Amended in Assembly June 24, 2015

Senate Bill No. 295

Introduced by Senator begin delete De León end delete begin insert Jackson end insert

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(Principal coauthor: Assembly Member Williams)

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February 23, 2015

begin delete An act to amend Sections 17053.86 and 23686 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. end delete begin insert An act to amend Section 51013.5 of, and to add Section 51015.1 to, the Government Code, relating to pipeline safety. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 295, as amended, begin delete De León end delete   begin insert Jackson end insert . begin delete College Access Tax Credit Fund. end delete begin insert Pipeline safety: inspections. end insert

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Under the Elder California Pipeline Safety Act of 1981, the State Fire Marshal exercises safety regulatory jurisdiction over intrastate pipelines used for the transportation of hazardous or highly volatile liquid substances. The act authorizes the State Fire Marshal to exercise safety regulatory jurisdiction over portions of interstate pipelines located within the state and subject to an agreement between the United States Secretary of Transportation and the State Fire Marshal. The act requires those pipelines over 10 years of age to be hydrostatically tested every 3 or 5 years, as provided, except that high-risk pipelines, as designated by the State Fire Marshall, are to be tested every 2 years or annually, as provided.

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This bill would require the State Fire Marshal, or an officer or employee authorized by the State Fire Marshal, to annually inspect all operators of intrastate pipelines under the jurisdiction of the State Fire Marshal. The bill would require pipelines over 5 years of age to be hydrostatically tested every 2 or 3 years, as provided, and would require all designated high-risk pipelines to be tested annually. The bill would require the State Fire Marshall, to the maximum extent possible, to become an inspection agent by entering into an agreement with the federal Pipeline and Hazardous Materials Safety Administration, as specified. The bill would require the State Fire Marshall to revise specified fees assessed to cover the costs associated with this measure. The bill would also delete obsolete provisions.

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The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including, for taxable years beginning on or after January 1, 2014, and before January 1, 2017, a credit equal to a certain percentage of a contribution to the College Access Tax Credit Fund for specified education purposes, as provided.

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This bill would extend the allowance of these credits to taxable years beginning before January 1, 2018.

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This bill would take effect immediately as a tax levy.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert Section 51013.5 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

51013.5.  

(a) Every newly constructed pipeline, existing
pipeline, or part of a pipeline system that has been relocated or
replaced, and every pipeline that transports a hazardous liquid
substance or highly volatile liquid substance, shall be tested in
accordance with Subpart E (commencing with Section 195.300)
of Part 195 of Title 49 of the Code of Federal Regulations.

(b) Every pipeline not provided with properly sized automatic
pressure relief devices or properly designed pressure limiting
devices shall be hydrostatically tested annually.

(c) Every pipeline over begin delete 10 end delete begin insert five end insert years of age and not provided
with effective cathodic protection shall be hydrostatically tested
every begin delete three end delete begin insert two end insert years, except for those on the State Fire Marshal’s
list of higher risk pipelines, which shall be hydrostatically tested
annually.

(d) Every pipeline over begin delete 10 end delete begin insert five end insert years of age and provided with
effective cathodic protection shall be hydrostatically tested every
begin delete five end delete begin insert three end insert years, except for those on the State Fire Marshal’s list
of higher risk pipelines which shall be hydrostatically tested begin delete every
two years. end delete begin insert annually. end insert

(e) Piping within a refined products bulk loading facility served
by pipeline shall be tested hydrostatically at 125 percent of
maximum allowable operating pressure utilizing the product
ordinarily transported in that piping if that piping is operated at a
stress level of 20 percent or less of the specified minimum yield
strength of the pipe. The frequency for pressure testing these
pipelines shall be every five years for those pipelines with effective
cathodic protection and every three years for those pipelines
without effective cathodic protection. If that piping is observable,
visual inspection may be the method of testing.

