Amended in Senate February 4, 2015

Senate Bill No. 18

Introduced by Senator Hill

December 1, 2014

An act to begin insert add Section 4216.11 to the Government Code, and to end insert amend Sections begin delete 2104 end delete begin insert 1702.5, 2104, end insert and 2104.5 begin delete of end delete begin insert of, and to add Section 320.5 to, end insert the Public Utilities Code, relating to begin delete gas corporations, end delete begin insert utility service, end insert making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 18, as amended, Hill. Gas begin insert and Electrical end insert Corporations: fines and begin delete penalties. end delete begin insert penalties: underground utility facilities. end insert

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.

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This bill would establish the California Underground Facilities Safe Excavation Authority. The bill would create the Safe Energy Infrastructure and Excavation Fund in the State Treasury and would provide that moneys deposited into the fund are to be used to cover the administrative expenses of the authority, upon appropriation by the Legislature. The bill would authorize the commission to use excess moneys in the fund for specified purposes relating to the safety of underground utilities, upon appropriation by the Legislature.

end insert begin insert

Existing law requires the commission to develop and implement a safety enforcement program that is applicable to gas corporations and electrical corporations and that includes procedures for monitoring, data tracking and analysis, and investigations, as well as issuance of citations by commission staff, under the direction of the executive director of the commission, for correction and punishment of safety violations. That law requires the commission to develop and implement an appeals process to govern issuance and appeal of citations, or resolution of corrective action orders. That law requires the commission to implement the safety enforcement program for gas safety by July 1, 2014, and for electrical safety by January 1, 2015.

end insert begin insert

This bill would require that moneys collected as a result of the issuance of citations to gas corporations and electrical corporations pursuant to the above-described law be deposited in the Safe Energy Infrastructure and Excavation Fund.

end insert

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:

begin insert

begin insert SECTION end insert begin insert 1. end insert   

end insert

begin insert Section 4216.11 is added to the end insert begin insert Government Code end insert begin insert ,
to read: end insert

begin insert

begin insert 4216.11. end insert   

The California Underground Facilities Safe
Excavation Authority is hereby created.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 320.5 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 320.5. end insert   

(a) The Safe Energy Infrastructure and Excavation
Fund is hereby established in the State Treasury. Moneys deposited
into the fund shall be used to cover the administrative expenses of
the California Underground Facilities Safe Excavation Authority,
upon appropriation by the Legislature.

(b) Any excess moneys in the fund that are not necessary for
the administrative expenses of the California Underground
Facilities Safe Excavation Authority may, upon appropriation by
the Legislature, be apportioned by the commission for the following
purposes:

(1) The California Underground Facilities Safe Excavation
Authority, for the purpose of the education and training of persons
who violate Article 2 (commencing with Section 4216) of Chapter
3.1 of Division 5 of Title 1 of the Government Code.

(2) Regional notification centers, as defined in Section 4216 of
the Government Code, to cover the cost of public education and
outreach programs designed to promote excavation safety around
underground facilities.

(3) The commission, to further a workforce development
program, which shall be consistent with its equal employment
opportunity program, that recruits and trains safety staff to perform
the highest quality gas and electric utility inspections, audits,
accident investigations, and data tracking and analysis. The
commission may only apportion moneys for this purpose upon
commission approval of the workforce development program at a
meeting of the commission.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 1702.5 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

1702.5.  

(a) The commission shall, in an existing or new
proceeding, develop and implement a safety enforcement program
applicable to gas corporations and electrical corporations which
includes procedures for monitoring, data tracking and analysis,
and investigations, as well as issuance of citations by commission
staff, under the direction of the executive director. The enforcement
program shall be designed to improve gas and electrical system
safety through the enforcement of applicable law, or order or rule
of the commission related to safety using a variety of enforcement
mechanisms, including the issuance of corrective actions, orders,
and citations by designated commission staff, and recommendations
for action made to the commission by designated commission staff.

(1) When considering the issuance of citations and assessment
of penalties, the commission staff shall take into account voluntary
reporting of potential violations, voluntary removal or resolution
efforts undertaken, the prior history of violations, the gravity of
the violation, and the degree of culpability.

(2) The procedures shall include, but are not limited to,
providing notice of violation within a reasonable period of time
after the discovery of the violation.

(3) The commission shall adopt an administrative limit on the
amount of monetary penalty that may be set by commission staff.

(b) The commission shall develop and implement an appeals
process to govern the issuance and appeal of citations or resolution
of corrective action orders issued by the commission staff. The
appeals process shall provide the respondent a reasonable period
of time, upon receiving a citation, to file a notice of appeal, shall
afford an opportunity for a hearing, and shall require the hearing
officer to expeditiously provide a draft disposition.

(c) The commission shall, within a reasonable time set by the
commission, conclude a safety enforcement action with a finding
of violation, a corrective action order, a citation, a determination
of no violation, approval of the corrective actions undertaken by
the gas corporation or electrical corporation, or other action. The
commission may institute a formal proceeding regarding the alleged
violation, potentially resulting in additional enforcement action,
regardless of any enforcement action taken at the commission staff
level.

