BILL ANALYSIS �
SB 705
Page 1
SENATE THIRD READING
SB 705 (Leno)
As Amended September 1, 2011
Majority vote
SENATE VOTE :30-7
UTILITIES & COMMERCE 13-2
APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|Bradford, Fletcher, |Ayes:|Fuentes, Harkey, |
| |Buchanan, Fong, Fuentes, | |Blumenfield, Bradford, |
| |Furutani, Roger | |Charles Calderon, Campos, |
| |Hern�ndez, Williams, Ma, | |Davis, Donnelly, Gatto, |
| |Nestande, Skinner, | |Hall, Hill, Lara, |
| |Swanson, Valadao | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
|Nays:|Beth Gaines, Knight | | |
| | | | |
-----------------------------------------------------------------
SUMMARY : This bill requires natural gas utilities regulated by
the California Public Utilities Commission (PUC) to develop
service and safety plans. Specifically, this bill :
1)Establishes PUC as the state authority responsible for
regulating and enforcing gas pipeline transportation and
pipeline facilities, including development and administration
of a state pipeline safety program.
2)Establishes the State Fire Marshal as the exclusive safety
regulatory and enforcement authority over intrastate hazardous
liquid pipelines.
3)Requires Pacific Gas and Electric and Sempra (San Diego Gas
and Electric and Southern California Gas) to develop and
implement service and safety plans.
4)Specifies minimum requirements of the service and safety plans
in order to protect the public and gas corporation employees:
a) Identify and minimize hazards and risks;
SB 705
Page 2
b) Identify safety systems to eliminate or minimize
hazards, including documentation;
c) Provide adequate storage and transportation capacity;
d) Provide patrol and inspection;
e) Provide systems controls with respect to both equipment
and personnel procedures;
f) Provide timely response to reported leaks or other
hazard conditions;
g) Provide protocols for determining maximum allowable
operating pressure on relevant pipeline segments, including
documentation;
h) Specifies that the term 'gas corporation workforce'
includes the employees of a gas corporation and the
employees of independent contractor while working under
contract with the gas corporation
i) Preparation to minimize damage and respond to
earthquakes and other major events;
j) Meet or exceed minimum standards for safe design,
construction, installation, and maintenance of gas
transmission and distribution facilities;
aa) Ensure adequate number of trained workforce to implement
the service and safety plan; and,
bb) Additional matters PUC determines should be included.
1)Provides that meaningful participation by employees in
development and implementation of safety plans.
2)Requires PUC to review and accept, modify, or reject the
service and safety plans by December 31, 2012, require
periodic updates to the plans, and provide additional reviews
at regular intervals.
3)Reorganizes existing statute governing natural gas service.
4)Allows just and reasonable cost recovery in rates.
SB 705
Page 3
EXISTING LAW : State (PUC and the Office of the State Fire
Marshal) and federal (U.S. Department of Transportation)
regulators are tasked with ensuring that pipeline and hazardous
materials operators have risk management programs in place, that
those programs are designed in conformance with state and
federal laws, that the programs are effective in achieving
safety for the public and the employees of the operator, and
that the entire system of achieving safety continues to improve
itself.
PUC enforces statutes and rules (General Order 112-E) which
establish, in addition to the Federal Pipeline Safety
Regulations, minimum requirements for the design, construction,
quality of materials, locations, testing, operations and
maintenance of facilities used in the gathering, transmission
and distribution of gas and in liquefied natural gas facilities
to safeguard life or limb, health, property and public welfare
and to provide that adequate service will be maintained by gas
utilities operating under the jurisdiction of the commission.
PUC conducts compliance inspections, accident investigations,
reviews utilities' reports and records, conducts construction
inspections, conducts special studies, and takes action in
response to complaints and inquiries from the public on issues
regarding gas pipeline and electric safety. PUC also conducts
audits and inspections of gas facilities owned and operated by
mobile home parks, and audits and inspections of underground
propane gas distributions systems.
PUC has responsibility to ensure compliance with federal
pipeline management standards for over 11,000 miles of
transmission pipeline and almost 2,350 miles of transmission
pipeline in high consequence areas.
The Office of the State Fire Marshal (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 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. All
spills, ruptures, fires, or similar incidents are responded to
immediately; all such accidents are investigated for cause.
Hazardous liquid pipelines are also periodically tested for
SB 705
Page 4
integrity using procedures approved by SFM. The program has
been certified by the federal government since 1981. SFM also
maintains Geographic Information Systems (GIS)-based maps of all
regulated pipelines and has been named as a state repository for
pipeline data by the National Pipeline Mapping System (NPMS).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, PUC will incur additional costs to review the safety
plans and to facilitate ongoing input from employees in the
development and implementation of the plans. Given the brief
timeframe to act on the initial plans and the ongoing nature of
these tasks, the commission will require three engineer
positions for the first year at a cost of $350,000, and two
positions annually thereafter at a cost of about $240,000.
COMMENTS : According to the author, this bill requires a safety
plan process for each utility overseen by and subject to the
approval of PUC and restricts the amount spent by utilities on
safety services that can be charged to ratepayers.
On September 9, 2010, a portion of a 30-inch diameter
underground natural gas transmission system of Pacific Gas and
Electric Company (PG&E) suddenly ruptured. The pipeline was
located under the asphalt paving at the intersection of Glenview
Drive and Earl Avenue in a residential area of San Bruno,
California. An explosion ensued, fueled by blowing natural gas.
The explosion and fire resulted in the loss of eight lives and
the total destruction of 38 homes. Seventy homes sustained
damage and eighteen homes adjacent to the destroyed dwellings
were left uninhabitable.
State and municipal authorities have safety agreements and/or
certifications with the U.S. Department of Transportation for
regulating intrastate and interstate pipelines. Federal law
does not specifically name responsible agencies at the state and
local level for implementing federal law - it allows the
Department of Transportation to enter into agreements or receive
certifications from state and local authorities. Several
publicly owned utilities own and operate pipelines, including
Palo Alto, Sacramento Municipal Utility District, and Los
Angeles Department of Water and Power. These publicly owned
utilities are not subject to the provisions of this bill,
however their individual boards require they have safety plans.
SB 705
Page 5
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
FN: 0002540