F I BEFORE THE CORPORATION COMMISSION OF OKLAHOMA S E P IN RE: INQUIRY OF THE OKLAHOMA CORPORATION COMMISSION TO EXAMINE PIPELINE SAFETY, PREVENTION OF EXCAVATION DAMAGE, AND PROCESSES RELATED TO ENFORCEMENT AND COMPLAINTS CAUSE NO [ED 0 2014 COU RTGIEM'S OFFICE OKc CQRPRATION COMMISSION OF OiLAHOMA TD 201400031 INITIAL COMMENTS OF CENTERPOINT ENERGY RESOURCES CORP. The Oklahoma Corporation Commission ("Commission" opened this proceeding to examine pipeline safety and enforcement procedures of the Commission in relation to the provisions of the Oklahoma Underground Facilities Damage Prevention Act 63 OKLA. STAT. 142.1 et seq. In response to the Commission's Notice of Inquiry, CenterPoint Energy Resources Corp. d!b/a CenterPoint Energy Oklahoma Gas ("CenterPoint Oklahoma" submits the following Initial Comments. Question A (1: Is the current Commission Judicial process sufficient to address complaints regarding violations of the Underground Facilities Damage Prevention Act and the prevention of excavation damage? If not, what adjustments, changes or additions are recommended to the judicial complaint process? In its latest session, the Oklahoma Legislature conferred new jurisdiction on the Commission to "enforce the provisions" of the Oklahoma Underground Facilities Damage Prevention Act (the "Damage Prevention Act". House Bill 2533, effective May 9, 2014. Because the provisions of the Damage Prevention Act are directed not only to pipeline owners and operators, but excavators in general, the Commissioner's enforcement process should be similarly directed. Excavators include contractors, heavy equipment operators and private landowners. Many of these excavators do not own or operate pipelines and are not subject to any pipeline safety regulation by the Commission, except as they may come under the jurisdiction of the Commission for violations of the Damage Prevention Act. The Commission's current judicial process on pipeline safety is set out at OAC 165:20-13-1 through 20-13-23. That process is entirely sufficient for enforcement of violations of traditional pipeline safety regulations promulgated by the U.S. Department of Transportation and by the Commission. Traditional pipeline safety enforcement is directed to owners and operator
Page 2 of 7 of pipelines. See, OAC 165:20-13-1 (1 and (2. The regulations focus on such matters as pipeline testing and records relating to pipeline operation, and the process is designed fundamentally to "correct a violation" of the pipeline safety requirements. See, e.g., OAC 165:20-13-14 (1 and (2; OAC 165: 20-13-15(a and OAC 165:20-13-16(a. The existing judicial process under the pipeline safety rules does not synch up with the Commission's jurisdiction to enforce the Damage Prevention Act. To exercise that new jurisdiction effectively, the Commission must have a process that covers not only pipeline owners and operators, but also "excavators" as defined by the Damage Prevention Act. Furthermore, violations will almost always involve a past incident or series of incidents, not a continuing operating condition in a particular pipeline. Thus the primary focus of the judicial process under the Commission's new jurisdiction should be on past violations, not on-going conditions. The new process should also provide explicitly for third party complaints. For example, if a private company (whether or not regulated has been harmed by violations of the Damage Prevention Act, a process should be available for it to file a complaint at the Commission if it so chooses. Such a process does not now exist in the Commission's rules. See, e.g., OAC 165: 20-13-11. Question A (2: What rule or rule changes would be necessary to facilitate modifications to the current Commission judicial complaint process? The Commission should implement the following rule changes: Adopt the Damage Prevention Act as it exists today (including the revisions effected by HB 2533, and as it may be modified by the Legislature in the future. This can be accomplished by simply revising OAC 165:20-5-41 to strike the phrase "as such exists March 1, 1993" in Paragraphs (1 and (2. Extend the Commission's authority over excavators subject to the Damage Prevention Act, as authorized by HB 2533. This can be accomplished by adding to OAC 165:20-5- 41 a new Paragraph (3 as follows: "(3 The Commission will enforce the provisions of Okla. Stat. Titl. 63, Section 142.1 through 142.11 against all excavators to the extent they are covered by these statutory provisions." Provide for a new judicial procedure that applies specifically to the Damage Prevention Act and all parties covered by its provisions. These changes to the rules should provide the regulatory structure for implementation of the Commission's new jurisdiction provided by HB 2533.
