BILL NUMBER: SB 1371 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 25, 2014
INTRODUCED BY Senator Leno
(Principal coauthor: Assembly Member Mullin)
(Coauthor: Senator Hill)
FEBRUARY 21, 2014
An act to add Article 3 (commencing with Section 975) to Chapter
4.5 of Part 1 of Division 1 of the Public Utilities Code, relating to
natural gas.
LEGISLATIVE COUNSEL'S DIGEST
SB 1371, as amended, Leno. Natural gas: leakage abatement.
The California Constitution establishes the Public Utilities
Commission with regulatory authority over public utilities,
authorizes the commission to establish its own procedures, subject to
statutory limitations or directions and constitutional requirements
of due process, and authorizes the commission to fix rates and
establish rules for all public utilities, subject to control by the
Legislature.
The Natural Gas Pipeline Safety Act of 2011, within the Public
Utilities Act, designates the commission as the state authority
responsible for regulating and enforcing intrastate gas pipeline
transportation and pipeline facilities pursuant to federal law,
including the development, submission, and administration of a state
pipeline safety program certification for natural gas pipelines.
This bill would require the commission to adopt rules and
procedures governing the operation, maintenance, repair, and
replacement of commission-regulated gas pipeline facilities to
minimize leaks as a hazard to be mitigated pursuant to the Natural
Gas Pipeline Safety Act of 2011 and to eliminate uncontrolled
emissions of natural gas from commission-regulated gas pipeline
facilities to the maximum extent feasible with the goal of
cutting total emission in 1/2 by January 1,
2020 . The bill would require the commission to commence a
proceeding by January 15, 2015, and to adopt rules and procedures not
later than December 31, 2015. The bill would require
the commission to consult with the State Air Resources
Board and those other state and federal entities that the commission
determines have regulatory roles of relevance to the rules and
procedures under consideration. The bill would require that the
rules and procedures provide for repair the
elimination of leaks in commission-regulated gas pipeline
facilities within a reasonable time after discovery, but require that
leaks discovered in close proximity to residential and commercial
buildings be repaired upon discovery so that the emission of
leaking gas that can result in injury or loss of life will be
substantially eliminated eliminated as soon as
reasonably possible after discovery, consistent with the goal of
reducing the risk of injury or loss of life . The bill would
additionally require that the rules and procedures
establish and require the use of best practices for leak
surveys, patrols, leak survey technology, and metrics for evaluating
and comparing leaks so that operators, the commission, and the public
have accurate information about the number and severity of leaks and
about the quantity of gas that is emitted to the atmosphere over
time. The bill would require that the rules and procedures, to
the extent feasible, provide for the establishment of a baseline
systemwide leak rate, a periodic updating of systemwide leak rate
quantifications, and an annual reporting structure of the
measures that will be taken in the following year to reduce the
systemwide leak rate to achieve the goals of the bill for each
commission-regulated pipeline. The bill would require that the
commission consider whether the costs of compliance with
the adopted rules and procedures are
commensurate with the short- and long-term benefits resulting from
reducing leaks and emissions and provide for cost recovery in
rates charged to their customers by a gas corporation, consistent
with the commission's existing ratemaking procedures and authority to
establish just and reasonable rates.
Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the
commission is a crime.
Because the provisions of this bill would be a part of the act and
because a violation of an order or decision of the commission
implementing its requirements would be a crime, the bill would impose
a state-mandated local program by creating a new crime.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares
all of the following:
(a) The Legislature has established that safety of the natural gas
pipeline infrastructure in California is a priority for the Public
Utilities Commission and gas corporations.
(b) The incidence of natural gas leaks and their repair is
considered by the industry and regulators to be a significant
indicator of pipeline integrity and safety.
(c) The Legislature has established a policy goal to significantly
reduce emissions of greenhouse gases in California.
(d) There is a growing awareness of the potency of methane, the
primary component of natural gas, as a greenhouse gas. The
Intergovernmental Panel on Climate Change estimates that the global
warming potential of methane is 84 times that of carbon dioxide over
a 20-year time horizon.
(e) Fugitive methane volumes from pipelines in California may
exceed 35 billion cubic feet annually and may exceed 500 billion
cubic feet nationwide.
(f) Reducing these fugitive emissions by repairing pipeline leaks
promptly and effectively advances both policy goals of natural gas
pipeline safety and integrity and reducing emissions of greenhouse
gases.
(g) Reducing leaks and promoting pipeline integrity in California
provides significant employment opportunities for California
residents and for domestic fabricators of high quality pipeline
materials.
(h) Providing just and reasonable rate revenues for gas
corporations to reduce leaks and repair them promptly when
discovered, including employing an adequate workforce, is in the
public interest, and promotes the interests of customers and the
public.
SEC. 2. SECTION 1. Article 3
(commencing with Section 975) is added to Chapter 4.5 of Part 1 of
Division 1 of the Public Utilities Code, to read:
Article 3. Methane Leakage Abatement
975. The Legislature finds and declares all of the following:
(a) The Legislature has established that safety of the natural gas
pipeline infrastructure in California is a priority for the Public
Utilities Commission and gas corporations.
(b) The incidence of natural gas leaks and their repair is
considered by the industry and regulators to be a significant
indicator of pipeline integrity and safety.
(c) The Legislature has established a policy goal to significantly
reduce emissions of greenhouse gases in California.
