BILL ANALYSIS �
AB 1511
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Date of Hearing: May 1, 2012
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 1511 (Bradford) - As Amended: April 9, 2012
As Proposed to Be Amended
SUBJECT : REAL PROPERTY: DISCLOSURES: TRANSMISSION PIPELINES
KEY ISSUE : IN WHAT WAYS WILL CALIFORNIA HOME BUYERS BENEFIT
FROM BEING INFORMED THAT THE PROPERTY THEY MAY BE INTERESTED IN
PURCHASING IS WITHIN 1,100 FEET OF A GAS TRANSMISSION PIPELINE?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This bill seeks to expand the natural hazard disclosure (NHD)
expert report commonly used in real estate transactions to
include a specified "Notice of Possible Transmission Pipeline"
if the property for sale is located within 1,100 feet of a gas
transmission or hazardous liquid pipeline, as depicted in the
federal National Pipeline Mapping System (NPMS). This bill is a
response to the 2010 explosion of a gas pipeline in San Bruno
whose existence, the author states, was unknown to many affected
property owners until it exploded. After many fruitful
discussions, the author has thoughtfully proposed to make the
following amendments in committee: (1) Reduce the distance that
triggers a notice from 2,000 feet to 1,100 feet; (2) Remove the
requirement that the notice, if given, shall also include a map
of the pipeline as visually depicted by NPMS; and (3) Provide a
shorter and more "consumer-friendly" disclosure notice.
The bill is supported by at least two hazard disclosure
companies, who contend that this bill will make prospective home
buyers aware of nearby pipelines before purchasing a property
and will protect them from unknowingly accepting risk, if any,
that is associated with proximity to a pipeline. It is believed
that despite the proposed amendments, the bill is still opposed
by at least two other hazard disclosure providers in the field,
who contend, among other things, that NPMS is too inaccurate and
imprecise to yield any disclosure report that will be of value
to consumers, and consequently the bill may provide a false
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security or false alarm to home buyers. There is continued
contention over whether the NPMS website actually provides data
which can be used by a knowledgeable disclosure provider to
calculate distance between a pipeline and a home, or whether it
provides nothing more than a visual depiction of the approximate
location of pipelines with an admitted 500-foot error of margin.
SUMMARY : Requires the expert report used by sellers to make
natural hazard disclosures to prospective property buyers to
include a disclosure that the property for sale is located
within 1,100 feet of a gas transmission or hazardous liquid
pipeline. Specifically, this bill :
1)Requires an expert who produces a natural hazard disclosure
report to determine whether the property is located within
1,100 feet of a gas transmission or hazardous liquid pipeline
according to the public Internet Web site of the federal
National Pipeline Mapping System.
2)Requires the report, if the property is within 1,100 feet of
the transmission pipeline, to contain a notice.
EXISTING LAW :
1)Requires a seller of real property that is located within one
of several specified hazard zones, to disclose to any
prospective purchaser the fact that the property is located
within one of these zones if the seller or agent has actual
knowledge that the property is within a special flood hazard
area, an area of potential flooding, a very high fire hazard
severity zone, a wildland area having substantial forest fire
risk, an earthquake fault zone, or a seismic hazard zone.
(Civil Code Section 1103. All further references are to this
code unless otherwise stated.)
2)Requires the above disclosures to be made upon a copy of the
Natural Hazard Disclosure Statement, as specified. (Section
1103.2.)
3)Allows a seller of property to use an expert report or opinion
from a licensed engineer, land surveyor, geologist, or expert
in natural hazard discovery to comply with the natural hazard
disclosure requirements if the information is provided
pursuant to a request by the prospective transferee. Requires
the expert, in responding to such a request, to determine
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whether the property, by virtue of its location, is:
a) Within an airport influence area, as defined;
b) Within the jurisdiction of the San Francisco Bay
Conservation and Development Commission;
c) Within one mile of property of certain designated
farmland areas;
d) Within one mile of a mine operation. (Section
1103.4(c).)
4)Provides that neither the transferor nor any listing or
selling agent shall be liable for any error, inaccuracy, or
omission of any information delivered pursuant to these
disclosure requirements if: (a) it was not within the personal
knowledge of the transferor or the listing or selling agent;
(b) it was based on information timely provided by public
agencies or by other persons in the preparation of the expert
report or opinion, and (c) ordinary care was exercised in
obtaining and transmitting the information. (Section
1103.4(a).)
5)Provides that the delivery of any information required to be
disclosed to a prospective transferee by a public agency or
other person providing information required to be disclosed
shall relieve the transferor or any listing or selling agent
of any further duty under these provisions with respect to
that item of information. (Section 1103.4(b).)
6)Requires a real property seller, or the seller's agent, to
disclose to buyers any material facts that would have a
significant and measurable effect on the value or desirability
of the property (if the buyer does not know, and would not
reasonably discover, those facts). (Karoutas v. Homefed Bank
(1991) 232 Cal.App.3d 767; Reed v. King (1983) 145 Cal.App.3d
261.)