Page 3 of 7 The rules for the existing judicial process for pipeline safety simply do not accommodate the exercise of the Commission's new jurisdiction to enforce violations of the Damage Prevention Act. New procedural rules are required to ensure that the Commission has the process available to implement this new jurisdiction effectively. CenterPoint Oklahoma believes that these new rules should be primarily procedural and that enforcement should simply track the requirements of the Damage Prevention Act. The Damage Prevention Act imposes specific substantive requirements and the Commission jurisdiction is limited to enforcing those statutory requirements. New substantive rules have not been authorized by HB 2533, nor are any such rules necessary. The approach of HB 2533 is simply to authorize the Commission to enforce the law as it exists, not to add to or modify those substantive obligations. Substantive rules could even be counterproductive, requiring revision when and as the Legislature revises the statutes, creating potential conflict with private rights of action, and opening the door to potential challenges to the rules as inconsistent with the statutory scheme. By establishing a judicial process that does not seek to re-define violations of the Damage Prevention Act, nor to define exemptions from it, the Commission should be able to track and enforce the law as it exists now, and as it may develop in the future. As long as the Commission's rules remain congruent with its authority under the statute to "enforce the provisions" of the Damage Prevention Act, it should not run the risk of exceeding its jurisdiction or creating a perceived conflict with the statute. The best way to accomplish this is to write procedural rules that simply establish a judicial process for enforcement of existing law. Question A (3: Should the implementation of a complaint process include good-cause criteria in initial filings to avoid the filing of frivolous complaints? Yes, some standard to screen frivolous complaints is advisable. Fundamentally, the Commission should limit complaints to those relating to specific violations of the Damage Prevention Act. The Commission may also wish to include some minimum thresholds to screen out very minor and/or technical violations. For example, complaints could be limited to repeated violations by the same party, or violations of provisions of the Damage Prevention Act that result in injury or property damage. Question A (4: What should be the role of the Commission pipeline safety division in the implementation, processing, investigation or other activity related to a complaint?
Page 4 of 7 The Pipeline Safety Division should be authorized to file complaints in its own name, regardless of whether a third party has made or requested a complaint. The Pipeline Safety division should not be restricted to only those instances where a third party has complained. A pre-filing process could also be helpful where the PSD investigates an informal complaint and seeks an informal resolution by agreement of the parties. Question A (5: Should the Commission implement a new subchapter in its rules providing specifically for enforcement of violations of the Underground Facilities Damage Prevention Act? Yes, a new subchapter in Chapter 20 is appropriate to capture the new judicial process required to implement the Commission's new jurisdiction under HB 2533. As noted above, the existing judicial process is fine for enforcing traditional pipeline safety regulations where pipeline owners and operators are involved, but that process simply does not synch up with the new jurisdiction that will require a different process involving "excavators" that may not be subject to any traditional regulation. Furthermore, the Commission's jurisdiction to enforce provisions of the Damage Prevention Act arises from completely different authority and in many cases contemplates very different results than traditional pipeline safety regulation. Keeping these two processes separate will avoid a possible blurring of responsibilities in areas such as pipeline operation and general excavation. For example, most excavators bear no responsibility for pipeline operation and a pipeline operator bears no responsibility for excavation unless it is the party doing or authorizing the digging. These separate areas of responsibility should have separate processes for enforcement. Finally, because PHMSA apparently will review whether Oklahoma law is adequate to prevent damage to underground pipelines, a separate set of rules dedicated only to enforcement of the Damage Prevention Act may help demonstrate compliance. Question A (6: If a new subchapter is included, what procedures should be included? A new subchapter for a judicial process to enforce provisions of the Damage Prevention Act should include the following features: Due process provisions for service on the respondent named in the complaint and an opportunity to respond. (Respondents will not necessarily be subject to the Commission's traditional pipeline safety jurisdiction and may need to be summoned to appear. A standard of proof for a complaint. Assuming that some penalty will be imposed for violations, a standard higher than "substantial evidence" would seem appropriate.