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(f) Beginning on July 1, 1990, and continuing until the
regulations adopted by the State Fire Marshal pursuant to
subdivision (g) take effect, each pipeline within the State Fire
Marshal’s jurisdiction which satisfies any of the following sets of
criteria shall be placed on the State Fire Marshal’s list of higher
risk pipelines until five years pass without a reportable leak due
to corrosion or defect on that pipeline. Initially, pipelines on that
list shall be tested by the next scheduled test date, or within two
years of being placed on the list, whichever is first. On July 1,
1990, pipeline operators shall provide the State Fire Marshal with
a list of all their pipelines which satisfy the criteria in this
subdivision as of July 1, 1990. If any pipeline becomes eligible
for the list of higher risk pipelines after that date, the pipeline
company shall report that fact to the State Fire Marshal within 30
days, and the pipeline shall be placed on the list retroactively to
the date on which it became eligible for listing. Pipelines which
are found to belong on the list, but are not so reported by the
operator to the State Fire Marshal, shall be placed on the list
retroactively. Operators failing to properly report their pipelines
shall be subject to penalties under Section 51018.6. Pipelines not
covered under the risk criteria developed pursuant to subdivision
(g) shall be deleted from the list when regulations are adopted
pursuant to that subdivision. For purposes of this subdivision, a
leak which is traceable to an external force, but for which corrosion
is partly responsible, shall be deemed caused by corrosion, “defect”
refers to manufacturing or construction defects, and “leak” or
“reportable leak” means a rupture required to be reported pursuant
to Section 51018. As long as all pipelines are tested in their entirety
at least as frequently as standard risk pipelines under subdivisions
(c) and (d), it shall suffice for additional tests on higher risk
pipelines to cover 20 pipeline miles in all directions along an
operator’s pipeline from the position of the leak or leaks which
led to the inclusion or retention of that pipeline on the higher risk
list. The interim list shall include pipelines which meet any of the
following criteria:

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(1) Have suffered two or more reportable leaks, not including
leaks during a certified hydrostatic pressure test, due to corrosion
or defect in the prior three years.

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(2) Have suffered three or more reportable leaks, not including
leaks during a certified hydrostatic pressure test, due to corrosion,
defects, or external forces, but not all due to external forces, in the
prior three years.

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(3) Have suffered a reportable leak, except during a certified
hydrostatic pressure test, due to corrosion or defect of more than
50,000 gallons, or 10,000 gallons in a standard metropolitan
statistical area, in the prior three years; or have suffered a leak due
to corrosion or defect which the State Fire Marshal finds has
resulted in more than 42 gallons of a hazardous liquid within the
State Fire Marshal’s jurisdiction entering a waterway in the prior
three years; or have suffered a reportable leak of a hazardous liquid
with a flashpoint of less than 140 degrees Fahrenheit, or 60 degrees
centigrade, in the prior three years.

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(4) Are less than 50 miles long, and have experienced a
reportable leak, except during a certified hydrostatic pressure test,
due to corrosion or a defect in the prior three years. For the
purposes of this paragraph, the length of a pipeline with more than
two termini shall be the longest distance between two termini along
the pipeline.

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(5) Have experienced a reportable leak in the prior five years
due to corrosion or defect, except during a certified hydrostatic
pressure test, on a section of pipe more than 50 years old. For
pipelines which fall in this category, and no other category of
higher risk pipeline, additional tests required by this subdivision
shall be required only on segments of the pipe more than 50 years
old as long as all pipe more than 50 years old which is within 20
pipeline miles from the leak in all directions along an operator’s
pipeline is tested.

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(g)

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begin insert (f) end insert  The State Fire Marshal shall study indicators and precursors
of serious pipeline accidents, and, in consultation with the Pipeline
Safety Advisory Committee, shall develop criteria for identifying
which hazardous liquid pipelines pose the greatest risk to people
and the environment due to the likelihood of, and likely seriousness
of, an accident due to corrosion or defect. The study shall give due
consideration to research done by the industry, the federal
government, academia, and to any other information which the
State Fire Marshal shall deem relevant, including, but not limited
to, recent leak history, pipeline location, and materials transported.
Beginning January 1, 1992, using the criteria identified in that
study, the State Fire Marshal shall maintain a list of higher risk
pipelines, which exceed a standard of risk to be determined by the
State Fire Marshal, and which shall be tested as required in
subdivisions (c) and (d) as long as they remain on the list. begin delete By
January 1, 1992, after public hearings, the State Fire Marshal shall
adopt regulations to implement this subdivision. end delete

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(h)

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begin insert (g) end insert  In addition to the requirements of subdivisions (a) to (e),
inclusive, the State Fire Marshal may require any pipeline subject
to this chapter to be subjected to a pressure test, or any other test
or inspection, at any time, in the interest of public safety.

