SACRAMENTO – The California Air Resources Board (CARB) today announced that the Los Angeles Superior Court approved the settlement in the lawsuit against Southern California Gas Company (SoCalGas) resulting from the 2015-2016 Aliso Canyon natural gas leak (https://www.arb.ca.gov/research/aliso_canyon_natural_gas_leak.htm). This settlement will fully mitigate the 109,000 metric tons of methane released into the atmosphere over the approximately five-month duration of that leak. Full mitigation will be complete by 2031.

SoCalGas will pay a total of $119.5 million, including at least $26.5 million for full mitigation by directly addressing the largest source of California’s methane emissions: dairies.  The mitigation will be achieved by providing loans to construct methane digesters at 12 San Joaquin Valley dairies, grouped into three clusters, and constructing conditioning facilities and pipelines to allow the natural gas pipeline system to receive biomethane generated by cattle in the valley’s dairies. The digesters, the conditioning facilities, and parts of the pipeline will be built, owned, and operated by California Bioenergy.

The loan will be paid back over time by proceeds from sales of the generation of the renewable methane which will not return to SoCalGas. As mitigation progresses, repayments will be directed to two funds that will fund additional beneficial projects in the South Coast Air Basin. 

“This agreement will mitigate the methane leak itself, and will have a positive impact across California while providing long-term funding for air quality improvements in the parts of the L.A. Basin most directly affected by what happened at Aliso Canyon,” said CARB Chair Mary D. Nichols. “The settlement will also provide examples of transformative technology which can be shared around the world, as California pushes ahead with its own efforts to reduce methane emissions and limit the effects of climate change.”

The settlement involves government agencies at the local, county, and state level. The mitigation portion of the settlement meets all the requirements of former Governor Edmund G. Brown Jr.’s January 2016 proclamation (https://www.ca.gov/archive/gov39/2016/01/06/news19263/index.html) calling for full mitigation paid for by SoCalGas through California projects focusing on short-lived climate pollutants, and aligns with the project criteria, principles, and objectives of CARB’s Mitigation Program (https://www.arb.ca.gov/research/aliso_canyon/arb_aliso_canyon_methane_leak_climate_impacts_mitigation_program.pdf).

Methane is one of the short-lived climate pollutants (SLCPs), or super pollutants which can warm the atmosphere far beyond the impact of carbon dioxide (CO2). Methane’s warming potential is up to 84 times that of CO2. Methane constitutes approximately nine percent of the greenhouse gas (GHG) emitted in California. Dairy manure is responsible for about 25 percent of the state’s total methane emissions. SLCPs are believed to be responsible for more than 40 percent of the global warming now driving climate change.

Biomethane generated at the dairies will be distributed from the pipeline system for use as transportation fuel, which will avoid potential release of harmful air pollutants associated with burning biomethane to generate electricity. The fuel generated from the mitigation will displace about 46.7 million gallons of diesel fuel.

As stated above, the $26.5 million will be disbursed as loans to the mitigation project developer. Those loans and interest will then be ultimately directed into (1) the Aliso Canyon Recovery Account created by Senate Bill 801 (2017, Stern), where they can be allocated by the Legislature to pay for further mitigating impacts on local air quality, public health, and ratepayers resulting from the well failure at Aliso Canyon; and (2) the Aliso Canyon Supplemental Environmental Projects Fund, described below. 

The remaining $93 million of the total settlement will be directed as follows:

• $45.4 million to the Aliso Canyon Supplemental Environmental Project Fund run by the City of Los Angeles (City), Los Angeles County (County) and the California Attorney General’s Office.
• $21 million in penalties for the City, the County, and the Attorney General’s Office.
• $19 million for CARB, the City, the County, and the Attorney General’s Office to cover their leak response and litigation costs.
• $7.6 million held in reserve for mitigation, if needed.

The mitigation portion of the settlement will provide for new investment in the San Joaquin Valley and its disadvantaged communities, as well as the jobs and business opportunities that come with this type of investment. By putting the methane into a pipeline instead of burning it on-site for electrification, as is now done with some dairy methane, the settlement will also avoid localized NO_x emissions generated by using the biomethane for electrical generation.

CARB has developed a Short-Lived Climate Pollution Strategy, pursuant to SB 605 and SB 1383, which lays out a range of options to accelerate SLCP emission reductions in California from super pollutants such as methane. The strategy includes regulations, incentives, and other market-supporting activities, including the goal to incentivize economic uses of manure methane, such as biomethane transportation fuel. The strategy is a critical tool in California’s push to achieve the SB 32 statewide 2030 GHG limit of 40 percent below 1990 levels.

A 35-day public comment period on the Mitigation Agreement ended on September 12, 2018. You may view the Mitigation Agreement (https://www.arb.ca.gov/html/aliso-canyon/aliso-canyon-mitigation-agreement.pdf?_ga=2.215293975.1628578370.1540850453-1870923447.1485982578) on CARB’s website as well as all public comments (https://www.arb.ca.gov/lispub/comm2/bccommlog.php?listname=alisomitigation-ws) received and a summary of and response to public comments on the Mitigation Agreement. (https://www.arb.ca.gov/research/aliso_canyon/aliso-canyon-2018-10-09-final-summary-and-responses-to-public-comments.pdf?_ga=2.257838219.1628578370.1540850453-1870923447.1485982578)

A list of the dairies (https://www.arb.ca.gov/html/aliso-canyon/aliso-canyon-mitigation-project-dairy-sites.pdf?_ga=2.149383222.1628578370.1540850453-1870923447.1485982578) involved in the Mitigation Agreement is also available.