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California Regulators Face More Scrutiny on Pipe Safety

California regulators are facing increased scrutiny on their response to stepping up natural gas pipeline safety oversight following a 2010 explosion in San Bruno on a Pacific Gas and Electric Co. (PG&E) line.

The stepped-up review by the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) has been stirred in part by San Bruno Mayor Jim Ruane and Rep. Jackie Speier (D-CA), who have criticized the way the California Public Utilities Commission (CPUC) handled the aftermath of the PG&E explosion, which killed eight people.

There also has been an internal dispute among CPUC lawyers that recently became public about a CPUC safety staff recommendation for PG&E to pay a $2.25 billion penalty (see NGI, July 1). CPUC's Consumer Safety and Enforcement Division recently amended the proposed penalty to include a $300 million payment by PG&E to the state's General Fund (see NGI, July 22).

Speier said earlier in July that PHMSA's administrator pledged to review events at the CPUC and the "overall capacity of the CPUC to fulfill its duties under federal law." PHMSA would assure that the commission has the "technical and organizational strengths" to assure pipeline safety, she said.

Speier wrote in June to PHMSA Administrator Cynthia Quarterman alleging that the CPUC appeared to be "rife with conflicts of interest between its role as a guardian of public safety, its role as a rate-setter, and its role in ensuring the ongoing financial stability of the utility." Quarterman responded in mid-July, indicating that PHMSA has requested a detailed response from CPUC President Michael Peevey.

Coincidentally, an annual PHMSA audit of the CPUC was scheduled this month, and Quarterman told Speier that as part of that process the agency would "evaluate what actions or proceedings against the CPUC are warranted." Quarterman asked for details on what the CPUC has done to respond to various federal and state reviews about San Bruno; a response was due last Friday (July 26).

"We look forward to assuring PHMSA that the CPUC handles its responsibilities with integrity and lawfulness, and that our enforcement cases against PG&E are well underway, with an amended staff recommendation," a CPUC spokesperson told NGI on Wednesday.

"The bottom line is that Californians are safer now than before the tragedy in San Bruno, and the CPUC is firmly on a course to ensure that its safety programs and culture are a model for the nation."

Ruane also continues to pressure CPUC and has called for the state attorney general to investigate the regulatory panel. He said San Bruno is "heartened that the federal government has heard our concerns, and we are hopeful about this first step to improving [California's] ability to regulate pipeline infrastructure and create a new regulatory model for the state."

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