BILL ANALYSIS Ó SB 295 Page 1 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. 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 (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. SB 295 Page 3 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 SB 295 Page 4 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 SB 295 Page 5 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 SB 295 Page 6 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, SB 295 Page 7 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, SB 295 Page 8 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. SB 295 Page 9 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: SB 295 Page 10 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 SB 295 Page 11 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 SB 295 Page 12 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 SB 295 Page 13 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 SB 295 Page 14 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 SB 295 Page 15 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 SB 295 Page 16 Western States Petroleum Association Analysis Prepared by:Kenton Stanhope / G.O. / (916) 319-2531