BILL NUMBER: SB 1371 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 10, 2014
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.
The California Global Solutions Act of 2006 requires the State Air
Resources Board to adopt regulations to require the reporting and
verification of emissions of greenhouse gases and to monitor and
enforce compliance with the reporting and verification program, and
requires the state board to adopt a statewide greenhouse gas
emissions limit equivalent to the statewide greenhouse gas emissions
level in 1990, to be achieved by 2020.
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 reduce 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.
in order to advance the state's goals in reducing
emissions of greenhouse gases pursuant to the California Global
Warming Solutions Act of 2006. 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 state 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 the elimination cost-effective
avoidance, reduction, and repair 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
eliminated repaired as soon as reasonably
possible after discovery, consistent with the goal
goals of reducing the risk of injury or loss of
life. injury, loss of life, property damage, and air
pollution. The bill would require the rules and procedures to provide
for the ranking, by volume, of leaks recorded by each
commission-regulated gas pipeline facility and require the
implementation of programs that provide for the ongoing repair of
leaks that are in the top 20% of gas volumes leaked on an annual
basis. The bill would require that the rules and procedures evaluate
the operations, maintenance, and repair practices of
commission-regulated gas pipeline facilities to determine whether
existing practices are effective at achieving the goals of the bill
and to determine whether alternative practices may be more effective
at achieving the goals of the bill. The bill would 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 leak
prevention, and leak reduction. The bill would require the rules and
procedures to establish protocols and procedures for the development
a nd use of metrics to quantify the volume of emissions
from leaking components, and for evaluating and tracking leaks, both
geographically and over time, 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 require the owner of each
commission-regulated gas pipeline facility to calculate and report to
the commission a baseline systemwide leak rate, to periodically
update that systemwide leak rate calculation, and to annually report
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. bill. 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. 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.
corporations, and nothing in this article shall compromise or
deprioritize safety as a top consideration.
(b) The It is undisputed that
natural gas pipelines and infrastructure in California leak natural
gas. 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
84 times that of carbon dioxide over a 20-year time
horizon. There is also a growing awareness that climate change
impacts impose high social costs, including impacts upon the public
heal th and economy.
(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)
(e) 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
(f) Existing federal and state
rules and regulations that pertain pertaining
to the natural gas transmission and distribution system and
associated infrastructure, these rules and regulations are
insufficient to prevent infrastructure were not
developed for the purpose of preventing the climate change
impacts from leaks of natural gas.
(g) Examining the methods used by gas corporations under existing
federal and state rules to conduct and schedule leak repair and
prevention based on the implications of these practices with respect
to emissions of greenhouse gases will enable a more thorough
evaluation of whether existing practices are commensurate with
California's goals for reducing emissions of greenhouse gases.
(h) Reducing leaks and promoting the integrity of
repairing 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
repair leaks promptly when discovered, including employing
an adequate workforce, is in the public interest, and promotes the
interests of customers and the public.
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) While giving due consideration to the cost considerations of
Section 977, eliminate uncontrolled reduce
emissions of natural gas from commission-regulated gas pipeline
facilities to the maximum extent feasible with the goal of
cutting total emission in half by January 1, 2020,
feasible 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 accomplish all of the following:
(1) Provide for the elimination
cost-effective avoidance, reduction, and repair 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).
Cost-effectiveness criteria used to determine leak avoidance,
reduction, and repair requirements pursuant to this paragraph shall
take into account societal and public costs associated with climate
change and air pollution, including peer-reviewed estimates of the
social costs of emissions of greenhouse gases.
(2) Provide for the elimination As
determined by the commission, provide for the repair of any
leaks discovered in close proximity to residential and commercial
buildings as soon as reasonably possible after discovery, consistent
with the goal goals of reducing the risk
of injury or loss of life. injury, loss of
life, property damage, and air pollution, including the climate
change potential associ ated with methane emissions.
(3) Commensurate with a goal of reducing systemwide emissions of
methane, provide for a ranking, by volume, of leaks recorded by each
commission-regulated gas pipeline facility and require the
implementation of programs that, at a minimum, provide for the
ongoing repair of leaks that are in the top 20 percent of gas volumes
leaked on an annual basis.
(4) Evaluate the operations, maintenance, and repair practices of
commission-regulated gas pipeline facilities to determine whether
existing practices are effective at achieving the goals of
subdivision (b) and determine whether alternative practices may be
more effective at achieving the goals of subdivision (b).
(3)
(5) 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. leak prevention,
and leak reduction. Best practices shall include evaluation of
the quality of materials and equipment from various sources,
including foreign and domestic third-party suppliers.
(6) Establish protocols and procedures for the development and use
of metrics to quantify the volume of emissions from leaking
components, and for evaluating and tracking leaks, both
geographically and over time, 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 into the
atmosphere over time.
(4)
(7) To the extent feasible, provide for each
require the owner of each commission-regulated
gas pipeline facility, the establishment of a baseline
systemwide leak rate, a periodic updating of facility
to calculate and report to the commission a baseline systemwide leak
rate, along with any data and computer models used in making that
calculation, to periodically update that systemwide leak rate
quantifications, and an annual reporting structure of the
calculation, and to annually report on measures
that will be taken in the following year to reduce the systemwide
leak rate to achieve the goals of subdivision (b).
(e) The rules and procedures, including best practices and repair
standards, shall be incorporated into the safety plans required by
Section 961.
(f) Consistent with subdivision (e) of Section 961, the commission
shall facilitate robust ongoing participation of the workforce of
gas corporations and those state and federal entities that have
regulatory roles of relevance in all aspects of the proceeding.
977. As an element of the proceeding required by Section 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 leak
elimination. avoidance, reduction, and repair.
(b) Directing the revenues from any allowance for lost or
unaccounted for natural gas to leak elimination.
avoidance, reduction, and repair.
(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. 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.