Relates to the protection of underground facilities used in gas production and pipeline systems

Section 2 of this bill would amend PSL §25(3) to expand the circumstances in which a public utility is subject to penalties to include: (I) violations of an order or regulation adopted for the prevention of significant damage to real property if it is determined that the safety violation caused or constituted a contributing factor in bringing about damage in excess of $50,000 to real property; and (2) repeated gas pipeline safety violations that occur within a twenty-four month period. Section 2 of this bill would also increase the amount of the penalties that may be imposed for such violations. The authorized penalty would be the greater of a sum not to exceed $500,000 for each offense, or the maximum penalty required by PSL

§25(2) ($100,000 per day, with each day of a continuing violation deemed a separate and distinct offense). One million dollars would be the maximum penalty for certain repeated violations involving significant safety requirements within a 24-month period.

Section 3 of this bill provides that the bill would take effect immediately and apply to all violations occurring on or after such effective date.

Existing law

GBL Article 36 and PSL § 119-b establish requirements for protection of underground facilities during excavation or demolition activities, and direct the Commission to adopt rules and regulations to implement the requirements (16 NYCRR Part 753). The law requires operators of underground facilities to participate in "one-call" systems and to mark the location of their facilities; excavators are required to provide notice to the appropriate one-call center of proposed excavation and demolition activities and verify marked locations with test holes. These centers coordinate and distribute information about planned excavations. There are two such one-call centers in the State: The New York City/Long Island Center, covering excavation and demolition activities in those areas, and Dig Safely New York, covering the remainder of the State.

GBL §765 establishes a maximum penalty of $1,000 per violation and $7,500 for each succeeding violation arising out of the same activity within a two-month period. PSL §25(1) and (2) require a public utility to comply with provisions of the PSL and Commission orders, and authorize maximum civil penalties of $1 00,000 per day for noncompliance, with each day of a continuing violation deemed a separate and distinct offense. In addition, a penalty not to exceed $250,000 is authorized for a violation of a law, order or regulation adopted for the protection of human safety, provided that the violation caused or is a contributing factor in bringing about death or personal injury (PSL §25(3)). Further, a penalty not to exceed $500,009 is authorized for violation of a law, order or regulation designed to protect the overall reliability and continuity of electric service (PSL §25(4)). A penalty is recovered in a court action, initiated by the Commission (PSL §§24 and 25(5)). Penalty monies collected revert to the State (PSL §24).

The Commission exercises jurisdiction over safety in the provision of natural gas. It has adopted gas safety regulations, including requirements for the design, fabrication, installation, inspection, testing, operation and maintenance of gas transportation systems and related facilities (16 NYCRR Part 255). These regulations are consistent with federal gas safety rules. Public utilities that engage in the transportation of natural gas are required to comply with state and federal gas safety regulations.

Prior legislative history

In 2006, A.7097/S.4269, which included a proposal to increase PSL §25 penalties, passed the Assembly, but not the Senate. An earlier version of the portion of this bill relating to increased one-call penalties, A.8517, died in the Assembly in 2007 and, in an amended form, in both the Assembly and the Senate in 2008 (A.8517-A/S.3971). In 2008, increased penalties were also proposed in A.11409/S.7444, which did not pass the Assembly or the Senate.

Statement in support

This bill would increase the maximum penalty that the Commission could recommend for violations of one-call procedures, such as an operator's failure to mark out an underground line or an excavator's failure to comply with one-call requirements. The increased maximum penalty amounts would allow the State to assess more suitable and meaningful penalties for one-call violations.

Damage to natural gas or hazardous liquid facilities may result in death, injury or substantial property damage. Damage to telecommunications facilities may cause substantial service disruptions and losses to customers. There have been several instances of substantial property damage resulting from damages to natural gas lines. In one case, a major telephone company failed to notify the one-call center of a proposed excavation. During excavation activities, the company severed two conduits containing fiber optic lines and caused a major disruption of telephone service to 280,000 access lines. The Commission recommended the maximum penalty of $8,500 ($1,000 penalty for the initial violation and an additional $7,500penalty for a subsequent violation). Higher maximum penalties would enable the' Commission to recommend appropriate penalties for violations that result in substantial impact on public health, safety and welfare.

There have also been instances of excavators committing multiple violations, but outside the two month time frame and at different excavation sites, thus making such violations ineligible for higher penalties under existing law. Removing these restrictions will enable the Commission to recommend penalties that are more appropriate for entities that commit repeat violations.

Higher penalties would further encourage compliance with one-call requirements, thus protecting the public health and safety. Most operators and excavators adhere to the one-call requirements. For those who do not, it is important to maintain effective penalties for a failure to obey the law, as well as effective incentives to ensure compliance with procedures for the protection of underground facilities.

Finally, this bill makes the Commission's penalty authority for gas safety violations more closely track that of the federal government. Commission authority is expanded to address two specific circumstances: violations that cause or contribute to real property damage, and repeat violations by the same offender. Penalties that address "precursor events" (such as safety code violations) might prevent injury or death. The experience of the Department of Public Service (Department) in enforcing gas safety rules indicates that this additional penalty authority is needed to encourage compliance with gas safety requirements, and to enforce such requirements, thereby promoting public safety and protecting public and private property.

The availability of penalties for (1) violations of gas safety regulations causing significant . property damage, and (2) repeat violations, responds to the recommendations of the U.S. Department of Transportation Office of Pipeline Safety (OPS). In its audits of the enforcement of federal gas safety rules by the Department, OPS has consistently requested, most recently in December 2008, that State law be amended to provide penalties for violations of safety regulations resulting in property damage, and for repeat violations. OPS maintains that higher civil penalties are necessary to encourage recalcitrant violators to comply with safety regulations. The Department receives funding from the federal government for enforcing federal gas safety provisions, and failure to conform state penalties to federal penalties could threaten these funds.

Under this bill, the Commission would have the discretion to recommend a penalty amount within a wider range, depending upon the circumstances of the violation. In making a recommendation, the Commission considers the nature of the circumstances and gravity of the violation, the degree of culpability of the violator, history of prior violations, the effect of a penalty on the violator's ability to continue doing business, and any good faith efforts by the violator to comply with safety requirements.

In sum, this bill would provide more effective penalties for damages to underground facilities and conform state penalties with federal penalties for certain gas safety violations. These changes would allow the Commission to recommend an appropriate penalty level, encourage compliance with one-call and gas safety requirements, prevent service interruptions and further protect public health and safety.

Budget implications

Penalties are paid into the General Fund. Higher penalties would encourage safer performance or result in a greater amount of total penalty payments to the State Treasury.

Effective date

This bill would take effect immediately and apply to all violations occurring on or after such effective date.