Bill Text: CA SB1371 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Natural gas: leakage abatement.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Passed) 2014-09-21 - Chaptered by Secretary of State. Chapter 525, Statutes of 2014. [SB1371 Detail]

Download: California-2013-SB1371-Amended.html

---

BILL NUMBER: SB 1371	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 7, 2014
	AMENDED IN SENATE  APRIL 10, 2014
	AMENDED IN SENATE  MARCH 25, 2014

INTRODUCED BY   Senator Leno
   (Principal coauthor: Assembly Member Mullin)
   (Coauthor: Senator Hill)

                        FEBRUARY 21, 2014

   An act to add Article 3 (commencing with Section 975) to Chapter
4.5 of Part 1 of Division 1 of the Public Utilities Code, relating to
natural gas.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1371, as amended, Leno. Natural gas: leakage abatement.
   The California Constitution establishes the Public Utilities
Commission with regulatory authority over public utilities,
authorizes the commission to establish its own procedures, subject to
statutory limitations or directions and constitutional requirements
of due process, and authorizes the commission to fix rates and
establish rules for all public utilities, subject to control by the
Legislature.
   The Natural Gas Pipeline Safety Act of 2011, within the Public
Utilities Act, designates the commission as the state authority
responsible for regulating and enforcing intrastate gas pipeline
transportation and pipeline facilities pursuant to federal law,
including the development, submission, and administration of a state
pipeline safety program certification for natural gas pipelines.
   The California Global  Warming  Solutions Act of 2006
requires the State Air Resources Board to adopt regulations to
require the reporting and verification of emissions of greenhouse
gases and to monitor and enforce compliance with the reporting and
verification program, and requires the state board to adopt a
statewide greenhouse gas emissions limit equivalent to the statewide
greenhouse gas emissions level in 1990, to be achieved by 2020.
   This bill would require the commission to adopt rules and
procedures governing the operation, maintenance, repair, and
replacement of  those  commission-regulated gas pipeline
facilities  that are intrastate transmission and distribution
  lines  to minimize leaks as a hazard to be mitigated
pursuant to the Natural Gas Pipeline Safety Act of 2011 and to reduce
emissions of natural gas from  commission-regulated gas
pipeline   those  facilities to the maximum extent
feasible in order to advance the state's goals in reducing emissions
of greenhouse gases pursuant to the California Global Warming
Solutions Act of 2006. The bill would require the commission to
commence a proceeding by January 15, 2015, and to adopt rules and
procedures not later than December 31, 2015. The bill would require
the commission to consult with the state board and those other state
and federal entities that the commission determines have regulatory
roles of relevance to the rules and procedures under consideration.
The bill would require that the rules and procedures provide for the
 maximum technologically feasible and  cost-effective
avoidance, reduction, and repair of leaks in  those 
commission-regulated gas pipeline facilities  that are intrastate
transmission and distribution   lines  within a
reasonable time after  discovery, but require that leaks
discovered in close proximity to residential and commercial buildings
be repaired as soon as reasonably possible after discovery,
consistent with the goals of reducing the risk of injury, loss of
life, property damage, and air pollution.   discovery.
 The bill would require the rules and procedures to provide for
the ranking, by volume, of leaks recorded by each
commission-regulated gas pipeline facility  that is an intrastate
transmission or distribution line  and require the
implementation of programs that provide for the ongoing repair of
leaks that are in the top 20% of gas volumes leaked on an annual
basis. The bill would require that the rules and procedures evaluate
the operations, maintenance, and repair practices of 
commission-regulated gas pipeline   those 
facilities to determine whether existing practices are effective at
achieving the goals of the bill and to determine whether alternative
practices may be more effective at achieving the goals of the bill.
The bill would require that the rules and procedures establish and
require the use of best practices for leak surveys, patrols, leak
survey technology, leak prevention, and leak reduction. The bill
would require the rules and procedures to establish protocols and
procedures for the development and use of metrics to quantify the
volume of emissions from leaking components, and for evaluating and
tracking leaks, both geographically and over time, so that operators,
the commission, and the public have accurate information about the
number and severity of leaks and about the quantity of gas that is
emitted to the atmosphere over time. The bill would require that the
rules and procedures, to the extent feasible, require the owner of
each commission-regulated gas pipeline facility  that is an
intrastate transmission or distribution line  to calculate and
report to the commission a baseline systemwide leak rate, to
periodically update that systemwide leak rate calculation, and to
annually report measures that will be taken in the following year to
reduce the systemwide leak rate to achieve the goals of the bill. The
bill would require that the commission consider  whether the
costs of compliance with the adopted rules and procedures are
commensurate with the short- and long-term benefits resulting from
reducing leaks and emissions and provide for cost recovery in rates
charged to their customers by a gas corporation,  
specified topics in a manner  consistent with the commission's
existing ratemaking procedures and authority to establish just and
reasonable rates.
   Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the
commission is a crime.
   Because the provisions of this bill would be a part of the act and
because a violation of an order or decision of the commission
implementing its requirements would be a crime, the bill would impose
a state-mandated local program by creating a new crime.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Article 3 (commencing with Section 975) is added to
Chapter 4.5 of Part 1 of Division 1 of the Public Utilities Code, to
read:

