Home

Legislative Memo

BILL:

S.4269(Wright) A.7097(Tonko)

Support

SUBJECT:

Gas Safety Penalties

 

DATE:

April 28, 2006

 

Provisions

This legislation would double, to a half million dollars per offense, the penalties imposed on persons and corporations subject to the jurisdiction of the Public Service Commission for violations of laws, regulations and codes adopted for the protection of human safety, where that violation results in death or personal injury.

It would also, for the first time, extend those same penalties to a violation where there was real property damage in excess of $50,000.

Additionally, it would apply a penalty of $1,000,000 for any two or more specified gas pipeline safety violation within 24 months.

Concerns

Existing law authorizes different levels of penalties based on the nature of the violation. The PSC has strict regulations in place to ensure the public's safety and has the statutory power to impose substantial fines (the greater of $250,000 per offense or $100,000 per day for personal injury cases). These penalties would be over and above any civil liability and potential punitive damages to which a company might be subject. Public utilities that engage in the transportation of natural gas are also required to comply with federal safety regulations and are subject to penalties for violation of federal regulations. Existing penalties are adequate to ensure compliance with these requirements.

This bill inappropriately equates the value of real property with that of human life and safety. The penalties for actions affecting human health and safety are set high for good reason. This bill would allow a penalty of $500,000 for real property damages of $50,000 - a ten-fold penalty - in addition to any civil liability that might be imposed. No justification has been shown for authorizing the same level of penalty for violations that result in damage to real property to those that result in death or personal injury.

Another provision of this bill would allow the application of a one million dollar penalty for two or more “gas pipeline safety violations” within 2 years. These could be relatively routine ongoing functions which companies might perform thousands of times per year. The broad list of potential activities includes, for example, “periodic leak surveys and pipeline maintenance”, but does not detail the exact nature of the “violations” that would be subject to these vastly increased penalties. A penalty of $1,000,000 cannot be imposed based on such a broad and vague characterization of potential areas of violation.

For the abovementioned reasons, The Business Council opposes this legislation and urges it be rejected.