Transparency and Pipeline Safety

Lessons from San Bruno on the Relationship between Regulators, the Regulated and the Public May, 2015

“I have struggled with pipeline safety for five years, and we have made very little progress.

The system is fundamentally broken..” – Rep. Jackie Speier

Where We Started

On September 9, 2010, a PG&E gas pipeline ruptured, unleashing one of the worst gas pipeline explosions in U.S. history. Emergency personnel rushed to the scene not knowing the source of the blast.

• Took 1+ hours to confirm source of fire was a gas pipeline – initially suspected airplane, earthquake

• Took PG&E 95 minutes to stop the flow of gas and isolate the affected site

When Unsuspecting Tragedy Strikes

Multiple Investigations Revealed Troubling Root Causes of Explosion

National Transportation and Safety Board (NTSB) investigation

California Public Utilities Division of Safety and Enforcement investigation

Conclusion: Preventable tragedy caused by gross negligence, faulty record keeping and negligent oversight by PG&E and CPUC

NTSB’s Unsettling Conclusions in 2011 Set the Stage for Additional Discoveries

Utility Company-Faulty pipeline welds-Incomplete records-Inadequate inspections/tests

Regulator -Failed to regulate-Too cozy relationship with PG&E-Violation of CA transparency laws-Violation of Rules of Practice and Procedure- Federal and State investigations of largest public corruption scandal in modern CA history

Regulatory Penalty Proceeding Quickly Uncovers More Questions Than Answers San Bruno uncovers disturbing revelations and a complete lack of transparency

• Ethical violations and widespread conflicts of interest

• Troublesome delays

• Broken system in need of reform

Holding the Regulator and Utility Accountable City is forced to maintain a vigilant watch and keep process in public eye

• Initial penalty recommendation riddled with credits and tax benefits

• Ongoing recordkeeping errors led to additional $14 million fine for incident in neighboring city

• Public awareness is raised when audit shows utility has faulty records for 50% of gas pipelines

Public Records Lawsuit Documents Regulatory Corruption

• Following 10 months of unanswered Public Records Act requests, San Bruno files a public records lawsuit in February 2014

• Led to exposure of 7,000 emails demonstrating illegal and ex parte (private) communication between PG&E and the CPUC

• PG&E self-reported additional violations of rules

Unsettling DiscoveriesEmails reveal PG&E had no idea what ticking time bombs lay underground in 2010

Demand for Transparency Leads to Reform

Criminal InvestigationsBoth Attorney General, U.S. Attorney are investigating illegal communications

San Bruno’s actions have resulted in multiple criminal investigations

CPUC must also establish and comply with new rules for public records requests as a result of San Bruno’s public records lawsuit

Additional Outcomes

New Commission Code of Conduct Critical PHMSA audit will spur reform Acknowledged unfair access by utilities to CPUC Erosion of agency’s safety programs CPUC will make important changes Separate investigations into the email scandal

and PG&E’s lack of safety culture

On April 9, 2015, the CPUC approved a $1.6 billion penalty fine against PG&E for the 2010 explosion and fire – the largest recorded penalty in CPUC history.

Praise for Demanding Transparency

“The city stood up for all Californians in demanding a clearer picture of the cozy relationship between the utility and the regulatory agency under Peevey's leadership.”

“The communications were released in the wake of a demand by San Bruno authorities…..It’s a start on a long journey to instill a new ethic at a state agency that’s lost its way.”

“TURN, City of San Bruno, CCSF, and DRA have all actively participated in theseproceedings and have contributed substantially to our decisions on violations, as well as this decision.”

- Administrative Law Judges, CPUC

Lessons from the Tragedy in San Bruno

• Local authorities must step up to prevent the ‘business-as-usual’ regulatory mentality

• Advocate for more transparency, better public access to records, decisions

• Push for a performance-based regulatory model

• Better balance of competing policy considerations – ratemaking vs. safety

• Hold utilities fully accountable for making safety the top priority

San Bruno is not an isolated case. Similar collusion may be happening in communities across the United States. The buck stops locally because, as Rep. Jackie Speier said, national regulator PHMSA is a “toothless tiger.”

Preparing for Emergency

• Public officials and public safety responders should become familiar with local utility operators’ safety plans

• Share information and develop a coordinated emergency response plan

• Participate in a disaster preparedness exercise

Pipeline emergencies strike without notice. Local authorities should be prepared.

Public Transparency

• Seek out important information about local pipelines

• Communicate with local utility regulators and operators

• Review city franchise agreements

Aging infrastructure means ticking time bombs may be lurking beneath communities nationwide. Public officials need to know what’s beneath their cities.