BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 578| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 578 Author: Hill (D) Amended: 5/30/12 in Senate Vote: 21 SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 10-0, 5/15/12 AYES: Padilla, Fuller, Berryhill, Corbett, DeSaulnier, Emmerson, Kehoe, Pavley, Simitian, Wright NO VOTE RECORDED: De León, Rubio, Strickland SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/16/12 AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price, Steinberg ASSEMBLY FLOOR : 57-19, 1/30/12 - See last page for vote SUBJECT : Public utilities: natural gas pipeline: safety SOURCE : Author DIGEST : This bill requires the Public Utilities Commission (PUC) to formally respond to certain safety recommendations concerning gas pipeline safety made by the federal National Transportation Safety Board (NTSB) and federal Pipeline and Hazardous Materials Safety Administration (PHMSA). ANALYSIS : Existing law requires the PUC to regulate gas transmission, distribution and gathering pipeline CONTINUED AB 578 Page 2 facilities which include gas corporations, master-metered mobile home parks, and propane operators. Existing federal law and general orders of the PUC establish safety requirements pertaining to the design, construction, testing, operation, and maintenance of utility gas gathering, transmission, and distribution piping systems, and for the safe operation of such lines and equipment. Existing federal law requires the Secretary of the United States Department of Transportation (DOT) to respond to safety recommendations of the NTSB within 90 days of receipt and indicate the Secretary's intended actions as a result of the recommendations. Existing law grants the PUC the power and obligation to determine not only that any rate or increase in a rate is just and reasonable, but also the authority to supervise and regulate every public utility in the state and determine whether costs incurred are reasonable and prudent. This bill requires the PUC, within 90 days, to provide the NTSB, when the federal NTSB submits a safety recommendation letter concerning gas pipeline safety to the PUC, with a formal written response to each recommendation stating (1) the PUC's intent to implement the recommendations in full, with a proposed timetable for implementation of the recommendations, (2) the PUC's intent to implement part of the recommendations, with a proposed timetable for implementation of those recommendations, and detailed reasons for the PUC's refusal to implement those recommendations that the PUC does not intend to implement, or (3) the PUC's refusal to implement the recommendations, with detailed reasons for the PUC's refusal to implement the recommendations. When the NTSB issues a safety recommendation letter concerning any PUC-regulated gas pipeline facility to the United States Department of Transportation, the federal PHMSA, a gas corporation, or to the PUC, or the PHMSA issues an advisory bulletin concerning any commission-regulated gas pipeline facility; requires the PUC to determine if implementation of the recommendation or advisory is appropriate and further CONTINUED AB 578 Page 3 requires that the basis for the PUC's determination be detailed in writing and be approved by a majority vote of the PUC. If the PUC determines that a safety recommendation made by the NTSB is appropriate or that action concerning an advisory bulletin by the PHMSA is necessary, requires that the PUC issue orders or adopt rules to implement the safety recommendations or advisory as soon as practical and to consider whether a more effective, or equally effective and less costly, alternative exists to address the safety issue that the recommendation or advisory addresses; and requires the PUC to include a detailed description of any action taken on an NTSB safety recommendation, or to implement an advisory bulletin, in a specified annual report the PUC is required to make to the Legislature. Background The PHMSA, acting through the Office of Pipeline Safety (OPS), administers the national regulatory program to assure safe transportation of natural gas, petroleum, and other hazardous materials by pipeline. The statutes under which OPS operates provide for state assumption of all or part of the intrastate regulatory and enforcement responsibility through annual certifications and agreements. This cooperative, collaborative relationship between the federal and state government - the Federal/State Partnership - forms the cornerstone of the pipeline safety program for which the PUC has assumed most of the responsibility. The PUC does not exercise jurisdiction over municipal operators