BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:   July 15, 2015


                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION


                                  Adam Gray, Chair


          SB  
          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 5 years 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 years. 








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          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 (SFM) list of  
            higher risk pipelines.  





          4)Deletes language made obsolete by SFM's active regulations. 





          5)Requires SFM, or an officer or employee authorized by the SFM,  
            to annually inspect all operators of intrastate pipelines  
            under the jurisdiction of the SFM to ensure compliance with  
            applicable laws and regulations.





          6)Requires SFM, 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. 












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          7)Requires SFM 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 1981: 





             a.   Requires SFM to adopt hazardous liquid pipeline safety  
               regulations in 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 SFM 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 51012.4)





             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  








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               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 SFM'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 SFM to assess and collect from every pipeline  
               operator an annual administrative fee. (GO 51019)





          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  








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               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


          COMMENTS:  


           Purpose of the Bill  :  According to the author, "On May 19 of  








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          this 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,  








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          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  
          295 requires fee increases on pipeline owners to pay for more  
          inspections."





           Refugio Oil Spill :  On May 19, 2015, a pipeline owned by  
          Houston-based Plains All American Pipeline ruptured, spilling up  
          to 101,000 gallons of heavy crude oil along the Gaviota coast in  
          Santa Barbara County.  It is estimated that as much as 21,000  
          gallons of the oil went down a storm culvert onto cliffs and  
          into the Pacific Ocean.  The immediate oil spill area stretched  
          over nine miles of California coastline, and tar balls have  
          washed up as far as one hundred miles from the spill site.  The  
          pipeline that ruptured, known as Line 901, is a common carrier  
          pipeline that transports oil that was produced on platforms  
          offshore in both state and federal waters to be refined in Santa  
          Maria or Kern County.  





          On May 20, 2015, Governor Brown issued an emergency proclamation  
          for Santa Barbara County due to the effects of the oil spill.  
          Refugio State Beach and El Capitan State Beach have been closed  
          for over a month because of the oil spill. Fisheries from Canada  
          de Alegria to Coal Oil Point remain closed, which has negatively  
          impacted several commercial fisheries - including lobster, crab,  








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          shrimp, halibut, urchin, squid, whelk, and sea cucumber.  The  
          Oiled Wildlife Care Network has recovered 192 dead birds and 106  
          dead marine mammals from the spill to date. Dead marine mammals  
          recovered included 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 132 volunteers have participated in clean-up  
          efforts. 14,267 gallons of oily water have been recovered to  
          date.


           


          Lempert-Keene-Seastrand Oil Spill Prevention and Response Act  
          (Act)  :  On March 24, 1989, the Exxon Valdez spilled  
          approximately 11 million gallons of crude oil in Alaska.  Less  
          than a year later on February 7, 1990 the American Trader  
          spilled approximately 416,598 gallons of crude oil off  
          Huntington Beach in Southern California. These events inspired  
          the California Legislature to enact legislation in 1990 called  
          the Lempert-Keene-Seastrand Oil Spill Prevention and Response  
          Act.





          The Act covers all aspects of marine oil spill prevention and  
          response in California.  It established an Administrator who is  
          given very broad powers to implement the provisions of the Act.   
          The Act also gave the State Lands Commission certain authority  
          over marine terminals.  In 1991, the Office of Spill Prevention  
          and Response (OSPR) opened, headed by the Administrator.









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          The Act created an Administrator who is appointed by the  
          Governor, subject to the advice and consent of the Senate, and  
          serves at the pleasure of the Governor.  Subject to the  
          Governor, the Administrator has the primary authority in  
          California to direct prevention, removal, abatement, response,  
          containment, and cleanup efforts with regard to all aspects of  
          any oil spill in marine waters of the state.  The Governor,  
          through the Administrator, must provide the best achievable  
          protection of the coast and marine waters.





          The Administrator is also a Chief Deputy Director of the  
          California Department of Fish & Wildlife, and as such the  
          Administrator has been delegated the additional responsibilities  
          of carrying out the statewide water pollution enforcement  
          authority of the Department of Fish & Wildlife.



          In 2014, Governor Edmund G. Brown Jr. expanded the OSPR program  
          to cover all statewide surface waters at risk of oil spills from  
          any source, including pipelines and the increasing shipments of  
          oil transported by railroads. This expansion provided critical  
          administrative funding for industry preparedness, spill  
          response, and continued coordination with local, state and  
          federal government along with industry and non-governmental  
          organizations. SB 861(Senate Committee on Budget) authorized the  
          expansion and provided the additional statutory and regulatory  
          authority, for the prevention, preparedness and response  
          activities in the new inland areas of responsibility. Key  
          objectives are:









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                 Target critical locations to stage spill responders and  
               equipment for the best response to rail and pipeline  
               incidents; 


                 Develop effective regulations in close collaboration  
               with local government, non-governmental organizations, and  
               industry;


                 Implement regulations that will guide industry, local  
               and state government, and the public and build  
               relationships with local governments through workshops and  
               presentations;


                 Create inland response plans that have the depth and  
               breadth of the marine Area Contingency Plans; and,


                 Work with communities to build a strong response spill  
               team.


