TABLE 1

Class Location	Minimum Yield Strength9 For Pipeline Segments at MAOP
1	MAOP shall not exceed 72% of yield strength
2	MAOP shall not exceed 60% of yield strength
3	MAOP shall not exceed 50% of yield strength
4	MAOP shall not exceed 40% of yield strength

PG&E's potential failure to provide adequate safety and protection in violation of the federal minimum standards include the following.

A. PG&E Has Conceded that it Misidentified the Class Locations of 172.1 Miles of Its Natural Gas Transmission Pipelines

PG&E indicated in its June 30, 2011 Class Location Study that 172.1 miles of its natural gas transmission lines were identified as being located in areas of lower population density than was actually the case. The Class Location Study also identified 54.2 miles of natural gas transmission pipeline that were erroneously classified as class 1 when they were actually class 2 locations. (Class Location Study at p. 4.) The Class Location Study identified 52.1 miles of pipeline that were erroneously classified as
class 1 when they were actually class 3 locations. The Class Location Study identified 0.4 miles of pipeline segments that were erroneously classified as class 1 when they were actually class 4 locations. (Ibid.) The Class Location Study also identified 64.4 miles of pipeline that were erroneously classified as class 2 when they were actually class 3 locations. (Ibid.) Lastly, the Class Location Study identified 1.0 miles of pipeline segments that were erroneously classified as class 3 when they were actually class 4 locations. (Ibid.)

B. PG&E's Class Location Study Indicates that PG&E May Have Failed to Have Replaced Pipeline Segments with Stronger Pipe Material, or Reduced the Segment's Maximum Allowable Operating Pressure, When a Segment Designation Changed-Which Would Be a Violation of 49 Code of Federal Regulations, Part 192.611

As mentioned above, federal safety regulations protecting persons and property in areas near natural gas transmission pipelines demand increasing levels of

pipeline strength or reduced operating pressures as the human habitation or occupation¹⁰ in those areas increases. PG&E identified 172.1 miles of natural gas transmission pipeline segments in the Class Location Study that were erroneously classified under
49 C.F.R. §192.5. These locations indicated population densities that were lower than actual population densities. Further, PG&E neither increased the strength of its pipeline segments nor reduced the MAOP for portions of the 52.5 miles of pipeline segments it had misclassified as class 1 when the actual class location designation was class 3 or class 4. Wherever the misclassified pipeline segment required a reduction in MAOP gas pressure, or a replacement with higher strength pipe, the segment may have been operating above federally-mandated maximum levels. Under those circumstances, PG&E would have violated 49 C.F.R. § 192.611.

For instance, where PG&E operated its pipeline system segments at certain class designations lower than the actual existing class designations under 49 C.F.R. §192.5 (e.g., segments operated by PG&E as a class 1 location when, in fact, it was actually a class 3 or class 4 location as identified in PG&E's Class Location Study), the MAOP of those segments' may have exceeded the maximum MAOP permitted under
49 C.F.R. § 192.611-a serious violation. As an example, SMYS for the class 1 locations which may have been limited to 72% would be reduced to a value no higher than 60% of SMYS for a location which became class 3, and no higher than 50% of SMYS for one that became a class4. If PG&E operated a pipeline segment at a class 3 location at an MAOP permitted for a class 1 location), PG&E's MAOP for that
particular segment may have significantly exceeded that permitted by 49 C.F.R.
§ 192.611. Attachments A and B to PG&E's Class Location Study indicated that as of June 30, 2011, PG&E needed to reduce maximum allowable gas pressure for 67 natural gas transmission pipeline segments in order to comply with 49 C.F.R. § 192.611. If PG&E exceeded the maximum allowable operating pressure at these locations for any period of time, PG&E would have exposed nearby populations to an increased risk of pipeline failure in violation of federal and state safety regulations.

C. A Failure by PG&E to Conduct Class Location Studies Whenever an Increase in Population Density Indicated a Change in Class Location for a Segment of Pipeline Operating at More Than 40 Percent of SMYS Is a Potential Violation of 49 Code of Federal Regulations, Part 192.609

Title 49 C.F.R. § 192.609 requires that PG&E make a study to determine the actual class location of the pipeline segment "whenever" there is a change in population density. The study must compare the design, construction, and testing procedures used in the original construction to the requirements for the new increased class location level. PG&E is required to consider the physical condition of the segment to the extent ascertainable from available records, the operating and maintenance history of the segment, the maximum actual operating pressure and the corresponding hoop stress, taking pressure gradient into account, for the pipeline segment, and the actual area affected by the population density increase including physical barriers or other factors which may limit further expansion of the more densely populated area. (See 49 C.F.R.
§ 192.609.)

PG&E appears to have failed to conduct these class location studies whenever the class location, previously identified by PG&E for the segment, changed, i.e., a change in class location due to an increase in population density. PG&E's admission in its Class Location Study of June 30, 2011, that 172.1 miles of its transmission pipeline segments were misclassified at too low a class designation, may evidence a failure to comply with the class study requirement under 49 C.F.R. §192.609 at the time population density actually changed. To date, PG&E has not provided evidence that studies were conducted whenever a change in class location occurred. To the contrary, the Class Location Study seems to indicate that a change in class in some class 3 and class 4 locations went undetected by PG&E until June 30, 2011, when the Class Location Study was performed at the direction of the Commission in Resolution
L-403, Ordering Paragraphs 18 and 19 (Sept. 23, 2010).

