3. Transfer of Harbor City's Submetered Gas
System to SoCalGas under §§ 2791 et seq.
The Legislature adopted Stats. 1996, Ch. 424, Sec. 1 (effective January 1, 1997), codified as Pub. Util. Code §§ 2791-2799, to create a formal mechanism governing transfer of MHP submetered utility systems to the gas or electric service utility that provides the master-meter service.9
These code sections grant the MHP operator the discretion to: (1) compel the utility to accept the transfer of any submetered system that can safely and reliably provide service to its existing customers; and (2) compel the utility to provide the MHP operator with an estimate of the costs to make the system safe and reliable.
The only Code Section that grants any discretion to the utility is in § 2794(2), which allows the utility to waive requirements that might stand as an impediment to transfer. Hence, the clear intention of the statute is to facilitate such transfers, as long as the systems meet, or can be improved to meet, the basic standards of safety and reliability.
The central question in this proceeding is whether the System meets these basic standards of safety and reliability, as well as the other requirements of §§ 2791-2799, such that SoCalGas may be compelled to accept the transfer.
3.1. The Statute
Harbor City is seeking a Commission order that SoCalGas accept transfer of the System pursuant to §§ 2791-2799. SoCalGas argues that the System does not meet the criteria for acceptability of transfer set forth in § 2794(a). Section 2794(a) establishes three criteria which must be satisfied for a system to be considered acceptable for transfer:
(1) It is capable of providing the end users a safe and reliable source of gas or electric service.
(2) It meets the Commission's general orders (GOs), is compatible, and, in the case of new construction, meets the gas or electric corporation's design and construction standards insofar as they are related to safety and reliability. The parties may waive these requirements by mutual agreement and, where necessary, with Commission approval. The agreed upon deviations may be reflected in the purchase price.
(3) It is capable of serving the customary expected load in the park or community determined in accordance with a site-specific study, studies of comparable parks or communities, industry standards, and the gas or electric corporation's rules as approved by the Commission.
Harbor City has demonstrated that the System meets these criteria, as explained herein.
3.2. Standards of Safety and Reliability
SoCalGas relies in its testimony and written arguments upon two sets of standards regarding safety and reliability. The first is the minimum standards for pipeline safety regulations set forth in 49 Code of Federal Regulations (C.F.R.) Part 192 which apply to all gas pipeline systems. SoCalGas argues that these regulations constitute an irrebutable minimum standard for safety for gas systems.10 The second is SoCalGas' own standards for pipeline safety, which it contends it must follow pursuant to 49 C.F.R. § 192.13(c), which provides that utilities must follow their own safety procedures.11 SoCalGas is correct in its reliance upon the federal standards, but is incorrect in its reliance upon its own standards.
The Commission's GO 112-E, Section 101.2 incorporates by reference 49 C.F.R. Part 192. Therefore, the minimum safety standards set forth in 49 C.F.R. Part 192 are applicable to all gas pipelines covered under GO 112-E, including the System.
SoCalGas' standards, which are binding on SoCalGas under 49 C.F.R. § 192.13(c), are an entirely different matter, as these are within SoCalGas' discretion and control.12 While this provision requires SoCalGas to follow its own standards, it neither requires nor justifies SoCalGas using those standards beyond the minimums set forth in 49 C.F.R. Part 192 to thwart the application of §§ 2791-2799. As explained below, some of the discretionary SoCalGas standards would eliminate most MHP submetered systems from eligibility for transfer under §§ 2791-2799.
It may be that some MHP submetered gas systems, perhaps even this System, may not meet all of the ordinarily exacting standards that SoCalGas applies to its own operations. However, the legislature did not require that a submetered gas system meet the utility's internal standards to be eligible for transfer pursuant to §§ 2791-2799. That is consistent with the Legislature's goal, in adopting §§ 2791-2799, to have gas utilities acquire, operate and maintain these MHP submetered systems, as long as they meet the ordinary minimum safety and reliability requirements.
Therefore, to the extent that SoCalGas can modify its overall standards to meet the minimum safety standards under 49 C.F.R. Part 192 in a manner that is consistent with both §§ 2791-2799 and 49 C.F.R. § 192.13(c), it must do so. As a result, in terms of determining safety and reliability, the governing standards for purposes of this Decision are those standards set forth in 49 C.F.R. Part 192.
