SB 18, as introduced, Hill. Gas Corporations: fines and penalties.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, as defined. The Public Utilities Act requires the commission to investigate the cause of all accidents occurring upon the property of any public utility or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the commission, investigation by it, and authorizes the commission to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. The act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the commission, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund. The act includes provisions that are specific to gas corporations that involve safety standards for pipeline facilities or the transportation of gas in the state.
This bill would revise the provisions that are specific to gas corporations that involve safety standards for pipeline facilities or the transportation of gas in the state, to authorize the commission to order that all or a portion of a fine or penalty levied against a gas corporation in three specified proceedings be held in a separate account by the gas corporation to offset investments for pipeline replacement to be undertaken within the service territory of the corporation that would otherwise be recovered from the corporation’s ratepayers. The bill would require that moneys ordered by the commission to be held in a separate account be used only for the purpose of offsetting investments by the gas corporation for pipeline replacement to be undertaken within the service territory of the corporation, and only if the investments would otherwise be recovered in rates from the utility’s ratepayers. The bill would require that any moneys not used for these purposes be paid to the General Fund 5 years after the date of their deposit into the account. The bill would require the commission to allocate $30,000,000 from the separate account to fund an independent monitor for a period of no less than 5 years to oversee the pipeline operations of the gas corporation and the effectiveness of the commission’s regulatory oversight of those pipeline operations and would require the commission to allocate $50,000,000 in seed money from the separate account to fund the operations of a pipeline safety trust. By authorizing specified uses of state penalty moneys, this bill would make an appropriation. The bill would also require the commission to allocate $300,000,000 from the separate account to the General Fund. The bill would authorize the commission to adjust the above-described allocations from the separate account if the fines and penalties levied against the gas corporation in the three specified proceedings are less than $950,000,000 in total.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2⁄3. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 2104 of the Public Utilities Code is
2amended to read:
(a) Except as provided by Sections 2100 and 2107.5,
4actions to recover penalties under this part shall be brought in the
5name of the people of the State of California, in the superior court
6in and for the county, or city and county, in which the cause or
P3 1some part thereof arose, or in which the corporation complained
2of has its principal place of business, or in which the person
3complained of resides. The action shall be commenced and
4prosecuted to final judgment by the attorney or agent of the
5commission. All fines and penalties may be sued for and recovered.
6The commission may enjoin the sale of a public utility’s or
7common carrier’s assets to satisfy unpaid fines and penalties. The
8commission may use any of the remedies afforded to a creditor
9under the Uniform Fraudulent Transfer Act
(Chapter 1
10(commencing with Section 3439) of Title 2 of Part 2 of Division
114 of the Civil Code). Respondents who fraudulently transfer assets
12to avoid paying commission-imposed fines or penalties are subject
13to prosecution under Sections 154, 531, and 531a of the Penal
14Code. In all of these actions, the procedure and rules of evidence
15shall be the same as in ordinary civil actions, except for
16prosecutions under the Penal Code or as otherwise herein provided.
17begin delete Allend deletebegin insert Except as provided in Section 2104.5, allend insert fines and penalties
18recovered by the state in any action, together with the costs thereof,
19shall be paid into the State Treasury to the credit of the General
20Fund. Any action may be compromised or discontinued on
21application of the commission upon the terms the court approves
22and orders.
23(b) This section shall become operative on January 1, 2014.
Section 2104.5 of the Public Utilities Code is amended
25to read:
begin insert(a)end insertbegin insert end insert Any penalty for violation of any provision of this
27act, or of any rule, regulation, general order, or order of the
28commission, involving safety standards for pipeline facilities or
29the transportation of gas in the State ofbegin delete Californiaend deletebegin insert California,end insert may
30be compromised by the commission. In determining the amount
31ofbegin delete suchend deletebegin insert theend insert penalty, or the amount agreed upon in compromise,
32the appropriateness ofbegin delete suchend deletebegin insert theend insert penalty to the size of the business
33of the person charged, the gravity of the violation, and the good
34faith of the person charged in attempting to achieve compliance,
35after notification of a violation, shall be considered. The amount
36of anybegin delete suchend delete penalty, when finally determined, or the amount agreed
37upon in compromise, may be recovered in a civil action in the
38name of thebegin delete Peopleend deletebegin insert peopleend insert of the State of California in the superior
39court in and for the county, or city and county in which the cause
40or some part thereof arose, or in which the corporation complained
P4 1of has its principal place of business or the person complained of
2resides. In any such action, all penalties incurred, or amounts
3agreed upon in compromise for violations committed up to the
4time of commencing thebegin delete actionend deletebegin insert action,end insert may be sued for and
5recovered. In allbegin delete suchend deletebegin insert thoseend insert actions, the procedure and rules of
6evidence shall be the same as in ordinary civil actions, except as
7otherwise herein provided. All fines and penalties recovered by
8the state in anybegin delete suchend delete action, together with the costs thereof, shall
9be paid into the State Treasury to the credit of the Generalbegin delete Fund.end delete
10begin insert Fund, except upon order of the commission pursuant to subdivision
11(b).end insert
12(b) The commission shall order that any fine or penalty levied
13against a gas corporation in Investigation 11-02-016, Investigation
1411-11-009, or Investigation 12-01-007, be held in a separate
15account by the gas corporation to offset investments for pipeline
16replacement to be undertaken within the service territory of the
17corporation and that would otherwise be recovered from the
18corporation’s ratepayers.
19(c) The commission shall set a rate of interest for an account
20established pursuant to subdivision (b).
21(d) Any moneys ordered by the commission to be held in a
22separate account pursuant to subdivision (b)
shall be used only
23for the purpose of offsetting investments by the gas corporation
24for pipeline replacement to be undertaken within the service
25territory of the corporation, and only if the investments would
26otherwise be recovered in rates from the utility’s ratepayers. Any
27moneys not used for these purposes shall, five years after the date
28of their deposit into the account, be paid to the General Fund.
29(e) Notwithstanding subdivision (d), funds held in a separate
30account pursuant to subdivision (b) shall be allocated by the
31commission in the following manner:
32(1) Thirty million dollars ($30,000,000) to fund an independent
33monitor for a period of no less than five years to oversee both the
34pipeline operations of the gas corporation described in subdivision
35(b) and the effectiveness of the commission’s regulatory oversight
36of those pipeline operations.
37(2) Fifty million dollars ($50,000,000) in seed money to fund
38the
operations of a pipeline safety trust to represent and advocate
39on behalf of the interests of the public utility customers and
P5 1subscribers within the jurisdiction of the commission in all
2appropriate venues.
3(3) Three hundred million dollars ($300,000,000) to the General
4Fund.
5(f) If any fines or penalties levied against a gas corporation
6pursuant to the investigations specified in subdivision (b) are less
7than nine hundred fifty million dollars ($950,000,000) in total, the
8commission may adjust the amount of the allocations specified in
9subdivision (e).
This act is an urgency statute necessary for the
11immediate preservation of the public peace, health, or safety within
12the meaning of Article IV of the Constitution and shall go into
13immediate effect. The facts constituting the necessity are:
14In order to address and resolve significant financial issues
15presented by ongoing proceedings before the Public Utilities
16Commission, it is necessary for this act to take effect immediately.
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