BILL ANALYSIS �
AB 2201
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Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
AB 2201 (Bradford) - As Amended: March 29, 2012
SUBJECT : Pipeline Safety
SUMMARY : Raises the civil penalties associated with violations
of the Elder California Pipeline Safety Act of 1981 (Act).
Specifically, this bill :
1)Raises the civil penalties for each day that a violation of
the Act persists from $10,000 to $100,000.
2)Raises the civil penalties for any related series of
violations of the Act from $500,000 to $1,000,000.
EXISTING LAW
1)Provides the State Fire Marshal (SFM), under the Elder
California Pipeline Safety Act of 1981, with safety regulatory
jurisdiction over interstate pipelines used for the
transportation of hazardous or highly volatile liquid
substances, subject to federal law.
2)Establishes that a violation of the Act, as determined by the
SFM, is a civil penalty of not more than $10,000 for each day
that the violation persists.
3)Establishes that the maximum civil penalty for any related
series of violations is not permitted to exceed $500,000.
4)Requires the SFM to deposit these civil penalties into the
Local Training Account in the California Hazardous Liquid
Pipeline Safety Fund. The money is available, upon
appropriation by the Legislature, to the State Fire Marshal,
who is required to use the money for providing hazardous
liquid fire suppression training to local fire departments.
FISCAL EFFECT : Unknown
COMMENTS :
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Background : While the federal government is primarily
responsible for developing, issuing and enforcing pipeline
safety regulations, under she U.S. Department of
Transportation's Pipeline and Hazardous Materials Safety
Administration (PHMSA), the pipeline safety statutes provide for
State intrastate regulatory, inspection, and enforcement
responsibilities under an annual certification. To qualify for
certification, a State must adopt the minimum Federal
regulations. A State must also provide for injunctive and
monetary sanctions substantially the same as those authorized by
the pipeline safety statutes.
As part of this program, PHMSA provides reimbursable federal
grant funds to state pipeline programs to offset up to 80% of
costs. According to the author, these funds currently range from
$1 million to $1.4 million. The PHMSA uses a point system based
on program performance and available grant dollars in awarding
grant amounts.
In July 2011, PHMSA notified the State of California pipeline
safety programs that they will deduct points beginning in 2012
if the state has not achieved the desired penalty levels as set
forth by this bill by the end of 2012.
Increases in civil penalties by the Federal Government : In an
effort to enhance the security and safety of pipelines, Congress
enacted the Pipeline Safety Improvement Act of 2002 which
increased the civil penalties from $25,000 per day to $100,000
per day and changed the maximum civil penalty for a series of
related violations from $500,000 to $1,000,000.
Similarly, President Obama recently signed the Pipeline Safety,
Regulatory Certainty, and Job Creation Act of 2011 to increase
the civil penalties once again from $100,000 per day to $200,000
and increase the maximum civil penalty for a series of related
violations from $1,000,000 to $2,000,000.
Purpose of the bill : According to the author the assessment of
civil penalties is reserved for the most serious of violations
where the risk to the public and/or damage to the environment
has occurred or could have occurred due to operator negligence.
The $10,000 maximum penalty per violation is too low to provide
an effective deterrent or to appropriately punish an operator
for serious pipeline safety violations.
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The increases in civil penalties will make California's
penalties more in line with similar federal civil penalties,
provide for an effective deterrent, appropriately punish an
operator for serious pipeline safety violations, and ensure that
the State of California continues to receive the appropriate
federal grant funds.
The office of the State Fire Marshall's Pipeline Safety
Division : The SFM regulates the safety of approximately 5,500
miles of intrastate hazardous liquid transportation pipelines
and acts as an agent of the federal Office of Pipeline Safety
(OPS) concerning the inspection of more than 2,000 miles of
interstate pipelines. Pipeline Safety staff inspect, test, and
investigate to ensure compliance with all federal and state
pipeline safety laws and regulations. Hazardous liquid pipelines
are also periodically tested for integrity using procedures
approved by the OSFM. The program has been certified by the
federal government since 1981.
Kinder Morgan Example : On November 9, 2004 in Walnut Creek,
California a petroleum pipeline owned and operated by Kinder
Morgan Energy Partners was struck by a contractor of the
Mountain Cascade Inc. who was operating in the construction of a
water pipeline. A massive gasoline spill quickly ignited an
explosion that caused the deaths of 5 individuals and injuries
to four others. Several homes were ignited and one was
partially destroyed. After an investigation by the SFM, it was
determined that Kinder Morgan had failed to accurately stake-out
the location of the pipeline. The SFM assessed the maximum fee
of $500,000 dollars to Kinder Morgan as a result of the
investigation.
Policy considerations : While the committee is aware that PHMSA
is not currently requiring states to meet the new levels set
forth by the Obama Administration, the author might wish to
increase the civil penalties currently in the bill from $100,000
per day/$1,000,000 maximum for a series of violations to
$200,000 per day/$2,000,000 maximum for a series of violations
to reflect the recent increases by the federal government.
REGISTERED SUPPORT / OPPOSITION :
Support
None
AB 2201
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Opposition
None
Analysis Prepared by : Felipe Lopez / G. O. / (916) 319-2531