Amended in Assembly July 1, 2014

Amended in Assembly June 18, 2014

Amended in Assembly June 10, 2014

Amended in Senate May 27, 2014

Amended in Senate May 7, 2014

Amended in Senate April 10, 2014

Amended in Senate March 25, 2014

Senate BillNo. 1371


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 Warming 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 commissionbegin insert, giving priority to safety, reliability, and affordability of service,end insert to adopt rules and procedures governing the operation, maintenance, repair, and replacement of those commission-regulated gas pipeline facilities that are intrastate transmission and distribution lines to minimize leaks as a hazard to be mitigated pursuant to the Natural Gas Pipeline Safety Act of 2011 and to reduce emissions of natural gas from those facilities to the maximum extent 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. The bill would require the commission to commence a proceeding by January 15, 2015, to adopt those rules and procedures. The bill would require the commission to consult with the state board, the gas corporation’s workforce, and those other state and federal entities that the commission determines have regulatory roles of relevance to ensure that the rules and procedures it adopts are not inconsistent with the regulations and procedures adopted by those agencies. The bill would require that the rules and procedures (1) provide for the maximum technologically feasible and cost-effective avoidance, reduction, and repair of leaks and leaking components in those commission-regulated gas pipeline facilities that are intrastate transmission and distribution lines within a reasonable time after discovery, (2) provide for the repair of leaks as soon as reasonably possible after discovery, consistent with established safety requirements and the goals of reducing air pollution and the climate change impacts of methane emissions, (3) evaluate the operations, maintenance, and repair practices for those 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, (4) establish and require the use of best practices for leak surveys, patrols, leak survey technology, leak prevention, and leak reduction, (5) establish protocols and procedures for the development and use of metrics to quantify the volume of emissions from leaking components not inconsistent with the protocols and procedures utilized in mandatory reporting to state and federal air quality agencies, 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, and (6) to the extent feasible, require the owner of each commission-regulated gas pipeline facility that is an intrastate transmission or distribution line 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.begin delete Theend deletebegin insert In order to achieve transparency and accountability for rate revenues and best value for ratepayers, theend insert bill would require that the commission consider specified topics in a manner 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:

P3    1

SECTION 1.  

The Legislature finds and declares all of the
2following:

P4    1(a) The Legislature has established that safety of the natural gas
2pipeline infrastructure in California is a priority for the Public
3Utilities Commission and gas corporations, and nothing in this
4article shall compromise or deprioritize safety as a top
5consideration.

6(b) It is undisputed that natural gas pipelines and infrastructure
7in California leak natural gas. The incidence of natural gas leaks
8and their repair is considered by the industry and regulators to be
9a significant indicator of pipeline integrity and safety.

10(c) The Legislature has established a policy goal to significantly
11reduce emissions of greenhouse gases in California.

12(d) There is a growing awareness of the potency of methane,
13the primary component of natural gas, as a greenhouse gas. The
14Intergovernmental Panel on Climate Change estimates that the
15global warming potential of methane is 28 times that of carbon
16dioxide over a 100-year time horizon and 84 times that of carbon
17dioxide over a 20-year time horizon. There is also a growing
18awareness that climate change impacts impose high social costs,
19including impacts upon the public health and economy.

20(e) Reducing methane emissions by promptly and effectively
21repairing or replacing the pipes and associated infrastructure that
22is responsible for these leaks advances both policy goals of natural
23gas pipeline safety and integrity and reducing emissions of
24greenhouse gases.

25(f) Existing federal and state rules and regulations pertaining to
26the natural gas transmission and distribution system and associated
27infrastructure were not developed for the purpose of preventing
28the climate change impacts from leaks of natural gas.

29(g) Examining the methods used by gas corporations under
30existing federal and state rules to conduct and schedule leak repair
31and prevention based on the implications of these practices with
32respect to emissions of greenhouse gases, in addition to safety,
33will enable a more thorough evaluation of whether existing
34practices are commensurate with California’s goals for reducing
35emissions of greenhouse gases.

36(h) Reducing leaks and repairing pipelines and associated
37infrastructure in California provides significant employment
38opportunities for California residents and for domestic fabricators
39of high quality pipeline materials and other equipment associated
40with finding and fixing leaks.

P5    1(i) Providing just and reasonable rate revenues for gas
2corporations to find, categorize, and repair leaks promptly when
3discovered, including employing an adequate workforce, is in the
4public interest, and promotes the interests of customers and the
5public.

6

SEC. 2.  

Article 3 (commencing with Section 975) is added to
7Chapter 4.5 of Part 1 of Division 1 of the Public Utilities Code, to
8read:

9 

10Article 3.  Methane Leakage Abatement
11

 

12

975.  

(a) For purposes of this chapter, “commission-regulated
13gas pipeline facility” has the same meaning as defined in Section
14950.

15(b) begin deleteThe end deletebegin insertWith priority given to safety, reliability, and affordability
16of service, the end insert
commission shall adopt rules and procedures
17governing the operation, maintenance, repair, and replacement of
18those commission-regulated gas pipeline facilities that are intrastate
19transmission and distribution lines, as described in paragraphs (1)
20and (2) of subdivision (a) of Section 950, to achieve both of the
21following:

22(1) Minimize leaks as a hazard to be mitigated pursuant to
23paragraph (1) of subdivision (d) of Section 961.

