Senate committee eyes policy to align gas safety penalties with federal standards ⋆

Members of the Senate Energy and Environment Committee on Thursday took testimony on a proposal to raise the maximum fines for natural gas safety violations, a standard the bill’s sponsor says hasn’t changed since 1992. 

State Sen. Sean McCann (D-Kalamazoo), who chairs the committee, introduced Senate Bill 366 in May 2023, but the bill has yet to move to a vote before the committee. 

The bill would raise the maximum fines for gas safety violations from the current maximum of $10,000 per violation and $500,000 for a series of violations to a maximum of $200,000 per violation and $2.5 million for a series of violations. It would also ensure the fines are adjusted alongside inflation. 

In the more than three decades since the standard was last updated, Michigan has fallen out of compliance with the federal standard, with fining authority significantly below the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) standard, McCann said. 

While 28 other states have matched federal fine levels, there are only two states with a maximum fines lower than Michigan, McCann said: Idaho and Mississippi.  

Sen. Sean McCann (D-Kalamazoo) chair of the Senate Committee on Energy and the Environment and Sen. Kristen McDonald Rivet (D-Bay City) the committee’s majority vice chair, on Jan. 25, 2024. | Kyle Davidson

These fines play a key role in how the state energy regulator, the Michigan Public Service Commission (MPSC), enforces safety standards, McCann said. 

“The current level of fines, which haven’t changed since 1992, impacts grant awards from the federal government used to finance the gas safety program, but also threatens the commission’s ability to operate a state level gas safety inspection program,” McCann said. “Violations of the gas safety standards may have dire impacts on the safety of public, natural gas customers and workers in the industry.”

Dan Scripps, who chairs the MPSC, said he supports the bill. 

“This bill brings the commission’s authority to issue penalties for violations of the gas safety standards into alignment with federal standards,” Scripps said, noting its current enforcement authority has resulted in an annual loss of federal funding and prompted concerns for several years, with the commission flagging the issue in its 2019 statewide energy assessment.

Although the commission’s gas safety program typically scores high marks in PHMSA evaluations, its lack of compliance with federal standards has cost the program tens of thousands of dollars annually, Scripps said. 

“While this has been a concern for almost a decade, PHMSA is stepping up its efforts to bring states into compliance with the federal standard. Efforts have included reductions to federal grants; threatening congressional hearings, which were sidetracked only because of the pandemic; threats to revoke enforcement authority and actual revocation of enforcement authority,” Scripps said. 

Michigan Public Service Commission Chair Dan Scripps. | Kyle Davidson

“While the commission maintains its current enforcement authority relative to natural gas pipelines, the commission lost its delegated enforcement authority for underground natural gas storage, despite strong audit performance, and due only to the misalignment between our enforcement authority and what is required by PHMSA,” Scripps said. 

While the revocation of authority only applies to underground natural gas storage, the commission has concerns about what its deficiencies could mean for its ability to enforce gas safety standards, Scripps said. 

“To be clear, this isn’t just an issue of how much we can penalize, it is a critical safety issue,” Scripps said.

The committee did not vote on the bill. 

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authored by Kyle Davidson
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