BILL NUMBER: AB 56 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 13, 2011
AMENDED IN SENATE JUNE 29, 2011
AMENDED IN ASSEMBLY MAY 27, 2011
AMENDED IN ASSEMBLY MAY 18, 2011
AMENDED IN ASSEMBLY MARCH 16, 2011
AMENDED IN ASSEMBLY FEBRUARY 23, 2011
INTRODUCED BY Assembly Member Hill
DECEMBER 6, 2010
An act to add Section 770.6 to, and to add
Chapter 4.5 (commencing with Section 950) to Part 1 of Division 1 of
, the Public Utilities Code, relating to gas
corporations.
LEGISLATIVE COUNSEL'S DIGEST
AB 56, as amended, Hill. Gas corporations: rate recovery and
expenditure: intrastate pipeline safety.
(1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities. Existing law authorizes
the commission to fix the rates and charges for every public utility,
and requires that those rates and charges be just and reasonable.
This bill would prohibit a gas corporation from recovering any
fine or penalty in any rate approved by the commission. The bill
would require a gas corporation to file semiannual gas transmission
and storage safety reports with the commission's consumer protection
safety division that include certain matter and require that if the
division determines that there is a deficiency in a gas corporation's
prioritization or administration of the storage or pipeline capital
projects or operation and maintenance activities, to bring the
deficiency to the commission's immediate attention. If the commission
authorizes a gas corporation to recover expenses incurred for public
safety, the bill would require the commission to require the gas
corporation to establish and maintain a balancing account to record
the difference between the approved revenue requirements for public
safety and the actual expenditures made by the utility. The bill
would require a gas corporation to return moneys approved for
expenditure for public safety by the commission to the balancing
account, if those funds are not expended within a reasonable period
of time after the commission grants approval of the public safety
expenditure, as determined by the commission. The bill would
require the commission to consider the safety record of a gas
corporation in determining what constitutes a reasonable rate of
return for the utility. The bill would require the
commission, in any ratemaking proceeding in which the
commission authorizes a gas corporation to recover expenses for a
federal transmission pipeline integrity management program, or for
capital expenditures for the maintenance and repair of transmission
pipelines, to require the gas corporation to establish and maintain a
one-way balancing account for the recovery of those expenses.
(2) The Public Utilities Act authorizes the commission to
ascertain and fix just and reasonable standards, classifications,
regulations, practices, measurements, or service to be furnished,
imposed, observed, and followed by specified public utilities,
including gas corporations, as defined.
Existing federal law requires the United States Department of
Transportation Pipeline and Hazardous Materials Safety Administration
(PHMSA) to adopt minimum safety standards for pipeline
transportation and for pipeline facilities, including an interstate
gas pipeline facility and intrastate gas pipeline facility, as
defined. Existing law authorizes the Secretary of Transportation to
prescribe or enforce safety standards and practices for an intrastate
pipeline facility or intrastate pipeline transportation to the
extent that the safety standards and practices are regulated by a
state authority that submits to the secretary annually a
certification for the facilities and transportation or alternatively
authorizes the secretary to make an agreement with a state authority
authorizing it to take necessary action to meet certain pipeline
safety requirements. Existing law prohibits a state authority from
adopting or continuing in force safety standards for interstate
pipeline facilities or interstate pipeline transportation. Existing
law authorizes a state authority that has submitted a current
certification to adopt additional or more stringent safety standards
for intrastate pipeline facilities and intrastate pipeline
transportation only if those standards are compatible with the
minimum standards prescribed by PHMSA.
This bill would designate the commission as the state authority
responsible for development, submission, and administration of a
state pipeline safety program certification for natural gas
pipelines. The bill would require the commission, in
consultation with a specified independent review panel, to develop
minimum criteria and standards for the installation of sectionalized
block valves and automated and remote shutoff valves and to establish
a timeline by which the owner or operator of a commission-regulated
gas pipeline facility, as defined, is required to meet the minimum
criteria and standards. The bill would require owners
and operators of intrastate transmission and distribution lines, at
least once each calendar year, to meet with each local fire
department having fire suppression responsibilities in the area
served by the owner or operator's transmission and distribution
pipelines to discuss and review contingency plans for emergencies
involving the intrastate transmission and distribution line
s within the jurisdiction of the local fire department. The bill
would require the commission, unless it determines that
doing so is preempted under federal law, to require the installation
of automatic shutoff or remote controlled sectionalized block valves
on certain intrastate transmission lines, as defined, The bill
would require each gas corporation to prepare and submit to the
commission a proposed comprehensive pressure testing implementation
plan that includes specified elements and require that, at the
conclusion of an implementation period, all intrastate transmission
line segments meet specified requirements.