7)Requires a seller's real estate broker to conduct a reasonably
competent and diligent visual inspection of a property offered
for sale, and to disclose to potential buyers any facts
revealed that would materially affect the value or
desirability of the property. (Section 2079.)
COMMENTS : According to the author, this bill is in response to
numerous gas transmission pipeline issues over the last few
years, most notably the tragedy that occurred in September 2010
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when a natural gas pipeline owned and operated by Pacific Gas &
Electric (PG&E) ruptured and exploded in San Bruno. The author
contends that, prior to the San Bruno incident, many affected
property owners were unaware of the existence of the
transmission pipeline that exploded, and that there is still no
California law for notifying property owners and prospective
buyers about the presence of nearby gas pipelines.
Recent press articles have brought to light internal utility
documents and maintenance records that reportedly suggest the
San Bruno explosion may have been prevented if appropriate
measures had been taken in a more timely manner. (See, e.g.
"PG&E 1989 memo noted pipe's history of weld failure." San
Francisco Chronicle, 4/22/12.) In addition, increased attention
from the state Public Utilities Commission (CPUC) and state
legislators have renewed calls for greater transparency of
utility records. (See, e.g. "Pipeline regulators propose
broader public access." San Francisco Chronicle, 3/27/12.) For
these reasons, the author states that the proximity to a
transmission pipeline is information that many Californians may
wish to consider before purchasing a home.
Current law requires the seller of real property to make certain
disclosures to a prospective buyer about the proximity of the
property to natural hazard zones specified under the Public
Resources Code. This bill seeks to expand those disclosures by
requiring the expert report, commonly used to fulfill the
natural hazard disclosure requirements, to include a specified
"Notice of Possible Transmission Pipeline" if the property for
sale is located within 1,100 feet of a gas transmission or
hazardous liquid pipeline. These expert reports are prepared
for a fee by third-party hazard disclosure providers who, under
existing law, thereby assume the liability for making
determinations of proximity to hazards, which protects the
seller and the seller's agent from nondisclosure liability by
notifying the prospective home buyer of an issue that may affect
the decision to purchase.
Why reporting of transmission pipelines based on NPMS data? The
bill requires the proximity determination to be made "as
depicted" on the public internet website of the federal National
Pipeline Mapping System (NPMS). The bill is supported by First
American and GeoAssurance, two natural hazard disclosure (NHD)
companies who have provided the Committee with examples of
sample pipeline maps they can currently generate for customers
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that reflect pipeline proximity based on a given distance.
These proponents contend that NPMS, while not perfect,
represents the best resource for determining distance to a
pipeline because NPMS: (1) is standardized; (2) maintained by
the federal government; (3) publicly accessible; (4) covers the
transmission pipelines of all the major gas utility providers
and oil companies; and (5) since 2003, federal law has required
pipeline operators to submit and update their data to NPMS.
In direct contrast, this bill is opposed by Disclosure Source
(DS) and Property I.D., two other NHD companies in the same
field, who contend that NPMS is not a good source of data on
which to base a mandatory disclosure. DS opposes this bill
because it contends that the NPMS database is "substantially
incomplete and inaccurate," omitting significant pipeline
hazards. For example, DS submitted evidence to the Committee
showing that NPMS does not display jet fuel pipelines which
often run through residential neighborhoods, nor so-called
"Aldyl-A" pipes, which the Public Utilities Commission (CPUC)
recently concluded represent a more prominent danger due to
their brittle construction. (See CPUC "Hazard Database Project:
Report on Status and Initial Recommendations," 3/14/2012.) DS
also notes that NPMS does not reveal the presence of the
ubiquitous network of smaller gas distribution lines that
typically cross residential streets or go into gas customers'
homes. Although both types may present potential hazards, they
are not required to be reported to NPMS because of their small
size or pressure.
Property I.D. opposes the use of NPMS not only because of what
it is capable or incapable of depicting to the viewer, but
because it contends the underlying GIS data (i.e. map coordinate
data) that a NHD company would need to determine a distance
between a home and a pipeline is simply not available through
the NPMS website. They explain:
This bill requires disclosure of pipeline locations
based on maps on the NPMS website. That website
contains an online mapping application, which is
neither a map nor data. . . This bill would require us
to take a picture of the picture on the website and
disclose it as an accurate map. This is impossible,
however, without the underlying GIS data from which the
picture was created, and will result in inaccurate and
misleading depictions of the potential locations of
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these pipelines.
Property I.D. suggests that the bill be amended to require the
disclosure to be based on actual GIS data, although it is the
Committee's understanding that if what Property I.D. says is
true, NPMS could not be used as the data source for any
proximity determination without changes at the federal level to
make GIS coordinate data for pipelines available to anyone
visiting the NPMS website-thus leaving no workable solution for
this bill as long as it relies on NPMS. On the other hand,
GeoAssurance, another NHD provider, contends that "NPMS data is
of sufficient accuracy to be used for by disclosure companies. .
