BILL NUMBER: AB 56	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 30, 2011
	AMENDED IN SENATE  JULY 13, 2011
	AMENDED IN SENATE  JUNE 29, 2011
	AMENDED IN ASSEMBLY  MAY 27, 2011
	AMENDED IN ASSEMBLY  MAY 18, 2011
	AMENDED IN ASSEMBLY  MARCH 16, 2011
	AMENDED IN ASSEMBLY  FEBRUARY 23, 2011

INTRODUCED BY   Assembly Member Hill

                        DECEMBER 6, 2010

   An act to add  Chapter 4.5 (commencing with Section 950)
to Part 1 of Division 1 of   Sections 956.5, 957, 958,
958.5, 959, and 969 to the Public Utilities Code, relating to
gas corporations.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 56, as amended, Hill. Gas corporations: rate recovery and
expenditure: intrastate pipeline safety.
   (1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities  , including gas
corporations, as defined  . Existing law authorizes the
commission to fix the rates and charges for every public utility, and
requires that those rates and charges be just and reasonable.
   This bill would prohibit a gas corporation from recovering any
fine or penalty in any rate approved by the commission. The bill
would require a gas corporation to file semiannual gas transmission
and storage safety reports with the commission's consumer protection
safety division that include certain matter and require that if the
division determines that there is a deficiency in a gas corporation's
prioritization or administration of the storage or pipeline capital
projects or operation and maintenance activities, to bring the
deficiency to the commission's immediate attention.  If the
commission authorizes a gas corporation to recover expenses incurred
for public safety, the bill would require the commission to require
the gas corporation to establish and maintain a balancing account to
record the difference between the approved revenue requirements for
public safety and the actual expenditures made by the utility. The
bill would require a gas corporation to return moneys approved for
expenditure for public safety by the commission to the balancing
account, if those funds are not expended within a reasonable period
of time after the commission grants approval of the public safety
expenditure, as determined by the commission.  The bill
would require the commission, in any ratemaking proceeding in which
the commission authorizes a gas corporation to recover expenses for a
federal transmission pipeline integrity management program, or for
capital expenditures for the maintenance and repair of transmission
pipelines, to require the gas corporation to establish and maintain a
one-way balancing account for the recovery of those expenses.
   (2) The Public Utilities Act authorizes the commission to
ascertain and fix just and reasonable standards, classifications,
regulations, practices, measurements, or service to be furnished,
imposed, observed, and followed by specified public utilities,
including gas corporations  , as defined  .
   Existing federal law requires the United States Department of
Transportation Pipeline and Hazardous Materials Safety Administration
(PHMSA) to adopt minimum safety standards for pipeline
transportation and for pipeline facilities, including an interstate
gas pipeline facility and intrastate gas pipeline facility, as
defined. Existing law authorizes the Secretary of Transportation to
prescribe or enforce safety standards and practices for an intrastate
pipeline facility or intrastate pipeline transportation to the
extent that the safety standards and practices are regulated by a
state authority that submits to the secretary annually a
certification for the facilities and transportation or alternatively
authorizes the secretary to make an agreement with a state authority
authorizing it to take necessary action to meet certain pipeline
safety requirements. Existing law prohibits a state authority from
adopting or continuing in force safety standards for interstate
pipeline facilities or interstate pipeline transportation. Existing
law authorizes a state authority that has submitted a current
certification to adopt additional or more stringent safety standards
for intrastate pipeline facilities and intrastate pipeline
transportation only if those standards are compatible with the
minimum standards prescribed by PHMSA.
   This bill would  designate the commission as the state
authority responsible for development, submission, and administration
of a state pipeline safety program certification for natural gas
pipelines. The bill would  require owners and operators of
intrastate transmission and distribution lines  for natural gas