3.3. "Safe and Reliable Source"
For a system to be fit for transfer under §§ 2791-2799, it must be "capable of providing the end users a safe and reliable source of gas or electric service." Harbor City notes that there have been no reports of leaks or other problems with the System,13 and other than minor correctable reporting irregularities, the Commission's Utility Safety and Reliability Branch (USRB) has not cited any problems with the System during its regular inspections.14 There is no evidence that persuasively suggests that the System is unsafe or unreliable.
SoCalGas argues that the System does not comply with certain of the pipeline safety regulations set forth in 49 C.F.R. Part 192, that these regulations constitute a minimum safety standard for gas systems, and that consequently, as a matter of law, the System is unsafe.15
There are four major areas in which SoCalGas argues that the System deviates from the federal safety standards: (1) depth of burial of the mains; (2) separation of the mains in trenches from water pipes; (3) clearance of the service line risers from the homes; and (4) system pressure. Each area is addressed separately below.
With regard to the depth of the mains, SoCalGas notes that 49 C.F.R. § 192.327(d) states:
A main16 may be installed with less than 24 inches (610 millimeters) of cover if the law of the State or municipality:
(1) Establishes a minimum cover of less than 24 inches (610 millimeters);
(2) Requires that mains be installed in a common trench with other utility lines; and
(3) Provides adequately for prevention of damage to the pipe by external forces.
In California, the permitting authority for construction of MHP submetered gas systems is the California Department of Housing and Community Development (HCD). HCD regulations establish a minimum cover requirement of 18 inches, which the System complied with at the time of construction.17 The difference between HCD regulations and those described in 49 C.F.R. § 192.327(d) is that HCD regulations permit common trenching, rather than require common trenching. The difference is immaterial for present purposes because, in fact, the System's gas mains are installed in common trenches with other utilities.18
From a safety engineering perspective, there is no physical distinction between a gas main that is required to be commonly trenched and one that is permissibly commonly trenched.19 Hence, the failure of the System to meet this semantic requirement does not make the System any less safe than one that would otherwise comply with 49 C.F.R. § 192.327(d).
SoCalGas' arguments have shifted over the course of the proceeding (as have Harbor City's), but in general they are that: (1) mains must be buried at a depth of alternatively at least 24 inches20 or at least 30 inches;21 and (2) common trenching with other utilities is inherently unsafe.22 These arguments are inconsistent with 49 C.F.R. § 192.327(d), which allows common trenching under certain circumstances at a depth of less than 24 inches, and in general at a surface cover of 24 inches. Hence, the Commission finds that the System's common trenching at 18 inches of cover is not an impediment to the safe and reliable provision of gas services.
SoCalGas has argued that mains in a common trench must be separated by 12 inches,23 and that the clearance indicated in the plans for the System (Exhibits 5-A, 5-B and 5-C) does not permit safe maintenance of the System.24 Specifically, SoCalGas cites 49 C.F.R. § 192.325(b), SoCalGas' own standards and 2007 California Plumbing Code, Appendix E, Part D. E 36.1.25
As SoCalGas acknowledges,26 the language of 49 C.F.R. § 192.325(b) does not set a clear standard. Further, for reasons explained above, SoCalGas' standards are not governing. Hence, only the California Plumbing Code is relevant.
The 2007 California Plumbing Code is found at Cal. Code of Regs., Tit. 24, Part 5, and is adopted by the California Building Standards Commission on a triennial basis. SoCalGas alleges that Appendix E of this Code prohibits the placement of commonly trenched utilities within 12 inches.27 Harbor City claims that this provision of Appendix E was not adopted.28 Harbor City is correct.29 Therefore, SoCalGas has not demonstrated that the System is unsafe due to the close placement of commonly trenched utilities.
SoCalGas argued that the riser and meter assembly, in some cases, is located within four feet of the homes, which is a violation of SoCalGas' standards.30 Harbor City cites Cal. Code of Regs., Tit. 25, § 1222(b), which at the time of construction of the System required that MHP gas outlets terminate within four feet of the outside rear half of the mobile home. Having concluded earlier that SoCalGas may not establish discretionary standards contrary to California law, the Commission concludes that this construction was required under California law and does not render the System unsafe or unreliable.
SoCalGas maintains its overall gas system pressure at a district pressure of 42-47 pounds per square inch gauge (psig), which is significantly higher than the System's pressure of roughly 5 psig.31 SoCalGas asserts that after any transfer, SocalGas would likely operate the System at its higher system pressure. SoCalGas argues that the System may not have been tested at this higher pressure, and therefore might become subject to leaks.
