Southern California Gas Company’s Aliso Canyon storage facility has been leaking natural gas since October 23, 2015. Company officials have recently announced that a relief well is nearly finished and the leak will soon be plugged. However, for the natural gas industry as a whole, the legal and regulatory challenges have just begun.
The entire natural gas industry may be affected by this leak, as calls for new regulation proliferate. State oil and gas regulators have adopted six new emergency regulations, requiring measures including increased well-head monitoring and pressure limits for gas storage facilities. Additionally, the California Air Resources Board is considering new rules specifically targeting greenhouse gas emissions from the industry. On the federal level, U.S. Representatives Brad Sherman (D-CA) and Steve Knight (R-CA) have each announced plans to introduce bills requiring more stringent regulation for all natural gas storage facilities. Both of California’s Senators, Barbara Boxer and Diane Feinstein, have called for the U.S. Department of Energy to lead an investigation into the leak. Finally, the Pipeline and Hazardous Materials Safety Administration has issued an advisory regarding storage facility safety and is expected to pursue further regulation on the subject.
The Aliso Canyon leak appears to be following the pattern of other environmental mishaps, where the problem leads first to lawsuits and then to regulation. Consider the response to the 2008 Kingston coal-ash spill. That spill unleashed over a billion gallons of coal-ash slurry into two Tennessee rivers. Within a week, local landowners had sued for property damage and soon the whole industry was under scrutiny. Two years later, EPA issued a proposal to regulate coal-ash storage and disposal facilities that was ultimately promulgated.
In the wake of this natural gas leak, the industry should expect increased scrutiny.