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 








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               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.









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          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 








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          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
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          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