 , at least once each calendar year, to meet with each local
fire department having fire suppression responsibilities in the area
 served by the owner or operator's transmission and
distribution pipelines   where those lines are located
 to discuss and review contingency plans for emergencies
involving the intrastate transmission and distribution lines within
the jurisdiction of the local fire department. The bill would require
the commission, unless it determines that doing so is preempted
under federal law, to require the installation of automatic shutoff
or remote controlled sectionalized block valves on certain intrastate
transmission lines, as  defined,   specified.
 The bill would require each gas corporation to prepare and
submit to the commission a proposed comprehensive pressure testing
implementation plan that includes specified elements and require
that, at the conclusion of an implementation period, all intrastate
transmission line segments meet specified requirements.
   (3) Under existing law, a violation of the Public Utilities Act or
any order, decision, rule, direction, demand, or requirement of the
commission is a crime.
   Because the provisions of this bill would be a part of the act and
because a violation of an order or decision of the commission
implementing its requirements would be a crime, the bill would impose
a state-mandated local program by creating a new crime.
   (4) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 956.5 is added to the 
 Public Utilities Code   , to read:  
   956.5.  Owners and operators of intrastate transmission and
distribution lines, at least once each calendar year, shall meet with
each local fire department having fire suppression responsibilities
in the area where those lines are located to discuss and review
contingency plans for emergencies involving the intrastate
transmission and distribution lines within the jurisdiction of the
local fire department. 
   SEC. 2.    Section 957 is added to the  
Public Utilities Code   , to read:  
   957.  (a) (1) Unless the commission determines that it is
prohibited from doing so by Section 60104(c) of Title 49 of the
United States Code, the commission shall require the installation of
automatic shutoff or remote controlled sectionalized block valves on
both of the following facilities, if it determines those valves are
necessary for the protection of the public:
   (A) Intrastate transmission lines that are located in a high
consequence area.
   (B) Intrastate transmission lines that traverse an active seismic
earthquake fault.
   (2) Each owner or operator of a commission-regulated gas pipeline
facility that is an intrastate transmission line shall provide the
commission with a valve location plan, along with any recommendations
for valve locations. The commission may make modifications to the
valve location plan or provide for variations from any location
requirements adopted by the commission pursuant to this section that
it deems necessary or appropriate and consistent with protection of
the public.
   (3) The commission shall additionally establish action timelines,
adopt standards for how to prioritize installation of automatic
shutoff or remote controlled sectionalized block valves pursuant to
paragraph (1), ensure that remote and automatic shutoff valves are
installed as quickly as is reasonably possible, and establish ongoing
procedures for monitoring progress in achieving the requirements of
this section.
   (b) The commission shall authorize recovery in rates for all
reasonably incurred costs incurred for implementation of the
requirements of this section.
   (c) The commission, in consultation with the Pipeline and
Hazardous Materials Safety Administration of the United States
Department of Transportation, shall adopt and enforce compatible
safety standards for commission-regulated gas pipeline facilities
that the commission determines should be adopted to implement the
requirements of this section. 
   SEC. 3.    Section 958 is added to the  
Public Utilities Code   , to read:  
   958.  (a) Each gas corporation shall prepare and submit to the
commission a proposed comprehensive pressure testing implementation
plan for all intrastate transmission lines to either pressure test
those lines or to replace all segments of intrastate transmission
lines that were not pressure tested or that lack sufficient details
related to performance of pressure testing. The comprehensive
pressure testing implementation plan shall provide for testing or
replacing all intrastate transmission lines as soon as practicable.
