House Subcommittee to Hold Oversight Hearing on PHMSA Rulemakings. 

On April 14, the House Transportation and Infrastructure Committee’s Subcommittee on Railroads, Pipelines, and Hazardous Materials will hold an oversight hearing to discuss the status of rail, pipeline safety, and hazardous materials rulemaking proceedings pending before the Pipeline and Hazardous Materials Safety Administration (PHMSA).  The House Transportation and Infrastructure Committee is expected to play a lead role in the reauthorization of the Pipeline Safety Act this year, and this hearing may inform legislative priorities and issues.

Modified Proposed Decisions Issued in PG&E Investigations before CPUC.

On March 13, two California Public Utilities Commission (CPUC) Administrative Law Judges (ALJ) issued modified proposed decisions in three ongoing investigation proceedings involving the September 2010 rupture on Pacific Gas and Electric’s (PG&E) gas transmission line in San Bruno, California.  The March 13 proposed decisions modify decisions issued on September 2, 2014, finding that PG&E committed numerous violations of federal and state pipeline safety requirements, industry consensus standards, and the company’s internal procedures in connection with the construction, operation, and maintenance of the gas transmission line that ruptured.  Also on March 13, CPUC President Picker issued a “Decision Different” from the ALJ proposed decisions issued on March 13 and September 2, 2014.

The ALJs’ modified decisions relate to records; class location; construction; operation and maintenance; and the fines and remedies to be imposed with respect to the alleged violations.  Comments will not be accepted on the ALJs’ modified decisions, which will now be considered by the full CPUC.

• Records (Investigation 11-02-16).  The ALJ’s Modified Decision rejects PG&E’s arguments on appeal and reaffirms previous findings related to PG&E’s (1) recordkeeping for its gas transmission pipeline; and (2) violations of the CPUC’s procedural rules related to PG&E’s responses to the CPUC’s requests for information.
• Class Location (Investigation 11-11-009).  The ALJ’s Modified Decision rejects PG&E’s arguments on appeal, but reduces the total number of violations from 3,643 to 2,360 to account for an arithmetic error in the September 2, 2014 decision. 
• Construction, Operation and Maintenance (Investigation 12-01-007).  The ALJ’s Modified Decision rejects PG&E’s appeal, and reiterates previous findings that PG&E did not comply with industry consensus standards and federal and state requirements applicable to the construction, operation, and maintenance of the ruptured gas transmission line.
• Fines and Remedies.  The ALJs’ joint Modified Decision would retain the proposed $1.4 billion penalty, but consistent with President Picker’s Decision Different (see below), would require that $400 million of expenses associated with PG&E’s Pipeline Modernization Program be refunded to ratepayers instead of recorded as a reduction in the company’s revenue requirement.  The Modified Decision would not modify the proposed $950 million penalty to be paid to the state’s General Fund.

President Picker’s “Decision Different” would:  (1) increase the total amount of remedies and penalties from $1.4 billion to $1.6 billion; (2) increase from $0 to $850 million the amount PG&E shareholders would pay toward future gas infrastructure improvements ; (3) reduce the amount PG&E would pay to the state’s General Fund from $950 million to $300 million; and (4) require that $400 million of expenses associated with PG&E’s Pipeline Modernization Plan be refunded to ratepayers, rather than recorded as a reduction in the company’s revenue requirement.  Comments on President Picker’s Decision Different are due April 1.

PHMSA Updates

PHMSA Rulemaking Update.  The table below provides information on the status of PHMSA’s rulemaking initiatives as reported in the Department of Transportation’s (DOT) March Significant Rulemaking Report and by the Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA) in the Fall 2014 Unified Regulatory Agenda.  Note that the DOT and OIRA timeframes often are inconsistent.  The DOT report is updated monthly while OIRA’s regulatory agenda is updated semi-annually. 

Updates from Other Federal Agencies

NTSB proposes to reorganize its rules of practice.  On March 19, the NTSB published a notice of proposed rulemaking that would reorganize its rules of practice to improve clarity and ease of understanding.  The proposed amendments relate to the NTSB’s procedures for holding investigative hearings, various types of meetings, issuing reports, and responding to petitions for reconsideration.  Comments are due May 18.