The bill would require the commission, by July 1, 2012, to open an
appropriate proceeding or expand the scope of an existing proceeding
to establish compatible emergency response standards, as defined,
that owners or operators of certain commission-regulated gas pipeline
facilities would be required to follow. The standards would require
owners or operators of intrastate transmission and distribution lines
to implement emergency response plans, with specified requirements,
that are compatible with PHMSA's regulations concerning emergency
plans. The bill would require the owners of intrastate transmission
lines to provide the State Fire Marshal and the chief fire official
of the applicable local government with instructions on how to access
and utilize the National Pipeline Mapping System developed by PHMSA
to improve local response capabilities for pipeline emergencies. The
bill would require the commission to report to the Legislature on the
status of establishing the compatible emergency response standards
on or before January 1, 2013.
(3) Under existing law, a violation of the Public Utilities Act or
any order, decision, rule, direction, demand, or requirement of the
commission is a crime.
Because the provisions of this bill would be a part of the act and
because a violation of an order or decision of the commission
implementing its requirements would be a crime, the bill would impose
a state-mandated local program by creating a new crime.
(4) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 770.6 is added to the Public
Utilities Code, to read:
770.6. (a) For purposes of this section, the following terms have
the following meanings:
(1) "Commission-regulated gas pipeline facility" has the same
meaning as defined in Section 950.
(2) "Compatible emergency response standards" means emergency
response standards that are applicable to intrastate transmission and
distribution lines that are in addition to, or more stringent than,
the minimum safety standards adopted by the United States Department
of Transportation pursuant to Chapter 601 (commencing with Section
60101) of Subtitle VIII of Title 49 of the United States Code and
that the commission is authorized to adopt pursuant to Section 60104
(c) of that chapter.
(b) On or before July 1, 2012, the commission shall open an
appropriate proceeding or expand the scope of an existing proceeding
to establish compatible emergency response standards that owners or
operators of commission-regulated gas pipeline facilities shall be
required to follow for intrastate transmission and distribution
lines. The commission shall establish the standards to ensure that
intrastate transmission and distribution lines have emergency
response plans that adequately prepare them for a natural disaster or
malfunction that could cause injury to human life or property, with
the purpose of minimizing the occurrence of both.
(c) The commission shall establish the compatible emergency
response standards in consultation with the California Emergency
Management Agency and members of California's first responder
community, including, but not limited to, members of the California
Fire Chiefs Association.
(d) The compatible emergency response standards shall require
owners or operators of intrastate transmission and distribution lines
to implement emergency response plans that are compatible with the
United States Department of Transportation Pipeline and Hazardous
Materials Safety Administration's regulations concerning emergency
plans contained in Section 192.615 of Title 49 of the Code of Federal
Regulations, and those plans shall include, but not be limited to,
all of the following requirements:
(1) Emergency shutdown and pressure reduction shall be utilized
whenever deemed necessary and appropriate by the owners or operators
to minimize hazards to life or property. An owner or operator shall
notify appropriate first responders of emergency shutdown and
pressure reduction.
(2) During an emergency response effort, the incident commander
may direct coordination between first responders and owners or
operators to ensure timely and ongoing communication on decisions for
emergency shutdown and pressure reduction.
(3) Owners or operators of intrastate transmission and
distribution lines shall establish and maintain liaison with
appropriate fire, police, and other public officials to do all of the
following:
(A) Learn the responsibility and resources of each government
organization that may respond to a gas pipeline emergency, including,
but not limited to, the role of the incident commander in an
emergency.
(B) Acquaint the officials with the owner's or operator's ability
in responding to a gas pipeline emergency.
(C) Identify the types of gas pipeline emergencies of which the
owner or operator notifies the officials.
(D) Plan how the owner or operator and officials can engage in
mutual assistance to minimize hazards to life or property, or both.
(E) Identify and update information on individual personnel
responsible for the liaison with the appropriate first responder
organizations.
(4) Owners and operators of intrastate transmission lines shall
provide the State Fire Marshal and the chief fire official of the
applicable city, county, city and county, or fire protection district
with instructions on how to access and utilize the National Pipeline
Mapping System developed by the United States Department of
Transportation, Pipeline and Hazardous Materials Safety
Administration, utilizing data submitted pursuant to Section 60132 of
Title 49 of the United States Code, to improve local response
capabilities for pipeline emergencies.
(e) (1) The commission shall report to the Legislature on the
status of establishing the compatible emergency response standards on
or before January 1, 2013.
(2) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
SEC. 2. SECTION 1. Chapter 4.5
(commencing with Section 950) is added to Part 1 of Division 1 of the
Public Utilities Code, to read:
CHAPTER 4.5. GAS PIPELINE SAFETY
Article 1. General
950. For purposes of this chapter, the following terms have the
following meanings:
(a) "Class 1 location," "class 2 location," "class 3 location,"
and "class 4 location" have the same meanings as defined in the
regulations adopted by the United States Department of Transportation
pursuant to Chapter 601 (commencing with Section 60101) of Subtitle
VIII of Title 49 of the United States Code (49 C.F.R. 192.5, as
adopted January 1, 2011, or a successor regulation).
