BILL ANALYSIS Ó SB 705 Page 1 SENATE THIRD READING SB 705 (Leno) As Amended September 1, 2011 Majority vote SENATE VOTE :30-7 UTILITIES & COMMERCE 13-2 APPROPRIATIONS 17-0 ----------------------------------------------------------------- |Ayes:|Bradford, Fletcher, |Ayes:|Fuentes, Harkey, | | |Buchanan, Fong, Fuentes, | |Blumenfield, Bradford, | | |Furutani, Roger | |Charles Calderon, Campos, | | |Hernández, Williams, Ma, | |Davis, Donnelly, Gatto, | | |Nestande, Skinner, | |Hall, Hill, Lara, | | |Swanson, Valadao | |Mitchell, Nielsen, Norby, | | | | |Solorio, Wagner | |-----+--------------------------+-----+--------------------------| |Nays:|Beth Gaines, Knight | | | | | | | | ----------------------------------------------------------------- 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 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; SB 705 Page 2 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) Specifies that the term 'gas corporation workforce' includes the employees of a gas corporation and the employees of independent contractor while working under contract with the gas corporation i) Preparation to minimize damage and respond to earthquakes and other major events; j) Meet or exceed minimum standards for safe design, construction, installation, and maintenance of gas transmission and distribution facilities; aa) Ensure adequate number of trained workforce to implement the service and safety plan; and, bb) Additional matters PUC determines should be included. 1)Provides that meaningful participation by employees in development and implementation of safety plans. 2)Requires 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. SB 705 Page 3 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. PUC enforces statutes 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. 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. 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. 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 SB 705 Page 4 integrity using procedures approved by SFM. The program has been certified by the federal government since 1981. 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 : According to the Assembly Appropriations Committee, PUC will incur additional costs to review the safety plans and to facilitate ongoing input from employees in the development and implementation of the plans. Given the brief timeframe to act on the initial plans and the ongoing nature of these tasks, the commission will require three engineer positions for the first year at a cost of $350,000, and two positions annually thereafter at a cost of about $240,000. COMMENTS : According to the author, this bill requires a safety plan process for each utility overseen by and subject to the approval of 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 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. These publicly owned utilities are not subject to the provisions of this bill, however their individual boards require they have safety plans. SB 705 Page 5 Analysis Prepared by : Susan Kateley / U. & C. / (916) 319-2083 FN: 0002540