      Article 3.  Methane Leakage Abatement


   975.  The Legislature finds and declares all of the following:
   (a) The Legislature has established that safety of the natural gas
pipeline infrastructure in California is a priority for the Public
Utilities Commission and gas corporations, and nothing in this
article shall compromise or deprioritize safety as a top
consideration.
   (b) It is undisputed that natural gas pipelines and infrastructure
in California leak natural gas. The incidence of natural gas leaks
and their repair is considered by the industry and regulators to be a
significant indicator of pipeline integrity and safety.
   (c) The Legislature has established a policy goal to significantly
reduce emissions of greenhouse gases in California.
   (d) There is a growing awareness of the potency of methane, the
primary component of natural gas, as a greenhouse gas. The
Intergovernmental Panel on Climate Change estimates that the global
warming potential of methane is  28 times that of carbon dioxide
over a 100-year time horizon and  84 times that of carbon
dioxide over a 20-year time horizon. There is also a growing
awareness that climate change impacts impose high social costs,
including impacts upon the public health and economy.
   (e) Reducing methane emissions by promptly and effectively
repairing or replacing the pipes and associated infrastructure that
is responsible for these leaks advances both policy goals of natural
gas pipeline safety and integrity and reducing emissions of
greenhouse gases.
   (f) Existing federal and state rules and regulations pertaining to
the natural gas transmission and distribution system and associated
infrastructure were not developed for the purpose of preventing the
climate change impacts from leaks of natural gas.
   (g) Examining the methods used by gas corporations under existing
federal and state rules to conduct and schedule leak repair and
prevention based on the implications of these practices with respect
to emissions of greenhouse gases will enable a more thorough
evaluation of whether existing practices are commensurate with
California's goals for reducing emissions of greenhouse gases.
   (h) Reducing leaks and repairing pipelines and associated
infrastructure in California provides significant employment
opportunities for California residents and for domestic fabricators
of high quality pipeline materials and other equipment associated
with finding and fixing leaks.
   (i) Providing just and reasonable rate revenues for gas
corporations to find, categorize, and repair leaks promptly when
discovered, including employing an adequate workforce, is in the
public interest, and promotes the interests of customers and the
public.
   976.  (a) For purposes of this chapter, "commission-regulated gas
pipeline facility" has the same meaning as defined in Section 950.
   (b) The commission shall adopt rules and procedures governing the
operation, maintenance, repair, and replacement of  those 
commission-regulated gas pipeline facilities  that are intrastate
transmission and distribution lines, as described in paragraphs (1)
and (2) of subdivision (a) of Section 950,  to achieve both of
the following:
   (1) Minimize leaks as a hazard to be mitigated pursuant to
paragraph (1) of subdivision (d) of Section 961.
   (2) While giving due consideration to the cost considerations of
Section 977, reduce emissions of natural gas from  those 
commission-regulated gas pipeline facilities  that are intrastate
transmission and distribution lines  to the maximum extent
feasible in order to advance the state's goals in reducing emissions
of greenhouse gases pursuant to the California Global Warming
Solutions Act of 2006 (Division 25.5 (commencing with Section 38500)
of the Health and Safety Code).
   (c) Not later than January 15, 2015, the commission shall commence
a proceeding to adopt rules and procedures for  intrastate
distribution lines and intrastate transmission lines  
those commission-regulated pipeline facilities that are intrastate
transmission and distribution lines  , as respectively described
in paragraphs (1) and (2) of subdivision (a) of Section 950, to
achieve the goals of subdivision (b). The commission shall consult
with the State Air Resources Board and those other state and federal
entities that the commission determines have regulatory roles of
relevance to the rules and procedures under consideration. The
commission shall adopt rules and procedures not later than December
31, 2015.
   (d) The rules and procedures adopted pursuant to subdivision (c)
shall accomplish all of the following:
   (1) Provide for the  maximum technologically feasible and
 cost-effective avoidance, reduction, and repair of leaks in
 those  commission-regulated gas pipeline facilities 
that are intrastate transmission and distribution   lines
 within a reasonable time after discovery, consistent with
 eliminating hazards and reducing emissions  