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(i)

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begin insert (h) end insert  Test methods other than the hydrostatic tests required by
subdivisions (b), (c), (d), and (e), including inspection by
instrumented internal inspection devices, may be approved by the
State Fire Marshal on an individual basis. If the State Fire Marshal
approves an alternative to a pressure test in an individual case, the
State Fire Marshal may require that the alternative test be given
more frequently than the testing frequencies specified in
subdivisions (b), (c), (d), and (e).

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(j)

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begin insert (i) end insert  The State Fire Marshal shall adopt regulations begin delete before January
1, 1992, end delete to establish what the State Fire Marshal deems to be an
appropriate frequency for tests and inspections, including
instrumented internal inspections, which, when permitted as a
substitute for tests required under subdivisions (b), (c), and (d),
do not damage pipelines or require them to be shut down for the
testing period. That testing shall in no event be less frequent than
is required by subdivisions (b), (c), and (d). Each time one of these
tests is required on a pipeline, it shall be approved on the same
individual basis as under subdivision begin delete (i). end delete begin insert (h). end insert If it is not approved,
a hydrostatic test shall be carried out at the time the alternative
test would have been carried out, and subsequent tests shall be
carried out in accordance with the time intervals prescribed by
subdivision (b), (c), or (d), as applicable.

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begin insert SEC. 2. end insert   

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begin insert Section 51015.1 is added to the end insert begin insert Government Code end insert begin insert , to
read: end insert

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begin insert 51015.1. end insert   

(a) The State Fire Marshal, or an officer or employee
authorized by the State Fire Marshal, shall annually inspect all
operators of intrastate pipelines under the jurisdiction of the State
Fire Marshal to ensure compliance with applicable laws and
regulations.

(b) For portions of interstate pipelines that are not under the
jurisdiction of the State Fire Marshal pursuant to Section 51010.6,
the State Fire Marshal shall, to the maximum extent possible,
become an inspection agent through entering into an interstate
inspection agent agreement with the federal Pipeline and
Hazardous Materials Safety Administration.

(c) The State Fire Marshall shall revise the fee assessed
pursuant to Section 51019 to a level sufficient to cover the costs
associated with the implementation of this section and Section
51013.5, as amended by the act adding this section.

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SECTION 1.  

Section 17053.86 of the Revenue and Taxation
Code is amended to read:

17053.86.  

(a) (1) For each taxable year beginning on or after
January 1, 2014, and before January 1, 2018, there shall be allowed
as a credit against the “net tax,” as defined in Section 17039, an
amount equal to the following:

(A) For each taxable year beginning on and after January 1,
2014, and before January 1, 2016, 60 percent of the amount
contributed by the taxpayer for the 2014 or 2015 taxable year to
the College Access Tax Credit Fund, as allocated and certified by
the California Educational Facilities Authority.

(B) For each taxable year beginning on and after January 1,
2016, and before January 1, 2017, 55 percent of the amount
contributed by the taxpayer for the 2016 taxable year to the College
Access Tax Credit Fund, as allocated and certified by the California
Educational Facilities Authority.

(C) For each taxable year beginning on and after January 1,
2017, and before January 1, 2018, 50 percent of the amount
contributed by the taxpayer for the 2017 taxable year to the College
Access Tax Credit Fund, as allocated and certified by the California
Educational Facilities Authority.

(2) Contributions shall be made only in cash.

(b) (1) The aggregate amount of credit that may be allocated
and certified pursuant to this section and Section 23686 shall be
an amount equal to the sum of all of the following:

(A) Five hundred million dollars ($500,000,000) in credits for
the 2014 calendar year and each calendar year thereafter.

(B) The amount of previously unallocated and uncertified
credits.

(2) (A) For purposes of this section, the California Educational
Facilities Authority shall do all of the following:

(i) On or after January 1, 2014, and before January 1, 2018,
allocate and certify tax credits to taxpayers under this section.

(ii) Establish a procedure for taxpayers to contribute to the
College Access Tax Credit Fund and to obtain from the California
Educational Facilities Authority a certification for the credit
allowed by this section. The procedure shall require the California
Educational Facilities Authority to certify the contribution amount
eligible for credit within 45 days following receipt of the
contribution.

(iii) Provide to the Franchise Tax Board a copy of each credit
certificate issued for the calendar year by March 1 of the calendar
year immediately following the year in which those certificates
are issued.