The comprehensive pressure testing implementation plan shall set
forth criteria on which pipeline segments were identified for
replacement instead of pressure testing.
   (b) The comprehensive pressure testing implementation plan shall
include a timeline for completion that is as soon as practicable, and
includes interim safety enhancement measures, including increased
patrols and leak surveys, pressure reductions, prioritization of
pressure testing for critical pipelines that must run at or near
maximum allowable operating pressure values that result in hoop
stress levels at or above 30 percent of specified minimum yield
stress, and any other measure that the commission determines will
enhance public safety during the implementation period.
Engineering-based assumptions may be used to determine maximum
allowable operating pressure in the absence of complete records, but
only as an interim measure until such time as all the lines have been
tested or replaced, in order to allow the gas system to continue to
operate.
   (c) At the completion of the implementation period, all California
natural gas intrastate transmission line segments shall meet all of
the following:
   (1) Have been pressure tested.
   (2) Have traceable, verifiable, and complete records readily
available.
   (3) Where warranted, be capable of accommodating in-line
inspection devices. 
   SEC. 4.    Section 958.5 is added to the  
Public Utilities Code   , to read:  
   958.5.  (a) Each gas corporation shall, twice a year, file with
the commission's consumer protection safety division a gas
transmission and storage safety report. The consumer protection
safety division shall review the reports to monitor each gas
corporation's storage and pipeline-related activities to assess
whether the projects that have been identified as high risk are being
carried out, and to track whether the gas corporation is spending
its allocated funds on these storage and pipeline-related safety,
reliability, and integrity activities for which they have received
approval from the commission.
   (b) The gas transmission and storage safety report shall include a
thorough description and explanation of the strategic planning and
decisionmaking approach used to determine and rank the gas storage
projects, intrastate transmission line safety, integrity, and
reliability, operation and maintenance activities, and inspections of
its intrastate transmission lines. If there has been no change in
the gas corporation's approach for determining and ranking which
projects and activities are prioritized since the previous gas
transmission and storage safety report, the subsequent report may
reference the immediately preceding report.
   (c) If the commission's consumer protection safety division
determines that there is a deficiency in a gas corporation's
prioritization or administration of the storage or pipeline capital
projects or operation and maintenance activities, the division shall
bring the problems to the commission's immediate attention. 
   SEC. 5.    Section 959 is added to the  
Public Utilities Code   , to read:  
   959.  (a) A gas corporation shall not recover any fine or penalty
in any rate approved by the commission.
   (b) Each gas corporation shall demonstrate to the satisfaction of
the commission, in its general rate case, that its proposed rates
will be sufficient to enable the gas corporation to fund those
projects and activities necessary to maintain safe and reliable
service and to meet federal and state safety requirements applicable
to its gas plant, in a cost-effective manner. 
   SEC. 6.    Section 969 is added to the  
Public Utilities Code   , to read:  
   969.  In any ratemaking proceeding in which the commission
authorizes a gas corporation to recover expenses for the gas
corporation's transmission pipeline integrity management program
established pursuant to Subpart O (commencing with Section 192.901)
of Part 192 of Title 49 of the United States Code, or for capital
expenditures for the maintenance and repair of transmission
pipelines, the commission shall require the gas corporation to
establish and maintain a one-way balancing account for the recovery
of those expenses. Any unspent funds in the form of accumulated
account balance at the end of each rate case cycle, plus interest,
shall be returned to customers through a true-up filing. 
  SEC. 7.    No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.  
  SECTION 1.    Chapter 4.5 (commencing with Section
950) is added to Part 1 of Division 1 of the Public Utilities Code,
to read:
      CHAPTER 4.5.  GAS PIPELINE SAFETY



