Today's Law As Amended


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AB-478 Gas Corporations: fines and penalties.(2011-2012)



As Amends the Law Today


SECTION 1.
 The Legislature finds and declares all of the following:
(a) On September 9, 2010, a natural gas transmission pipeline owned and operated by Pacific Gas and Electric Company exploded under the intersection of Earl Avenue and Glenview Drive in the Crestmoor neighborhood of San Bruno, killing eight people, injuring more than 50, and destroying 38 homes.
(b) The explosion was in a section of pipeline thought by Pacific Gas and Electric Company to be seamless. Inspection by the National Transportation Safety Board (NTSB) determined that the pipe in fact had a double-submerged arc weld.
(c) The revelation that the utility did not know such basic and vital information as seam type for this pipeline led the NTSB to issue an urgent recommendation that Pacific Gas and Electric Company find traceable, verifiable, and complete records for all pipe in class 3 and 4 locations, and in class 1 and 2 high consequence areas, that had not had their maximum allowable operating pressures established through prior hydrostatic testing. The NTSB recommended that, should the utility not be able to comply with this recommendation, it establish a maximum allowable operating pressure through hydrostatic pressure testing.
(d) The Public Utilities Commission (PUC), in Decision 11-06-017, ordered all California gas corporations to develop a plan to implement these NTSB recommendations for all transmission pipelines. Pacific Gas and Electric Company’s plan for Phase 1, which addressed pipelines in high-consequence areas, proposed to incur expenses of seven hundred fifty million five hundred thousand dollars ($750,500,000) and to make capital expenditures of one million four hundred thirty-three thousand dollars ($1,433,000) between 2011 and 2013. Pacific Gas and Electric Company officials have stated that Phase 2 could cost between six billion eight hundred million dollars ($6,800,000,000) and nine billion dollars ($9,000,000,000).
(e) Pacific Gas and Electric Company is currently under investigation in three PUC penalty proceedings related to the pipeline accident: Investigation 11-02-016, Investigation 11-11-009, and Investigation 12-01-007. The utility projects that fines in these penalty proceedings will likely exceed two hundred million dollars ($200,000,000).
(f) Currently, all fines in PUC penalty proceedings are required by statute to be deposited into the state’s General Fund.
(g) Prior to the current investigations involving the San Bruno pipeline explosion, the largest safety-related fine the PUC had levied was a thirty-eight million dollar ($38,000,000) fine for a fatal natural gas distribution pipeline explosion on Christmas Eve of 2008 in Rancho Cordova.
(h) Given the unprecedented amount of pipeline investment that Pacific Gas and Electric Company is proposing to make in the aftermath of the San Bruno explosion and the unprecedented size of the likely fine that the utility faces as a result of the explosion, any fines assessed to the utility as a result of the explosion should go toward offsetting the costs that the utility’s ratepayers would otherwise bear for safety upgrades to the utility’s pipeline system.

SEC. 2.

 Section 2104 of the Public Utilities Code, as amended by Section 7 of Chapter 552 of the Statutes of 2008, is amended to read:

2104.
 (a) Except as provided by Sections 2100 and 2107.5, and in addition to the remedies provided in Sections 688.020 and 688.030 of the Code of Civil Procedure,  actions to recover penalties under this part shall may  be brought in the name of the people of the State of California, in the superior court in and for the county, or city and county, in which the cause or some part thereof arose, or in which the corporation complained of has its principal place of business, or in which the person complained of resides. The action  action, if brought pursuant to this section,  shall be commenced and prosecuted to final judgment by the attorney or agent of the commission. All fines and penalties may be sued for and recovered. The commission may enjoin the sale of a public utility’s or common carrier’s assets to satisfy unpaid fines and penalties. The commission may use any of the remedies afforded to a creditor under the Uniform Voidable Transactions Fraudulent Transfer  Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code). Respondents who fraudulently transfer assets to avoid paying commission-imposed fines or penalties are subject to prosecution under Sections 154, 531, and 531a of the Penal Code. In all of these actions, the procedure and rules of evidence shall be the same as in ordinary civil actions, except for prosecutions under the Penal Code or as otherwise herein provided. All  Except as provided in Section 2104.5, all  fines and penalties recovered by the state in any action, together with the costs thereof, shall be paid into the State Treasury to the credit of the General Fund. Any action may be compromised or discontinued on application of the commission upon the terms the court approves and orders.
(b) This section shall become operative on January 1, 2014. remain in effect only until January 1, 2014, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2014, deletes or extends that date. 

