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SPONSOR: |
HENRC |
DATE TYPED: |
|
HB |
490/HENRCS/aHJC |
||
|
SHORT TITLE: |
Change Pipeline Safety Oversight |
SB |
|
||||
|
|
ANALYST: |
Valenzuela |
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APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
|
$0.0 |
|
$350.0 |
Recurring |
General
Fund |
|
|
|
Transfer |
$263.0 |
Recurring |
General
Fund |
|
|
|
Transfer |
$187.6 |
Recurring |
Federal
Funds |
(Parenthesis
( ) Indicate Expenditure Decreases)
REVENUE
|
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
|
FY03 |
FY04 |
|
|
|
|
|
See
Narrative |
|
Recurring |
Federal |
|
|
|
|
|
|
(Parenthesis ( ) Indicate Revenue Decreases)
Relates to HJR 13 & 14
Relates
to Appropriation in the General Appropriation Act for the PRC Public Safety
Program
-
Report of the Legislative Finance
Committee to the Forty-sixth Legislature, First Session,
January 2003 for Fiscal Year 2003 – 2004, pp. 390 – 401.
-
Report to the Legislative Council from
the Public Regulation Commission Subcommittee, in Response
to SJM 41, 2001 Legislative Session, December 2002.
Responses
Received From
Public
Regulation Commission (PRC)
Energy,
Minerals and Natural Resources Department (EMNRD)
Department
of Environment (NMED)
SUMMARY
Synopsis of HJC Amendment
The
House Judiciary Committee (HJC) amendment to House Energy and Natural Resources
Committee substitute to House Bill 490 makes technical corrections and corrects
the definition for “interstate pipelines” as being those regulated by the
Federal Energy Regulatory Commission (FERC).
Synopsis of HAFC Amendment
The
House Appropriations and Finance Committee (HAFC) amendment to amended House Energy
and Natural Resources Committee substitute to House Bill 490 deletes the $325.0
appropriation from the general fund.
Synopsis of Original Bill
The House Energy and
Natural Resources Committee (HENRC) substitute for House Bill 490 appropriates
$325.0 from the general fund to Oil Conservation Division (OCD) of EMNRD for
the purpose of employing 12 FTE to inspect and enforce provisions of the
Pipeline Safety Act with respect to intrastate pipeline facilities and to
assume oversight responsibilities from the federal Department of Transportation
for interstate pipeline inspection duties. The bill also transfers the functions
of, and the Pipeline Safety Bureau of the Public Regulation Commission, to the
OCD.
Sections
1 to 6 transfer the statutory authority under 62-14-2 and 62-14-7.1 from the Public
Regulation Commission and to the Oil Conservation Division.
Sections
7 to 14 transfer the statutory authority under the Pipeline Safety Act from the
Public Regulation Commission and to the Oil Conservation Division. In Section 7,
a definition for “interstate pipelines” has been added. Section 8 authorizes
OCD to assume oversight responsibilities for interstate pipelines and
assess/collect reasonable fees for its activities involving intra- and
interstate pipelines.
Section
15 transfers personnel, property, contracts and references in law for pipeline
safety from the PRC to the Oil Conservation Division.
Section
16 makes the appropriation.
Section
17 makes the effective date
Significant
Issues
The subject of state pipeline inspection has been
discussed recently by a special subcommittee of the Legislative Council, called
the Public Regulation Commission Subcommittee. The task of the subcommittee was
to make recommendations on the structure of the PRC. The conclusion was that
the PRC be restructured to focus only on utility and telecommunications
regulation. To do this effectively, the non-utility functions from the PRC were
recommended to be transferred to other departments. A specific recommendation was to transfer the responsibilities for on-site field
inspection and enforcement related to pipeline safety to the OCD, which has the
on-site field offices and staff to better perform these duties.
Several issues surround this bill: can this transfer be made without an amendment to the state constitution? What are the financial implications of such a transfer? What are the implications of the state taking over federal primacy for interstate pipeline inspection?
Constitutional Amendment or Statutory Revision.