      Article 1.  General


   950.  For purposes of this chapter, the following terms have the
following meanings:
   (a) "Class 1 location," "class 2 location," "class 3 location,"
and "class 4 location" have the same meanings as defined in the
regulations adopted by the United States Department of Transportation
pursuant to Chapter 601 (commencing with Section 60101) of Subtitle
VIII of Title 49 of the United States Code (49 C.F.R. 192.5, as
adopted January 1, 2011, or a successor regulation).
   (b) "Commission-regulated gas pipeline facility" means an
intrastate gas pipeline facility as defined in Section 60101 of Title
49 of the United States Code, that is subject to the safety
regulatory authority of the commission to the extent authorized
between the commission and the United States Secretary of
Transportation, including each of the following pipelines:
   (1) An intrastate distribution line, which is a pipeline that is
not subject to the jurisdiction of the Federal Energy Regulatory
Commission pursuant to Section 717(b) of Title 15 of the United
States Code because it is used for the local distribution of natural
gas.
   (2) An intrastate transmission line, which is a transmission
pipeline that the commission, pursuant to Section 717(c) of Title 15
of the United States Code, has certified to the Federal Energy
Regulatory Commission as being subject to the regulatory jurisdiction
of the commission over rates and service. For these purposes, a
transmission pipeline means a pipeline other than a gathering line
that: (A) transports gas from a gathering line or storage facility to
a distribution center, storage facility, or large volume customer
that is not downstream from a distribution center, (B) operates at a
hoop stress of 20 percent or more of specified maximum yield
strength, or (C) transports gas within a storage field.
   (3) An intrastate gathering line, which is a pipeline that
transports gas from a current production facility to a transmission
line or main.
   (4) A mobilehome park master-metered natural gas distribution
system that is subject to the commission's safety inspection and
enforcement program pursuant to Chapter 4 (commencing with Section
4351) of Division 2.
   (5) A propane distribution system that is subject to the
commission's safety inspection and enforcement program pursuant to
Chapter 4.1 (commencing with Section 4451) of Division 2.
   (c) "High consequence area" has the same meaning as defined in the
regulations adopted by the United States Department of
Transportation pursuant to Chapter 601 (commencing with Section
60101) of Subtitle VIII of Title 49 of the United States Code (49
C.F.R. 192.903, as adopted January 1, 2011, or a successor
regulation).

      Article 2.  Natural Gas Pipeline Safety Act of 2011


   955.  (a) This article shall be known and may be cited as the
Natural Gas Pipeline Safety Act of 2011.
   (b) The commission is the state authority responsible for
regulating and enforcing intrastate gas pipeline transportation and
pipeline facilities pursuant to Chapter 601 (commencing with Section
60101) of Subtitle VIII of Title 49 of the United States Code,
including the development, submission, and administration of a state
pipeline safety program certification for natural gas pipelines
pursuant to Section 60105 of that chapter.
   956.  Owners and operators of intrastate transmission and
distribution lines, at least once each calendar year, shall meet with
each local fire department having fire suppression responsibilities
in the area served by the owner or operator's transmission and
distribution pipelines to discuss and review contingency plans for
emergencies involving the intrastate transmission and distribution
lines within the jurisdiction of the local fire department.
   957.  (a) (1) Unless the commission determines that it is
prohibited from doing so by subdivision (c) of Section 60104 of Title
49 of the United States Code, the commission shall require the
installation of automatic shutoff or remote controlled sectionalized
block valves on both of the following facilities, if it determines
those valves are necessary for the protection of the public:
   (A) Intrastate transmission lines that are located in a high
consequence area.
   (B) Intrastate transmission lines that traverse an active seismic
earthquake fault.
   (2) Each owner or operator of a commission-regulated gas pipeline
facility that is an intrastate transmission line shall provide the
commission with a valve location plan, along with any recommendations
for valve locations. The commission may make modifications to the
valve location plan or provide for variations from any location
requirements adopted by the commission pursuant to this section that
it deems necessary or appropriate and consistent with protection of
the public.
   (3) The commission shall additionally establish action timelines,
adopt standards for how to prioritize installation of automatic
shutoff or remote controlled sectionalized block valves pursuant to
paragraph (1), ensure that remote and automatic shutoff valves are
installed as quickly as is reasonably possible, and establish ongoing
procedures for monitoring progress in achieving the requirements of
this section.
   (b) The commission shall authorize recovery in rates for all
reasonably incurred costs incurred for implementation of the
requirements of this section.
   (c) The commission, in consultation with the Pipeline and
Hazardous Materials Safety Administration of the United States
Department of Transportation, shall adopt and enforce compatible
safety standards for commission-regulated gas pipeline facilities
that the commission determines should be adopted to implement the
requirements of this section.
   958.  (a) Each gas corporation shall prepare and submit to the
commission a proposed comprehensive pressure testing implementation
plan for all intrastate transmission lines to either pressure test
those lines or to replace all segments of intrastate transmission
lines that were not pressure tested or that lack sufficient details
related to performance of pressure testing. The comprehensive
pressure testing implementation plan shall provide for testing or
replacing all intrastate transmission lines as soon as practicable.
The comprehensive pressure testing implementation plan shall set
forth criteria on which pipeline segments were identified for
replacement instead of pressure testing.
   (b) The comprehensive pressure testing implementation plan shall
include a timeline for completion that is as soon as practicable, and
includes interim safety enhancement measures, including increased
patrols and leak surveys, pressure reductions, prioritization of
pressure testing for critical pipelines that must run at or near
maximum allowable operating pressure values that result in hoop
stress levels at or above 30 percent of specified minimum yield
stress, and any other measure that the commission determines will
enhance public safety during the implementation period.
Engineering-based assumptions may be used to determine maximum
allowable operating pressure in the absence of complete records, but
only as an interim measure until such time as all the lines have been
tested or replaced, in order to allow the gas system to continue to
operate.
   (c) At the completion of the implementation period, all California
natural gas intrastate transmission line segments shall meet all of
the following:
   (1) Have been pressure tested.
   (2) Have traceable, verifiable, and complete records readily
available.
   (3) Where warranted, be capable of accommodating in-line
inspection devices.
   959.  (a) Each gas corporation shall, twice a year, file with the
commission's consumer protection safety division a gas transmission
and storage safety report. The consumer protection safety division
shall review the reports to monitor each gas corporation's storage
and pipeline-related activities to assess whether the projects that
have been identified as high risk are being carried out, and to track
whether the gas corporation is spending its allocated funds on these
storage and pipeline-related safety, reliability, and integrity
activities for which they have received approval from the commission.

