BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 888| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 888 Author: Allen (D), et al. Amended: 8/19/16 Vote: 21 SENATE GOVERNMENTAL ORG. COMMITTEE: 9-0, 3/8/16 AYES: Hall, Block, Glazer, Hernandez, Hill, Hueso, Lara, McGuire, Vidak NO VOTE RECORDED: Berryhill, Gaines, Galgiani, Runner SENATE ENERGY, U. & C. COMMITTEE: 9-2, 4/19/16 AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley, Wolk NOES: Morrell, Gaines SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16 AYES: Lara, Beall, Hill, McGuire, Mendoza NOES: Bates, Nielsen SENATE FLOOR: 28-10, 6/2/16 AYES: Allen, Beall, Block, Cannella, De León, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan, Pavley, Roth, Vidak, Wieckowski, Wolk NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Moorlach, Morrell, Nguyen, Nielsen, Stone NO VOTE RECORDED: Galgiani, Runner ASSEMBLY FLOOR: 59-21, 8/24/16 - See last page for vote SUBJECT: Gas corporations: emergency management: leak mitigation SOURCE: Author SB 888 Page 2 DIGEST: This bill establishes the California Office of Emergency Services (OES) as the lead agency for emergency response to a leak of natural gas from a natural gas storage facility. Assembly Amendments (1) require the moneys in the Gas Storage Facility Leak Mitigation fund resulting from penalties assessed for the Aliso Canyon gas leak be expended, consistent with the State Air Resources Board's (ARB) Aliso Canyon Climate Impacts Mitigation Program, for specified purposes, (2) require a penalty assessed against a gas corporation in regards to a natural gas storage facility leak to fully offset the impact on the climate from the greenhouse gases emitted by the leak, as specified, and (3) require, if sufficient moneys remain after mitigating the impact on the climate form the gas corporation's emissions, to reimburse state and local response costs. ANALYSIS: Existing law: 1)Creates 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, 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. SB 888 Page 3 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 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 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. 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 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 SB 888 Page 4 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 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 SB 888 Page 5 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 service area. Background Purpose of SB 888. 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 SB 888 Page 6 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 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 six 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 SB 888 Page 7 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. Related/Prior Legislation SB 380 (Pavley, Chapter 14, Statutes of 2016) continued the moratorium on injection of natural gas at the Aliso Canyon gas storage facility until specified criteria, including testing, are met, requires the feasibility of the storage facility to be addressed and requires the PUC, with input from others, to determine the amount of gas necessary at the facility for safety, regional reliability to ensure just and reasonable rates, as specified, among other provisions. SB 887 (Pavley, 2016) provides a framework for reforming oversight of natural gas storage facilities. (Pending on the Senate Floor) FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the 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 per major event for OES to deploy an onsite SB 888 Page 8 coordinator. These costs 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. SUPPORT: (Verified8/24/16) California Public Interest Research Group Clean Water Action Consumer Attorneys of California Environment California Environmental Working Group Los Angeles Unified School District Board Member District 3, Scott M. Schmerelson National Parks Conservation Association Sierra Club California South Coast Air Quality Management District Union of Concerned Scientists OPPOSITION: (Verified8/24/16) 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 SB 888 Page 9 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." ASSEMBLY FLOOR: 59-21, 8/24/16 AYES: Alejo, Arambula, Atkins, Baker, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine, Linder, Lopez, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell, Olsen, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wilk, Williams, Wood, Rendon NOES: Achadjian, Travis Allen, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Harper, Jones, Kim, Mathis, Mayes, Melendez, Obernolte, Patterson, Steinorth, Wagner, Waldron Prepared by:Felipe Lopez / G.O. / (916) 651-1530 8/25/16 17:34:51 **** END **** SB 888 Page 10