SEC. 3.

 Section 2104 of the Public Utilities Code, as added by Section 8 of Chapter 552 of the Statutes of 2008, is amended to read:

2104.
 (a) Except as provided by Sections 2100 and 2107.5, actions to recover penalties under this part shall be brought in the name of the people of the State of California, in the superior court in and for the county, or city and county, in which the cause or some part thereof arose, or in which the corporation complained of has its principal place of business, or in which the person complained of resides. The action shall be commenced and prosecuted to final judgment by the attorney or agent of the commission. All fines and penalties may be sued for and recovered. The commission may enjoin the sale of a public utility’s or common carrier’s assets to satisfy unpaid fines and penalties. The commission may use any of the remedies afforded to a creditor under the Uniform Voidable Transactions Fraudulent Transfer  Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code). Respondents who fraudulently transfer assets to avoid paying commission-imposed fines or penalties are subject to prosecution under Sections 154, 531, and 531a of the Penal Code. In all of these actions, the procedure and rules of evidence shall be the same as in ordinary civil actions, except for prosecutions under the Penal Code or as otherwise herein provided. All  Except as provided in Section 2104.5, all  fines and penalties recovered by the state in any action, together with the costs thereof, shall be paid into the State Treasury to the credit of the General Fund. Any action may be compromised or discontinued on application of the commission upon the terms the court approves and orders.
(b) This section shall become operative on January 1, 2014.

SEC. 4.

 Section 2104.5 of the Public Utilities Code is amended to read:

2104.5.
 (a)  Any penalty for violation of any provision of this act, or of any rule, regulation, general order, or order of the commission, involving safety standards for pipeline facilities or the transportation of gas in the State of California California,  may be compromised by the commission. In determining the amount of such the  penalty, or the amount agreed upon in compromise, the appropriateness of such the  penalty to the size of the business of the person charged, the gravity of the violation, and the good faith of the person charged in attempting to achieve compliance, after notification of a violation, shall be considered. The amount of any such  penalty, when finally determined, or the amount agreed upon in compromise, may be recovered in a civil action in the name of the People people  of the State of California in the superior court in and for the county, or city and county in which the cause or some part thereof arose, or in which the corporation complained of has its principal place of business or the person complained of resides. In any such action, all penalties incurred, or amounts agreed upon in compromise for violations committed up to the time of commencing the action action,  may be sued for and recovered. In all such those  actions, the procedure and rules of evidence shall be the same as in ordinary civil actions, except as otherwise herein provided. All fines and penalties recovered by the state in any such  action, together with the costs thereof, shall be paid into the State Treasury to the credit of the General Fund. Fund, except upon order of the commission pursuant to subdivision (b). 
(b) The commission shall order that any fine or penalty levied against a gas corporation in Investigation 11-02-016, Investigation 11-11-009, or Investigation 12-01-007, be held in a separate account by the gas corporation to offset investments for pipeline replacement to be undertaken within the service territory of the corporation and that would otherwise be recovered from the corporation’s ratepayers.
(c) The commission shall set a rate of interest for an account established pursuant to subdivision (b).
(d) Any moneys ordered by the commission to be held in a separate account pursuant to subdivision (b) shall be used only for the purpose of offsetting investments by the gas corporation for pipeline replacement to be undertaken within the service territory of the corporation, and only if the investments would otherwise be recovered in rates from the utility’s ratepayers. Any moneys not used for these purposes shall, five years after the date of their deposit into the trust account, be paid to the General Fund.
SEC. 5.
 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to address and resolve significant financial issues presented by ongoing proceedings before the Public Utilities Commission, it is necessary for this act to take effect immediately.