Senate Bill S3761

                                 BILL NUMBER:  S3761

 TITLE OF BILL :

An act to amend the general business law and the public service law,
in relation to the protection and excavation of underground facilities
and penalties for gas safety violations


 PURPOSE OF THE BILL :

The purpose of this bill is to protect public safety and welfare and
encourage compliance with gas safety regulations by increasing the
amounts of penalties that may be imposed for certain violations.

 SUMMARY OF PROVISIONS :

Section 1 of this bill would amend General Business Law (GBL) §765(1)
to increase the maximum penalties for violations of Public Service Law
(PSL) § 119-b, GBL Article 36 and any Public Service Commission
(Commission) regulation implementing Article 36. Penalties would
increase from a maximum of $1,000 to a maximum of $2,500 for a first
violation, and from a maximum of$7,500 to a maximum of $10,000 for
subsequent violations by the same operator occurring within a
twelve-month period.

              

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.