(b) "Commission-regulated gas pipeline facility" means an
intrastate gas pipeline facility as defined in Section 60101 of Title
49 of the United States Code, that is subject to the safety
regulatory authority of the commission to the extent authorized
between the commission and the United States Secretary of
Transportation, including each of the following pipelines:
(1) An intrastate distribution line, which is a pipeline that is
not subject to the jurisdiction of the Federal Energy Regulatory
Commission pursuant to Section 717(b) of Title 15 of the United
States Code because it is used for the local distribution of natural
gas.
(2) An intrastate transmission line, which is a transmission
pipeline that the commission, pursuant to Section 717(c) of Title 15
of the United States Code, has certified to the Federal Energy
Regulatory Commission as being subject to the regulatory jurisdiction
of the commission over rates and service. For these purposes, a
transmission pipeline means a pipeline other than a gathering line
that: (A) transports gas from a gathering line or storage facility to
a distribution center, storage facility, or large volume customer
that is not downstream from a distribution center, (B) operates at a
hoop stress of 20 percent or more of specified maximum yield
strength, or (C) transports gas within a storage field.
(3) An intrastate gathering line, which is a pipeline that
transports gas from a current production facility to a transmission
line or main.
(4) A mobilehome park master-metered natural gas distribution
system that is subject to the commission's safety inspection and
enforcement program pursuant to Chapter 4 (commencing with Section
4351) of Division 2.
(5) A propane distribution system that is subject to the
commission's safety inspection and enforcement program pursuant to
Chapter 4.1 (commencing with Section 4451) of Division 2.
(c) "High consequence area" has the same meaning as defined in the
regulations adopted by the United States Department of
Transportation pursuant to Chapter 601 (commencing with Section
60101) of Subtitle VIII of Title 49 of the United States Code (49
C.F.R. 192.903, as adopted January 1, 2011, or a successor
regulation).
Article 2. Natural Gas Pipeline Safety Act of 2011
955. (a) This article shall be known and may be cited as the
Natural Gas Pipeline Safety Act of 2011.
(b) The commission is the state authority responsible for
regulating and enforcing intrastate gas pipeline transportation and
pipeline facilities pursuant to Chapter 601 (commencing with Section
60101) of Subtitle VIII of Title 49 of the United States Code,
including the development, submission, and administration of a state
pipeline safety program certification for natural gas pipelines
pursuant to Section 60105 of that chapter.
957. The commission, in consultation with the independent review
panel appointed to investigate the San Bruno natural gas pipeline
explosion of 2010, shall develop minimum criteria and standards for
the installation of sectionalized block valves and automated and
remote shutoff valves, taking into consideration weather-related and
outside faces, operating pressure, the rate of potential release of
natural gas, the potential for ignition of the gas, and
accessibility. The commission shall establish a timeline by which the
owner or operator of a commission-regulated gas pipeline facility
shall meet the minimum criteria and standards established by the
commission, unless technically unfeasible, for each of the following:
(a) Each commission-regulated gas pipeline facility that is first
placed in service or replaced.
(b) Each commission-regulated gas pipeline facility that traverses
an earthquake fault zone designated by the State Geologist pursuant
to the Alquist-Priolo Earthquake Fault Zoning Act (Chapter 7.5
(commencing with Section 2621) of Division 2 of the Public Resources
Code).
(c) Each commission-regulated gas pipeline facility that is in a
class 3 location, class 4 location, or high consequence area.
956. Owners and operators of intrastate transmission and
distribution lines, at least once each calendar year, shall meet with
each local fire department having fire suppression responsibilities
in the area served by the owner or operator's transmission and
distribution pipelines to discuss and review contingency plans for
emergencies involving the intrastate transmission and distribution
lines within the jurisdiction of the local fire department.
957. (a) (1) Unless the commission determines that it is
prohibited from doing so by subdivision (c) of Section 60104 of Title
49 of the United States Code, the commission shall require the
installation of automatic shutoff or remote controlled sectionalized
block valves on both of the following facilities, if it determines
those valves are necessary for the protection of the public:
(A) Intrastate transmission lines that are located in a high
consequence area.
(B) Intrastate transmission lines that traverse an active seismic
earthquake fault.
(2) Each owner or operator of a commission-regulated gas pipeline
facility that is an intrastate transmission line shall provide the
commission with a valve location plan, along with any recommendations
for valve locations. The commission may make modifications to the
valve location plan or provide for variations from any location
requirements adopted by the commission pursuant to this section that
it deems necessary or appropriate and consistent with protection of
the public.
