BILL ANALYSIS                                                                                                                                                                                                    



                                                                     SB 295  


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          Date of Hearing:  August 26, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          SB 295  
          (Jackson) - As Amended August 19, 2015


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill beginning January 1, 2017, requires the State Fire  
          Marshal to annually inspect all intrastate pipelines and  
          pipeline operators under its jurisdiction to ensure compliance  








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          with applicable laws and regulations.  Additionally, this bill: 


             1)   Requires the State Fire Marshal to adopt regulations for  
               annual inspections by January 1, 2017.


             2)   Prohibits the State Fire Marshal from becoming an  
               inspection agent for interstate pipelines unless the  
               federal Pipeline and Hazardous Materials Safety  
               Administration transfers regulatory and enforcement  
               authority to the State Fire Marshal.


             3)   Requires the State Fire Marshal to revise fees to a  
               level sufficient to cover the costs of the annual  
               inspections.


          FISCAL EFFECT:


          1)One-time costs of approximately $3.3 million (special fund) to  
            establish regulations and administer the inspection program in  
            the first year.



          2)Ongoing annual costs of approximately $2.4 million (special  
            fund) to administer the inspection program.



          3)Unknown potential increases in fees charged to pipeline  
            operators and independent hydrostatic testing firms.
            The current fee schedule for pipeline operations is $6,000 per  
            pipeline operator and $550 per mile of pipeline operated for  
            intrastate pipelines. There is also a fee on the registration  
            of the independent hydrostatic testing firms. 








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            Fee revenues have not been raised since 2007.  The special  
            fund into which these fees are placed had a significant fund  
            balance of $8.8 million at the end of 2014-15. 





          





          COMMENTS:


          1)Purpose.  According to the author, oil pipeline owners should  
            be required to ensure their pipelines operate safely and meet  
            applicable laws and regulations.
            
            According to proponents, this bill will protect Californians  
          against a repeat of the May 2015 Refugio oil spill where an  
          onshore pipeline carrying crude oil ruptured and spilled over  
          100,000 gallons of oil. The pipeline that ruptured was being  
          inspected biennially.  





            By providing an annual inspection schedule, any pipeline  
          corrosion will be detected earlier, thus preventing future  
          ruptures.











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          2)Background.  The Lempert-Keene-Seastrand Oil Spill Prevention  
            and Response Act (Act) requires the Governor to establish a  
            state oil spill contingency plan 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. 

            This bill revises the Act to provide further inspection and  
            financial responsibility.



          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081