Alternatively, SoCalGas acknowledges that it could safely operate the System at a lower pressure if a district regulator station were installed at the master meter entrance point to the System. A district regulator station would cost approximately $250,000.32 SoCalGas claims that such a regulator station is required under 49 C.F.R. § 192.195, 49 C.F.R. § 192.199, and 49 C.F.R. § 192.201.33
SoCalGas further contends that the System cannot be operated reliably due to the low pressures in the System.34 SoCalGas contends that operation at low pressures poses potential safety and reliability risks, particularly in a common trench with water utilities, because a leak could result in water entering the low pressure system,35 which SoCalGas contends provides a safety and reliability hazard for the gas system.
Harbor City argues that if SoCalGas' interpretation were correct, then most MHP submetered systems would require a district regulator station, as relatively low pressure is a common operational situation with MHP submetered systems.36 Harbor City notes that it has not had complaints about the quality of service,37 and has not been cited by the Commission's USRB staff except for a minor reporting violation.38
The only cited authority that actually requires a district regulator station in these circumstances is a SoCalGas standard. That standard, as we concluded above, cannot govern where it would thwart the application of §§ 2791-2799. If that standard were to govern universally, then most submetered systems operated at low pressure would need a costly district regulator station to allow transfer to the gas utility. That result is not necessary or reasonable.
SoCalGas' Koskie testified that:
...any place within the system, within our own system, any time that we would reduce pressure, we would change from one pressure, one pressure area to a lower pressure, the method that we would do that is through a regulator station. As opposed to when we come to the customer, when we come to the termination where it's turned over to the customer, the requirements are different. The requirements would be a single regulator to drop the pressure down to the customer. And then the customer would have regulation, and it would have safeguards themselves as well.39
Koskie was unclear why a district regulator station would not be required to enter the MHP submetered system if SoCalGas treated it as a single customer but would be if required for such a system if SoCalGas operated it.40
SoCalGas also argues that the System has not been tested at pressures comparable to SoCalGas' recommended pressure of 40-60 psi, or even demonstrated to have been tested pursuant to 49 C.F.R. § 192.513(c).41 However, since we find the System may be operated safely at the current pressures, this is not a concern.
In light of the above discussion, there is no compelling reason to conclude that installation of a district regulator station prior to transfer would be necessary, or that the System could not be safely operated by SoCalGas.42
3.4. Compliance with the Commission's General Orders
Section 2794(a)(2) requires that the System comply with all Commission's GOs. GO 112-E, Section 101.2 incorporates by reference all of 49 C.F.R. Part 192. This would include 49 C.F.R. § 192.327(d).
SoCalGas argues that under 49 C.F.R. § 192.327(d) which governs line cover, the System does not meet the required depth requirement of 24 inches or qualify for the exemption in that subsection.43 However, that is not the appropriate end point for the present inquiry, and there are several compelling reasons to believe that the Commission's General Order should be interpreted to be consistent with a broader view of this requirement.
First and foremost, the agency designated by the Legislature to oversee the construction of MHP submetered gas systems is now, and has been for the relevant past, HCD. HCD has incorporated into its regulations the same provisions of 49 C.F.R. Part 192 as the Commission has in GO 112-E. Nevertheless, the clear language of Cal. Code of Regs., Tit. 25, § 1216 permits trenching at 18 inches without any requirement of joint trenching.
In deference to our sister agency's interpretation of its own guiding statutes and regulations, the Commission accepts gas mains trenched at 18 inches in MHPs as meeting the minimum gas safety standards under federal law.
This is not an unreasonable conclusion. Prior to the USRB taking over enforcement of 49 C.F.R. Part 192 in 1995, the U.S. Dept. of Transportation's Office of Pipeline Safety (OPS) had direct responsibility for oversight of these MHP submetered gas systems. There is nothing in the record of this proceeding, or readily available in the public records of which the Commission could take official notice, that indicates that OPS has ever objected to HCD's interpretation of this regulation.
It is a basic precept of legislative interpretation that when presented with competing interpretations, those interpretations which render the legislation inoperative are disfavored over those which meet the legislative intent. It is clear in this case that the Legislature intended that utilities must receive in transfer any system which may be safely and reliably operated.