NTSB Operations Group releases factual report on 2014 gas explosion in East Harlem.  On March 18, the NTSB released a Final Operations Group Factual Report describing the circumstances surrounding a gas distribution line leak and explosion that occurred in East Harlem, New York, in March 2014.  The NTSB expects to release a final report providing further analysis and an assessment of the incident’s probable cause at a later date.  The NTSB’s docket for this proceeding is here.

Select Regulatory and Legislative Updates from the States

(New or updated items are marked with an “*”)

ALABAMA

HB 61 (Greer):  This bill would increase the civil penalties for pipeline safety violations to conform with federal limits of $200,000 for each violation, not to exceed two million dollars for any related series of violations.  The bill was referred to the Committee on Public Safety and Homeland Security on March 3.

ARIZONA

HB 2259 (Gray):  On March 17, Governor Ducey signed legislation increasing the civil penalties for pipeline safety violations to match the federal limits of $200,000 for each violation, not to exceed two million dollars for any related series of violations. 

CALIFORNIA

*CPUC’s Safety and Enforcement Division (SED) issues pipeline safety citation to PG&E.  On March 20, the CPUC’s SED issued a $200,000 citation to PG&E for failing to timely file a safety-related condition report for a condition that PG&E had determined existed four months earlier.

*CPUC ALJ schedules workshop on MAOP.  On March 13, CPUC ALJ Bushey scheduled a workshop to be convened on May 11-12 to address the calculation of Maximum Allowable Operating Pressure (MAOP) of natural gas transmission systems in California under section 192.619 of PHMSA’s regulations.  Topics include calculating MAOP for pipe constructed before and after 1970, after uprating a pipeline, and after a class location change.

*CPUC releases independent assessment of gas safety and reliability programs.  On March 12, the CPUC released an assessment of the CPUC’s gas safety and reliability programs that had been prepared by consulting firm Crowe Horwath .  The CPUC requested the assessment in response to an Independent Review Panel recommendation following the 2010 San Bruno pipeline rupture.  The assessment identifies areas for improvement and provides 33 recommendations to address these and other challenges. 

*CPUC’s SED releases report and initiates proceeding to consider approaches to reducing methane leaks.  On March 18, the CPUC’s SED released a report entitled Survey of Natural Gas Leakage Abatement Best Practices that identifies best practices and new technologies in natural gas leak detection to reduce methane emissions.  The report finds that, for purposes of reducing greenhouse gas emissions, all methane leaks may be considered hazardous.  The report coincides with a new rulemaking proceeding established to consider comments on the report and to fulfill the requirement of S.B. 1371 (Leno 2014, now Chapter 525) to establish rules to reduce gas leaks from natural gas facilities.  Comments and reply comments are due April 1 and April 22, respectively.

*CPUC names new General Counsel.  On March 12, the CPUC announced that it has named Arocles Aguilar as its new General Counsel.  Ms. Aguilar previously served as the CPUC’s Assistant General Counsel from 1998 to 2012, and after a brief retirement, returned to CPUC as a Special Advisory Counsel in June 2013. 

SB 18 (Hill):  This bill would authorize the CPUC to require that the $1.4 billion fine proposed by CPUC administrative law judges against PG&E for violations relating to the 2010 San Bruno accident be held in a separate account and not deposited into the state’s General Fund.  Most of the funds would be used to offset investments in pipeline replacements in the company’s service territory that otherwise would be recovered from ratepayers.  A portion of the funds also would be allocated for an independent monitor to oversee the company’s pipeline operations and provide seed money for a pipeline safety trust that would advocate on behalf of utility consumers.  The bill was referred to the Committee on Energy, Utilities and Communication on January 15.  On February 4, the bill was amended to require that moneys collected as a result of citations issued to gas and electric corporations be deposited in the Safe Energy Infrastructure and Excavation Fund, which would be used to fund the California Underground Facilities Safe Excavation Authority.

CONNECTICUT

SB No. 369 (Frantz):  This bill would require the Department of Energy and Environmental Protection to conduct a study on property damage, environmental impacts, and public safety issues related to above-ground pipelines.  The bill was introduced and referred to the Joint Committee on the Environment on January 22.