(B) (i) The California Educational Facilities Authority shall
adopt any regulations necessary to implement this paragraph.

(ii) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any regulation adopted by the California Educational Facilities
Authority pursuant to clause (i).

(c) (1) In the case where the credit allowed by this section
exceeds the “net tax,” the excess may be carried over to reduce
the “net tax” in the following year, and succeeding five years if
necessary, until the credit is exhausted.

(2) A deduction shall not be allowed under this part for amounts
taken into account under this section in calculating the credit
allowed by this section.

(d) (1) The College Access Tax Credit Fund is hereby created
as a special fund in the State Treasury. All revenue in this special
fund shall be allocated as follows:

(A) First to the General Fund in an amount equal to the
aggregate amount of certified credits allowed pursuant to this
section and Section 23686 for the taxable year. Funds allocated to
the General Fund shall be considered General Fund revenues for
purposes of Sections 8 and 8.5 of Article XVI of the California
Constitution.

(B) Second, upon appropriation, as follows:

(i) To the Franchise Tax Board, the California Educational
Facilities Authority, the Controller, and the Student Aid
Commission for reimbursement of all administrative costs incurred
by those agencies in connection with their duties under this section,
Section 23686, and Section 69432.7 of the Education Code.

(ii) To the Student Aid Commission for purposes of awarding
Cal Grants to students pursuant to Section 69431.7 of the Education
Code.

(2) The tax credit allowed by subdivision (a) of this section and
subdivision (a) of Section 23686 for donations to the College
Access Tax Credit Fund shall be known as the College Access
Tax Credit.

(e) This section shall remain in effect only until December 1,
2018, and as of that date is repealed.

SEC. 2.  

Section 23686 of the Revenue and Taxation Code is
amended to read:

23686.  

(a) (1) For each taxable year beginning on or after
January 1, 2014, and before January 1, 2018, there shall be allowed
as a credit against the “tax,” as defined in Section 23036, an amount
equal to the following:

(A) For each taxable year beginning on and after January 1,
2014, and before January 1, 2016, 60 percent of the amount
contributed by the taxpayer for the 2014 or 2015 taxable year to
the College Access Tax Credit Fund, as allocated and certified by
the California Educational Facilities Authority.

(B) For each taxable year beginning on and after January 1,
2016, and before January 1, 2017, 55 percent of the amount
contributed by the taxpayer for the 2016 taxable year to the College
Access Tax Credit Fund, as allocated and certified by the California
Educational Facilities Authority.

(C) For each taxable year beginning on and after January 1,
2017, and before January 1,2018, 50 percent of the amount
contributed by the taxpayer for the 2017 taxable year to the College
Access Tax Credit Fund, as allocated and certified by the California
Educational Facilities Authority.

(2) Contributions shall be made only in cash.

(b) (1) The aggregate amount of credit that may be allocated
and certified pursuant to this section and Section 17053.86 shall
be an amount equal to the sum of all of the following:

(A) Five hundred million dollars ($500,000,000) in credits for
the 2014 calendar year and each calendar year thereafter.

(B) The amount of previously unallocated and uncertified
credits.

(2) (A) For purposes of this section, the California Educational
Facilities Authority shall do all of the following:

(i) On or after January 1, 2014, and before January 1, 2018,
allocate and certify tax credits to taxpayers under this section.

(ii) Establish a procedure for taxpayers to contribute to the
College Access Tax Credit Fund and to obtain from the California
Educational Facilities Authority a certification for the credit
allowed by this section. The procedure shall require the California
Educational Facilities Authority to certify the contribution amount
eligible for credit within 45 days following receipt of the
contribution.

(iii) Provide to the Franchise Tax Board a copy of each credit
certificate issued for the calendar year by March 1 of the calendar
year immediately following the year in which those certificates
are issued.

(B) (i) The California Educational Facilities Authority shall
adopt any regulations necessary to implement this paragraph.

(ii) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any regulation adopted by the California Educational Facilities
Authority pursuant to clause (i).

(c) (1) In the case where the credit allowed by this section
exceeds the “tax,” the excess may be carried over to reduce the
“tax” in the following year, and succeeding five years if necessary,
until the credit is exhausted.

(2) A deduction shall not be allowed under this part for amounts
taken into account under this section in calculating the credit
allowed by this section.

(d) This section shall remain in effect only until December 1,
2018, and as of that date is repealed.

SEC. 3.  

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

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