           Intrastate vs. Interstate Pipelines  :  The U.S. Department of  
          Transportation Pipeline and Hazardous Materials Safety  
          Administration (PHMSA) has exclusive federal authority over  
          interstate pipeline facilities (49 USC  60101, et seq.).   
          Interstate pipeline is defined as a pipeline or that part of a  
          pipeline that is used in the transportation of hazardous liquid  
          or carbon dioxide in interstate or foreign commerce.  Typically,  
          these lines cross state borders, of begin in federal waters.   
          Also, A Federal Energy Regulatory Commission (FERC) filing by  
          the operator can be the determining factor.  The two pipelines  
          in Santa Barbara County have a FERC filing.


          Office of the State Fire Marshal (OSFM) has safety regulatory  








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          and enforcement authority over intrastate hazardous liquid  
          pipelines pursuant to the Elder California Pipeline Safety Act  
          of 1981 (Gov. Code,  51010, et seq.).  Intrastate pipeline is  
          defined as means a pipeline or that part of a pipeline to which  
          this part applies that is not an interstate pipeline.  Those  
          pipelines are located entirely within state borders including  
          offshore state waters.


          SB 295 requires the SFM, to the maximum extent possible, become  
          an inspection agent through entering into an interstate  
          inspection agent agreement with the federal PHMSA.

           Pipeline Testing  : 





             1.   Hydrostatic Testing - This test involves filling the  
               pipe system with a liquid, usually water, which may be dyed  
               to aid in visual leak detection, and pressurization of the  
               vessel to the specified test pressure. The test for oil  
               pipelines are done at 125% of pressure over an 8 hour  
               period. Pressure tightness can be tested by shutting off  
               the supply valve and observing whether there is a pressure  
               loss.  The location of a leak can be visually identified  
               more easily if the water contains a colorant. Strength is  
               usually tested by measuring permanent deformation of the  
               container. Hydrostatic testing is the most common method  
               employed for testing pipes.



             2.   Pipe Line Inspection Gauge (a.k.a. "Smart Pig") - Smart  
               Pigs are inspection devices that record information about  
               the internal conditions of a pipeline.  The device is  
               inserted into the pipeline and is pushed along by the  
               flowing product.  They may measure several different things  








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               from inside of the pipeline, including restrictions and  
               deformations of the pipe, as well as metal loss. Smart  
               Pigging is effective at detecting pre-leak situations.



          Should SB 295 become law, it would increase the frequency of  
          hydrostatic testing from 5 years to 3 years for pipes with  
          cathodic protection; and from 3 years to 2 years for pipes  
          without cathodic protection. Some concerns have been raised by  
          industry that increasing the frequency of these high pressure  
          tests could be counterproductive because it could weaken the  
          integrity of the pipes. 





           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."





           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  
          pipelines ? SB 295 would not lower the risk of pipeline spills  
          and may actually have more unintended consequences of placing  








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          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."


           


          Author amendments  : The author will propose amendments in  
          committee in response to concerns raised about pipelines being  
          weakened through more frequent hydrostatic testing.  The  
          amendments will:





             1.   Requires the State Fire Marshal to approve other  
               pressure tests, specifically "Smart Pigging", in lieu of  
               hydrostatic testing. 



             2.   Should operator use other pressure tests, they shall  
               occur twice as frequently (Annually for non-cathodic and  
               every 18 months for cathodic pipes) as than hydrostatic  
               tests.



             3.   This amendment shall not apply to State Fire Marshal's  








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               list of higher risk pipelines.   



          REGISTERED SUPPORT / OPPOSITION:




          Support


          Asian Pacific Environmental Network


          Audubon California


          Azul


          California Coastal Commission 


          California Coastal Protection Network


          California Professional Firefighters


          Center for Biological Diversity


          Clean Water Action


          Defenders of Wildlife










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          Environment California


          Environmental Action Committee of West Marin


          Environmental Defense Center


          Environmental Working Group


          Heal the Bay


          National Parks Conservation Association


          Natural Resources Defense Council


          Santa Barbara Channelkeeper


          Surfrider Foundation


          Surfrider Foundation, Santa Barbara Chapter


          Surfrider Foundation, South Bay Chapter


          WILDCOAST




          Opposition








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          Western States Petroleum Association




          Analysis Prepared by:Kenton Stanhope / G.O. / (916)  
          319-2531