Report to TACIR on Underground Utility Damage Prevention in Tennessee

1. Report to TACIR on Underground Utility Damage Prevention in Tennessee Tennessee Regulatory Authority

2. Outline • What is underground utility damage and how does current law address utility damage prevention in Tennessee? • Why is this issue important? • Why is the TRA involved? • Have other states implemented reforms and how are they working? • What reforms are needed in Tennessee to comply with Federal guidelines?

3. Damage Prevention Enforcement • Gas Pipeline Operators • Violations and Fines are assessed by TRA • $10,000 per violation per day up to $500,000 • ATMOS Energy – $12,000 • Athens Utility Board – $15,000 • Mt Pleasant Gas – $76,396 • Memphis Light Gas and Water - $3,000 • Gibson County Utility District - $184,000

4. Damage Prevention Enforcement • All other utility owners and/or excavators • Violations and Fines assessed by local police • Maximum $2,500, 48 hrs in jail, or both.

5. Why important? • Disruption of utility services to customers • Increase utility costs • Public safety • Current law problems • Inconsistent enforcement • Not uniformly applied • Lack of public education efforts on law to stakeholder groups • No advisory group to help enforce law (stakeholder involvement lacking)

6. Why TRA Involved? • Promote public utility safety • Existing jurisdiction (Gas Pipeline Safety Program) • Comptroller’s Audit Report 2007 • Pressure from U.S. Department of Transportation • Congressional action (PIPES Act 2006)

7. Federal Certification • Application for states to enforce Federal Regulations • Must adopt Federal Regulations • Must have essentially same authority • Must encourage and promote programs to prevent damage to pipeline facilities. • Cooperate with Federal monitoring

8. Federal Monitoring Results • Yearly Scores

9. Inspection Totals • Minimum requirement of 420 inspection Days Per Year

10. Funding • 40-50% Federal funding • 50-60% Inspection fee • State Damage Prevention Program Grant • ~$150,000 in past 2 years

11. Training • Mandatory Federal Training • 7 – Week-long Classes • Pipeline Failure Investigation Techniques Course • Optional Classes • LNG, IMP, OQ • Industry training and meetings

12. Expertise • Education • 6 Graduate Engineers • 2 Licensed Professional Engineers in the State of Tennessee • Federal Categorization • 4 Category I • 2 Category III

13. Tennessee Regulatory Authority Performance Audit (August 2007) Tennessee Comptroller of the Treasury Recommendation: The General Assembly may wish to consider increasing the civil penalties for gas pipeline safety violations to levels that are substantially the same as federal levels. Such a revision could encourage increased compliance with pipeline safety standards and could also help ensure that Tennessee receives the maximum federal funding available from the U.S. Pipeline and Hazardous Materials Safety Administration.

14. Federal Evaluation Results • “Dear Mr. Borum …Improvements are needed to Tennessee’s underground facilities damage prevention laws to incorporate the best practices described in the published Common Ground Alliance Study.” U.S. Department of Transportation Pipeline and Hazardous Material Safety Administration July 22, 2007

15. Federal Evaluation Results • “Dear Mr. Borum …Excavation damage continues to be the single greatest cause of underground pipeline failures. The PIPES Act encourages states to oversee damage prevention law non-compliance enforcement.” U.S. Department of Transportation Pipeline and Hazardous Material Safety Administration August 22, 2008

16. Federal Evaluation Results • “Dear Director Hargett. …The PIPES Act raises the 50 % cap on Federal funding of states pipeline safety programs to 80%. Establishing or actions taken to establish an effective Damage Prevention Program will likely be one of the key factors in achieving funding above the 50% level” U.S. Department of Transportation Pipeline and Hazardous Material Safety Administration August 28, 2008

17. Federal Evaluation Results • “Dear Commissioner Roberson, I am writing to enlist your support for a vital initiative to improve all underground utilities within your state. We are advocating an excavation damage prevention program to protect all pipelines as well as telecommunications water and sewer and other vital lifelines on which your citizens depend. Construction related damages is an all too frequent threat to our safety and the continuity of services we need to live and work ” U.S. Department of Transportation Pipeline and Hazardous Material Safety Administration

18. Has Reform Worked in Other States? • Virginia Law • §56-265 (1995) • Approximate 55% decrease in damages since inception. • Georgia Law • §25-9-1 (2000) • “The new enforcement program has been successful and the stakeholder group has aided the PSC in driving down underground utility damages.” Georgia PSC Commissioner

19. Essential Components of Reform • Element 1 – More utilities become a part of One Call • Element 2 – Establish a stakeholder group • Element 6 – Establish a dispute resolution process by the State • Element 7 -- Empower a state agency with enforcement power with sufficient penalties to ensure consistent and fair enforcement of state law

20. Questions