BILL ANALYSIS                                                                                                                                                                                                    

                                                                     SB 295

                                                                    Page  1

          Date of Hearing:  July 14, 2015


                                  Luis Alejo, Chair

          295 (Jackson) - As Amended June 24, 2015

          SENATE VOTE:  Not relevant

          SUBJECT:  Pipeline safety: inspections.

          SUMMARY:  Increases the frequency of intrastate pipeline  
          inspections.  Specifically, this bill:   

             1)   Changes from 10 years to 5years the age of the pipeline  
               that is not provided with effective cathodic protection  
               that is to be hydrostatically tested on a periodic basis,  
               and increases that periodic basis from every 3 years to  
               every 2 years. 

             2)   Changes from 10 years to 5 years the age of the pipeline  
               that is provided with effective cathodic protection that is  
               to be hydrostatically tested on a periodic basis, and  
               increases that periodic basis from every 5 years to every 3  


                                                                     SB 295

                                                                    Page  2

             3)   Increases from every 2 years to annually the testing  
               frequency on those pipelines that are provided with  
               effective cathodic protection that are on the State Fire  
               Marshal's list of higher risk pipelines.  

             4)   Deletes language made obsolete by the State Fire  
               Marshal's active regulations. 

             5)   Requires 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 to ensure compliance  
               with applicable laws and regulations.

             6)   Requires the State Fire Marshal, to the maximum extent  
               possible, to become an inspection agent by entering into an  
               interstate inspection agent agreement with the federal  
               Pipeline and Hazardous Materials Safety Administration for  
               authority to inspect portions of interstate pipelines that  
               are not under the jurisdiction of the State Fire Marshal. 

             7)   Requires the State Fire Marshal to revise the fee  
               assessed to a level sufficient to cover the costs  
               associated with implementation.

          EXISTING LAW:   

             1)   Pursuant to the Elder California Pipeline Safety Act of  

                  a.        Requires the State Fire Marshal to adopt  
                    hazardous liquid pipeline safety regulations in  


                                                                     SB 295

                                                                    Page  3

                    compliance with the federal law relating to hazardous  
                    liquid pipeline safety, including, but not limited to,  
                    compliance orders, penalties, and inspection and  
                    maintenance provisions. (Government Code (GO) 51011)

                  b.        Requires each pipeline operator to file with  
                    the State Fire Marshal an inspection, maintenance,  
                    improvement, or replacement assessment for older  
                    pipelines built before January 1, 1960 and any  
                    pipeline installed on or after January 1, 1960, for  
                    which regular internal inspections cannot be  
                    conducted, or which shows diminished integrity due to  
                    corrosion or inadequate cathodic protection. (GO  

                  c.        Requires 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, to be tested in accordance  
                    with federal regulations and every pipeline more than  
                    10 years of age and not provided with effective  
                    cathodic protection to be hydrostatically tested every  
                    three years, except for those on the State Fire  
                    Marshal's list of higher risk pipelines, which shall  
                    be hydrostatically tested annually. (GO 51013.5)

                  d.        Defines "hydrostatic testing" as the  
                    application of internal pressure above the normal or  
                    maximum operating pressure to a segment of pipeline,  
                    under no-flow conditions for a fixed period of time,  
                    utilizing a liquid test medium. (GO 51010.5 (c))

                  e.        Authorizes the State Fire Marshal to assess  
                    and collect from every pipeline operator an annual  
                    administrative fee. (GO 51019)


                                                                     SB 295

                                                                    Page  4

             2)   Pursuant to the Lempert-Keene-Seastrand Oil Spill  
               Prevention and Response Act:

                  a.        States that because of the inadequacy of  
                    existing cleanup and response measures and technology,  
                    the emphasis must be put on prevention, if the risk  
                    and consequences of oil spills are to be minimized,  
                    and that improvements in the design, construction, and  
                    operation of rail tank cars, tank trucks, tank ships,  
                    terminals, and pipelines; improvements in marine  
                    safety; maintenance of emergency response stations and  
                    personnel; and stronger inspection and enforcement  
                    efforts are necessary to reduce the risks of and from  
                    a major oil spill. (GO 8670.2 (f)-(g)) 