which are under the direct authority of the OPS. State pipeline safety programs adopt the federal regulations and may issue more stringent regulations for intrastate pipeline operators under state law. San Bruno Tragedy . On the evening of September 9, 2010, a 30-inch natural gas transmission line ruptured in a residential neighborhood in the City of San Bruno. The rupture caused an explosion and fire which took the lives of eight people and injured dozens more; destroyed 37 homes and damaged 70. Gas service was also disrupted for 300 customers. CONTINUED AB 578 Page 4 The NTSB, which has primary jurisdiction for investigating pipeline accidents in which there is a fatality, substantial property damage, or significant environmental impacts, issued its Pipeline Accident Report on the San Bruno tragedy in August, 2011 and determined that: 1. The probable cause of the accident was PG&E's (a) inadequate quality assurance and quality control in 1956 during its Line 132 relocation project, which allowed the installation of a substandard and poorly welded pipe section with a visible seam weld flaw that, over time grew to a critical size, causing the pipeline to rupture during a pressure increase stemming from poorly planned electrical work at the Milpitas Terminal; and (b) inadequate pipeline integrity management program, which failed to detect and repair or remove the defective pipe section; 2. Contributing to the accident were the PUC's and the DOT's exemptions of existing pipelines from the regulatory requirement for pressure testing, which likely would have detected the installation defects. Also contributing to the accident was the PUC's failure to detect the inadequacies of PG&E's pipeline integrity management program; and 3. Contributing to the severity of the accident were the lack of either automatic shutoff valves or remote control valves on the line and PG&E's flawed emergency response procedures and delay in isolating the rupture to stop the flow of gas. NTSB Safety Recommendations . In an accident investigation, the NTSB will often make recommendations to the parties involved in the accident, such as the gas utility operator, local first responders, and regulatory agencies such as the PHMSA and the PHMSA-certified state entity responsible for enforcement such as the PUC. Recommendations usually identify a specific problem uncovered during an investigation and specify how to correct the situation. Letters containing the recommendations are directed to the organization best able to act on the problem, whether it is public or private. The NTSB does not, however, make recommendations to pipeline safety regulators in other CONTINUED AB 578 Page 5 states. Regulators in other states are therefore only compelled to consider NTSB recommendations if they result in a PHMSA rulemaking or a change in the certification process. More than 13,000 recommendations have been issued by the NTSB since 1967. In response to San Bruno, in 2010 and 2011 the NTSB issued 39 safety recommendations in 11 letters directed to the DOT, PHMSA, PG&E, PUC, Governor Brown and the American Gas Association. Comments The author asserts that this bill 578 addresses a deficiency in the regulatory oversight of natural gas pipeline operations in California wherein the PUC frequently ignores and fails to act upon pipeline safety recommendations issued by the NTSB. This bill requires the PUC to determine, upon the adoption of a natural gas pipeline safety recommendation by NTSB, whether that recommendation is appropriate for California. If so, the PUC must implement that recommendation in a cost-effective manner. If not, the PUC must detail in writing the reason for not doing so. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee, on-going costs of $130,000 annually from the Public Utilities Commission Utilities Reimbursement Account, beginning in 2013-14 for staff to respond to NTSB safety recommendations and PHMSA advisory bulletins. SUPPORT : (Verified 8/16/12) California Professional Firefighters San Mateo County Board of Supervisors ASSEMBLY FLOOR : 57-19, 1/30/12 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, Galgiani, Gatto, CONTINUED AB 578 Page 6 Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning, Nestande, Olsen, Pan, Perea, Portantino, Skinner, Solorio, Swanson, Torres, Valadao, Wieckowski, Williams, Yamada, John A. Pérez NOES: Conway, Donnelly, Beth Gaines, Garrick, Grove, Hagman, Halderman, Harkey, Jones, Knight, Logue, Mansoor, Miller, Morrell, Nielsen, Norby, Silva, Smyth, Wagner NO VOTE RECORDED: Cook, Gorell, Lara, V. Manuel Pérez RM:m 8/17/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED