BILL NUMBER: AB 478	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 30, 2012
	AMENDED IN ASSEMBLY  APRIL 7, 2011

INTRODUCED BY   Assembly Member  Roger Hernández 
 Hill 
    (   Principal coauthor:   Senator 
 Leno   ) 

                        FEBRUARY 15, 2011

   An act to amend  Section 84750.5 of the Education Code,
relating to community colleges   Sections 2104 and
2104.5 of the Public Utilities Code, relating to gas corporations,
and declaring the urgency thereof, to take effect immediately  .


	LEGISLATIVE COUNSEL'S DIGEST


   AB 478, as amended,  Roger Hernández   Hill
 .  Community colleges: funding.   Gas
Corporations: fines and penalties.  
   Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, as defined. The Public Utilities
Act requires the commission to investigate the cause of all accidents
occurring upon the property of any public utility or directly or
indirectly arising from or connected with its maintenance or
operation, resulting in loss of life or injury to person or property
and requiring, in the judgment of the commission, investigation by
it, and authorizes the commission to make any order or recommendation
with respect to the investigation that it determines to be just and
reasonable. The act provides that any public utility that violates
any provision of the California Constitution or the act, or that
fails or neglects to comply with any order, decision, decree, rule,
direction, demand, or requirement of the commission, where a penalty
has not otherwise been provided, is subject to a penalty of not less
than $500 and not more than $50,000 for each offense. Existing law
requires that any fine or penalty imposed by the commission and
collected from a public utility be paid to the State Treasury to the
credit of the General Fund. The act includes provisions that are
specific to gas corporations that involve safety standards for
pipeline facilities or the transportation of gas in the state. 

   This bill would revise the provisions that are specific to gas
corporations that involve safety standards for pipeline facilities or
the transportation of gas in the state, to authorize the commission
to order that all or a portion of a fine or penalty levied against a
gas corporation in three specified proceedings be held in a separate
account by the gas corporation to offset investments for pipeline
replacement to be undertaken within the service territory of the
corporation that would otherwise be recovered from the corporation's
ratepayers. The bill would require that moneys ordered by the
commission to be held in a separate account be used only for the
purpose of offsetting investments by the gas corporation for pipeline
safety replacement to be undertaken within the service territory of
the corporation, and only if the expenses would otherwise be
recovered in rates from the utility's ratepayers. The bill would
require that any moneys not used for these purposes be paid to the
General Fund 5 years after the date of their deposit into the trust
account.  
   This bill would declare that it is to take effect immediately as
an urgency statute.  
   Existing law establishes the California Community Colleges under
the administration of the Board of Governors of the California
Community Colleges. Existing law authorizes the establishment of
community college districts under the administration of community
college governing boards, and authorizes these districts to provide
instruction at community college campuses throughout the state.
 
   Existing law requires the board of governors to develop criteria
and standards, in accordance with specified statewide minimum
requirements, for the purposes of making the annual budget request
for the California Community Colleges to the Governor and the
Legislature and allocating state general apportionment revenues.
Those statewide minimum requirements include, among other things, a
requirement that the calculations of each community college district'
s revenue level for each fiscal year be based on specified criteria,
with revenue adjustments being made for increases or decreases in
full-time equivalent students (FTES) for specified purposes. These
requirements also include a requirement that the statewide requested
increase in budgeted workload FTES be based on the sum of specified
computations, computed on the basis of fiscal years, including the
positive difference between the California unemployment rate and a
rate of 5%. For purposes of this computation, existing law prohibits
that positive difference from exceeding 2%.  
   This bill would change the basis of the computation to calendar
years, and delete that prohibition. 
   Vote:  majority   2/3  . Appropriation:
no. Fiscal committee: yes. State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    The Legislature finds and declares all
of the following:  
   (a) On September 9, 2010, a natural gas transmission pipeline
owned and operated by Pacific Gas and Electric Company exploded under
the intersection of Earl Avenue and Glenview Drive in the Crestmoor
neighborhood of San Bruno, killing eight people, injuring more than
50, and destroying 38 homes.  
   (b) The explosion was in a section of pipeline thought by Pacific
Gas and Electric Company to be seamless. Inspection by the National
Transportation Safety Board (NTSB) determined that the pipe in fact
had a double-submerged arc weld.  
   (c) The revelation that the utility did not know such basic and
vital information as seam type for this pipeline led the NTSB to
issue an urgent recommendation that Pacific Gas and Electric Company
find traceable, verifiable, and complete records for all pipe in
class 3 and 4 locations, and in class 1 and 2 high consequence areas,
that had not had their maximum allowable operating pressures
established through prior hydrostatic testing. The NTSB recommended
that, should the utility not be able to comply with this
recommendation, it establish a maximum allowable operating pressure
through hydrostatic pressure testing.  
   (d) The Public Utilities Commission (PUC), in Decision 11-06-017,
ordered all California gas corporations to develop a plan to
implement these NTSB recommendations for all transmission pipelines.
Pacific Gas and Electric Company's plan for Phase 1, which addressed
pipelines in high-consequence areas, proposed to incur expenses of
seven hundred fifty million five hundred thousand dollars
($750,500,000) and to make capital expenditures of one million four
hundred thirty-three thousand dollars ($1,433,000) between 2011 and
2013. Pacific Gas and Electric Company officials have stated that
Phase 2 could cost between six billion eight hundred million dollars
($6,800,000,000) and nine billion dollars ($9,000,000,000). 

   (e) This investment will greatly exceed the total net investment
that Pacific Gas and Electric Company has placed in its pipeline
system over the past several decades. The vast majority of this cost
is proposed to be borne by the utility's ratepayers.  
   (f) Given Pacific Gas and Electric Company's current 11.35 percent
authorized return on equity, each dollar of capital investment in
pipeline replacement will cost ratepayers more than three dollars and
fifty cents ($3.50) in repayment of principal, debt service, return
on shareholder equity, and taxes on the return on shareholder equity
over the 45-year amortization of the investment.  
   (g) Pacific Gas and Electric Company is currently under
investigation in three PUC penalty proceedings related to the
pipeline accident: Investigation 11-02-016, Investigation 11-11-009,
and Investigation 12-01-007. The utility projects that fines in these
penalty proceedings will likely exceed two hundred million dollars
($200,000,000).  
   (h) Currently, all fines in PUC penalty proceedings are required
by statute to be deposited into the state's General Fund.  
   (i) Prior to the current investigations involving the San Bruno
pipeline explosion, the largest safety-related fine the PUC had
levied was a thirty-eight-million-dollar ($38,000,000) fine for a
fatal natural gas distribution pipeline explosion on Christmas Eve of
2008 in Rancho Cordova.  
   (j) Given the unprecedented amount of pipeline investment that
Pacific Gas and Electric Company is proposing to make in the
aftermath of the San Bruno explosion and the unprecedented size of
the likely fine that the utility faces as a result of the explosion,
any fines assessed to the utility as a result of the explosion should
go toward offsetting the costs that the utility's ratepayers would
otherwise bear for safety upgrades to the utility's pipeline system.

   SEC. 2.    Section 2104 of the   Public
Utilities Code   , as amended by Section 7 of Chapter 552 of
the Statutes of 2008,   is amended to read: 
   2104.  (a) Except as provided by Sections 2100 and 2107.5, and in
addition to the remedies provided in Sections 688.020 and 688.030 of
the Code of Civil Procedure, actions to recover penalties under this
part may be brought in the name of the people of the State of
California, in the superior court in and for the county, or city and
county, in which the cause or some part thereof arose, or in which
the corporation complained of has its principal place of business, or
in which the person complained of resides. The action, if brought
pursuant to this section, shall be commenced and prosecuted to final
judgment by the attorney or agent of the commission. All fines and
penalties may be sued for and recovered. The commission may enjoin
the sale of a public utility's or common carrier's assets to satisfy
unpaid fines and penalties. The commission may use any of the
remedies afforded to a creditor under the Uniform Fraudulent Transfer
Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2
of Division 4 of the Civil Code). Respondents who fraudulently
transfer assets to avoid paying commission-imposed fines or penalties
are subject to prosecution under Sections 154, 531, and 531a of the
Penal Code. In all of these actions, the procedure and rules of
evidence shall be the same as in ordinary civil actions, except for
prosecutions under the Penal Code or as otherwise herein provided.
 All   Except as provided in Section 2104.5, all
 fines and penalties recovered by the state in any action,
together with the costs thereof, shall be paid into the State
Treasury to the credit of the General Fund. Any action may be
compromised or discontinued on application of the commission upon the
terms the court approves and orders.
   (b) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.
   SEC. 3.    Section 2104 of the   Public
Utilities Code   , as added by Section 8 of Chapter 552 of
  the Statutes of 2008, is amended to read: 
   2104.  (a) Except as provided by Sections 2100 and 2107.5, actions
to recover penalties under this part shall be brought in the name of
the people of the State of California, in the superior court in and
for the county, or city and county, in which the cause or some part
thereof arose, or in which the corporation complained of has its
principal place of business, or in which the person complained of
resides. The action shall be commenced and prosecuted to final
judgment by the attorney or agent of the commission. All fines and
penalties may be sued for and recovered. The commission may enjoin
the sale of a public utility's or common carrier's assets to satisfy
unpaid fines and penalties. The commission may use any of the
remedies afforded to a creditor under the Uniform Fraudulent Transfer
Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2
of Division 4 of the Civil Code). Respondents who fraudulently
transfer assets to avoid paying commission-imposed fines or penalties
are subject to prosecution under Sections 154, 531, and 531a of the
Penal Code. In all of these actions, the procedure and rules of
evidence shall be the same as in ordinary civil actions, except for
prosecutions under the Penal Code or as otherwise herein provided.
 All   Except as provided in Section 2104.5, all
 fines and penalties recovered by the state in any action,
together with the costs thereof, shall be paid into the State
Treasury to the credit of the General Fund. Any action may be
compromised or discontinued on application of the commission upon the
terms the court approves and orders.
   (b) This section shall become operative on January 1, 2014.
   SEC. 4.    Section 2104.5 of the   Public
Utilities Code   is amended to read: 
   2104.5.   (a)    Any penalty for violation of
any provision of this act, or of any rule, regulation, general order,
or order of the commission, involving safety standards for pipeline
facilities or the transportation of gas in the State of California
may be compromised by the commission. In determining the amount of
 such   the  penalty, or the amount agreed
upon in compromise, the appropriateness of  such 
 the  penalty to the size of the business of the person
charged, the gravity of the violation, and the good faith of the
person charged in attempting to achieve compliance, after
notification of a violation, shall be considered. The amount of any
 such  penalty, when finally determined, or the
amount agreed upon in compromise, may be recovered in a civil action
in the name of the  People   people  of the
State of California in the superior court in and for the county, or
city and county in which the cause or some part thereof arose, or in
which the corporation complained of has its principal place of
business or the person complained of resides. In any such action, all
penalties incurred, or amounts agreed upon in compromise for
violations committed up to the time of commencing the action may be
sued for and recovered. In all  such   those
 actions, the procedure and rules of evidence shall be the same
as in ordinary civil actions, except as otherwise herein provided.
All fines and penalties recovered by the state in any  such
 action, together with the costs thereof, shall be paid into
the State Treasury to the credit of the General Fund  , except
upon order of the commission pursuant to subdivision (b)  . 

   (b) The commission shall order that any fine or penalty levied
against a gas corporation in Investigation 11-02-016, Investigation
11-11-009, or Investigation 12-01-007, be held in a separate account
by the gas corporation to offset investments for pipeline replacement
to be undertaken within the service territory of the corporation and
that would otherwise be recovered from the corporation's ratepayers.
 
   (c) The commission shall set a rate of interest for an account
established pursuant to subdivision (b).  
   (d) (1) Any moneys ordered by the commission to be held in a
separate account pursuant to subdivision (b) shall be used,
consistent with the intent of the Legislature as stated in paragraph
(2), only for the purpose of offsetting investments by the gas
corporation for pipeline replacement to be undertaken within the
service territory of the corporation, and only if the investments
would otherwise be recovered in rates from the utility's ratepayers.
Any moneys not used for these purposes shall, five years after the
date of their deposit into the trust account, be paid to the General
Fund.  
   (2) It is the intent of the Legislature that moneys ordered by the
commission to be held in a separate account pursuant to subdivision
(b) be used to offset investments that are to be made by a gas
corporation during the first phase of the utility's implementation
plan filed in response to Decision 11-06-017, Decision Determining
Maximum Allowable Operating Pressure Methodology and Requiring Filing
of Natural Gas Transmission Pipeline Replacement or Testing
Implementation Plans (filed June 9, 2011), if the commission
determines that the investments would otherwise be recovered in rates
from the utility's ratepayers. 
   SEC. 5.    This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
 
   In order to address and resolve significant financial issues
presented by ongoing proceedings before the Public Utilities
Commission, it is necessary for this act to take effect immediately.
 
  SECTION 1.    Section 84750.5 of the Education
Code is amended to read:
   84750.5.  (a) The board of governors, in accordance with the
statewide requirements contained in paragraphs (1) to (11),
inclusive, of subdivision (d), and in consultation with institutional
representatives of the California Community Colleges and statewide
faculty and staff organizations, so as to ensure their participation
in the development and review of policy proposals, shall develop
criteria and standards for the purposes of making the annual budget
request for the California Community Colleges to the Governor and the
Legislature, and for the purpose of allocating the state general
apportionment revenues.
   (b) In developing the criteria and standards, the board of
governors shall utilize and strongly consider the recommendations and
work product of the "System Office Recommendations Based on the
Report of the Work Group on Community College Finance" that was
adopted by the board at its meeting of March 7, 2005. The board shall
complete the development of these criteria and standards,
accompanied by the necessary procedures, processes, and formulas for
utilizing its criteria and standards, by March 1, 2007, and shall
submit on or before that date a report on these items to the
Legislature and the Governor.
   (c) (1) It is the intent of the Legislature in enacting this
section to improve the equity and predictability of general
apportionment and growth funding for community college districts in
order that the districts may more readily plan and implement
instruction and related programs, more readily serve students
according to the policies of the state's master plan for higher
education, and enhance the quality of instruction and related
services for students.
   (2) It is the intent of the Legislature to determine the amounts
to be appropriated for the purposes of this section through the
annual Budget Act. Nothing in this section shall be construed as
limiting the authority either of the Governor to propose, or the
Legislature to approve, appropriations for California Community
Colleges programs or purposes.
   (d) The board of governors shall develop the criteria and
standards within the following statewide minimum requirements:
   (1) The calculations of each community college district's revenue
level for each fiscal year shall be based on the level of general
apportionment revenues (state and local) the district received for
the prior year plus any amount attributed to a deficit from the
adopted standards to be developed pursuant to this section, with
revenue adjustments being made for increases or decreases in full
time equivalent students (FTES), for equalization of funding per
credit FTES, for necessary alignment of funding per FTES between
credit and noncredit programs, for inflation, and for other purposes
authorized by law.
   (2) The funding mechanism developed pursuant to this section shall
recognize the need for community college districts to receive an
annual allocation based on the number of colleges and comprehensive
centers in the district. In addition to this basic allocation, the
marginal amount of credit revenue allocated per FTES shall be funded
at a rate not less than four thousand three hundred sixty-seven
dollars ($4,367), as adjusted for the change in the cost-of-living in
subsequent annual budget acts.
   (A) To the extent that the Budget Act of 2006 contains an
appropriation of one hundred fifty-nine million four hundred
thirty-eight thousand dollars ($159,438,000) for community college
equalization, the Legislature finds and declares that community
college equalization for credit FTES has been effectively
accomplished as of March 31, 2007.
   (B) The chancellor shall develop criteria for the allocation of
one-time grants for those districts that would have qualified for
more equalization under prior law than pursuant to this section and
the Budget Act of 2006, and for those districts that would have
qualified for more funding under a proposed rural college access
grant than pursuant to this section and the Budget Act of 2006, as
determined by the chancellor. Appropriations for the one-time grants
shall be provided pursuant to paragraph (24) of subdivision (a) of
Section 43 of Chapter 79 of the Statutes of 2006.
   (3) Noncredit instruction shall be funded at a uniform rate of two
thousand six hundred twenty-six dollars ($2,626) per FTES, as
adjusted for the change in the cost-of-living provided in subsequent
annual budget acts.
   (4) Funding for instruction in career development and college
preparation, as authorized pursuant to Section 84760.5, shall be
provided as follows:
   (A) Career development and college preparation FTES may be funded
at a rate of three thousand ninety-two dollars ($3,092) per FTES for
courses in programs that conform to the requirements of Section
84760.5. This rate shall be adjusted for the change in the
cost-of-living or as otherwise provided in subsequent annual budget
acts.
   (B) Changes in career development and college preparation FTES
shall result in adjustments to revenues as follows:
   (i) Increases in career development and college preparation FTES
shall result in an increase in revenues in the year of the increase
and at the average rate per career development and college
preparation FTES, including any cost-of-living adjustment authorized
by statute or by the annual Budget Act.
   (ii) Decreases in career development and college preparation FTES
shall result in a revenue reduction in the year following the
decrease and at the average rate per career development and college
preparation FTES.