                  b.        Requires the Governor to appoint an oil spill  
                    response coordinator (GO 86703.4) who has the primary  
                    authority to direct prevention, removal, abatement,  
                    response, containment, and cleanup efforts with regard  
                    to all aspects of any oil spill in waters of the  
                    state, in accordance with any applicable facility or  
                    vessel contingency plan and the California oil spill  
                    contingency plan. (GO 8670.7)

                  c.        Requires the Governor to establish a state oil  
                    spill contingency plan (GO 8574.1 et seq.),  
                    establishes oil spill response and contingency  
                    planning requirements (GO 8670.1 et seq.), and  
                    establishes oil spill prevention, response,  
                    containment, and cleanup programs. (Public Resources  
                    Code 8750 et seq.)

          FISCAL EFFECT:  Unknown. 


          Need for the bill: According to the author, "On May 19 of this  


                                                                     SB 295

                                                                    Page  5

          year tragedy struck when an onshore pipeline carrying crude oil  
          ruptured and spilled more than 100,000 gallons of oil, more than  
          20,000 gallons of which ended up in the ocean off the Santa  
          Barbara Coastline. To date, this spill has caused significant  
          negative impacts to the ocean, local beaches, wildlife, and the  
          local economy. Although the investigation into the response and  
          the oil spill is ongoing, we do know that corrosion was  
          responsible for the rupture. Before the spill, the last  
          completed inspection was in 2013. The pipeline was again  
          inspected in 2015, but at the time of the accident the results  
          of the inspection had not been analyzed. 

          "The pipeline that ruptured-Line 901-was being inspected every  
          other year. If Line 901 had been inspected annually the  
          corrosion would likely have been detected before it ruptured and  
          this disaster would have been avoided. Because Line 901 is  
          federally regulated, SB 295 addresses these shortcomings by  
          directing the State Fire Marshall to seek the authority to  
          inspect federally regulated pipelines and to inspect all  
          pipelines annually.

          "Increasing the frequency of hydrostatic testing will also help  
          reduce the risk of oil spills caused by pipeline failure.  
          Hydrostatic tests are performed by pressurizing pipelines beyond  
          their operating pressure. It has been reported that the  
          operating pressure of line 901 was 650 pounds per square inch  
          (psi); the failure occurred when the pressure spiked to 700 psi,  
          or 107.7 percent of its operating pressure. The State Fire  
          Marshall pressurizes pipelines to 125 percent during hydrostatic  
          testing, well above the 107.7 percent that caused line 901 to  
          fail. A hydrostatic test would likely have ruptured Line 901,  
          spilling nothing.

          "Most importantly, oil pipeline owners should be financially  
          responsible to ensure their pipelines operate safely and meet  
          applicable laws and regulations, not taxpayers, which is why SB  


                                                                     SB 295

                                                                    Page  6

          295 requires fee increases on pipeline owners to pay for more  

          Refugio oil spill: On May 20, 2015, Governor Brown issued an  
          emergency proclamation for Santa Barbara County due to the  
          effects of the oil spill described by the author. Refugio State  
          Beach and El Capitan State Beach have been closed for more than  
          a month because of the oil spill. Fisheries from Canada de  
          Algeria to Coal Oil Point remain closed, which has negatively  
          impacted several commercial fisheries - including lobster, crab,  
          shrimp, halibut, urchin, squid, whelk, and sea cucumber. The  
          Oiled Wildlife Care Network has recovered 192 dead birds and 103  
          dead marine mammals from the spill to date. Dead marine mammals  
          recovered include dolphins, sea lions and seals. Sensitive  
          habitat of the California least tern and the snowy plover, birds  
          protected by the Endangered Species Act, has been damaged.  
          Hotels, tour outfits and other tourism businesses have  
          experienced cancelations and decreased bookings due to the  
          spill. More than 1,000 workers from local, state and federal  
          agencies have been working to clean up the beaches. Since May  
          20, approximately 14,267 gallons of oily water have been  

          On May 21, 2015, the Pipeline and Hazardous Material Safety  
          Administration (PHMA) issued a Correct Action Order to require  
          Plans All American Pipeline, the owner of the ruptured pipeline,  
          to take certain corrective actions to protect the public,  
          property, and the environment from potential hazards associated  
          with Line 901 in Santa Barbara County. The Correct Action Order  
          also found that Line 901 was a 24-inch diameter line that was  
          installed in 1987 and the section that ruptured had extensive  
          corrosion. The deepest metal loss at each area ranged between  
          54%-74% of the original pipeline wall thickness. The failure  
          site wall thickness had degraded to an estimate 1/16 of an inch.  