IDAHO

HB 118:  This bill would establish the Damage Prevention Board to be funded by a fee imposed on owners of underground facilities that would be assessed each time an owner receives notification through the one-call system.  The Board would be authorized to investigate alleged violations and impose civil penalties.  The bill was referred to the Business Committee on February 13.

ILLINOIS

The Illinois Commerce Commission has proposed to amend its gas pipeline safety regulations to (1) incorporate by reference the federal pipeline safety rules in effect on October 1, 2014, and (2) require that owners and operators of gas pipeline facilities submit to the ICC plans, procedures, and programs required or necessary to implement the gas pipeline safety standards.  Comments on the proposed amendments were filed December 22, 2014.

KENTUCKY

HB 272 (Floyd):  On March 3, it was reported that Representative Floyd will not pursue a proposed bill that would have required the Kentucky Public Service Commission (KPSC) to seek certification from PHMSA to regulate intrastate hazardous liquid lines and act as an interstate agent on behalf of PHMSA.   The bill will be tabled for the remainder of this session of the Kentucky General Assembly, because of concerns about impacts on utilities.  Rep. Floyd plans to amend the bill on the House floor and discuss the amended version before the legislature convenes in 2016.  In addition to requiring the KPSC to seek certification from PHMSA, the proposed legislation would have created a pipeline safety fund using money generated from an annual pipeline safety assessment on pipeline operators transporting natural gas or hazardous liquids through Kentucky.   The funds would have been used to oversee a proposed spill response program, which would have required operators of intrastate and interstate pipelines to submit detailed spill response plans to the Kentucky Department of Environmental Protection and to establish a grant program to assist local governments with pipeline safety program costs.   The bill also would have imposed new reporting requirements, and would have authorized the state to require pipelines to post security deposits with the state. 

MINNESOTA

SF 1100 (Jensen):  This bill would expand existing oil and hazardous substance discharge preparedness requirements, currently applicable to railroads, to also apply to hazardous liquid pipeline facilities that transport more than 100,000 gallons of hazardous liquid per month.  Covered pipelines would be required to communicate annually with emergency responders; conduct at least one containment, recovery, and sensitive area protection drill every three years; submit initial prevention and response plans to the Pollution Control Agency by June 30, 2016; and update them every three years.  This bill was referred to the Transportation and Public Safety Committee on February 23.

NEW JERSEY

A 2711 (Handlin):  This bill proposes to create the New Jersey Taskforce on Underground Utility Lines for the purpose of studying issues related to placing overhead utilities underground.  The bill was referred to the Assembly Committee on Telecommunications and Utilities on February 24, 2014.

S 2422 (Greenstein & Bateman):  This bill would require natural gas pipeline utilities to repair or replace leaking natural gas pipelines within time frames to be established by the Dept. of Environmental Protection (DEP).  DEP, in consultation with the Board of Public Utilities, would adopt implementing regulations to prioritize time frames for the repair and replacement of pipelines based on the severity of leaks, best practices and repair standards, and de minimis exceptions to the repair and replacement requirements.  The penalties for noncompliance would be those set forth in the Air Pollution Control Act (1954).  The bill was referred to the Senate Economic Growth Committee on September 18, 2014.

A 4260 (Eustace):  This bill is the Assembly version of S 2422, currently pending in the Senate.  The Assembly bill was introduced and referred to the Telecommunications and Utilities Committee on March 2.

NEW MEXICO

HB 33 (McCamley):  This bill proposes to increase the civil penalties for pipeline safety violations to match limits in the federal Pipeline Safety Act.  The bill was introduced on December 15, 2014 and referred to the House Energy, Environmental, and Natural Resources Committee on February 3.

NEW YORK

AB 5083 (Paulin):  This bill would amend the Public Service Law to require (1) the Department of Public Service to establish a uniform system for classifying gas leaks; (2) gas companies to annually report the location, classification, date, and date of repair of each leak; and (3) the Department to promulgate regulations to implement the classification system and oversee annual reporting.  The bill also would require the New York Public Service Commission to determine whether New York should require winter surveillance of cast or ductile iron pipelines.  The bill was referred to the Corporations, Authorities, and Commissions Committee on February 12.

