
released by all industrial activity in the state. To ensure we
stay on track to meet our climate goals, the Gas Company must
fully mitigate the methane emissions from this disaster. SB 888
requires the fines and penalties the Gas Company pays as a
result of this leak to be used to make certain the leak is fully
mitigated. This will ensure the mitigation is not paid by rate
payers, but instead comes from the company's profits."
The author states, "While the Division of Oil, Gas and
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Geothermal Resources (DOGGR) was notified of the leak right
away, the Air Resources Board said it wasn't notified of the
leak until November 5, 2015. State officials might have more
quickly understood the severity of the leak if emissions had
been measured earlier. Further, a Unified Command structure
under the direction of the Office of Emergency Services (OES)
was not established until January 2016. Given the aging
infrastructure at many of these facilities, it is critically
important that we take the lessons learned from this leak and
better prepare for the next one. SB 888 makes OES the immediate
lead point of contact for future significant leads, allowing
them to act quickly to protect public health and the
environment."
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.
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.
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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.
Cal OES is responsible for developing the State Emergency Plan,
which addresses the state's response to extraordinary emergency
situations associated with natural disasters or human-caused
emergencies. In accordance with the California Emergency
Services Act, the plan describes the methods for carrying out
emergency operations, the process for rendering mutual aid, the
emergency services of governmental agencies, how resources are
mobilized, how the public will be informed and the process to
ensure continuity of government during and emergency or
disaster. Cal OES would apply the same methodology and emergency
response plan should they become the lead agency for emergency
response to a large ongoing leak like the one that occurred in
Aliso Canyon.
Standardized Emergency Management System (SEMS) : SEMS is the
system used for coordinating state and local emergency response
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in California. SEMS provides a multiple level emergency
response organization that facilitates the flow of emergency
information and resources. SEMS consists of the Incident
Command System (ICS), mutual aid, the operational area concept
and multi-interagency coordination. SEMS is designed to be
flexible and adaptable to the varied emergencies that can occur
in California, and to meet the emergency management needs of all
responders. Government Code 8607(a), requires CalOES, in
coordination with other state agencies and interested local
emergency management agencies, to establish SEMS by regulation.
Operational Area (OA ): OAs encompass the county and all
political subdivisions within the county. The OA serves as a
focal point for all local emergency management information and
the provision of mutual aid. It manages information, resources,
and priorities among local governments within the OA. The OA
also serves as the coordination and communication link between
the local government level and the regional level. SEMS
regulations authorize each County Board of Supervisors to
designate an OA lead agency.
Green House Gas Reduction Fund (GGRF) : Authorized by the
California Global Warming Solutions Act of 2006 (AB 32), the
cap-and-trade program is one of several strategies that
California uses to reduce greenhouse gas emissions that cause
climate change. Funds received from the program are deposited
into the GGRF and appropriated by the Legislature. They must be
used for programs that further reduce emissions of greenhouse
gases.
Disadvantaged communities in California are specifically
targeted for investment of proceeds from the State's
cap-and-trade program. These investments are aimed at improving
public health, quality of life and economic opportunity in
California's most burdened communities at the same time they're
reducing pollution that causes climate change.
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In 2012, the Legislature passed Senate Bill 535 (De León)
directing that, in addition to reducing greenhouse gas
emissions, a quarter of the proceeds from the Greenhouse Gas
Reduction Fund must also go to projects that provide a benefit
to disadvantaged communities, specifically, a minimum of 25% of
the available moneys in the fund to projects that provide
benefits to identified disadvantaged communities; and a minimum
of 10% of the available moneys in the fund to projects located
within identified disadvantaged communities. The legislation
gives the California Environmental Protection Agency
responsibility for identifying those communities.
SB 888 would direct penalty fees from a gas leak collected by
the PUC to be used for the same purpose as the funds in the
GGRF. However, rather than placing the fees in the GGRF, this
bill creates a new account, the Gas Storage Facility Leak
Mitigation Account, in which the fees are placed prior to being
used for greenhouse gas reduction purposes.
The Committee may wish to consider whether it is more
appropriate for the fees collected by the PUC be placed in the
GGRF since they are being used for the same purpose. At minimum,
should there be a legitimate need to create a the new account,
the Committee may wish to consider placing the same constraints
on the account that are in place for the GGRF, specifically 25%
of funds must benefit disadvantaged communities.
Suggested Amendment : Per the discussion above, add in language
to ensure the Gas Storage Facility Leak Mitigation Account be
subject to the same funding provisions as the GGRF, specifically
25% of the available moneys in the fund go to projects that
provide benefits to disadvantaged communities; and a minimum of
10% of the available moneys in the fund to projects located
within identified disadvantaged communities (see below).
(3) Moneys in the account shall be expended consistent Section
39713 of the Health and Safety Code.
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Double referral : Should SB 888 pass the Assembly Committee on
Governmental Organization on Wednesday, June 22, 2016, this bill
will be referred to the Assembly Committee Natural Resources for
further consideration.
Prior/Related Legislation : SB 380 (Pavley) of 2015-2016
Legislative Session. 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) of 2015-2016 Legislative Session. 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)
SB 535 (De León, Chapter 830, Statutes of 2012). Requires the
California Environmental Protection Agency to identify
disadvantaged communities for investment opportunities. The bill
would require the Department of Finance, when developing a
specified 3-year investment plan, to allocate 25% of the
available moneys in the Greenhouse Gas Reduction Fund to
projects that provide benefits to disadvantaged communities, as
specified, and to allocate a minimum of 10% of the available
moneys in the Greenhouse Gas Reduction Fund to projects located
within disadvantaged communities.
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REGISTERED SUPPORT / OPPOSITION:
Support
California Public Interest Research Group
Clean Water Action
Consumer Attorneys of California
Environment California
Environmental Working Group
National Parks Conservation Association
LAUSD Board Member District 3, Scott M. Schmerelson
National Parks Conservation Association
Sierra Club California
South Coast Air Quality Management District
Union of Concerned Scientists
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Opposition
None on File
Analysis Prepared by:Kenton Stanhope / G.O. / (916)
319-2531