BILL ANALYSIS                                                                                                                                                                                                    Ó



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          SENATE THIRD READING


          SB  
          888 (Allen)


          As Amended  June 29, 2016


          Majority vote


          SENATE VOTE:  28-10


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Governmental    |16-2 |Gray, Alejo, Bonta,   |Bigelow, Steinorth  |
          |Organization    |     |Campos, Cooley, Daly, |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |Eduardo Garcia,       |                    |
          |                |     |Gipson,               |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Roger Hernández,      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Jones-Sawyer, Levine, |                    |
          |                |     |Maienschein, Salas,   |                    |
          |                |     |Waldron, Wilk         |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Natural         |8-0  |Williams, Cristina    |                    |
          |Resources       |     |Garcia, Gomez,        |                    |








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          |                |     |Hadley, Harper,       |                    |
          |                |     |McCarty, Mark Stone,  |                    |
          |                |     |Wood                  |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |14-2 |Gonzalez, Bloom,      |Bigelow, Obernolte  |
          |                |     |Bonilla, Bonta,       |                    |
          |                |     |Calderon, Daly,       |                    |
          |                |     |Eggman, Eduardo       |                    |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Weber, Wood, McCarty  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  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  
            (account) and requires the Public Utilities Commission (PUC)  
            to deposit any penalties assessed against a gas corporation  








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            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 all 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 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).


             c)   Moneys shall be expended consistent with Health and  
               Safety Code Section 39713.  Specifically, 25% of the  
               available moneys in the account shall be allocated to  
               provide benefits to disadvantaged communities. 


             d)   Consistent with the ARB's Aliso Canyon Climate Impacts  
               Mitigation Program, moneys in the fund resulting from  
               penalties assessed for the Aliso Canyon gas leak shall be  
               expended to do any the following:


               i) Generate significant and quantifiable reductions in  
                 methane emissions within the agriculture and waste  
                 sectors.









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               ii) Promote a more sustainable energy infrastructure by  
                 promoting energy efficiency and decreasing reliance on  
                 fossil fuels.


               iii) Address emissions from methane hot spots not presently  
                  targeted under federal, state, or local laws.


               iv) Yield cobenefits in communities directly affected by  
                  the leak and in disadvantaged communities. 


                v) Prioritize projects in nearby communities harmed by the  
                 leak and other communities directly affected by methane  
                 emissions, disadvantaged communities, and communities  
                 within the Aliso Canyon service area.


          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  
            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  








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            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 Assembly Appropriations Committee,  
          the total annual cost of this bill depends on the number of  
          significant gas leaks that occur in that year.  The costs per  
          significant gas leak event include:  


          1)Minor costs for CalOES to deploy an onsite coordinator.  This  
            would be recovered from the responsible party.


          2)Approximately $100,000 per major event 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. (Oil, Gas and Geothermal  
            Administrative Fund)


          3)Additional unknown, but potentially significant, redirection  
            of penalty revenue from the General Fund.


          COMMENTS:








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          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  
          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  








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          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.   
          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  
          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  








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          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.


          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  








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          Plan No. 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  
          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  








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          the local government level and the regional level.  SEMS  
          regulations authorize each County Board of Supervisors to  
          designate an OA lead agency.



          Disadvantaged Communities:  Authorized by the California Global  
          Warming Solutions Act of 2006 (AB 32 (Núñez), Chapter 488,  
          Statutes of 2006), 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 Greenhouse Gas Reduction Fund  
          (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. 



          In 2012, the Legislature passed SB 535 (De León), Chapter 830,  
          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. 
          Prior/Related Legislation:  SB 380 (Pavley), Chapter 14,  
          Statutes of 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  








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          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.  


          SB 887 (Pavley) of the current legislative session.  Requires  
          the DOGGR 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 Assembly)


          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.




          Analysis Prepared by:                                             
                          Kenton Stanhope / G.O. / (916) 319-2531  FN:  
          0004032
















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