AB 730 (Lentol):  This bill would require that the Department of Environmental Conservation, prior to the issuance or renewal of a major facility license, require applicants to demonstrate implementation of state and federal regulations for prompt detection of petroleum discharges from tanks and connecting pipelines, including installation of proper detection equipment.  The bill was introduced and referred to the Standing Committee on Environmental Conservation on January 7.

AB 2547 (Rodriguez):  This bill would require operators of gas distribution and gas utility facilities to accelerate the repair, rehabilitation, and replacement of pipeline or equipment that is leaking, may pose a high risk of leaks, or may no longer be fit for service.  The bill also would require the New York Public Service Commission to adopt a cost recovery program, develop timelines prioritizing the repair of all leaks based on severity, require the use of best available technologies to detect gas leaks, adopt standard methodology for calculating and reporting lost and unaccounted for (LAUF) gas, and adopt limits on cost recovery for LAUF gas.  The bill was referred to the Energy Committee on January 16.

AB 2648 (Pretlow):  This bill would amend the Public Service Law to define “excavation” as including the use of hand tools, and would require excavators to request mark outs for excavation using hand tools through the One-Call notification system.   Tilling soil for agricultural purposes, routine residential or right-of-way maintenance, and landscaping activities are exempt provided the activity is performed with non-powered equipment.  The bill also would amend the definition of “underground facilities” to include all facilities that an operator uses to provide services or materials, regardless of whether the operator installed the facility.  The bill was referred to the Corporations, Authorities, and Commissions Committee on January 20.

AB 2777 (Brennan):  This bill would require gas corporations to file an annual gas safety report with the Department of Public Service.  The report would include a description of the strategic planning and decision-making methodology employed in prioritizing pipeline replacement projects, the corporation’s operations and maintenance activities relating to gas safety, the corporation’s intrastate inspections policies, and a list of pipeline replacement projects.  The Department must report deficiencies in the gas corporation’s project prioritization or administration of pipeline infrastructure to the Public Service Commission, which could order reasonable improvements.  This bill was referred to the Corporations, Authorities, and Commissions Committee on January 20.  On March 24, the bill was passed by the Assembly and referred to the Senate Committee on Corporations, Authorities, and Commissions.

NORTH DAKOTA

On November 10, 2014, the North Dakota Public Service Commission (PSC) issued a notice that it is proposing to amend its pipeline safety regulations to include PHMSA’s gas and hazardous liquid safety regulatory requirements adopted through November 6, 2014.  The PSC convened a public hearing on the proposed amendments on December 15, 2014.  On January 7, the PSC issued an Order submitting the proposed rules to the Attorney General.  The Order notes that, although the PSC has the authority to regulate the safety of the state’s hazardous liquid pipelines, it currently does not have a certified hazardous liquid safety program with PHMSA.

SB 2374 (Wardner):  This bill would (1) require operators of gas and liquid gathering lines (including salt water pipelines) to secure a permit from the North Dakota PSC prior to installing a pipeline; (2) direct the PSC to require the installation of flow meters, automatic shutoff valves, and pressure cutoff switches on all new gas or liquid gathering pipelines; (3) require operators to post a reasonable bond; and (4) require legislative management (a group of legislators that meet between legislative sessions) to study technology that may be used to detect or prevent pipeline leaks and present findings and recommendation so the legislative assembly.  The bill was introduced on January 26, and on February 6, the proposed bill was amended to require underground crude oil or produced water gathering pipelines to secure a permit, file engineering design drawings and independent inspection certifications, and to allow the PSC to perform inspections and review records.  On February 19, the Senate passed the bill, and on February 25, the bill was introduced in the House and referred to the Energy and Natural Resources Committee.  A hearing was held on March 6. 