(d) The commission shall implement the safety enforcement
program for gas safety by July 1, 2014, and implement the safety
enforcement program for electrical safety no later than January 1,
2015.

(e) This section does not apply to an exempt wholesale
generator, a qualifying small power producer, or qualifying
cogenerator, as defined in Section 796 of Title 16 of the United
States Code and the regulations enacted pursuant thereto. Nothing
in this section affects the commission’s authority pursuant to
Section 761.3.

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(f) Moneys collected as a result of the issuance of citations
pursuant to this section shall be deposited in the Safe Energy
Infrastructure and Excavation Fund.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 4. end insert   

Section 2104 of the Public Utilities Code is amended
to read:

2104.  

(a) Except as provided by Sections 2100 and 2107.5,
actions to recover penalties under this part shall be brought in the
name of the people of the State of California, in the superior court
in and for the county, or city and county, in which the cause or
some part thereof arose, or in which the corporation complained
of has its principal place of business, or in which the person
complained of resides. The action shall be commenced and
prosecuted to final judgment by the attorney or agent of the
commission. All fines and penalties may be sued for and recovered.
The commission may enjoin the sale of a public utility’s or
common carrier’s assets to satisfy unpaid fines and penalties. The
commission may use any of the remedies afforded to a creditor
under the Uniform Fraudulent Transfer Act (Chapter 1
(commencing with Section 3439) of Title 2 of Part 2 of Division
4 of the Civil Code). Respondents who fraudulently transfer assets
to avoid paying commission-imposed fines or penalties are subject
to prosecution under Sections 154, 531, and 531a of the Penal
Code. In all of these actions, the procedure and rules of evidence
shall be the same as in ordinary civil actions, except for
prosecutions under the Penal Code or as otherwise herein provided.
Except as provided in begin delete Section end delete begin insert Sections 1702.5 and end insert 2104.5, all fines
and penalties recovered by the state in any action, together with
the costs thereof, shall be paid into the State Treasury to the credit
of the General Fund. Any action may be compromised or
discontinued on application of the commission upon the terms the
court approves and orders.

(b) This section shall become operative on January 1, 2014.

begin delete SEC. 2. end delete
begin insert SEC. 5. end insert   

Section 2104.5 of the Public Utilities Code is amended
to read:

2104.5.  

(a)  Any penalty for violation of any provision of this
act, or of any rule, regulation, general order, or order of the
commission, involving safety standards for pipeline facilities or
the transportation of gas in the State of California, may be
compromised by the commission. In determining the amount of
the penalty, or the amount agreed upon in compromise, the
appropriateness of the penalty to the size of the business of the
person charged, the gravity of the violation, and the good faith of
the person charged in attempting to achieve compliance, after
notification of a violation, shall be considered. The amount of any
penalty, when finally determined, or the amount agreed upon in
compromise, may be recovered in a civil action in the name of the
people of the State of California in the superior court in and for
the county, or city and county in which the cause or some part
thereof arose, or in which the corporation complained of has its
principal place of business or the person complained of resides.
In any such action, all penalties incurred, or amounts agreed upon
in compromise for violations committed up to the time of
commencing the action, may be sued for and recovered. In all
those actions, the procedure and rules of evidence shall be the
same as in ordinary civil actions, except as otherwise herein
provided. All fines and penalties recovered by the state in any
action, together with the costs thereof, shall be paid into the State
Treasury to the credit of the General Fund, except upon order of
the commission pursuant to subdivision (b) begin insert or as described in
Section 1702.5 end insert .

(b) The commission shall order that any fine or penalty levied
against a gas corporation in Investigation 11-02-016, Investigation
11-11-009, or Investigation 12-01-007, 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 and that would otherwise be recovered from the
corporation’s ratepayers.

(c) The commission shall set a rate of interest for an account
established pursuant to subdivision (b).

(d) Any moneys ordered by the commission to be held in a
separate account pursuant to subdivision (b) shall 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. Any moneys
not used for these purposes shall, five years after the date of their
deposit into the account, be paid to the General Fund.

(e) Notwithstanding subdivision (d), funds held in a separate
account pursuant to subdivision (b) shall be allocated by the
commission in the following manner:

(1) Thirty million dollars ($30,000,000) to fund an independent
monitor for a period of no less than five years to oversee both the
pipeline operations of the gas corporation described in subdivision
(b) and the effectiveness of the commission’s regulatory oversight
of those pipeline operations.

(2) Fifty million dollars ($50,000,000) in seed money to fund
the operations of a pipeline safety trust to represent and advocate
on behalf of the interests of the public utility customers and
subscribers within the jurisdiction of the commission in all
appropriate venues.

(3) Three hundred million dollars ($300,000,000) to the General
Fund.

(f) If any fines or penalties levied against a gas corporation
pursuant to the investigations specified in subdivision (b) are less
than nine hundred fifty million dollars ($950,000,000) in total, the
commission may adjust the amount of the allocations specified in
subdivision (e).

begin delete SEC. 3. end delete
begin insert SEC. 6. end insert   

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to address and resolve significant financial issues
presented by ongoing proceedings before the Public Utilities
Commission begin insert and to provide funding necessary to protect the public
health and safety end insert , it is necessary for this act to take effect
immediately.