BILL ANALYSIS Ó 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 291 - Hill Hearing Date: April 2, 2013
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As Introduced: February 14, 2013 FISCAL B
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DESCRIPTION
Current law permits powers and duties of public officers of the
California Public Utilities Commission (CPUC) to be delegated to
deputies of the officers or authorized personnel unless expressly
prohibited by law. (PUC §7)
Current law declares that any public utility that violates or
fails to comply with any part or provision of any order,
decision, decree, rule, direction, demand, or requirement of the
CPUC is subject to a penalty between $500 and $50,000 for each
offense. (PUC §2107)
Rules of the CPUC establish citation procedures for the
enforcement of safety regulations by the CPUC Consumer Protection
and Safety Division (CPSD) Staff for violations by gas
corporations of CPUC and federal regulations. (Resolution
ALJ-274)
This bill would require the CPUC to develop procedures to
delegate citation authority to staff, under the direction of the
executive director, to gas and electrical corporations for
correction and punishment of safety violations. This bill would
also require the CPUC to develop an appeals process to dispute
citations issued by CPUC staff.
BACKGROUND
In recent years, gas and electrical incidents have caused
fatalities, injuries, and serious damage to the gas and
electrical infrastructure. These incidents include the gas
pipeline explosion at San Bruno and a Southern California wind
storm that knocked out power to the region. In the aftermath of
these incidents, there has been increased focus on how the CPUC
enforces the safety procedures of the utilities it regulates.
When an investor owned utility (IOU) is suspected of violating a
rule established by the CPUC, an investigation and proceeding are
opened to determine the magnitude of the potential violation.
These proceedings are classified as Orders Instituting
Investigation (OII) and are referred to as adjudication cases in
statute. Statute requires that adjudication cases be resolved
within 12 months of initiation unless the commission makes
findings why that deadline cannot be met and orders an extension
(PUC 1701.2).
While it is currently necessary for an electrical violation to be
evaluated through the OII process, the CPUC has established
procedures for its staff to directly issue citations in other
industries that it regulates. For example, staff citation
programs have been developed for the Renewables Portfolio
Standard filing requirements, railroad citations, propane gas
distribution system, and water and sewer utilities.<1>
Furthermore, after the San Bruno incident in 2010, the CPUC
adopted Resolution ALJ-274 (see below), which implemented
procedures for staff to issue citations for gas pipeline safety.
The CPUC does not currently delegate citation authority to staff
for electrical violations, but it reports that it intends to
implement such procedures.
San Bruno - On September 9, 2010, a gas pipeline in San Bruno, CA
ruptured. The resultant explosion and fire killed eight people
and destroyed 38 homes. The National Transportation Safety Board
(NTSB) performed an investigation and analysis of the incident.
In addition, the CPUC created an Independent Review Panel (IRP)
of experts to conduct an investigation of the explosion and fire.
Both the NTSB and the IRP recommended that staff at the safety
and reliability branches within the CPUC be delegated authority
to issue citations to regulated entities.<2>
The IRP based their recommendation in part on the citation model
of the Office of the State Fire Marshal (OSFM), which regulates
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<1> See resolutions listed at
http://www.cpuc.ca.gov/PUC/Practitioner/DecRes.htm
<2> Pipeline Accident Report, NTSB/PAR-11/01, PB2011-916501; and
Report of the Independent Review Panel San Bruno Explosion,
Revised Copy, Prepared for CPUC, June 24, 2011
approximately 5,500 miles of intrastate hazardous liquid
transportation pipelines. The OSFM Pipeline Safety Division has
authority to initiate and conclude enforcement actions and assess
civil penalties without going through administrative hearings
(CCR Title 19 §§ 2070-2075). It should be noted that the
organization of OFSM and CPUC are somewhat different. While there
are five members who make up the CPUC, there is only one State
Fire Marshal. By necessity, the OFSM delegates authority to
staff.
Gas Enforcement Policy - In December 2011, the CPUC passed
Resolution ALJ-274, which delegated specified authority to the
CPSD staff to issue citations to all gas corporations to enforce
compliance with regulations. Specific CPUC rules govern the
design, construction, testing, maintenance, and operation of
utility gas pipeline systems. This resolution was adopted largely
as a response to the recommendations of the San Bruno IRP report,
the NTSB report, and legislation from 2011.
As currently instituted, the gas company citation program begins
when CPUC staff discover a possible violation (PV). Possible
violations are categorized as hazardous or non-hazardous and have
varying levels or remedial actions, respectively. Hazardous PVs
result in the issuance of a citation and require immediate
correction. Non-hazardous PVs and all pertinent information are
forwarded to a review committee, which ensures statewide
consistency in reviewing PVs. The review committee evaluates the
PV and can draw any of three possible conclusions: 1) no
violation, 2) citation, or 3) warning. A warning results in no
monetary penalty, but is used for tracking trends of similar
violations. A citation results in the maximum penalty. Once
receiving a citation or warning, utilities may appeal the
violation in a proceeding before an administrative law judge and
then vote by the CPUC Commissioners.
