BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 888|
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                                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








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          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. 









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          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  








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            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  








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                 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  








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          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  








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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.   
          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  








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            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  








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          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


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