(3) The commission shall additionally establish action timelines,
adopt standards for how to prioritize installation of automatic
shutoff or remote controlled sectionalized block valves pursuant to
paragraph (1), ensure that remote and automatic shutoff valves are
installed as quickly as is reasonably possible, and establish ongoing
procedures for monitoring progress in achieving the requirements of
this section.
(b) The commission shall authorize recovery in rates for all
reasonably incurred costs incurred for implementation of the
requirements of this section.
(c) The commission, in consultation with the Pipeline and
Hazardous Materials Safety Administration of the United States
Department of Transportation, shall adopt and enforce compatible
safety standards for commission-regulated gas pipeline facilities
that the commission determines should be adopted to implement the
requirements of this section.
958. (a) Each gas corporation shall prepare and submit to the
commission a proposed comprehensive pressure testing implementation
plan for all intrastate transmission lines to either pressure test
those lines or to replace all segments of intrastate transmission
lines that were not pressure tested or that lack sufficient details
related to performance of pressure testing. The comprehensive
pressure testing implementation plan shall provide for testing or
replacing all intrastate transmission lines as soon as practicable.
The comprehensive pressure testing implementation plan shall set
forth criteria on which pipeline segments were identified for
replacement instead of pressure testing.
(b) The comprehensive pressure testing implementation plan shall
include a timeline for completion that is as soon as practicable, and
includes interim safety enhancement measures, including increased
patrols and leak surveys, pressure reductions, prioritization of
pressure testing for critical pipelines that must run at or near
maximum allowable operating pressure values that result in hoop
stress levels at or above 30 percent of specified minimum yield
stress, and any other measure that the commission determines will
enhance public safety during the implementation period.
Engineering-based assumptions may be used to determine maximum
allowable operating pressure in the absence of complete records, but
only as an interim measure until such time as all the lines have been
tested or replaced, in order to allow the gas system to continue to
operate.
(c) At the completion of the implementation period, all California
natural gas intrastate transmission line segments shall meet all of
the following:
(1) Have been pressure tested.
(2) Have traceable, verifiable, and complete records readily
available.
(3) Where warranted, be capable of accommodating in-line
inspection devices.
959. (a) Each gas corporation shall, twice a year, file with the
commission's consumer protection safety division a gas transmission
and storage safety report. The consumer protection safety division
shall review the reports to monitor each gas corporation's storage
and pipeline-related activities to assess whether the projects that
have been identified as high risk are being carried out, and to track
whether the gas corporation is spending its allocated funds on these
storage and pipeline-related safety, reliability, and integrity
activities for which they have received approval from the commission.
(b) The gas transmission and storage safety report shall include a
thorough description and explanation of the strategic planning and
decisionmaking approach used to determine and rank the gas storage
projects, intrastate transmission line safety, integrity, and
reliability, operation and maintenance activities, and inspections of
its intrastate transmission lines. If there has been no change in
the gas corporation's approach for determining and ranking which
projects and activities are prioritized since the previous gas
transmission and storage safety report, the subsequent report may
reference the immediately preceding report.
(c) If the commission's consumer protection safety division
determines that there is a deficiency in a gas corporation's
prioritization or administration of the storage or pipeline capital
projects or operation and maintenance activities, the division shall
bring the problems to the commission's immediate attention.
968. (a) A gas corporation shall not recover any fine or penalty
in any rate approved by the commission.
(b) Each gas corporation shall demonstrate to the satisfaction of
the commission, in its general rate case, that its proposed rates
will be sufficient to enable the gas corporation to fund those
projects and activities necessary to maintain safe and reliable
service and to meet federal and state safety requirements applicable
to its gas plant, in a cost-effective manner.
(c) In determining what constitutes a reasonable rate of return,
the commission shall consider the safety record of the gas
corporation.
(d)
(c) If the commission authorizes a gas corporation to
recover expenses incurred for public safety, the commission shall
require the gas corporation to establish and maintain a balancing
account to record the difference between the approved revenue
requirements for public safety and the actual expenditures made by
the utility. A gas corporation shall return moneys approved for
expenditure for public safety by the commission, to the balancing
account, if those funds are not expended within a reasonable period
of time after the commission grants approval of the public safety
expenditure, as determined by the commission.
969. In any ratemaking proceeding in which the commission
authorizes a gas corporation to recover expenses for the gas
corporation's transmission pipeline integrity management program
established pursuant to Subpart O (commencing with Section 192.901)
of Part 192 of Title 49 of the United States Code, or for capital
expenditures for the maintenance and repair of transmission
pipelines, the commission shall require the gas corporation to
establish and maintain a one-way balancing account for the recovery
of those expenses. Any unspent funds in the form of accumulated
account balance at the end of each rate-case cycle, plus interest,
shall be returned to customers through a true-up filing.
SEC. 3. SEC. 2. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.