BILL ANALYSIS Ó SB 661 Page 1 Date of Hearing: August 29, 2016 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Mike Gatto, Chair SB 661 (Hill) - As Amended August 19, 2016 SENATE VOTE: 35-3 SUBJECT: Protection of subsurface installations SUMMARY: Enacts the Dig Safe Act of 2016 to modify laws governing excavations near subsurface installations. Among other things, this bill: 1)Requires a person planning to conduct an excavation to contact the appropriate regional notification center prior to commencing the excavation regardless of whether it will be conducted in an area that is known, or reasonably should be known, to contain subsurface installations. 2)Requires an excavator to delineate the area to be excavated before notifying the regional notification center. Specifies the amount of time required for notification prior to an excavation. 3)Prohibits an excavator who damages a subsurface installation due to an inaccurate field mark by an operator from being SB 661 Page 2 liable for damages and other specified costs and expenses. 4)Establishes the California Underground Facilities Safe Excavation Advisory Board (the Board), within the Office of the State Fire Marshall (OSFM), to investigate violations of the state's excavation and subsurface installation laws, coordinate education and outreach, and develop standards. The Board may obtain funding for its operational expenses from: a) A federal or state grant. b) A fee charged to members of the regional notification centers. c) Any other source. 5)Authorizes the Contractor's State Licensing Board (CSLB), the California Public Utilities Commission (CPUC), the OSFM, and local governments to accept, amend, or reject the recommendations of the Board to enforce specific provisions related to operators and excavators whose activities or business fall within the agency's statutorily defined enforcement jurisdiction as follows: a) The Registrar of Contractors of the CSLB enforces violations by licensed contractors. b) The CPUC enforces violations by investor-owned electric and gas operators, and water corporations. c)OFSM enforces violations by operators of hazardous liquid pipeline facilities. d)Local governments may enforce against local agencies under their jurisdictions. SB 661 Page 3 6)Creates a Safe Energy Infrastructure and Excavation Fund and requires penalties to be deposited in the fund, for appropriation by the Legislature, for operational expenses and education and outreach, as specified. 7)Defines terms used in the article in statute. 8)Establishes an "area of continual excavation" ticket of one year in length for areas in which excavation is the business of the property, including agriculture and flood control facilities. 9)Directs the Board to determine through regulation how to address "area of continual excavation" ticket renewal in areas in which no subsurface installations are present. 10)Prohibits the regional notification centers from charging an excavator to provide a ticket. 11)Provides that, during a meeting between an excavator and an operator before digging near a high priority subsurface installation, the information that the operator shall provide to the excavator to verify the installation's location shall be discussed. 12)States that the CPUC existing authority over a public utility is not affected. 13)States the CSLB is the enforcement entity for a telephone corporation, when the telephone corporation is acting as contractor. SB 661 Page 4 14)Provides that one Governor appointee of the Board shall have an agricultural background, and that the locator position is a Senate appointee. 15)Provides that excavation using pneumatic hand tools for the purpose of locating a gas facility does not require three day notification if in the vicinity of a school or hospital. FISCAL EFFECT: According to the Assembly Appropriations Committee: 1)Unknown diversion of penalty revenues, in the millions annually, from the General Fund (GF) to the Safe Energy Infrastructure and Excavation Fund, created by this bill. 2)Increased first-year costs of $5.8 million (23 personnel year) and ongoing costs of $3.6 million for OSFM/California Department of Forestry and Fire Protection to support the Board with potential minor offsets from fee revenue generated from regional notification centers (GF/Special Fund). 3)Increased CSLB first year costs of $190,000 and ongoing annual costs of $175,000 to process Advisory Committee recommendations for disciplinary actions. CSLB notes there will also be increased Attorney General (AG) costs to prosecute the most egregious actions. Using the current referral rate to the AG of 3% (approximately 150 cases) and $5,000 per case, estimated annual ongoing costs are $750,000. 4)Minor, absorbable CPUC costs. SB 661 Page 5 COMMENTS: 1)Background: According to the author, roughly 7,000 of California's natural gas pipelines are hit every year, and it is estimated that roughly half of them occur because the excavator failed to use the free 8-1-1 service so that pipes can be located and marked before digging. Both the National Transportation Safety Board and the federal pipeline safety regulator, Pipeline and Hazardous Materials Safety Administration (PHMSA), have identified call-before-you-dig laws as a means of improving excavation safety. PHMSA, in adopting regulations requiring distribution pipeline companies to develop comprehensive risk-based pipeline safety programs, explored best practices in excavation enforcement. In 2005, its working group found the states that have had the most success house enforcement in a centralized agency responsible for pipeline safety. California relies on the AG and district attorneys to enforce the one-call law, though regulatory authorities such as the CPUC, OFSM, and CSLB have broad jurisdiction over gas pipeline and electric operators, hazardous liquid operators, and contractors, respectively, and thus have the ability to enforce safe operations on those entities within their jurisdictions. However, according to the author, existing authorities have SB 661 Page 6 rarely been used, except for a recent CPUC investigation into Pacific, Gas and Electric Company's recordkeeping practices on its distribution system, which explores excavation issues. 2)Prior Legislation: Last year, the Governor vetoed SB 119 (Hill) of 2015 that would have created the California Underground Facilities Safe Excavation Advisory Committee, within CSLB, to enforce existing and new provisions related to safe excavation. The Governor's veto message included the following: I understand that the telecommunications and cable companies have resisted providing explicit enforcement authority to the Public Utilities Commission over excavation safety. However, it is the Public Utilities Commission, and not the Contractors' State Licensing Board, that has the technical expertise and funds and should be given full authority to enforce and regulate excavation activities near subsurface installations. This is a matter of public safety, and I look forward to working closely with the author to achieve our mutual goal. 3)Continual Excavation: This bill includes a definition of "continual excavation" to mean a location where excavation is part of the normal business activities of that location, including, but not limited to, agricultural operations and flood control facilities. Agricultural groups expressed concern that the current language requiring an onsite meeting with the owners of subsurface installations is too broad and should be amended to limit the scope of the on-site meeting to excavation that is planned within 10 feet of a high priority subsurface installation and within five feet of a subsurface SB 661 Page 7 installation that is not a high priority. According to agricultural groups, this bill, as written, would mandate procedures to be followed prior to commencing excavation regardless of whether it will be conducted in an area that is known, or reasonably should be known, to contain subsurface installations. They further state that "Since there are still open issues because we simply ran out of time in the negotiations with the Governor's office and other stakeholders, we have been directed by our members to get on record our opposition unless the amendments that have been agreed to with the utilities can be adopted this year." It is unclear if other stakeholders agree to the amendments proposed by the agricultural groups. While the agricultural groups would prefer to have this particular language in the bill clarified, they have agreed to pursue this through the stakeholder group process rather than amending this bill at this time. REGISTERED SUPPORT / OPPOSITION: SB 661 Page 8 Support Associated General Contractors of California AT&T California Labor Federation California Legislative Conference of the Plumbing, Heating and Piping Industry California State Council of Laborers Construction Employers Association National Electrical Contractors Association Pacific, Gas and Electric Company United Contractors Western Line Constructors Chapter Opposition SB 661 Page 9 Agricultural Council of California (unless amended) California Association of Winegrape Growers (unless amended) California Citrus Mutual (unless amended) California Fresh Fruit Association (unless amended) California Fresh Fruit Association (unless amended) Farm Bureau Federation (unless amended) Western Agricultural Processers Association (unless amended) Western Growers (unless amended) Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083