24(2) While giving due consideration to the cost considerations
25of Section 977, reduce emissions of natural gas from those
26commission-regulated gas pipeline facilities that are intrastate
27transmission and distribution lines to the maximum extent feasible
28in order to advance the state’s goals in reducing emissions of
29greenhouse gases pursuant to the California Global Warming
30Solutions Act of 2006 (Division 25.5 (commencing with Section
3138500) of the Health and Safety Code).

32(c) Not later than January 15, 2015, the commission shall
33commence a proceeding to adopt rules and procedures for those
34commission-regulated pipeline facilities that are intrastate
35transmission and distribution lines, as respectively described in
36paragraphs (1) and (2) of subdivision (a) of Section 950, to achieve
37the goals of subdivision (b).

38(d) In developing the rules and procedures pursuant to
39subdivision (c), the commission shall consult with the State Air
40Resources Board, the gas corporation’s workforce, and those other
P6    1state and federal entities that the commission determines have
2regulatory roles of relevance, to ensure that the rules and
3procedures it adopts are not inconsistent with regulations and
4procedures adopted by those agencies.

5(e) The rules and procedures adopted pursuant to subdivision
6(c) shall accomplish all of the following:

7(1) Provide for the maximum technologically feasible and
8cost-effective avoidance, reduction, and repair of leaks and leaking
9components in those commission-regulated gas pipeline facilities
10that are intrastate transmission and distribution lines within a
11reasonable time after discovery, consistent with the California
12Global Warming Solutions Act of 2006 (Division 25.5
13(commencing with Section 38500) of the Health and Safety Code)
14to achieve the goals in subdivision (b).

15(2) Provide for the repair of leaks as soon as reasonably possible
16after discovery, consistent with established safety requirements
17and the goals of reducing air pollution and the climate change
18impacts of methane emissions.

19(3) Evaluate the operations, maintenance, and repair practices
20of those commission-regulated gas pipeline facilities that are
21intrastate transmission and distribution lines to determine whether
22existing practices are effective at achieving the goals of subdivision
23(b) and determine whether alternative practices may be more
24effective at achieving the goals of subdivision (b).

25(4) Establish and require the use of best practices for leak
26surveys, patrols, leak survey technology, leak prevention, and leak
27reduction. The commission shall consider in the development of
28best practices the quality of materials and equipment from various
29sources, including foreign and domestic third-party suppliers.
30Collected leak data shall remain the property of the utility and
31shall be available to the commission and parties in commission
32proceedings as determined by the commission.

33(5) Establish protocols and procedures for the development and
34use of metrics to quantify the volume of emissions from leaking
35 components not inconsistent with the protocols and procedures
36utilized in mandatory reporting to state and federal air quality
37agencies, and for evaluating and tracking leaks, both geographically
38and over time, so that operators, the commission, and the public
39have accurate information about the number and severity of leaks
P7    1and about the quantity of natural gas that is emitted into the
2atmosphere over time.

3(6) To the extent feasible, require the owner of each
4commission-regulated gas pipeline facility that is an intrastate
5 transmission or distribution line to calculate and report to the
6commission a baseline systemwide leak rate, along with any data
7and computer models used in making that calculation, to
8periodically update that systemwide leak rate calculation, and to
9annually report on measures that will be taken in the following
10year to reduce the systemwide leak rate to achieve the goals of
11subdivision (b).

12(f) The rules and procedures, including best practices and repair
13standards, shall be incorporated into the safety plans required by
14Section 961.

15(g) Consistent with subdivision (e) of Section 961, the
16commission shall facilitate robust ongoing participation of the
17workforce of gas corporations and those state and federal entities
18that have regulatory roles of relevance in all aspects of the
19proceeding. Nothing in this section affects the commission’s
20authority to determine eligibility for intervenor compensation.

21

977.  

begin deleteConsistent end deletebegin insertIn order to achieve transparency and
22accountability for rate revenues and best value for ratepayers,
23and consistent end insert
with the commission’s existing ratemaking
24procedures and authority to establish just and reasonable rates, the
25commission shall consider all of the following:

26(a) Providing an adequate workforce to achieve the objectives
27of reducing hazards and emissions from leaks, including leak
28avoidance, reduction, and repair.

29(b) Providing revenues for all activities identified and required
30pursuant to Sectionbegin delete 976,end deletebegin insert 975,end insert including any adjustment of
31allowance for lost and unaccounted for gas related to actual leakage
32volumes.

33(c) Providing guidance for treatment of expenditures as being
34either an item of expense or a capital investment.

35(d) The impact on affordability of gas service for vulnerable
36customers as a result of the incremental costs of compliance with
37the adopted rules and procedures.

begin delete

38(e) The social and public costs associated with climate change
39and air pollution, including peer-reviewed estimates of the social
40costs of emissions of greenhouse gases.

end delete
begin insert
P8    1

begin insert978.end insert  

Except as expressly so provided, this article does not
2expand or in any manner alter the commission’s jurisdiction over
3the regulation of emissions of greenhouse gases.

end insert
4

SEC. 3.  

No reimbursement is required by this act pursuant to
5Section 6 of Article XIII B of the California Constitution because
6the only costs that may be incurred by a local agency or school
7district will be incurred because this act creates a new crime or
8infraction, eliminates a crime or infraction, or changes the penalty
9for a crime or infraction, within the meaning of Section 17556 of
10the Government Code, or changes the definition of a crime within
11the meaning of Section 6 of Article XIII B of the California
12Constitution.



O

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