. It does require a certain level of expertise but would not be
a problem for any reputable disclosure company with professional
GIS staff. "
Author's Proposed Amendments: After discussions with
stakeholders and Committee counsel, the author has thoughtfully
proposed to make the following amendments in committee: (1)
Reduce the distance that triggers a notice from 2,000 feet to
1,100 feet; (2) Remove the requirement that the notice, if
given, shall also include a map of the pipeline as visually
depicted by NPMS; and (3) Revise the wording of the consumer
disclosure notice.
1) An 1100-foot radius reflects an empirical basis for potential
risk. As proposed to be amended, this bill requires the NHD
provider to notify the prospective buyer if the property is
within 1,100 feet from a transmission pipeline as depicted by
NPMS. Scientific studies suggest there is a sound empirical
basis associating a distance of 1,100 feet with actual risk from
an explosion of the type of gas transmission lines depicted by
NPMS-an empirical basis that was not evident for a distance of
2,000 feet. (See, e.g. M.J. Stephens, "A Model for Sizing High
Consequence Areas Associated with Natural Gas Pipelines." Gas
Research Institute: Edmonton (2000), estimating 1,100 feet for
large diameter lines operating in the range of 600 to 1,200 psi;
"Partnering to Further Enhance Pipeline Safety In Communities
Through Risk-Informed Land Use Planning." Also, Pipelines and
Informed Planning Alliance (PIPA), Nov. 2010, recommending a
default planning range from 660 to 1,000 feet on either side of
a hazardous liquid transmission pipeline.)
This proposed amendment for 1,100 feet is not expected to fully
address the concerns of the opponents. Disclosure Source
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contends that NPMS is so riddled with inaccuracies that any
disclosure report based on its data will be of little value to
consumers, and consequently will provide a false sense of
security to home buyers and unnecessarily increase the price
paid by consumers for hazard disclosure reports. Opponents
note, for example, that the NPMS website itself warns users that
its geospatial data is accurate only to plus or minus 500 feet-a
large built-in degree of error whether the distance is 1,100
feet or 2,000 feet.
DS also contends that because gas transmission pipelines are
more likely to be located in poor or middle class neighborhoods,
home buyers and sellers in those areas are more likely to be
negatively impacted by this bill. So while the narrower 1,100
foot distance will necessarily reduce the number of people
receiving the notice whose property value may be impacted by
such determination, if DS is correct the safety-based distance
in the bill may unfortunately have a greater impact on poor and
middle class neighborhoods. Yet there is no known safety-based
scientific rationale for the earlier 2000 foot disclosure
requirement in the measure.
2) A NPMS map may be requested but is no longer required to
accompany the disclosure. The Committee received dozens of
letters from concerned individuals specifically objecting to the
map requirement, stating that it "will stigmatize a neighborhood
and taint the value of California properties." Property I.D.
contends that no map should be included because the data that it
purports to depict is so inaccurate, with a 500-foot degree of
error built in, that it is bound to mislead the consumer and
"far from providing accurate disclosure information, will only
give them false comfort or false alarm." As proposed to be
amended, the bill no longer requires the report to include a map
showing the pipeline as depicted on the NPMS website, but also
advises the reader that, if desired, a map may be requested from
a NHD company. It is believed that this amendment may be
sufficient to address the concerns of many of the dozens of
individuals who wrote to the Committee on this primary point.
3) Shorter disclosure notice. As proposed to be amended, the
bill specifies a shorter disclosure notice, intended to be more
readable and in plainer language than the previously specified
notice statement. The notice clarifies that the determination
that a pipeline is within 1,100 feet of the property "does not
at all mean this property is at any known risk of danger." The
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shorter proposed notice continues to direct the recipient to the
NPMS website where he or she may find the contact information
for the pipeline operator to seek further information about the
pipeline itself. It is hoped that by directing recipients of
the notice to the contact information of the utility or other
operator responsible for the pipeline, individuals will be able
to obtain additional information, if any, that they are
interested in (e.g. more precise pipeline location, recent
maintenance history, prior discovered problems, etc.)
Pending Related Legislation: SB 1000 (Yee) seeks to require
Public Utility Commission investigation orders, recommendations,
and accident reports to be made publicly available, pursuant to
the California Public Records Act. This bill is scheduled to be
heard by the Senate Appropriations Committee on May 7, 2012.
AB 578 (Hill) seeks to require the Public Utilities Commission
to implement those recommendations of the National
Transportation Safety Board (NTSB) regarding natural gas
pipeline safety that the PUC determines are appropriate. This
bill is awaiting hearing in the Senate Energy & Utilities
Committee.
REGISTERED SUPPORT / OPPOSITION :
Support (previous version of the bill)
Consumer Federation of California
First American Real Estate Disclosures (FARED)
GeoAssurance
Oppose (previous version of the bill)
Disclosure Source
Property ID
Dozens of individuals
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334
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