OKLAHOMA

*Oklahoma Corporation Commission adopts rules relating to damage prevention and enforcement.  On March 15, the Oklahoma Corporation Commission (OCC) adopted proposed rules that provide the OCC with authority to enforce violations of the Oklahoma Underground Facilities Damage Prevention Act with respect to pipelines.  The rules also require excavators to immediately notify local emergency responders in the event of an uncontrolled or unintentional release of flammable, toxic or corrosive gas or liquid from a pipeline or pipeline system.  The rules were submitted to the Governor and the Oklahoma Legislature for approval.

OREGON

HB 3410 (Helm):  This bill would establish a nine-member Task Force on Secure Pipelines, which would study and report on state and federal safety standards, new technologies for safer pipeline transportation of petroleum, natural gas, and other flammable substances, costs related to such technologies, and incentives to encourage the use of such technologies to construct or retrofit pipelines and related facilities.  The Task Force would be required to report its findings by September 15, 2016.  The bill was introduced on February 27 and is awaiting committee referral. 

PENNSYLVANIA

*SB 561 (Rafferty):  This bill would amend the Gas and Hazardous Liquids Act to replace the Pennsylvania Public Utility Commission with the Department of Transportation of the Commonwealth as the entity with safety jurisdiction over pipelines.  The bill also would require the newly created Department to seek certification from PHMSA to enforce pipeline safety requirements for intrastate gas and hazardous liquid pipelines, and to act as an interstate inspection agent on behalf of PHMSA.  The bill was referred to the Consumer Protection and Professional Licensure Committee on March 6. 

HB 445 (Baker):  This bill would amend the Underground Utility Line Protection Law to impose additional duties on facility owners, including submitting reports of alleged excavation damage violations, to establish an annual fee for excavators requesting information from the One Call System, and to create a Damage Prevention Committee to review reports of alleged violations and issue informal determinations imposing administrative penalties.  The bill was referred to the Consumer Affairs Committee on February 11.

SB 418:  This bill would amend the Underground Utility Protection Law to require the exclusive use of steel products produced in the United States for the construction, alteration, repair, improvement, and maintenance of gathering lines.  The bill was referred to the Consumer Protection and Professional Licensure Committee on February 12.

SB 367 (White):  This bill would amend the definition of “line” and “facility” in the Underground Utility Protection Law to include gathering lines used to gather natural gas from unconventional gas wells.  The effect of this legislation is to make these lines in Pennsylvania subject to the state’s One-Call system.  This bill was referred to the Consumer Protection and Professional Licensure Committee on January 30.

RHODE ISLAND

*HB 5959 (Azzinaro):  This bill would provide the Division of Public Utilities and Carriers with the authority to adopt safety standards contained in the federal Pipeline Safety Act.  The bill was referred to the House Corporations Committee on March 20.

UTAH

*HB 31 (Handy):  On March 24, Utah enacted legislation increasing civil penalties for violations of Utah’s Public Utilities Code governing intrastate pipeline transportation to $100,000 per violation for each day the violation occurs, not to exceed $1 million for any related series of violations.  This bill also requires operators to maintain an inspection and maintenance plan for each pipeline facility and to make it available to the Utah Public Service Commission upon request. 

WEST VIRGINA

HB 3010 (Fleischauer):  This bill would reenact and amend the state’s one-call legislation to modify the definition of excavate to include routine road maintenance by state, county, and municipal employees, modify the definition of underground facility to include those regulated gas gathering lines subject to federal damage prevention requirements in 49 C.F.R. § 192.614, and to exclude nonproducing, pre-1990 gas and oil wells for which location records do not exist.  The bill also would allow owners and operators of underground facilities not subject to the one-call requirements to voluntarily opt in to the one-call system.  The bill was referred to the Committee on the Judiciary on February 24.  

WISCONSIN

The Wisconsin Public Service Commission issued a proposed order that would amend its pipeline safety regulations to incorporate the latest federal safety standards in 49 C.F.R. Parts 192, 193, and 199.  The proposed order was submitted to the both Houses of the Wisconsin legislature on December 14, 2014.  It was referred to the Senate Committee on Workforce Development, Public Works, and Military Affairs on January 8, and to the Assembly Committee on Energy and Utilities on January 20.

To download a full text PDF, which includes Dates of Interest, upcoming PHMSA State Seminars, and State Specific Association Meetings, please click here.