   (5) Except as otherwise provided by statute, current categorical
programs providing direct services to students, including extended
opportunity programs and services, and disabled students programs and
services, shall continue to be funded separately through the annual
Budget Act, and shall not be assumed under the budget formula
otherwise specified by this section.
   (6) For credit and noncredit instruction, changes in FTES shall
result in adjustments in district revenues as follows:
   (A) Increases in FTES shall result in an increase in revenues in
the year of the increase and at the amount per FTES provided for in
paragraph (2) or (3), as appropriate, including any cost-of-living
adjustment authorized by statute or by the annual Budget Act.
   (B) Decreases in FTES shall result in revenue reductions beginning
in the year following the initial year of decrease in FTES, and at
the district's marginal funding per FTES.
   (C) Districts shall be entitled to the restoration of any
reductions in apportionment revenue due to decreases in FTES during
the three years following the initial year of decrease in FTES if
there is a subsequent increase in FTES.
   (7) Revenue adjustments shall be made to reflect cost changes,
using the same inflation adjustment as required for school districts
pursuant to subdivision (b) of Section 42238.1. These revenue
adjustments shall be made to the college and center basic
allocations, credit and noncredit FTES funding rates, and career
development and college preparation FTES funding rates.
   (8) The statewide requested increase in budgeted workload FTES
shall be based, at a minimum, on the sum of the following
computations:
   (A) Determination of an equally weighted average of the rate of
change in the California population of persons between the ages of 19
and 24 and the rate of change in the California population of
persons between the ages of 25 and 65, both as determined by the
Department of Finance's Demographic Research Unit as determined for
the preceding fiscal year.
   (B) To the extent the California unemployment rate exceeds 5
percent for the most recently completed calendar year, that positive
difference shall be added in an amount determined by the Chancellor
of the California Community Colleges to the Department of Finance, to
the rate computed in subparagraph (A). The amount determined by the
Chancellor shall be accompanied by a rationale for that determination
and be submitted to the Department of Finance.
   (C) The chancellor may also add to the amounts calculated pursuant
to subparagraphs (A) and (B) the number of FTES in the areas of
transfer, vocational education, and basic skills that were unfunded
in the current fiscal year. For this purpose, the following
computation shall be determined for each district, and a statewide
total shall be calculated:
   (i) Establish the base level of FTES earned in the prior fiscal
year for transfer courses consisting of courses meeting the
California State University breadth or Intersegmental General
Education Transfer Curriculum requirements or major course
prerequisites accepted by the University of California or the
California State University.
   (ii) Establish the base level of FTES earned in the prior fiscal
year for vocational education courses consisting of courses defined
by the chancellor's office Student Accountability Model codes A and B
that are consistent with the courses used for measuring success in
this program area under the accountability system established
pursuant to Section 84754.5.
   (iii) Establish the base level of FTES in the prior fiscal year
for basic skills courses, both credit and noncredit.
   (iv) Add the sum of FTES for clauses (i) to (iii), inclusive.
   (v) Multiply the result of the calculation made under clause (iv)
by one plus the district's funded growth rate in the current fiscal
year. This figure shall represent the maintenance of effort level for
the budget year.
   (vi) FTES in transfer, vocational education, and basic skills that
are in excess of the total calculated pursuant to clause (v), shall
be considered in excess of the maintenance of effort level, and shall
be eligible for overcap growth funding if the district exceeds its
overall funded FTES.
   (vii) In no event shall the amount calculated pursuant to clause
(vi) exceed the total unfunded FTES for that fiscal year. To the
extent the computation specified in subdivision (c) requires the
reporting of additional data by community college districts, that
reporting shall be a condition of the receipt of apportionment for
growth pursuant to this section and those funds shall be available to
offset any and all costs of providing the data.
   (9) Except as provided in subparagraph (B) of paragraph (6), for
the 2006-07 fiscal year or for the first fiscal year for which this
section is implemented by the board of governors, whichever is later,
all districts shall receive at least the amount of revenue received
for the prior fiscal year, adjusted for the cost-of-living adjustment
specified in subdivision (b) of Section 42238.1 and adjusted for the
actual increase in FTES not to exceed the district's funded growth
cap. Thereafter, allocations shall be made pursuant to this section,
as implemented by the board of governors pursuant to the annual
Budget Act.
   (10) Except as specifically provided in statute, regulations of
the board of governors for determining and allocating the state
general apportionment to the community college districts shall not
require district governing boards to expend the allocated revenues in
specified categories of operation or according to the workload
measures developed by the board of governors.