In January 2012, the CPUC fined PG&E $16.8 million for failure to
conduct pipeline leak surveys. The CPSD was notified by PG&E
regarding the violations on December 30, 2011, and staff issued
the citation on January 27, 2012. It has been the only citation
issued under the new citation program. The citation was appealed
and the appeal was denied.
Southern California Wind Storm - A windstorm in Southern
California on November 30 and December 1, 2011 caused prolonged
power outages, affecting 248 wood poles and 1,064 overhead
conductors in the territory of Southern California Edison (SCE).
Up to 226,053 customers were without power simultaneously. The
CPSD investigated the outages and concluded that SCE and several
communication infrastructure providers (CIPs) were in violation
of CPUC general orders, citing that at least 21 poles and 17 guy
wires did not meet the safety factor requirements. The CPSD also
found that SCE failed to adequately investigate the outages and
pole failures and failed to preserve evidence after the
windstorm.<3>
As of this writing, the CPUC has not opened an OII regarding the
power outages or potential violations of SCE. The CPUC reports
that it has directed SCE to revise its emergency response
procedures. Furthermore, the CPUC is currently revising its own
general orders relevant to emergencies and disasters and will
open a rulemaking regarding those revisions later this year. It
is not clear at this time if staff citation authority would
hasten the process or result in increased safety in this
instance.
COMMENTS
1. Author's Purpose. This bill would direct the CPUC to
develop procedures to delegate authority to issue citations
and fines to electrical and gas corporations to its safety
enforcement staff. Authority is already delegated to staff
under ALJ-274 to cite and fine gas corporations, and the
author seeks to extend that authority to electrical
corporations. The author argues this delegation of authority
will increase safety by expediting the process for safety
enforcement. Furthermore, it will satisfy any concern that
the delegation of this authority is unlawful.
The author argues that because the OII process is
time-intensive, often taking more than one year to complete,
only the most grievous violations of CPUC regulations and
federal and state law have been prosecuted. Violations that
do not involve the loss of life or extensive destruction of
property may indicate systemic problems, but those problems
would be ignored by the CPUC until an incident of the
magnitude of that in San Bruno happened.
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<3> Investigation of Southern California Edison Company's Outages
of November 30 and December 1, 2011. CPUC Consumer Protection and
Safety Division
The following examples highlight the difference in required
time to process potential violations between the OII and
staff citation processes. In December 2008 in Rancho Cordova
a PG&E distribution pipe leaked and exploded. The OII was
opened in November 2010, and it finally closed in December
2011, three years after the incident. The response to the
September 2010 San Bruno explosion resulted in three OIIs
opening in February 2011, November 2011, and January 2012.
These three OIIs remain open. By comparison, the citation
issued to PG&E under the authority delegated to staff took
one month between initial notification of a potential
violation and the issuance of the citation.
2. Safety Impact . This bill will likely enhance safety
measures from utilities, because of the threat of increased
frequency of citations.
Utilities are required to report safety incidents that meet
certain criteria (e.g., injuries or fatalities) to the CPUC
within two hours of the incident. The CPUC reports that the
average number of fatalities resulting from electrical
incidents between 2008 and 2012 is 11. By contrast in the
same time, an average of 5 people died per year from gas
incidents.
Injuries and deaths resulting from electrical incidents are
more common than those from gas incidents in part because of
the exposure of electrical infrastructure and its proximity
to people. The author argues that the delegation of citation
authority to staff is imperative to increasing electrical
safety and reducing the number of injuries and fatalities
from electrical incidents.
3. Scope of Authority . During the proceeding considering
Resolution ALJ-274, Sempra argued that the issuance of
citations and fines includes an exercise of judgment that
cannot lawfully be delegated to staff. The administrative
law judge disagreed with Sempra, arguing the CPUC requires
flexibility in implementing the resolution. Furthermore, § 7
of the Public Utilities Code implies such a delegation of
authority is permitted. Part of the author's purpose of this
bill is to make that delegation of authority expressly
permitted by statute in order to uphold such resolutions
before judicial review.
The bill does not describe potential limits to the authority
given to the staff. The bill does not distinguish between
when the OII process is appropriate and when staff citations
are appropriate. Potential limits might include a cap on the
monetary fine of a citation, or on the type of violations.
What are the circumstances that would justify the OII
process rather than the staff citation process?
The extent of the delegated authority would be determined in
the CPUC rulemaking, much like ALJ-274. In that rulemaking,
staff were only issued authority to issue citations for
violations of specific general orders. In addition, the
monetary fine for staff citations is predetermined to be the
maximum penalty allowed for in statute. Concerns that staff
have too much authority should be alleviated by the
establishment of the appeals process.
POSITIONS
Sponsor:
Author
Support:
Division of Ratepayer Advocates
The Utility Reform Network
Oppose:
None on file
Kyle Hiner
SB 291 Analysis
Hearing Date: April 2, 2013