BILL ANALYSIS Ó SB 705 Page 1 Date of Hearing: June 27, 2011 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Steven Bradford, Chair SB 705 (Leno) - As Amended: June 22, 2011 SENATE VOTE : 30-7 SUBJECT : Natural Gas Pipeline Safety SUMMARY : This bill requires natural gas utilities regulated by the California Public Utilities Commission (PUC) to develop service and safety plans. Specifically, this bill : 1)Establishes the PUC as the state authority responsible for regulating and enforcing gas pipeline transportation and pipeline facilities, including development and administration of a state pipeline safety program. 2)Establishes the State Fire Marshal as the exclusive safety regulatory and enforcement authority over intrastate hazardous liquid pipelines. 3)Requires Pacific Gas and Electric and Sempra (San Diego Gas and Electric and Southern California Gas) to develop and implement service and safety plans. 4)Specifies minimum requirements of the service and safety plans in order to protect the public and gas corporation employees: a) Identify and minimize hazards and risks b) Identify safety systems to eliminate or minimize hazards, including documentation c) Provide adequate storage and transportation capacity d) Provide patrol and inspection e) Provide systems controls with respect to both equipment and personnel procedures f) Provide timely response to reported leaks or other hazard conditions g) Provide protocols for determining maximum allowable operating pressure on relevant pipeline segments, including documentation h) Preparation to minimize damage and respond to earthquakes and other major events i) Meet or exceed minimum standards for safe design, construction, installation, and maintenance of gas transmission and distribution facilities j) Ensure adequate number of trained workforce to implement SB 705 Page 2 the service and safety plan aa) Additional matters the PUC determines should be included 1)Provides that meaningful participation by employees in development and implementation of safety plans. 2)Requires the PUC to review and accept, modify, or reject the service and safety plans by December 31, 2012, require periodic updates to the plans, and provide additional reviews at regular intervals. 3)Reorganizes existing statute governing natural gas service. 4)Allows just and reasonable cost recovery in rates. EXISTING LAW : State (PUC and the Office of the State Fire Marshal) and federal (U.S. Department of Transportation) regulators are tasked with ensuring that pipeline and hazardous materials operators have risk management programs in place, that those programs are designed in conformance with state and federal laws, that the programs are effective in achieving safety for the public and the employees of the operator, and that the entire system of achieving safety continues to improve itself. The PUC enforces statues and rules (General Order 112-E) which establish, in addition to the Federal Pipeline Safety Regulations, minimum requirements for the design, construction, quality of materials, locations, testing, operations and maintenance of facilities used in the gathering, transmission and distribution of gas and in liquefied natural gas facilities to safeguard life or limb, health, property and public welfare and to provide that adequate service will be maintained by gas utilities operating under the jurisdiction of the commission. The PUC conducts compliance inspections, accident investigations, reviews utilities' reports and records, conducts construction inspections, conducts special studies, and takes action in response to complaints and inquiries from the public on issues regarding gas pipeline and electric safety. The PUC also conducts audits and inspections of gas facilities owned and operated by mobile home parks, and audits and inspections of underground propane gas distributions systems. SB 705 Page 3 The PUC has responsibility to ensure compliance with federal pipeline management standards for over 11,000 miles of transmission pipeline and almost 2,350 miles of transmission pipeline in high consequence areas. The Office of the State Fire Marshal (SFM) regulates the safety of approximately 5,500 miles of intrastate hazardous liquid transportation pipelines and acts as an agent of the federal Office of Pipeline Safety concerning the inspection of more than 2,000 miles of interstate pipelines. Pipeline Safety staff inspect, test, and investigate to ensure compliance with all federal and state pipeline safety laws and regulations. All spills, ruptures, fires, or similar incidents are responded to immediately; all such accidents are investigated for cause. Hazardous liquid pipelines are also periodically tested for integrity using procedures approved by SFM. The program has been certified by the federal government since 1981. The SFM also maintains Geographic Information Systems (GIS)-based maps of all regulated pipelines and has been named as a state repository for pipeline data by the National Pipeline Mapping System (NPMS). FISCAL EFFECT : Unknown COMMENTS : According to the author, this bill requires a safety plan process for each utility overseen by and subject to the approval of the PUC and restricts the amount spent by utilities on safety services that can be charged to ratepayers. On September 9, 2010, a portion of a 30-inch diameter underground natural gas transmission system of Pacific Gas and Electric Company (PG&E) suddenly ruptured. The pipeline was located under the asphalt paving at the intersection of Glenview Drive and Earl Avenue in a residential area of San Bruno, California. An explosion ensued, fueled by blowing natural gas. The explosion and fire resulted in the loss of eight lives and the total destruction of 38 homes. Seventy homes sustained damage and eighteen homes adjacent to the destroyed dwellings were left uninhabitable. State and municipal authorities have safety agreements and/or certifications with the U.S. Department of Transportation for regulating intrastate and interstate pipelines. Federal law SB 705 Page 4 does not specifically name responsible agencies at the state and local level for implementing federal law - it allows the Department of Transportation to enter into agreements or receive certifications from state and local authorities. Several publicly owned utilities own and operate pipelines, including Palo Alto, Sacramento Municipal Utility District, and Los Angeles Department of Water and Power. The author may wish to consider an amendment to clarify that the provisions of this bill to specify the PUC's jurisdiction is limited what is within the scope of the PUC's regulatory authority and delineated in the PUC's certification to the U.S. Department of Transportation. RELATED LEGISLATION AB 56 (Hill) requires the operators of natural gas pipelines to institute safety programs and facilities modernization programs and requires the Public Utilities Commission to oversee those programs. SB 44 (Corbett) requires the PUC to set emergency response standards for PUC-regulated gas pipeline and distribution systems and requires that access to pipeline maps be made accessible to the State Fire Marshal and the local fire marshal SB 216 (Yee) requires the Public Utilities Commission to evaluate current safety practices with regard to intrastate natural gas transmission pipelines. The bill requires operators of natural gas transmission pipelines to install automatic or remote-controlled shut off valves in areas of high population density or where pipelines cross active seismic faults. SB 879 (Padilla) requires the Public Utilities Commission to require natural gas utilities to account for ratepayer funds designated for pipeline maintenance and repair in a more transparent way. REGISTERED SUPPORT / OPPOSITION : Support SB 705 Page 5 California Labor Federation California Public Utilities Commission (CPUC) Coalition of California Utility Employees (CCUE) Consumer Federation of California International Brotherhood of Electrical Workers (IBEW) San Diego and Imperial Counties Labor Council The Utility Reform Network (TURN) Utility Workers Union of America (UWUA) Opposition None on file. Analysis Prepared by : Susan Kateley / U. & C. / (916) 319-2083