(d) There is a growing awareness of the potency of methane, the
primary component of natural gas, as a greenhouse gas. The
Intergovernmental Panel on Climate Change estimates that the global
warming potential of methane is approximately 80 times that of carbon
dioxide over a 20-year time horizon.
(e) It is undisputed that natural gas pipelines and infrastructure
in California leak substantial volumes of natural gas, estimated in
2011 to exceed 35 billion cubic feet annually.
(f) Reducing these fugitive methane emissions by promptly and
effectively repairing or replacing the pipes and associated
infrastructure that is responsible for these leaks advances both
policy goals of natural gas pipeline safety and integrity and
reducing emissions of greenhouse gases.
(g) Although there are existing federal and state rules and
regulations that pertain to the natural gas transmission and
distribution system and associated infrastructure, these rules and
regulations are insufficient to prevent the climate change impacts
from leaks of natural gas.
(h) Reducing leaks and promoting the integrity of pipelines and
associated infrastructure in California provides significant
employment opportunities for California residents and for domestic
fabricators of high quality pipeline materials and other equipment
associated with finding and fixing leaks.
(i) Providing just and reasonable rate revenues for gas
corporations to find, categorize, and eliminate leaks promptly when
discovered, including employing an adequate workforce, is in the
public interest, and promotes the interests of customers and the
public.
975. 976. (a) For purposes of this
chapter, "commission-regulated gas pipeline facility" has the same
meaning as defined in Section 950.
(b) The commission shall adopt rules and procedures governing the
operation, maintenance, repair, and replacement of
commission-regulated gas pipeline facilities to achieve both of the
following:
(1) Minimize leaks as a hazard to be mitigated pursuant to
paragraph (1) of subdivision (d) of Section 961.
(2) Eliminate While giving due
consideration to the cost considerations of Section 977, eliminate
uncontrolled emissions of natural gas from commission-regulated
gas pipeline facilities to the maximum extent feasible w
ith the goal of cutting total emission in half by January 1,
2020 , in order to advance the state's goals in reducing
emissions of greenhouse gases pursuant to the California Global
Warming Solutions Act of 2006 (Division 25.5 (commencing with Section
38500) of the Health and Safety Code).
(c) Not later than January 15, 2015, the commission shall commence
a proceeding to adopt rules and procedures for intrastate
distribution lines and intrastate transmission lines, as respectively
described in paragraphs (1) and (2) of subdivision (a) of Section
950, to achieve the goals of subdivision (b). The commission
shall consult with the State Air Resources Board and those other
state and federal entities that the commission determines have
regulatory roles of relevance to the rules and procedures under
consideration. The commission shall adopt rules and procedures
not later than December 31, 2015.
(d) The rules and procedures adopted pursuant to subdivision
(c) shall provide accomplish all of the
following:
(1) Provide for the
repair elimination of leaks in
commission-regulated gas pipeline facilities within a reasonable time
after discovery, consistent with eliminating hazards and reducing
emissions to achieve the goals in subdivision (b). Leaks
(2) Provide for the elimination of any
leaks discovered in close proximity to residential and
commercial buildings shall be repaired upon discovery so
that the emission of leaking gas that can result in injury or loss of
life will be substantially eliminated. as soon as
reasonably possible after discovery, consistent with the goal of
reducing the risk of injury or loss of life.
(e) The rules and procedures shall establish
(3) Establish and require the use of
best practices for leak surveys, patrols, leak survey
technology, and metrics for evaluating and comparing leaks so that
operators, the commission, and the public have accurate information
about the number and severity of leaks and about the quantity of
natural gas that is emitted to the atmosphere over time. Best
practices shall include evaluation of the quality of materials and
equipment from various sources, including foreign and domestic
third-party suppliers.
(4) To the extent feasible, provide for each commission-regulated
gas pipeline facility, the establishment of a baseline systemwide
leak rate, a periodic updating of systemwide leak rate
quantifications, and an annual reporting structure of the measures
that will be taken in the following year to reduce the systemwide
leak rate to achieve the goals of subdivision (b).
(f)
(e) The rules and procedures, including best practices
and repair standards, shall be incorporated into the safety plans
required by Section 961.
(g)
(f) Consistent with subdivision (e) of Section 961, the
commission shall facilitate robust ongoing participation of the
workforce of gas corporations in all aspects of the proceeding.
976. 977. As an element of the
proceeding required by Section 975, 976,
the commission shall consider whether the costs of
compliance with the adopted rules and procedures are
commensurate with the short- and long-term benefits resulting from
reducing leaks and emissions and shall provide for cost
recovery in rates charged to their customers by a gas corporation,
consistent with the commission's existing ratemaking procedures and
authority to establish just and reasonable rates. Cost considerations
shall include , but are not limited to, all of the
following:
(a) Providing an adequate workforce to achieve the objectives of
reducing hazards and emissions from leaks, including prompt
leak repair and leak elimination.
(b) Directing the revenues from any allowance for lost or
unaccounted for natural gas to leak repair and
elimination.
(c) Providing guidance for treatment of expenditures as being
either an item of expense or a capital investment.
(d) The impact on affordability of gas service for vulnerable
customers as a result of the incremental costs of compliance with the
adopted rules and procedures.
SEC. 3. SEC. 2. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.