Fundamentally, the purpose of all of these regulations is to ensure that the gas system meets minimum safety and reliability requirements. As explained above in Section 3.3, the System is safe, and as explained below in Section 3.5, it is reliable. To apply the interpretation propounded by SoCalGas to the System would render a great number, if not most, MHP submetered gas systems ineligible for transfer under §§ 2791-2799. This cannot be what the Legislature intended when adopting §§ 2791-2799.
For these reasons, GO 112-E must be interpreted to be consistent with HCD practices, i.e., to allow a depth of 18-inches even though joint trenching is not required by the HCD regulations. There is no other deviation from the GOs alleged by SoCalGas, other than those based upon SoCalGas' own safety standards, which are not relevant to this determination. Therefore, we find that the System meets the requirements of GO 112-E.
3.5. Capable of Serving the Customary Expected Load
Harbor City has satisfactorily provided gas service to its residents since the re-installation of the System in 1995 without incident or disruption of service.44 While SoCalGas raises numerous hypothetical objections to the System, it provides no credible contrary testimony. Hence, the System meets this requirement for transfer under § 2794(a).
3.6. Transfer is Appropriate Under § 2794(a)
As demonstrated above, each of the three essential elements required to allow a transfer of a submetered system pursuant to § 2794(a) are met by the System. Hence, the System is eligible for transfer, and SoCalGas must accept the transfer under §§ 2791-2799.
9 In a submetered utility system such as the System, a utility supplies service to a master meter, with the operator of the submetered system operating as a small utility service for its individual submetered customers. Therefore, the System can be called either a submetered system or a master-metered system. Here, we will use the term submetered system.
10 SoCalGas Opening Brief, pages 2-3.
11 Exhibit 12, pages 7-8.
12 49 C.F.R. § 192.13(c) allows utilities to "modify as appropriate" their own "plans, procedures, and programs."
13 Exhibit 3, pages 5 and 11.
14 Exhibit 3, page 5.
15 SoCalGas Opening Brief, pages 2-3.
16 A "main" is defined in 49 C.F.R. § 192.3 as "a distribution line that serves as a common source of supply for more than one service line." The System comprises both mains, which are primarily buried beneath the roadways, and service lines connected to the mains, which bring the gas to the individual homes.
17 Exhibit 22.
18 Exhibits 5-A, B and C.
19 While the Commission and the parties are rightly sensitive to the nuances of legal distinction between these phrases, the pipes are completely oblivious to our parsing of words - they respond only to physical laws. The Systems pipes' ability to be operated safely is a matter of engineering and physical fact, not a matter of legal status.
20 SoCalGas Opening Brief, pages 14-16.
21 Exhibit 12, page 8; Hearing Transcript, page 172, line 4 to page 175, line 14.
22 Exhibit 12, page 9.
23 Exhibit 12, page 8; Exhibit 19, pages 5-6.
24 Id.
25 Exhibit 19, pages 5-6.
26 Id.
27 Id.
28 Exhibit 16, page 8; Hearing Transcript, page 226, line 11 through page 227, line 28.
29 See http://www.documents.dgs.ca.gov/bsc/prpsd_chngs/documents/2006/Part5-4. pdf at page 43, where the California Building Standards Commission states "Appendix E is not adopted."
30 Exhibit 12, page 9 and Exhibit 18, page 5.
31 Exhibit 8, page 7.
32 Exhibit 19, pages 5-6.
33 Exhibit 18, page 4.
34 Exhibit 18, page 3.
35 Id.
36 Exhibit 17, pages 2-3.
37 Hearing Transcript, page 150, lines 6 through 10.
38 Exhibit 3, page 5.
39 Hearing Transcript, page 247, lines 18-28.
40 If SoCalGas believed the system to be unsafe, then SoCalGas either should have already installed a district regulator station or otherwise isolated the system from other SoCalGas facilities.
41 Exhibit 12, page 11; Exhibit 19, page 5.
42 This decision relates to the transfer of the System and the costs associated with that transfer. The question of what changes SoCalGas might make to the System after transfer is beyond the scope of this proceeding.
43 As noted above, the System meets a requirement of 18 inches. Exhibit 12, pages 6-8. See detailed discussion of this issue at Section 3.3.1 above.
44 Exhibit 3, pages 4-5 and 12; Hearing Transcript page 150, lines 6-10; Harbor City's Opening Brief, pages 6-7.