                                                                     SB 295

                                                                    Page  7

          Oil spill prevention and response: The Lempert-Keene-Seastrand  
          Oil Spill Prevention and Response Act (Act) requires the  
          Governor to establish a state oil spill contingency plan,  
          establishes oil spill response and contingency planning  
          requirements, and establishes oil spill prevention, response,  
          containment, and cleanup programs.  Under the Act, the oil spill  
          administrator promulgates regulations that provide for the best  
          achievable protection of waters and natural resources of the  
          state. The regulations permit the development, application, and  
          use of an oil spill contingency plan for vessels, pipelines,  
          terminals, and facilities within a single company or  
          organization, and across companies and organizations. Each oil  
          spill contingency plan must provide for appropriate financial or  
          contractual arrangements for all necessary equipment and  
          services for the response, containment, and cleanup of a  
          reasonable worst case oil spill scenario for each area the plan  

          Plains All American Pipeline has an Oil Spill Contingency Plan  
          and will pay for the more than $92 million in cleanup costs that  
          have been incurred so far. 

          Arguments in support: According to the California Professional  
          Firefighters, "Ultimately SB 295, through the implementation of  
          such required inspections, will better protect Californians  
          against a repeat of the May 2015 tragedy where an onshore  
          pipeline carrying crude oil ruptured and spilled over 100,000  
          gallons of oil ?The pipeline that ruptured was being inspected  
          biennially. However, if it has been on an annual inspection  
          schedule, the pipeline's corrosion would have been detected  
          before rupturing and this disaster would have been avoided."

          Arguments in opposition: According to the Western States  
          Petroleum Association, "A key concern with SB 295 is a mandate  
          for intrastate pipeline operators to conduct more frequent  
          hydrostatic testing of pipelines without considering the  
          drawbacks and unintended consequences it can have on crude oil  


                                                                     SB 295

                                                                    Page  8

          pipelines ? SB 295 would not lower the risk of pipeline spills  
          and may actually have more unintended consequences of placing  
          pipelines at risk by requiring more frequent hydrostatic testing  
          since this method cannot determine where any defects are located  
          along the pipeline system.  Not only that, requiring more  
          hydrostatic testing raises significant questions about increased  
          water use, disposal and treatment costs, and lost throughput by  
          taking product out of the pipeline without any determinable  
          level of increased safety.  On the other hand, in-line  
          inspection tools provide a complete listing of the defects in  
          the pipeline and their location in an electronic format which  
          can be used as a baseline for future inspections and to  
          calculate corrosion rates."

          Related legislation: AB 864 (Williams, 2015), which is pending  
          before the Senate Natural Resources & Water Committee, would  
          require the operators of pipelines in environmentally and  
          ecologically sensitive areas of state waters or along the coasts  
          of those areas to use the best achievable technologies to reduce  
          the amount of oil released in an oil spill to protect the state  
          waters and wildlife, and to include a description of the use of  
          those technologies in their oil spill contingency plans.

          Double referral: This bill is double referred to the Assembly  
          Government Organization Committee. 




                                                                     SB 295

                                                                    Page  9

          Asian Pacific Environmental Network


          California Coastal Commission 

          California Coastal Protection Network

          California Professional Firefighters

          Center for Biological Diversity

          Clean Water Action

          Defenders of Wildlife

          Environment California

          Environmental Action Committee of West Marin

          Environmental Defense Center

          Environmental Working Group

          Heal the Bay


                                                                     SB 295

                                                                    Page  10

          National Parks Conservation Association

          Natural Resources Defense Council

          Santa Barbara Channelkeeper

          Surfrider Foundation

          Surfrider Foundation, Santa Barbara Chapter

          Surfrider Foundation, South Bay Chapter



          California Independent Petroleum Association

          Western States Petroleum Association 

          Analysis Prepared by:Paige Brokaw / E.S. & T.M. / (916)  


                                                                     SB 295

                                                                    Page  11