BILL ANALYSIS                                                                                                                                                                                                    Ó



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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