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SB 366

Energy: natural gas; penalties for natural gas safety violations; modify. Amends sec. 11 of 1969 PA 165 (MCL 483.161).

2023-2024 Regular Session Introduced by Rosemary Bayer and 6 co-sponsors

Michigan hikes natural gas safety penalties: up to $200,000 per day per violation, $2.5 million per related series, with annual CPI adjustments by the MPSC.

ASSIGNED PA 0131'24 WITH IMMEDIATE EFFECT
#energy:gasandoil #energy:naturalgas #safety:other
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Bill Summary · SB 366

SB 366 — Summary (Natural Gas Safety Penalties; amends MCL 483.161 / 1969 PA 165)

Status: Enacted as Public Act 131 of 2024 (effective October 8, 2024; immediate effect)
Subject: Energy (natural gas), pipeline safety, enforcement/penalties

Purpose / Intent

The bill updates Michigan’s penalty structure for violations of the state’s Gas Safety Standards (1969 PA 165). Its principal aims are to (1) substantially increase maximum fines authorized for natural gas safety violations, (2) convert penalties to an administrative fine framework, and (3) require annual inflation adjustments — aligning state enforcement authority with federal standards and preserving Michigan’s delegated enforcement role under PHMSA.

Key provisions

  • Amends section 11 of 1969 PA 165 (MCL 483.161).
  • Maximum fines:
    • Raises the maximum administrative fine to up to $200,000 per day for each violation (previously $10,000/day).
    • Raises the maximum aggregate fine for a related series of violations to $2,500,000 (previously $500,000).
  • Annual inflation adjustment:
    • Requires the Michigan Public Service Commission (MPSC) to issue an order adjusting the maximum administrative fines for inflation using the Consumer Price Index (Detroit area, BLS) no sooner than Sept. 1, 2024 and by October 1 each year thereafter.
  • Enforcement, collection and remedies:
    • Administrative fines may be deducted from sums the State owes the fined person or recovered through civil action in Ingham County Circuit Court.
    • A separate misdemeanor penalty remains for willfully defacing/damaging pipeline signage (up to 1 year imprisonment and/or up to $5,000 fine).
  • Deposit and use of revenues:
    • Administrative fines must be deposited into the State General Fund.
    • For each calendar year, amounts of administrative fines deposited in the General Fund that exceed $200,000 are credited to the MPSC to be used for underground facilities safety education and training (consistent with MISS DIG provisions).
  • Factors for setting fines:
    • MPSC must consider effect on business, nature/circumstances/gravity of violation, good‑faith efforts to comply, degree of culpability, prior violation history, ability to pay, and other relevant matters.

Who is affected

  • Regulated entities: any person or entity that transports gas, owns or operates pipeline facilities in Michigan (including utilities and pipeline operators).
  • Michigan Public Service Commission: gains increased penalty authority and an obligation to set annual CPI adjustments and allocate excess funds for safety training.
  • State government: potential increase in General Fund revenue; some revenue earmarked for MPSC safety education when annual collections exceed $200,000.

Rationale and potential impacts

  • Rationale: Michigan’s prior penalty limits were unchanged for decades and were substantially lower than federal standards; increasing penalties helps align state enforcement with federal PHMSA expectations and helps preserve the state’s delegated enforcement authority and related federal funding.
  • Potential impacts:
    • Greater deterrence and stronger enforcement leverage for MPSC.
    • Increased, but indeterminate, state revenue from fines (depends on number/duration of violations).
    • Larger financial exposure for utilities/operators for safety violations; could prompt compliance investments.
    • Annual CPI adjustments will preserve penalty real value over time.

Procedural / timeline notes

  • Enacted as Public Act 131 of 2024; effective October 8, 2024 (immediate effect).
  • Statutory citation amended: MCL 483.161 (section 11 of 1969 PA 165).

Compiled from official sources — confirm details with the bill’s official record.

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