A key question taken up by the PRC subcommittee was the legislative mechanism
for transferring the Pipeline Safety Bureau from the PRC to EMNRD. The
subcommittee’s report states that this transfer can be accomplished through
statutory revision, which supports the provisions of this bill. The PRC reports
that the constitutional language that created the Commission clearly confers
upon the PRC the responsibility for regulating transmission and pipeline
companies[1].
If enacted, the PRC reports the bill could be unconstitutional. The PRC would
have standing to challenge and overturn the bill.
House Joint Resolutions 13 and 14 have been introduced to delete the PRC authority from the state Constitution and rather have it developed in statute.
State Assumes Primacy for Interstate Pipeline Inspection. Federal statutes give states all or part of the intrastate regulatory and enforcement responsibility through annual certifications and agreements. The federal Department of Transportation provides grants to states to assume more responsibility for pipeline safety. The Office of Pipeline Safety can reimburse a state agency up to 50 percent of the actual costs of a safety program, including the cost of personnel and equipment.
According to EMNRD, the Pipeline Safety Bureau has not scored well in its annual performance reviews for the intrastate program. The PRC reports that its scoring is a reflection in the few number of staff for the program: there are 5 FTE in the program. EMNRD further reports that the federal Office of Pipeline Safety would not likely transfer its primacy for interstate pipeline inspection to the PRC until the staffing level is increased to 9 FTE. The bill would remedy this concern, potentially improving the state’s opportunity to gain primacy in this area.
FISCAL IMPLICATIONS
The appropriation of
$325.0 contained in this bill is a recurring expense to the general fund. Any
unexpended or unencumbered balance remaining at the end of fiscal year 2004
shall revert to the general fund.
The transfer of the pipeline safety bureau would increase the OCD organization by 5 FTE and $450.6 ($263.0 from the general fund and $187.6 from federal funds), not including the $325.0 general appropriation made in this bill. Additionally, the Governor’s FY03 initiatives include $350.0 for taking over federal inspection of pipelines. This funding generates from the dissolution of the Tobacco Settlement Revenue Fund. However, SB 655 does not include this funding.
ADMINISTRATIVE IMPLICATIONS
TECHNICAL ISSUES
EMNRD reports the following technical issues:
The provision in Section 16 of the bill that
appropriates $325,000 to employ "twelve full-time-equivalent positions to
assume primacy … for interstate pipeline inspection duties …" might be
read to provide that the appropriation is intended to provide for twelve additional
positions. The program needs about twelve people to
perform both the intrastate and interstate functions to meet federal guidelines. EMNRD reads this section to provide for the
employment of twelve FTEs total to perform both functions. The provision might also be read as providing
funding only for personal services rather than for capital outlay, equipment
and other items that might be needed.
EMNRD assumes that funding for these needs will be available through the
budget of the Pipeline Safety Bureau through the PRC when transferred.
Section 8 of the bill (amending NMSA 1978,
Section 70-3-13(A)) leaves in place language that grandfathers safety standards
"in existence on the date the safety standards are adopted." EMNRD interprets this language to pertain to
facilities in existence on the date the safety regulations were initially
adopted by the PRC. However, since the
Oil Conservation Commission (OCC) will have to re-adopt safety standards
shortly after the effective date of the bill, some may read such language as
grandfathering facilities in existence on the date of the OCC’s action, rather
than the previous adoption of safety regulations by the PRC, years ago. This issue (which does not appear to EMNRD to
be a proper reading of the bill) could be eliminated by amending the second
full sentence of 70-3-13(A) as follows:
Safety standards shall not be applicable to oil, hazardous liquid or gas
pipeline facilities in existence on the date the safety standards are were
first adopted by the Public Regulation Commission …"
POSSIBLE QUESTIONS
1. Can the Oil Conservation Division house the
five staffers from the Pipeline Safety Bureau?
2. What fees are collected by the PRC from
pipeline companies and how much on an annual basis? In what state fund is the
revenue deposited?
MFV/prr:sb:njw