Page 5 of 7 Incorporate existing law expressed in the Damage Prevention Act. Provide for complaints by either the Pipeline Safety Divisions, or a private third party. Preserve unconditionally for private entities all their private rights of action arising from the Damage Prevention Act, including the enforcement of civil damages in district court. Expand the Commissioner's existing rules for imposing fines and penalties to now include excavators under the Damage Prevention Act. Question B (1: What is needed to address adequate enforcement authority in Oklahoma to encourage and ensure compliance by parties subject to the Underground Facilities Damage Prevention Act? HB 2533 did not authorized the Commission to impose damages or specific new penalties for violations of the Damage Prevention Act, but the Commission could apply its existing rule enforcement authority pursuant 17 OKLA. STAT. I and 6.1 and pursuant to Article 9, Section 19 of the Oklahoma Constitution. Under these authorities, the Commission already has authority to impose fines and penalties for violations of its rules (which should now include the application of the Damage Prevention Act to all parties including excavators. These fines and penalties should be available against not only pipeline owners and operators, as at present, but excavators as well, whether or not regulated by the Commission. Question B (2: The Pipeline and Hazardous Material Safety Administration's annual monitoring audits of the Commission over the past years continue to state that civil penalties should be used as an enforcement tool. Should the Commission incorporate civil penalties, as well as other possible performance incentives, into procedures for enforcing violations of the Underground Facilities Damage Prevention Act? Under the authority of 17 OKLA. STAT. 1 and 6.1 and Okla. Const. art. 9, 19, the Commission already has authority to impose fines and penalties for violations of the Commissioner's rules, regulations or orders. The Commissioner's rules implementing that authority (now codified at OAC 165:20-13-1 should be extended also to cover violations by excavators (whether or not otherwise regulated. Question B (3: Should Commission enforcement authority over violations of the Underground Facilities Damage Prevention Act extend to the assessment of training and/or fines based on circumstances and severity of violations?
Page 6 of 7 Yes, the Commission should not limit its options to apply all available remedies to fit particular circumstances associated with violations of the Damage Prevention Act. Question B (4: What rules or rule changes would be necessary to facilitate modifications of the current Commission enforcement powers? The changes to the Commission's rules that are required are as follows: The rules enforcing the provisions of the Damage Prevention Act now apply only to pipeline owners and operators. These rules should be extended to apply to excavators, whether or not regulated: Adopt the Damage Prevention Act as it exists today (including the revisions effected by HB 2533, and as it may be modified by the Legislature in the future. This can be accomplished by simply revising OAC 165:20-5-41 to strike the phrase "as such exists March 1, 1993" in Paragraphs (1 and (2. Extend the Commission's authority to cover excavators subject to the Damage Prevention Act, as authorized by HB 2533. This can be accomplished by adding to OAC 165:20-5-41 a new Paragraph (3 as follows: "(3 The Commission will enforce the provisions of Okla. Stat. Titi. 63, Section 142.1 through 142.11 against all excavators to the extent they are covered by these statutory provisions." The Commission's existing enforcement powers under Chapter 20 must be extended to all excavators subject to the Damage Prevention Act, whether or not regulated: o OAC 165:20-13-1 should be revised to add the following new Paragraph 3: "For each violation of a Commission rule enforcing the provisions of the Oklahoma Underground Facilities Damage Prevention Act, the Commission may issue an order fining an excavator up to ten thousand dollars ($10,000 per violation plus prosecution costs, provided that the maximum fine shall not exceed five hundred thousand dollars ($500,000 for any series of violations." These revisions will place excavators on an equal footing with pipeline owners and operators when the Commission seeks to apply and enforce the provisions of the Damage Prevention Act.
Respectfully submitted, a_ ML. ongano. 5504 FELLERS, SNIDER, BLANKENSHIP, BAILEY & TIPPENS 321 S. Boston Ave., Suite 800 Tulsa, Oklahoma 74103 Telephone: 918.599.0621 Facsimile: 918.583.9659 clong@fellerssnider.com Page 7 of 7 A ITORNEY FOR CENTERPOINT ENERGY RESOURCES CORP. d/b/a CENTERPOINT ENERGY OKLAHOMA GAS #40632-vS