the California Global Warming Solutions Act of 2006 (Division 25.5
(commencing with Section 38500) of the Health and Safety Code) 
to achieve the goals in subdivision (b).  Cost-effectiveness
criteria used to determine leak avoidance, reduction, and repair
requirements pursuant to this paragraph shall take into account
societal and public costs associated with climate change and air
pollution, including peer-reviewed estimates of the social costs of
emissions of greenhouse gases.  
   (2) As determined by the commission, provide for the repair of any
leaks discovered in close proximity to residential and commercial
buildings as soon as reasonably possible after discovery, consistent
with the goals of reducing the risk of injury, loss of life, property
damage, and air pollution, including the climate change potential
associated with methane emissions.  
   (2) Provide for the repair of leaks as soon as reasonably possible
after discovery, consistent with the goals of reducing air pollution
and the climate change impacts of methane emissions. 
   (3) Commensurate with a goal of reducing systemwide emissions of
methane, provide for a ranking, by volume, of leaks recorded by each
commission-regulated gas pipeline facility  that is an intrastate
transmission or distribution line  and require the
implementation of programs that, at a minimum, provide for the
ongoing repair of leaks that are in the top 20 percent of gas volumes
leaked on an annual basis.
   (4) Evaluate the operations, maintenance, and repair practices of
 those  commission-regulated gas pipeline facilities 
that are intrastate transmission and distribution lines  to
determine whether existing practices are effective at achieving the
goals of subdivision (b) and determine whether alternative practices
may be more effective at achieving the goals of subdivision (b).
   (5) Establish and require the use of best practices for leak
surveys, patrols, leak survey technology, leak prevention, and leak
reduction. Best practices shall include evaluation of the quality of
materials and equipment from various sources, including foreign and
domestic third-party suppliers.
   (6) Establish protocols and procedures for the development and use
of metrics to quantify the volume of emissions from leaking
components, and for evaluating and tracking leaks, both
geographically and over time, so that operators, the commission, and
the public have accurate information about the number and severity of
leaks and about the quantity of natural gas that is emitted into the
atmosphere over time.
   (7) To the extent feasible, require the owner of each
commission-regulated gas pipeline facility  that is an intrastate
transmission or distribution line  to calculate and report to
the commission a baseline systemwide leak rate, along with any data
and computer models used in making that calculation, to periodically
update that systemwide leak rate calculation, and to annually report
on measures that will be taken in the following year to reduce the
systemwide leak rate to achieve the goals of subdivision (b).
   (e) The rules and procedures, including best practices and repair
standards, shall be incorporated into the safety plans required by
Section 961.
   (f) Consistent with subdivision (e) of Section 961, the commission
shall facilitate robust ongoing participation of the workforce of
gas corporations and those state and federal entities that have
regulatory roles of relevance in all aspects of the proceeding. 
Nothing in this section affects the commission's authority to
determine eligibility for intervenor compensation. 
   977.   As an element of the proceeding required by Section
976, the commission shall consider whether the costs of compliance
with the adopted rules and procedures are commensurate with the
short- and long-term benefits resulting from reducing leaks and
emissions and shall provide for cost recovery in rates charged to
their customers by a gas corporation, consistent  
Consistent  with the commission's existing ratemaking procedures
and authority to establish just and reasonable  rates. Cost
considerations shall include, but are not limited to,  
rates, the commission shall consider  all of the following:
   (a) Providing an adequate workforce to achieve the objectives of
reducing hazards and emissions from leaks, including leak avoidance,
reduction, and repair.
   (b) Directing the revenues from any allowance for lost or
unaccounted for natural gas to leak avoidance, reduction, and repair.

   (c) Providing guidance for treatment of expenditures as being
either an item of expense or a capital investment.
   (d) The impact on affordability of gas service for vulnerable
customers as a result of the incremental costs of compliance with the
adopted rules and procedures. 
   (e) The social and public costs associated with climate change and
air pollution, including peer-reviewed estimates of the social costs
of emissions of greenhouse gases. 
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.