   (b) The gas transmission and storage safety report shall include a
thorough description and explanation of the strategic planning and
decisionmaking approach used to determine and rank the gas storage
projects, intrastate transmission line safety, integrity, and
reliability, operation and maintenance activities, and inspections of
its intrastate transmission lines. If there has been no change in
the gas corporation's approach for determining and ranking which
projects and activities are prioritized since the previous gas
transmission and storage safety report, the subsequent report may
reference the immediately preceding report.
   (c) If the commission's consumer protection safety division
determines that there is a deficiency in a gas corporation's
prioritization or administration of the storage or pipeline capital
projects or operation and maintenance activities, the division shall
bring the problems to the commission's immediate attention.
   968.  (a) A gas corporation shall not recover any fine or penalty
in any rate approved by the commission.
   (b) Each gas corporation shall demonstrate to the satisfaction of
the commission, in its general rate case, that its proposed rates
will be sufficient to enable the gas corporation to fund those
projects and activities necessary to maintain safe and reliable
service and to meet federal and state safety requirements applicable
to its gas plant, in a cost-effective manner.
   (c) If the commission authorizes a gas corporation to recover
expenses incurred for public safety, the commission shall require the
gas corporation to establish and maintain a balancing account to
record the difference between the approved revenue requirements for
public safety and the actual expenditures made by the utility. A gas
corporation shall return moneys approved for expenditure for public
safety by the commission, to the balancing account, if those funds
are not expended within a reasonable period of time after the
commission grants approval of the public safety expenditure, as
determined by the commission.
   969.  In any ratemaking proceeding in which the commission
authorizes a gas corporation to recover expenses for the gas
corporation's transmission pipeline integrity management program
established pursuant to Subpart O (commencing with Section 192.901)
of Part 192 of Title 49 of the United States Code, or for capital
expenditures for the maintenance and repair of transmission
pipelines, the commission shall require the gas corporation to
establish and maintain a one-way balancing account for the recovery
of those expenses. Any unspent funds in the form of accumulated
account balance at the end of each rate-case cycle, plus interest,
shall be returned to customers through a true-up filing. 

  SEC. 2.    No reimbursement is required by this
act pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.