BILL ANALYSIS Ó
SB 888
Page 1
SENATE THIRD READING
SB
888 (Allen)
As Amended August 19, 2016
Majority vote
SENATE VOTE: 28-10
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|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, Hadley, | |
| | |Harper, McCarty, Mark | |
| | |Stone, Wood | |
SB 888
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| | | | |
|----------------+-----+-----------------------+---------------------|
|Appropriations |14-2 |Gonzalez, Bloom, |Bigelow, Obernolte |
| | |Bonilla, Bonta, | |
| | |Calderon, Daly, | |
| | |Eggman, Eduardo | |
| | |Garcia, Holden, Quirk, | |
| | |Santiago, Weber, Wood, | |
| | |McCarty | |
| | | | |
| | | | |
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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.
Specifies how penalty money assessed against a gas corporation
for a gas storage leak should be spent. 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 (CPUC)
to deposit any penalties assessed against a gas corporation
pursuant to a gas storage facility leak into the account.
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4)Requires a penalty assessed in regards to a natural gas
storage facility leak shall at least equal the amount
necessary to reduce the impact on the climate by an amount
equivalent to the greenhouse gases emitted by the leak from
the storage facility, as determined by the State Air Resources
Board (ARB).
5)Provides that the CPUC, in determining the amount necessary to
fully offset the impact on the climate from the gases emitted
by the leak, shall consider the extent to which the gas
corporation has mitigated, or is in the process of mitigating,
the impact on the climate from greenhouse gas emissions
resulting from the leak.
6)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. If
sufficient moneys remain after mitigating the impact on the
climate from the gas corporation's emissions, it shall be
used for reimbursing state and local response costs.
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 to be determined by
the CPUC, in consultation with the ARB, to achieve a
reduction in greenhouse gases that will fully offset the
impact on the climate from those gases emitted by that
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leak.
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.
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) Where feasible, 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 area.
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7)Provides that Section 2 of the bill shall not affect the
authority of the ARB to adopt rules and regulations to reduce
greenhouse gas emissions at natural gas storage facilities or
to require mitigation of natural gas leaks from those
facilities.
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)Establishes the Division of Oil, Gas, and Geothermal Resources
(DOGGR) as the state's oil and gas regulator.
3)Requires the state's Oil and Gas Supervisor (Supervisor) to
supervise the drilling, operation, maintenance, and
abandonment of wells and the operation, maintenance, and
removal or abandonment of tanks and facilities attendant to
oil and gas production.
4)Defines "well" to mean any oil or gas well or well for the
discovery of oil or gas; any well on lands producing or
reasonably presumed to contain oil or gas; any well drilled
for the purpose of injecting fluids or gas for stimulating oil
or gas recovery, repressuring or pressure maintenance of oil
or gas reservoirs, or disposing of waste fluids from an oil or
gas field; any well used to inject or withdraw gas from an
underground storage facility; or any well drilled within or
adjacent to an oil or gas pool for the purpose of obtaining
water to be used in production stimulation or repressuring
operations.
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5)Requires the operator of any well, before commencing the work
of drilling the well, to file with the Supervisor a notice of
intention (NOI). Requires approval of the NOI by the
Supervisor. Authorizes the Supervisor to deny approval of
proposed well operations for failure to comply with an order
until the operator brings its existing well operations into
compliance with the order.
6)Allows DOGGR to apply to the United States Environmental
Protection Agency (US EPA) to receive "primacy" to operate the
Class II Underground Injection Control (UIC) program for oil
and gas injection wells at the state level. The US EPA
granted primacy and delegated authority to DOGGR to operate
the UIC program in 1983.
7)Prohibits the unreasonable waste of natural gas by the act,
omission, sufferance, or insistence of the lessor, lessee, or
operator of any land containing oil or gas, or both.
8)Provides that a person who violates the state's oil and gas
laws or regulations is subject to a civil penalty not to
exceed $25,000 for each violation. Requires the Supervisor to
consider specified circumstances when establishing the amount
of the civil penalty such as:
a) The extent of harm caused by the violation;
b) The persistence of the violation;
c) The pervasiveness of the violation; and,
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d) The number of prior violations by the same violator.
9)Authorizes the CPUC to regulate gas corporations, including
natural gas storage facilities (Facilities).
10)Requires Facilities to receive a Certificate of Public
Convenience and Necessity (CPCN) before constructing a
Facility. Requires that the CPUC grant a CPCN on the grounds
that the present or future public convenience and necessity
requires or will require the Facility.
11)Requires, pursuant to the California Global Warming Solutions
Act (AB 32 (Núñez), Chapter 488, Statutes of 2006), the Air
Resources Board (ARB) to adopt a statewide greenhouse gas
(GHG) emissions limit equivalent to 1990 levels by 2020 and to
adopt rules and regulations to achieve maximum technologically
feasible and cost-effective GHG emission reductions.
12)Requires the Supervisor to continue the prohibition against
Southern California Gas Company injecting any natural gas into
the Aliso Canyon Facility located in the County of Los Angeles
until a comprehensive review of the safety of the gas storage
wells at the Facility is completed and the supervisor
determines that well integrity has been ensured by the review.
Prohibits the Supervisor from lifting the prohibition on
injection until the Executive Director of the CPUC has
concurred via letter with the Supervisor regarding his or her
determination of safety.
13)Requires the CPUC, no later than July 1, 2017, to open a
proceeding on the feasibility of minimizing or eliminating use
of the Aliso Canyon Facility while still maintaining energy
and electric reliability for the region.
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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:
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 DOGGR, the
CPUC, 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.
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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
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.
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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
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
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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
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
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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
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), 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
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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
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 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 on Assembly Floor)
SB 535 (De León), Chapter 830, Statutes of 2012. Requires the
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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:
0004629