D. PG&E's Admission that Some Class 3 and Class 4 Locations and Class 1 and Class 2 Locations Were Not Properly Designated Evidences a Potential Failure by PG&E to Adequately Patrol its Natural Gas Transmission System under 49 Code of Federal Regulations Part 192.705.

In order to operate natural gas transmission pipelines commensurate with the strength of the pipe based on the requirements of 49 C.F.R. § 192.611, federal regulations require that pipeline system operators have a patrol program to observe surface conditions on and adjacent to the transmission line right-of-way for indications of leaks, construction activity, and other factors affecting safety and operation. The frequency of patrols is determined by the size of the line, the operating pressures, the class location, terrain, weather, and other relevant factors, but intervals between patrols may not be longer than 15 months (but at least once each calendar year) for Class 1 and 2 up to 4 times each calendar year at intervals not exceeding 4.5 month, in Class 4 locations. (See 49 C.F.R. § 192.705.) The patrolling methods can include walking, driving, flying or other appropriate means of traversing the right-of-way.

PG&E's Class Location Study identifying 172.1 miles of pipeline which were misclassified, sometimes two or more classes or levels out-of-class, demonstrates a possible lack of regular and/or adequate patrolling required under
49 C.F.R. § 192.705 to adequately identify changes in class locations on its general system of natural gas pipelines.

E. PG&E's Admission that Some Class 2, Class 3, and
Class 4 Locations Were Not Properly Designated Evidences a Potential Failure to Provide Continuing Surveillance of its Pipeline System under 49 Code of Federal Regulations Part 192.613.

Federal regulations require a natural gas transmission pipeline operator to have a procedure for continuing surveillance of its facilities to determine and take appropriate action related to changes in class location, failures, leakage history, corrosion, substantial changes in cathodic protection requirements, and other unusual operating and maintenance conditions. (See 49 C.F.R. § 192.613.) PG&E's misidentification of 172.1 miles of pipeline segments evidences a possible failure to adequately surveil its transmission pipeline system for the above-mentioned issues, particularly changes in class location designation.

F. Any Failure by PG&E to Furnish and Maintain Such Adequate, Efficient, Just, and Reasonable Service, Instrumentalities, Equipment, and Facilities, Including Such Service, Instrumentalities, Equipment, and Facilities to Individuals with Disabilities, as Are Necessary to Promote the Safety, Health, Comfort, and Convenience of its Patrons, Employees, and the Public Is A Potential Violation of California Public Utilities Code Section 451.

A failure by PG&E to comply with any of the above-mentioned federal safety regulations for the operation of its natural gas transmission pipeline system may establish a failure on its part to provide Californians in PG&E's service territory with safe, healthful, comfortable, and convenient natural gas transmission service, instrumentalities, equipment, and facilities and, therefore, may constitute a violation of California Public Utilities ("Cal. Pub. Util.") Code § 451.

For instance, a failure to replace pipeline segments with higher-strength pipe or reduce the MAOP on segments in areas of higher population density pursuant to 49 C.F.R. § 192.611, could place persons working or living nearby at serious risk. Allowing pipeline segments to operate at pressures above the federally mandated safety levels under 49 C.F.R. §192.611, would constitute a serious violation of Cal. Pub. Util. Code § 451.

Likewise, a failure by PG&E to commence class location studies under
49 C.F.R. § 192.609 "whenever" the segment's population density increased by another factor, e.g., an increase from class 1 to class 2, or class 1 to class 3, would violate minimum federal safety standards, place nearby workers and occupants at risk, and could be a serious violation of Cal. Pub. Util. Code § 451.

⁹ Pressure is derived from the design formula for steel pipe in 49 C.F.R. §192.105. [P = (2St/D) x F x E x T.] Using the outside pipe diameter, wall thickness of the pipe in inches, the design factor set forth in 49 C.F.R. § 192.111, the longitudinal joint factor set forth in 49 C.F.R. § 192.113, and a temperature factor set forth in 49 C.F.R. § 192.115, and steel properties in accordance with 49 C.F.R. § 192.107. For example, generally the Maximum Allowable Operating Pressure (MAOP) in a pipeline segment in a class 1 location, with all de-rating factors considered, can produce a hoop stress not exceeding 72% of the pipe Specified Minimum Yield Strength (SMYS). The MAOP for a pipeline segment may not exceed this percentage of minimum yield strength for each of the four class locations. The fact that a segment is one class out-of-class may not result in the segment exceeding the maximum percentage of SMYS. To meet class change conditions, a system operator may either replace the existing pipe with stronger pipe or reduce the pressure in the pipe thereby reducing the stress on the pipe to a level which meets 49 C.F.R.
§ 192.611.

¹⁰ Human habitation and/or occupancy include more than just residential, commercial, or industrial development. Under 49 C.F.R. § 192.903, the concept of population density incorporates other kinds of human development such as public assembly areas at beaches, playgrounds, recreational facilities, camping grounds, outdoor theaters, stadiums, recreational areas near a body of water. It includes areas outside a rural building such as a religious facility, community centers, general stores, 4-H facilities, or roller skating rinks, and includes hospitals, prisons, schools, day-care facilities, retirement facilities or assisted-living facilities.